8-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 20, 2012 (February 3, 2012)

NGL ENERGY PARTNERS LP

(Exact name of registrant as specified in its charter)

Delaware	001-35172	27-3427920
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

6120 South Yale Avenue
Suite 805
Tulsa, Oklahoma 74136

(Address of principal executive offices) (Zip Code)

(918) 481-1119

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

This Current Report on Form 8-K/A amends and supplements the Current Report on Form 8-K of NGL Energy Partners LP, filed with the Securities and Exchange Commission on February 10, 2012 (the “Form 8-K”), which reported under Item 2.01 the completion of the business combination with North American Propane, Inc. and its affiliated companies (collectively, “North American Propane”).  This amendment is filed to provide the financial statements for North American Propane and the pro forma financial information of NGL Energy Partners LP for such transaction as required by Item 9.01, to amend Item 9.01 to file the amendments to the Asset Purchase Agreement (as defined below) and to amend and restate Item 2.01 to correct the date of completion of the transaction (which was February 3, 2012, previously reported as February 6, 2012).  Unless set forth below, all previous Items of the Form 8-K are unchanged.

Item 2.01. Completion of Acquisition or Disposition of Assets.

On February 3, 2012, NGL Energy Partners LP (the “Partnership”) completed its previously announced transaction with North American Propane. As contemplated by the Asset Purchase Agreement (as amended, the “Asset Purchase Agreement”), dated as of January 16, 2012, by and between the Partnership and North American Propane, the Partnership acquired substantially all of the assets comprising the propane operations of North American Propane in exchange for an adjusted purchase price of approximately $69.8 million in cash. The purchase price is subject to further adjustment for certain specified working capital items.

The assets acquired from North American Propane include retail propane and distillate operations, wholesale supply and marketing operations and three propane terminals located in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Pennsylvania and Rhode Island.

The description of the Asset Purchase Agreement is qualified in its entirety by reference to the full text of the Asset Purchase Agreement, a copy of which is filed as Exhibit 2.1 to the Current Report on Form 8-K dated February 10, 2012, and to the First and Second Amendments to the Asset Purchase Agreement, copies of which are filed as Exhibits 2.2 and 2.3, respectively, to this Current Report on Form 8-K/A, all of which are incorporated into this Item 2.01 by reference.

The Asset Purchase Agreement contains representations, warranties and other provisions that were made or agreed to, among other things, to provide the parties with specified rights and obligations and to allocate risk among them and is qualified by the related schedules. Accordingly, the Asset Purchase Agreement should not be relied upon as constituting a description of the state of affairs of any of the parties or their affiliates at the time it was entered into or otherwise.

Item 9.01            Financial Statements and Exhibits.

(a)           Financial Statements of Businesses Acquired

The audited consolidated financial statements of North American Propane, Inc. and subsidiaries as of September 30, 2011 and 2010 and for the years then ended and the related notes are filed as Exhibit 99.1 to this Current Report on Form 8-K/A.

(b)           Pro Forma Financial Information

The unaudited pro forma condensed consolidated balance sheet as of December 31, 2011, the unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2011, and the unaudited pro forma condensed consolidated statement of operations for the nine months ended December 31, 2011 of NGL Energy Partners LP and the related notes are filed as Exhibit 99.2 to this Current Report on Form 8-K/A.

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(d) Exhibits

Exhibit No.	Description
2.2	Waiver and First Amendment to Asset Purchase Agreement dated as of January 31, 2012 by and among NGL Energy Partners LP and North American Propane, Inc., EnergyUSA Propane, Inc., EUSA-Allied Acquisition Corp. and EUSA Heating & Air Conditioning Services, Inc. *
2.3	Waiver and Second Amendment to Asset Purchase Agreement dated as of February 3, 2012 by and among NGL Energy Partners LP and North American Propane, Inc., EnergyUSA Propane, Inc., EUSA-Allied Acquisition Corp. and EUSA Heating & Air Conditioning Services, Inc. *
99.1	Audited consolidated financial statements of North American Propane, Inc. and subsidiaries as of September 30, 2011 and 2010 and for the years then ended and the related notes
99.2	The unaudited pro forma condensed consolidated balance sheet as of December 31, 2011, the unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2011, and the unaudited pro forma condensed consolidated statement of operations for the nine months ended December 31, 2011 of NGL Energy Partners LP and the related notes

*      Exhibits and Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Partnership agrees to furnish a supplemental copy of the omitted Exhibits and Schedules to the Securities and Exchange Commission upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NGL ENERGY PARTNERS LP
	By:	NGL Energy Holdings LLC,
		its general partner
Date: April 20, 2012		By:	/s/ Craig S. Jones
			Craig S. Jones
			Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
2.2	Waiver and First Amendment to Asset Purchase Agreement dated as of January 31, 2012 by and among NGL Energy Partners LP and North American Propane, Inc., EnergyUSA Propane, Inc., EUSA-Allied Acquisition Corp. and EUSA Heating & Air Conditioning Services, Inc. *
2.3	Waiver and Second Amendment to Asset Purchase Agreement dated as of February 3, 2012 by and among NGL Energy Partners LP and North American Propane, Inc., EnergyUSA Propane, Inc., EUSA-Allied Acquisition Corp. and EUSA Heating & Air Conditioning Services, Inc. *
99.1	Audited consolidated financial statements of North American Propane, Inc. and subsidiaries as of September 30, 2011 and 2010 and for the years then ended and the related notes
99.2	The unaudited pro forma condensed consolidated balance sheet as of December 31, 2011, the unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2011, and the unaudited pro forma condensed consolidated statement of operations for the nine months ended December 31, 2011 of NGL Energy Partners LP and the related notes

*      Exhibits and Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Partnership agrees to furnish a supplemental copy of the omitted Exhibits and Schedules to the Securities and Exchange Commission upon request.

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EX-2.2

Exhibit 2.2

WAIVER AND FIRST AMENDMENT TO

ASSET PURCHASE AGREEMENT

This Waiver and First Amendment to Asset Purchase Agreement (this “Amendment”) is entered into this 31st day of January, 2012 by and among NGL ENERGY PARTNERS, LP, a Delaware limited partnership (“Purchaser”), NORTH AMERICAN PROPANE, INC., a Delaware corporation (“NAP”), EUSA-ALLIED ACQUISITION CORP., a Delaware corporation (“EUSAA”), ENERGYUSA PROPANE, INC., a Delaware corporation (“EUSAP”), and EUSA HEATING & AIR CONDITIONING SERVICES, INC., a Delaware corporation (“EUSAH&AC”) (EUSAA, EUSAP and EUSAH&AC are sometimes singularly and collectively referred to as “Seller”).  Unless otherwise defined herein, the capitalized terms used in this Amendment shall have the same meaning as the defined terms of the Agreement (as defined below).

RECITALS

WHEREAS, Purchaser, Seller, and NAP have entered into an Asset Purchase Agreement, dated as of January 16, 2012 (the “Agreement”), pursuant to which Seller has agreed to sell, and Purchaser has agreed to buy, substantially all of the assets of the Business of the Seller.

WHEREAS, Purchaser, Seller and NAP now desire to amend certain provisions of the Agreement, and to take such other actions as they have deemed necessary and desirable.

NOW THEREFORE, in consideration of the mutual covenants in the Agreement and herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.Waiver and Acknowledgement Regarding Conditions.

(a)Purchaser hereby waives its condition to closing the transactions contemplated by the Agreement set forth in Section 7.3(c) of the Agreement with respect to receipt of consent to assignment of the following intellectual property: (i) FAS license agreement (depreciation system); (ii) Quickbooks license agreement; (iii) FRx report writer for use with Great Plains; and (iv) Microsoft Office Suite (Word, Excel, Powerpoint, Outlook, etc.).

(b)Purchaser acknowledges and agrees that as of the date of this Amendment: (i) all mutual conditions to the closing of the transactions contemplated by the Agreement contained in Section 7.1(a) thereof; and (ii) Purchaser’s condition to closing set forth in Section 7.3(d) has been satisfied.

2.Deposit Release; Additional Deposit; Dispensation.

(a)As consideration for Seller’s agreement to amend the Agreement to change the Closing Date from January 31, 2012 to February 3, 2012 (to be effective

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as of 12:01 a.m. February 4, 2012), Purchaser shall, as of the date of this Amendment:

i.Execute joint instructions, with NAP and the Seller, mutually instructing the Escrow Agent to release the Deposit from escrow to an account of Seller’s designation (which amount will be credited against the Purchase Price); and

ii.Wire an additional deposit of ONE MILLION DOLLARS ($1,000,000.00) (the “Additional Deposit”) to an account of Seller’s designation (which amount shall be credited against the Purchase Price, as contemplated by Section 3(e) below).

(b)If (x) the transactions contemplated by the Agreement fail to close by the Outside Date for any reason other than: (i) mutual agreement of Seller, Purchaser and NAP; or (ii) the failure of Purchaser’s conditions to closing the transactions contemplated by the Agreement set forth in Sections 7.1(b), 7.1(c), 7.3(a), 7.3(b), 7.3(c), 7.3(e), 7.3(f), 7.3(g) and 7.3(h) of the Agreement, and (y), as a result thereof, the Seller elects to terminate the Agreement, then, without limiting the rights and remedies of the Seller, the Deposit and the Additional Deposit shall become the property of Seller, and Purchaser shall have no further right, title or interest in the Deposit or the Additional Deposit.

3.Additional Amendments.

(a)Schedules 2.1(a), 4.3(a), 4.9(a)(i), 4.10, 4.12, 4.14(e), and 4.15(c) attached to the Agreement are hereby deleted and replaced in their entirety with the schedules attached to this Amendment as Exhibit A, bearing the same number and title as those deleted.

(b)The following shall be added to the definition of Permitted Encumbrances in Section 1.1: “(f) Encumbrances related to possible excise tax liens; and (g)  Encumbrances related to Taxes due to the state in which the Owned Real Property is located, to the extent that such Taxes became due and payable on the earlier of (i) the Closing Date; or (ii) the date that either Seller or Purchaser was required to provide notice of the sale of the Acquired Assets to the applicable state; provided, however, that all Taxes contemplated by clauses (f) and (g) constitute Excluded Liabilities for which Seller is solely responsible.”

(c)The following is added to the second sentence of Section 2.3C of the Agreement, to immediately precede the first word of such sentence: “Seller acknowledges that it bears sole financial responsibility for propane gallonsallocated to any period prior to the Closing Date under all Assumed Supply Agreements, therefore…”.

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(d)The following is added to Section 2.3C of the Agreement following the last word of the last sentence of such Section “; provided, however, that the adjustment of the Estimated Propane Supply Agreement Adjustment with respect to those Assumed Supply Agreements under which propane lifting requirements are calculated on a seasonal basis (“Seasonal Basis Contracts”) shall occur as quickly as practicable following April 1, 2012.  Notwithstanding anything to the contrary contained in this Section 2.3C, Purchaser agrees to use its best efforts to fulfill all lifting requirements contained in the Seasonal Basis Contracts and outstanding as of the Closing Date.”

(e)The words “and the Additional Deposit” are hereby added to Section 3.3(a)(i) following the word “Deposit.”

(f)A new Section 6.18 is hereby added to Article VI of the Agreement, which shall read in its entirety as follows:

“Section 6.18.  Roll-Back Taxes.  Purchaser acknowledges that a portion of the parcel of Owned Real Property located at 159 Floodgate Road in Gibbstown, New Jersey (“Farmland Property”) is taxed as an eligible agricultural or horticultural use pursuant to the New Jersey Farmland Assessment Act of 1964 (“Eligible Use”).  Purchaser covenants that, for the period beginning on the Closing Date and continuing until the end of the third tax year following the Closing Date, (i) Purchaser shall timely file all required applications to maintain the Eligible Use, and (ii) Purchaser shall not change, or permit to be changed, the use of the Farmland Property from an Eligible Use, or take any other actions that would trigger roll-back tax liability relating to the period of Seller’s ownership of the Farmland Property.”

4.Power and Authority.  Each of the parties hereto represents and warrants that (i) it has all necessary power to execute, deliver and perform this Amendment and the Agreement, as amended hereby, and (ii) all necessary corporate action on its part has been taken to authorize the execution, delivery and performance of this Amendment.

5.Continuing Effectiveness.  The Agreement, except to the extent expressly amended hereby, shall continue in full force and effect in accordance with its terms.

6.Successors and Assigns.  Subject to the provisions of Section 10.3 of the Agreement, this Amendment shall inure to the benefit of and be binding upon the heirs, legal representatives, successors and assigns of each of the parties.

7.Conflicts.  To the extent that the provisions of this Amendment conflict with any other provisions of the Agreement, the provisions of this Amendment control.

8.Counterparts.  This Amendment may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.

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9.Governing Law.  This Amendment shall be enforced, construed and performed in accordance with the laws of the State of Delaware, exclusive of such State’s rules respecting the choice of law.

10.Titles.  Titles to the sections in this Amendment are intended solely for convenience and no provision of this Amendment is to be construed by reference to the title of any section.

[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties have executed, or caused to be executed, this Amendment in a manner sufficient to bind them as of the day and in the month and year first above written.

NORTH AMERICAN PROPANE, INC.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
SELLER
EUSA-ALLIED ACQUISITION CORP.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
ENERGYUSA PROPANE, INC.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
EUSA HEATING & AIR CONDITIONING SERVICES, INC.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
PURCHASER:
NGL ENERGY PARTNERS, LP,
a Delaware limited partnership
By:	NGL ENERGY HOLDINGS LLC,
	its general partner
By:	/s/ H. Michael Krimbill
Name: H. Michael Krimbill
Title: Chief Executive Officer

[Signature Page of Waiver and First Amendment to Asset Purchase Agreement]

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EX-2.3

Exhibit 2.3

WAIVER AND SECOND AMENDMENT TO

ASSET PURCHASE AGREEMENT

This Waiver and Second Amendment to Asset Purchase Agreement (this “Second Amendment”) is entered into this 3rd day of February, 2012 by and among NGL ENERGY PARTNERS, LP, a Delaware limited partnership (“Purchaser”), NORTH AMERICAN PROPANE, INC., a Delaware corporation (“NAP”), EUSA-ALLIED ACQUISITION CORP., a Delaware corporation (“EUSAA”), ENERGYUSA PROPANE, INC., a Delaware corporation (“EUSAP”), and EUSA HEATING & AIR CONDITIONING SERVICES, INC., a Delaware corporation (“EUSAH&AC”) (EUSAA, EUSAP and EUSAH&AC are sometimes singularly and collectively referred to as “Seller”).  Unless otherwise defined herein, the capitalized terms used in this Second Amendment shall have the same meaning as the defined terms of the Agreement (as defined below).

RECITALS

WHEREAS, Purchaser, Seller, and NAP have entered into an Asset Purchase Agreement, dated as of January 16, 2012 (the “APA”), as amended by that certain Waiver and First Amendment to Asset Purchase Agreement dated as of January 31, 2012 (the “First Amendment”) (the APA as amended by the First Amendment is hereinafter referred to as the “Agreement” pursuant to which Seller has agreed to sell, and Purchaser has agreed to buy, substantially all of the assets of the Business of the Seller.

WHEREAS, Purchaser, Seller and NAP now desire to amend certain provisions of the Agreement, and to take such other actions as they have deemed necessary and desirable.

NOW THEREFORE, in consideration of the mutual covenants in the Agreement and herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.Waiver of Condition.  Purchaser hereby waives its condition to closing the transactions contemplated by the Agreement set forth in Section 7.3(h) of the Agreement, solely with respect to the Seller’s delivery of the closing deliverables set forth in Section 3.2(g) of the Agreement.  Seller shall (i) deliver to Purchaser the motor vehicle certificate of title and other documentation necessary to transfer title to the vehicles, constituting a part of the Tangible Personal Property as and when received, and (ii) keep Purchaser reasonably informed regarding the status of such delivery and use its commercially reasonable efforts to accomplish such delivery as quickly as practicable after the Closing.

2.Amendments.

(a)Schedules 2.3A, 4.6(a) and 4.15(c) attached to the Agreement are hereby deleted and replaced in their entirety with the schedules attached to this Amendment as Exhibit A, bearing the same number and title as those deleted.

(b)The words “or relating solely to the Excluded Liabilities” are hereby added to the definition of “Business Books and Records” set forth in Section 1.1 of the Agreement following the last word of such definition.

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(c)The words “ninety percent (90%) of” are hereby added to Section 2.4 of the Agreement following the word “plus” in the seventh line of such Section.

(d)Section 2.5(c) of the Agreement is hereby deleted in its entirety and replaced with the following:

“Within forty-five (45) calendar days after the Closing Date, Seller shall prepare a statement (the “Reconciliation Statement”) setting forth Seller’s calculation of (i) the Working Capital as of the Closing Date (the “Closing Working Capital”), and (ii) the amount, if any, by which the Closing Working Capital is greater or less than (x) ninety percent (90%) of the Estimated Working Capital if the Estimated Working Capital was positive or (y) the Estimated Working Capital if the Estimated Working Capital was Negative (such difference being referred to herein as the “Adjustment Amount”).  Purchaser shall be permitted to review all work papers and procedures used by Seller to prepare the statement setting forth the Estimated Working Capital and the Reconciliation Statement and shall have the right to perform any other reasonable procedures to verify the accuracy thereof.”

(e)The parenthetical beginning following the word “positive” in the second sentence of Section 2.5(e) of the Agreement is hereby deleted in its entirety and replaced with the following:

“(i.e., the Closing Working Capital is greater than (x) ninety percent (90%) of the Estimated Working Capital if the Estimated Working Capital is positive or (y) the Estimated Working Capital if the Estimated Working Capital is negative)”

(f)The parenthetical beginning following the word “negative” in the third sentence of Section 2.5(e) of the Agreement is hereby deleted in its entirety and replaced with following:

“(i.e., the Closing Working Capital is less than (x) ninety percent (90%) of the Estimated Working Capital if the Estimated Working Capital is positive or (y) the Estimated Working Capital if the Estimated Working Capital is negative)”

(g)Section 3.3(a)(i) of the Agreement is hereby deleted in its entirety and replaced with the following:

“the dollar amount equal to the Base Purchase price minus the Escrow Amount, the Deposit, the Additional Deposit, and the Purchased Personal Goodwill Consideration (as defined in the NonCompetition and Nonsolicitation Agreement to be entered into by Mark Cleaves in the form

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attached hereto as Exhibit 1.1(e)), by wire transfer of immediately available funds to an account or accounts designated by Seller;”

3.Power and Authority.  Each of the parties hereto represents and warrants that (i) it has all necessary power to execute, deliver and perform this Second Amendment and the Agreement, as amended hereby, and (ii) all necessary corporate action on its part has been taken to authorize the execution, delivery and performance of this Second Amendment.

4.Continuing Effectiveness.  The Agreement, except to the extent expressly amended hereby, shall continue in full force and effect in accordance with its terms.

5.Successors and Assigns.  Subject to the provisions of Section 10.3 of the Agreement, this Second Amendment shall inure to the benefit of and be binding upon the heirs, legal representatives, successors and assigns of each of the parties.

6.Conflicts.  To the extent that the provisions of this Second Amendment conflict with any other provisions of the Agreement, the provisions of this Second Amendment control.

7.Counterparts.  This Second Amendment may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.

8.Governing Law.  This Second Amendment shall be enforced, construed and performed in accordance with the laws of the State of Delaware, exclusive of such State’s rules respecting the choice of law.

9.Titles.  Titles to the sections in this Second Amendment are intended solely for convenience and no provision of this Second Amendment is to be construed by reference to the title of any section.

[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties have executed, or caused to be executed, this Amendment in a manner sufficient to bind them as of the day and in the month and year first above written.

NORTH AMERICAN PROPANE, INC.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
SELLER
EUSA-ALLIED ACQUISITION CORP.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
ENERGYUSA PROPANE, INC.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
EUSA HEATING & AIR CONDITIONING SERVICES, INC.
By:	/s/ Robert R. Kaplan
Name: Robert R. Kaplan
Its: Secretary and Treasurer
PURCHASER:
NGL ENERGY PARTNERS, LP,
a Delaware limited partnership
By: NGL ENERGY HOLDINGS LLC,
its general partner
By:	/s/ H. Michael Krimbill
Name: H. Michael Krimbill
Title: Chief Executive Officer

[Signature Page of Waiver and Second Amendment to Asset Purchase Agreement]

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EX-99.1

Exhibit 99.1

INDEPENDENT AUDITORS’ REPORT

Board of Directors

North American Propane, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of North American Propane, Inc. and Subsidiaries as of September 30, 2011 and 2010, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of North American Propane, Inc. and Subsidiaries as of September 30, 2011 and 2010, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

GRAY, GRAY & GRAY, LLP

Westwood, Massachusetts

April 11, 2012

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

ASSETS

	September 30,
	2011		2010
CURRENT ASSETS
Cash	$	—	$	359,443
Accounts receivable, trade, less allowance for doubtful accounts of $335,000 in 2011 and $485,623 in 2010	5,455,575		5,132,116
Inventories	3,966,636		4,334,224
Deferred tax asset	6,653,935		—
Prepaid expenses and other current assets	1,623,255		836,393
TOTAL CURRENT ASSETS	17,699,401		10,662,176
PROPERTY, PLANT, AND EQUIPMENT
Building and improvements	2,736,934		2,692,900
Land	2,166,548		2,144,796
Tanks and equipment	27,684,286		26,301,157
Furniture and fixtures	183,261		172,200
Vehicles	11,297,318		10,176,014
Computer equipment	1,308,573		1,198,186
	45,376,920		42,685,253
Less accumulated depreciation	14,188,329		11,025,942
NET PROPERTY, PLANT, AND EQUIPMENT	31,188,591		31,659,311
OTHER ASSETS
Deferred taxes	1,703,170		—
Intangible assets, net of accumulated amortization of $8,850,272 in 2011 and $6,828,656 in 2010	5,058,270		7,079,886
Goodwill	2,787,220		3,065,072
TOTAL OTHER ASSETS	9,548,660		10,144,958
TOTAL ASSETS	$	58,436,652	$	52,466,445

The accompanying notes are an integral part of these financial statements.

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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

	September 30,
	2011			2010
CURRENT LIABILITIES
Accounts payable	$	3,843,029		$	3,383,387
Accrued expenses	3,377,173			1,899,085
Customer deposits	6,063,364			6,125,720
Current portion of long-term commitments	348,000			383,000
Current portion of long-term debt	26,487,113			2,370,066
TOTAL CURRENT LIABILITIES	40,118,679			14,161,258
LONG-TERM LIABILITIES
Long-term commitments, net of current portion	540,000			1,118,000
Long-term debt, net of current portion	12,006,981			34,805,107
Accrued preferred dividends	2,475,772			2,475,772
TOTAL LONG-TERM LIABILITIES	15,022,753			38,398,879
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY (DEFICIT)
Convertible preferred stock, Series B, 7% cumulative, $0.01 par value:
Authorized 69,396 shares, issued and outstanding 65,624 shares in 2011 and 2010 (liquidating preference of$12,033,908 in 2011 and 2010)	656			656
Redeemable preferred stock, $0.01 par value:
Authorized 69,396 shares; none issued and outstanding	—			—
Convertible preferred stock, Series A, $0.01 par value:
Authorized 5,300 shares; issued and outstanding 5,000 shares (liquidation preference of $500,000)	50			50
Common stock, $0.01 par value:
Authorized 74,000 shares; issued and outstanding 1 share	—			—
Restricted common stock, $0.01 par value:
Issued and outstanding 7,317 shares	73			73
Additional paid-in capital	12,233,812			11,913,311
Accumulated deficit	(8,499,797		)	(11,520,539		)
Accumulated other comprehensive loss	(439,574		)	(487,243		)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)	3,295,220			(93,692		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	58,436,652		$	52,466,445

The accompanying notes are an integral part of these financial statements.

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NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended September 30,
	2011			2010
REVENUES
Propane	$	62,591,293		$	52,475,020
Industrial gas and hardgoods	4,748,339			4,442,336
Distillates	32,028,398			24,737,743
Service and installations	7,311,886			7,700,025
TOTAL REVENUES	106,679,916			89,355,124
COSTS AND EXPENSES
Cost of products sold	77,026,335			60,194,152
Operating expenses	23,821,623			23,498,944
Acquisition costs	—			633,061
Non-operating legal and finance costs	1,420,365			—
Management fees	56,250			75,000
Stock option compensation expense	320,501			—
Depreciation and amortization	5,241,711			5,908,168
TOTAL COSTS AND EXPENSES	107,886,785			90,309,325
LOSS FROM OPERATIONS	(1,206,869		)	(954,201		)
OTHER INCOME (EXPENSES)
Interest expense	(4,045,048		)	(2,308,153		)
Other expenses	(101,987		)	(88,519		)
Gain on sale of assets	17,541			31,657
TOTAL OTHER INCOME (EXPENSES)	(4,129,494		)	(2,365,015		)
LOSS BEFORE BENEFIT FROM INCOME TAX	(5,336,363		)	(3,319,216		)
INCOME TAX BENEFIT
Deferred	8,357,105			—
NET INCOME (LOSS)	$	3,020,742		$	(3,319,216	)

The accompanying notes are an integral part of these financial statements.

4

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Year Ended September 30,
	2011		2010
NET INCOME (LOSS)	$	3,020,742	$	(3,319,216	)
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gain (loss) on interest rate swap	47,669		(360,032		)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	3,068,411	$	(3,679,248	)

The accompanying notes are an integral part of these financial statements.

5

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

YEARS ENDED SEPTEMBER 30, 2011 AND 2010

	Convertible Preferred			Convertible Preferred			Restricted								Accumulated Other
	Stock, Series B			Stock, Series A			Common Stock			Additional Paid-		Accumulated			Comprehensive
	Amount		Shares	Amount		Shares	Amount		Shares	in Capital		Deficit			Loss			Total
BALANCE AT SEPTEMBER 30, 2009	$	593	59,275	$	50	5,000	$	73	7,317	$	9,913,374	$	(7,580,954	)	$	(127,211	)	$	2,205,925
Net (loss)	—		—	—		—	—		—	—		(3,319,216		)	—			(3,319,216		)
Preferred dividends	—		—	—		—	—		—	—		(620,369		)	—			(620,369		)
Stock issued	63		6,349	—		—	—		—	1,999,937		—			—			2,000,000
Other comprehensive loss	—		—	—		—	—		—	—		—			(360,032		)	(360,032		)
BALANCE AT SEPTEMBER 30, 2010	656		65,624	50		5,000	73		7,317	11,913,311		(11,520,539		)	(487,243		)	(93,692		)
Net income	—		—	—		—	—		—	—		3,020,742			—			3,020,742
Stock compensation expense	—		—	—		—	—		—	320,501		—			—			320,501
Other comprehensive gain	—		—	—		—	—		—	—		—			47,669			47,669
BALANCE AT SEPTEMBER 30, 2011	$	656	65,624	$	50	5,000	$	73	7 317	$	12,233,812	$	(8,499,797	)	$	(439,574	)	$	3,295,220

The accompanying notes are an integral part of these financial statements.

6

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended September 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	3,020,742		$	(3,319,216	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Deferred tax benefit	(8,357,105		)	—
Depreciation and amortization	5,241,711			5,908,168
Stock option compensation expense	320,501			—
Gain on sale of assets	(17,541		)	(31,657		)
Bad debt expense	384,921			308,426
(Increase) decrease in assets:
Accounts receivable, trade	(708,380		)	(588,721		)
Inventories	367,588			(815,052		)
Prepaid expenses and other assets	(786,862		)	(233,390		)
Increase in liabilities:
Accounts payable, accrued expenses, long-term commitments and customer deposits	1,587,896			2,214,644
NET CASH PROVIDED BY OPERATING ACTIVITIES	1,053,471			3,443,202
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets in acquisitions	—			(4,344,574		)
Proceeds from sale of assets	51,657			59,990
Purchase of customer relations from acquisition	—			(2,006,064		)
Purchase of goodwill from acquisition	—			(864,290		)
Purchase of property, plant, and equipment	(2,045,951		)	(761,537		)
NET CASH (USED) BY INVESTING ACTIVITIES	(1,994,294		)	(7,916,475		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolver	111,847,936			98,843,595
Repayments on revolver	(111,874,207		)	(94,360,106		)
Principal payments on long-term debt	(2,392,349		)	(1,650,773		)
Proceeds from long-term debt	3,000,000			—
Proceeds from issuance of preferred stock	—			2,000,000
NET CASH PROVIDED BY FINANCING ACTIVITIES	581,380			4,832,716
NET INCREASE (DECREASE) IN CASH	(359,443		)	359,443
CASH AT BEGINNING OF YEAR	359,443			—
CASH AT END OF YEAR	$	—		$	359,443
SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property and equipment with debt	$	737,541		$	1,947,910
Goodwill assumed from acquisition through debt	$	—		$	492,390
Customer relations from acquisitions financed with debt	$	—		$	615,610
Non-compete purchased with debt	$	—		$	149,880
Accumulated other comprehensive income (loss) included in accounts payable and accrued expenses	$	47,669		$	360,031
Preferred dividends accrued	$	—		$	620,369
Non cash reduction of goodwill and long-term commitments	$	277,852		$	—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	2,277,560		$	2,082,377

The accompanying notes are an integral part of these financial statements.

7

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 1 — BUSINESS

Principal Business Activity — North American Propane, Inc. (the “Company”) is a holding company for its wholly-owned subsidiaries EnergyUSA Propane, Inc. (“EnergyUSA”), EUSA-Allied Acquisition Corp. (“Allied”) and EUSA Heating and Air Conditioning Services, Inc. (“EUSA-HAC”).  EnergyUSA and Allied are engaged in the sale and distribution of propane and petroleum distillates to retail customers including sale, rental, service, and installation of related equipment.  Additionally, the companies operate a packaged gas business throughout New England and the Mid-Atlantic states.  EnergyUSA conducts business primarily in Massachusetts with operations in Maine, New Hampshire, Connecticut, and Rhode Island as well.  Allied’s operations are spread between eastern Pennsylvania, Delaware, Maryland, and New Jersey.  EUSA-HAC began operation of a plumbing and heating service business in Massachusetts in April 2006.  Propane and petroleum distillates accounted for 89% of fiscal 2011 net sales and 86% of fiscal 2010 net sales.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation — The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated.

Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Significant Vendors — The Company purchased 78% of its propane from four suppliers during the year ended September 30, 2011.  Since this product is available from other suppliers, the loss of these suppliers would not have a long-term material adverse effect on the Company’s business.

The Company purchased 75% of its hard-goods from four suppliers during the year ended September 30, 2011.  Since this product is available from other suppliers, the loss of these suppliers would not have a long-term material adverse effect on the Company’s business.

Cash — The cash balances may fluctuate during the year and can exceed the Federal Deposit Insurance Corporation’s (FDIC) coverage limit of $250,000.  However, all funds in noninterest-bearing accounts are temporarily insured in full by the FDIC through December 31, 2012.

Accounts Receivable and Credit Policies — Accounts receivable are uncollateralized customer obligations due under normal trade terms generally requiring payment within 30 days from the invoice date.  Trade accounts receivable are stated at the amount management expects to collect from outstanding balances.  The carrying amounts of accounts receivable are reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected.  Management reviews overdue accounts receivable and estimates the portion, if any, of the balance that will not be collected.

8

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventories — Inventories are composed of propane, distillates, industrial gas, hardgoods, and welding supplies and are stated at the lower of cost (first-in, first-out basis) or market.

Property, Plant, and Equipment — Property, plant, and equipment are stated at cost.  Depreciation is computed principally on a straight-line method over the estimated useful lives of the related assets as follows:

	Estimated
	Useful Lives
Building and improvements	39 Years
Tanks and equipment	15 Years
Furniture and fixtures	7 Years
Vehicles	5 Years
Computer equipment	5 Years

Depreciation expense for the years ended September 30, 2011 and 2010 totaled $3,220,094 and $3,221,579, respectively.

Goodwill — Goodwill represents the excess of the purchase prices over the estimated fair value of the net assets acquired from the acquisitions of certain businesses.

Goodwill must be assessed for impairment at least annually or when an event occurs or circumstances change that would indicate potential impairment.  In making this assessment, management relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and market conditions.  Goodwill was written off in the amount of $277,852 for the year ended September 30, 2011 as a result of sales targets not met on certain acquisitions.  The Company had a related long term commitment payable in the same amount which was also written off.  As a result there was no net income effect.

Intangible Assets — Intangible assets include customer relationships, non-compete agreements, loan financing costs, and trademarks.

Intangible assets are being amortized over their estimated useful lives.  Customer relationships and trademarks are being amortized over three to twenty years based on the estimated period from which the assets are expected to contribute to future cash flows.  Non-compete agreements are being amortized over five to seven years, per the terms of applicable agreements.  Loan financing costs are being amortized on a straight-line basis over the expected term of the related debt which is five years.

9

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Long-Lived Assets — The Company periodically evaluates the net realizable value of long-lived assets, including property and equipment and amortizable intangible assets through a review of operating results, business plans, economic projections, and anticipated future cash flows.  If indicators of impairment are present, the carrying values of assets are evaluated by estimated future undiscounted cash flows of the business.  If impairment exists, assets are written down to fair value.  No impairments have been noted to date.

Customer Deposits — The Company records a liability for customer deposits received for rental of tank equipment.  The Company also considers net credit customer trade receivable balances, which may result from prepayment programs, as a current liability in customer deposits.

Pricing Program — The Company is involved in a program to purchase and sell propane at fixed prices.  The gallons bought and sold through this program account for less than 1% of all gallons bought or sold by the company during the year.

Derivatives — The Company uses derivatives to manage risks related to interest rate movements.  Interest rate swap contracts designated and qualifying as cash flow hedges are reported at fair value.  The gain or loss on the effective portion of the hedge initially is included as a component of other comprehensive income and is subsequently reclassified into earnings when interest on the related debt is paid.  The Company documents its risk management strategy and hedge effectiveness at the inception of and during the term of each hedge.  The Company’s interest rate risk management strategy is to stabilize cash flow requirements by maintaining interest rate swap contracts to convert variable-rate debt to a fixed rate.

Revenue Recognition — The Company generally recognizes revenue from propane and distillate sales at the time of delivery or, in the case of metered accounts, when consumed.

Revenue from the sale of appliances and equipment is recognized at the time of sale or when installation is complete, as applicable.  Revenues from maintenance and other service activities are recognized upon completion of the service.  Revenues from fixed-price contracts are recognized using the percentage-of-completion method, measured by actual work delivered to date to estimated total cost for each contract.  Because of inherent uncertainties in estimating costs, it is at least reasonably possible that estimates used will change within the near term.

Financial Instruments — The carrying value for each of the Company’s financial instruments (consisting of cash, accounts receivable, and accounts payable) approximates fair value because of the short-term nature of those instruments.  The fair value of the Company’s notes payable and revolving line of credit is estimated based on the quoted market rates for similar debt with remaining maturity.  On September 30, 2011, the carrying value of long-term debt approximates fair value.

10

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes — Deferred income taxes are provided based on the liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The Company has a net deferred tax asset at September 30, 2011, primarily due to cumulative net operating loss carryforwards.

The Company is required to recognize the financial statement impact of a tax position unless it is more likely than not that the position will be sustained upon examination.  If applicable, the Company recognizes accrued interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Advertising — The Company expenses advertising costs as they are incurred.  Advertising expenses for the years ended September 30, 2011 and 2010, were $299,925 and $403,058, respectively.

NOTE 3 — INVENTORIES

Major classes of inventories as of September 30 are as follows:

	2011		2010
Propane	$	2,218,132	$	1,966,733
Industrial gas and distillates	652,325		1,287,337
Parts	1,096,179		1,080,154
	$	3,966,636	$	4,334,224

NOTE 4 — ACQUISITIONS

In October 2009, through its subsidiary EnergyUSA Propane, Inc., the Company acquired the operation and certain assets net of liabilities assumed of a propane and distillate supply business (Acquisition A below).  Total acquisition cost was approximately $8.7 million as summarized below.

In April 2010, through its subsidiary EnergyUSA Propane, Inc., the Company acquired the operation and certain assets net of liabilities assumed of a propane and distillate supply business (Acquisition B below).  Total acquisition cost was approximately $62,700 as summarized below.

11

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 4 — ACQUISITIONS (CONTINUED)

The following approximately summarizes allocations of the purchase price of the various acquisitions as noted above:

	A			B
Property, plant, and equipment	$	(4,308,000	)	$	(55,700	)
Intangibles and other	(2,765,000		)	(7,000		)
Accounts receivable and other	(530,500		)	—
Inventories	(405,500		)	—
Accounts payable and other liabilities	714,000			—
Management’s assessed fair value of net assets acquired	(7,295,000		)	(62,700		)
Acquisition cost of net assets acquired	8,650,000			62,700
Excess of cost over management’s assesed fair value of assets acquired	$	1,355,000		$	—

NOTE 5 — INTANGIBLE ASSETS

Amortizable intangible assets at September 30 consist of the following:

	2011				2010
	Gross Carrying		Accumulated		Gross Carrying		Accumulated		Estimated
	Amount		Amortization		Amount		Amortization		Useful Lives
Non-compete agreements	$	3,031,886	$	1,990,214	$	3,031,886	$	1,583,887	4 - 5 Years
Customer relationships	10,381,877		6,487,711		10,381,877		4,934,090		3 - 20 Years
Loan costs	494,779		372,347		494,779		310,679		2 - 7 Years
Total intangible assets	$	13,908,542	$	8,850,272	$	13,908,542	$	6,828,656

Amortization expense for fiscal 2011 and 2010 was $2,021,617 and $2,686,589, respectively.  Estimated amortization expense for each of the five succeeding years is as follows:

Year Ended September 30,
2012	$	1,488,988
2013	$	1,095,283
2014	$	801,561
2015	$	556,696
2016	$	341,324

12

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 6 — LONG-TERM DEBT

Long-term debt consists of the following as of September 30:

	2011		2010
Revolving credit note payable to a senior lender dated July 17, 2008, maturing July 2013, secured by inventory, accounts receivable, equipment, tanks, and intangibles with maximum advances available of $25,000,000. The Company was a party to interest rate swaps which expire in July 2013 and effectively converted the applicable variable rate of prime to fixed rates of 4.15% to 5.59%. The agreement contains certain covenants including maintenance of certain financial ratios as defined in the agreement. The Company was in default of certain of its debt covenants.	$	23,146,574	$	23,172,845
Note payable to stockholders, maturing February 2013, with interest only payable quarterly at 15.25%, secured by virtually all assets and subordinated to the senior lender. The note was amended in June 2011 and an additional $2 million was borrowed, with interest only payable monthly at 12%. The note was also amended in August 2011 and an additional $1 million was borrowed, with interest only payable monthly at 12%.	8,949,000		5,949,000
Term note payable to a senior lender, dated July 17, 2008, maturing July 2013, with monthly principal due of $32,143 plus interest at a variable rate (3.25% at September 30, 2011), secured by all assets with maximum advances available of $2,700,000. The agreement contains certain covenants including maintenance of certain financial ratios as defined in the agreement. The Company was in default of certain of its debt covenants.	1,478,568		1,864,284
Note payable subordinated to senior debt to the seller of an acquired business, originally due February 2011. The note was amended to be due February 2012 payable in monthly principal payments of $25,000 bearing interest at 5.00%.	75,000		650,000
Note payable to the seller of an acquired business, maturing December 2012, with interest only payable monthly at 5.50%, secured by real estate acquired.	500,000		500,000

13

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 6 — LONG-TERM DEBT (CONTINUED)

	2011		2010
Notes payable in connection with the purchase of vehicles and equipment, maturing through January 2016, with monthly payments ranging from $366 to $7,046, including interest ranging from 5.75% to 11.50%, secured by related vehicles and equipment.	1,071,409		755,844
On July 17, 2008, the Company entered into an equipment term loan with borrowings up to $1,500,000, maturing April 2013, and interest at 3.25%. The loan is secured by all of the assets of the Company with monthly principal payments of $25,000.	975,000		1,275,000
Note payable subordinated to senior debt to sellers of an acquired business, maturing December 31, 2012 with interest at 6%, requiring a quarterly principal and interest payment of $25,791.	123,350		215,628
Notes payable subordinated to senior debt to sellers of acquired businesses, maturing through April 2015 with interest ranging from 5.25% to 5.50%, requiring annual principal payments totaling approximately $200,000.	1,522,164		1,676,529
Note payable to a propane supplier, maturing March 31, 2013, with no interest, requiring principal payments of $.35 per gallon for the first 200,000 gallons purchased by the Company each year. The note is personally guaranteed by the former owner of an acquired company.	110,552		158,604
Notes payable subordinated to senior debt to sellers of acquired businesses, maturing through October 2012 with interest of 4.00%, requiring annual principal payments totaling $414,000.	542,477		957,439
	38,494,094		37,175,173
Less current portion	26,487,113		2,370,066
	$	12,006,981	$	34,805,107

14

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 6 — LONG-TERM DEBT (CONTINUED)

Future payments of long-term debt consist of the following:

Year Ended September 30,
2012	$	26,487,113
2013	10,886,679
2014	326,567
2015	771,286
2016	22,449

NOTE 7 — LONG-TERM COMMITMENTS

The Company has acquired various propane and oil companies (see Note 4), and as a result of these acquisitions, the Company has Non-Compete Agreements (see Note 2) with the former owners of the companies.  The future payments for these agreements are as follows:

Year Ended September 30,
2012	$	348,000
2013	220,000
2014	220,000
2015	100,000

NOTE 8 — INCOME TAXES

The net deferred tax amounts included in the accompanying consolidated balance sheets include the following amounts of deferred tax assets as of September 30:

	2011				2010
	Current		Noncurrent		Current			Noncurrent
Deferred tax assets	$	6,653,935	$	1,703,170	$	306,018		$	6,773,356
Valuation allowance	—		—		(306,018		)	(6,773,356		)
Net deferred tax assets/liability	$	6,653,935	$	1,703,170	$	—		$	—

15

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 8 — INCOME TAXES (CONTINUED)

The deferred tax assets result primarily from income and expenses recorded and accrued in differing years for financial reporting purposes and for income tax purposes and from net operating losses.  Specifically, the deferred tax assets result primarily from net operating loss carryforwards, the allowance for doubtful accounts, accrued vacation, and differing amortization methods for financial reporting and income tax purposes.  The types of these temporary differences are as follows at September 30:

	2011				2010
	Current		Noncurrent		Current		Noncurrent
State deferred tax assets:
Fixed assets and intangibles	$	—	$	334,252	$	—	$	451,809
State net operating loss	697,712		—		—		402,453
Allowance for doubtful accounts	28,629		—		41,351		—
Accrued vacation	18,559		—		14,692		—
Total state	744,900		334,252		56,043		854,262
Federal deferred tax assets:
Fixed assets and intangibles	—		1,368,918		—		1,857,114
Federal net operating loss	5,338,072		—		—		3,762,988
Benefit of state taxes	377,703		—		19,615		298,992
Allowance for doubtful accounts	117,250		—		169,968		—
Accrued vacation	76,010		—		60,392		—
Total federal	5,909,035		1,368,918		249,975		5,919,094
Total deferred tax Assets	$	6,653,935	$	1,703,170	$	306,018	$	6,773,356

At September 30, 2011, the Company had federal net operating loss carryforwards of approximately $15,200,000 for income tax purposes that expire from 2025 through 2031, and state net operating loss carry-forwards of approximately $8,200,000 that expire beginning in 2012.  A valuation allowance has been recognized in 2010 to reduce the Company’s entire net deferred tax asset due to uncertainty as to the utilization of the net operating loss carryforwards.  As a result of the expected gain on the asset sale as described in Note 17, management has determined that the valuation allowance for the deferred tax assets, are no longer required.

Currently, the tax years ended September 30, 2011, 2010 and 2009 are open and subject to examination by the Internal Revenue Service and various state taxing authorities.  However, the Company is not currently under audit.

16

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 9 — EMPLOYEE BENEFIT PLANS

The Company maintains a defined-contribution plan (“Plan”) covering eligible employees.  Non-union employees become eligible to participate at 21 years of age and completion of 30 days of service.  Union employees become eligible to participate at completion of 60 days of service.  Non-union employees are eligible to receive discretionary Company matching contributions upon initial eligibility, and union employees become eligible to receive discretionary Company matching contributions on the first day of the month following their employment anniversary date.  Employees are 100% vested in their accounts immediately.  The Company reserves the right to terminate the Plan at any time but has not expressed any intent to do so to date.  Company contributions to the Plan for the years ended September 30, 2011 and 2010, were approximately $345,000.

Additionally, as a result of the February 2006 Allied asset purchase, the Company, through Allied, assumed the responsibilities of a collective bargaining agreement and participation in two multi-employer Defined-benefit plans for covered employees of the Allied subsidiary.  The Company does not administer either plan and contributions are determined in accordance with provisions of a collective bargaining agreement.  As of January 1, 2011, the Company had withdrawn from the defined benefit plan for the Allied employees.  The Allied employees, who were eligible, were allowed to enroll in the Company’s defined contribution plan mentioned in the preceding paragraph.

Information with respect to the Company’s proportionate share of the excess, if any, of the actuarially computed value of vested benefits over the total of the benefit plans’ net assets is not available from the Plans’ Administrators.  Due to its new entry as a covered employer under the multi-employer plans, the Company has no potential for withdrawal liability under the provisions of the plans for at least five years.  In conjunction with the February 2006 asset purchase by the Company, the previous owners satisfied the withdrawal liability for covered employees through that date.  The Company made cash contributions to the multi-employer benefit plans of approximately $67,000 and $199,000 for the years ended September 30, 2011 and 2010, respectively.

17

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 10 — STOCKHOLDERS’ EQUITY

Convertible Preferred Stock — The holders of the Series A and Series B convertible preferred stock have the following rights:

Conversion:  Each share of Series A and Series B is convertible, at the option of the shareholder, into shares of common stock.  Each share of Series B is convertible into a number of shares of common stock determined by dividing $145.65 by the Series B conversion price, plus one share of redeemable preferred stock.  The Series B conversion price is initially set at $145.65 and is adjusted based on issuance of additional shares of common stock at prices less than the current conversion price.  Each share of Series A is convertible into one share of common stock.  The conversion price for both Series A and Series B is subject to adjustment for certain dilutive events, such as, but not limited to, stock splits and dividends.  All outstanding shares of preferred stock shall automatically be converted into shares of common stock at the then effective conversion prices if there is a sale of shares of common stock at a price to the public.

Redemption:  Upon a change in control transaction at the Company, each share of Series A and Series B are entitled to be redeemed in the same manner as if such transaction were a liquidation event, if elected by the holders of Series B.

Dividends: The holders of the Series A and Series B are entitled to receive dividends, when and as declared by the Company’s board of directors, out of any assets at the time legally available therefore.  Additionally, the holders of Series B are entitled to receive cumulative dividends at the rate of 7% per annum per share of Series B Preferred stock from the date of original issuance of such shares, however, such dividends ceased to accrue as of June 30, 2010.  At September 30, 2011 and 2010, accrued dividends on the Series B were $2,475,772.

Liquidation:  In the event of a voluntary or involuntary liquidation, dissolution, or a winding up of the Company, the holders of Series B then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, before any payment shall be made to the holders of other classes or series of stock, an amount equal to the greater of $145.65 per share plus any dividends accrued or declared that are unpaid, or the “alternative payment” per the stockholder’s agreement.  If, after the payments of all preferential amounts required to be distributed to the holders of Series B, any assets of the Company remain available for distribution to its stockholders, before any payment shall be made to the holders of common stock, the holders of Series A then outstanding shall be entitled to receive an amount equal to the greater of $100.00 per share plus any dividends declared and unpaid, or the “alternative payment” per the stockholder’s agreement.  After the payment of all preferential amounts, any remaining assets shall be distributed among the holders of the shares of common stock then outstanding.

Voting:  The holders of the Series A and Series B are entitled to the number of votes equal to the number of common shares into which the Series A and Series B are convertible.

During the fiscal year ended September 30, 2010, 6,349.21 shares of series “B” convertible preferred stock were issued for $2,000,000.

18

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 10 — STOCKHOLDERS’ EQUITY (CONTINUED)

Redeemable Preferred Stock — The holders of redeemable preferred stock have the following rights:

Redemption:  Upon a change in control transaction at the Company, each share of redeemable preferred stock are entitled to be redeemed in the same manner as if such transaction were a liquidation event.

Dividends:  The holders of outstanding shares of redeemable preferred stock are entitled to receive cumulative dividends at a rate of 1% per annum per share of redeemable preferred stock from the date of original issuance of such shares; however, such dividends shall cease to accrue as of June 30, 2010.  No accrual was required at September 30, 2011 or 2010 since no shares of redeemable preferred stock were issued or outstanding at those dates.

Liquidation:  In the event of a voluntary or involuntary liquidation, dissolution, or a winding up of the Company, the holders of redeemable preferred stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders after all payments are made to the Series B convertible preferred stockholders and before any payment shall be made to the holders of other classes or series of stock, an amount equal to $138.37 per share plus any dividends accrued or declared that are unpaid.

Voting:  The holders of shares of redeemable preferred stock are not entitled to vote on any matters except to the extent otherwise required by law.

Common Stock — The holders of each share of common stock shall be entitled to one vote for each share held.  Certain shares of common stock are restricted as to transferability and only vest based upon the Company realizing specified internal rates of return, which have not been reached as of September 30, 2011, or with a change in control of the Company.

NOTE 11 — STOCK OPTION PLAN

The Company’s Board of Directors may grant stock awards to officers, employees, directors, consultants, and key persons of the Company pursuant to the 2005 Stock Incentive Plan (the “2005 Plan”).  Awards shall include incentive stock options, non-qualified stock options, restricted stock awards, and unrestricted stock awards.  The maximum number of shares of common stock reserved for issuance under the Plan for the years ended September 30, 2011 and 2010 was 17,640.  The exercise price shall not be less than the fair market value on the date of grant and the term shall be no greater than 10 years.  These options vest 33% annually over three years and expire over a period of five to ten years.  No options were exercised, forfeited, or expired during the years ended September 30, 2011 or 2010.

19

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 11 — STOCK OPTION PLAN (CONTINUED)

The fair value of each option award is estimated on the date of grant using the Black-Scholes option valuation model that uses the following assumptions for the year ended September 30, 2011: expected volatility of 32%, expected dividend yield of 0%, and risk-free interest rate of 1.79%.  The expected volatility is based upon management’s best estimate of the volatility of the Company’s stock and comparisons to publicly traded competitors within the same industry.

The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable.  In addition, option-pricing models require the input of highly subjective assumptions, including expected stock price volatility.  Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The Company follows “Accounting for Stock Based Compensation”, utilizing the modified prospective approach.  The compensation expense for share-based plans would be recognized on the straight-line basis over the vesting period of each agreement.  Stock option expense for the year ended September 30, 2011 amounted to $320,501.

	Total	Weighted Average
	Options	Exercise Price
Total options outstanding, October 1, 2009	8,737	$	26.33
Granted	—	—
Exercised	—	—
Expired/cancelled	—	—
Total options outstanding, September 30, 2010	8,737	26.33
Granted	—	—
Exercised	—	—
Expired/cancelled	—	—
Total options outstanding, September 30, 2011	8,737	26.33
Options exercisable, September 30, 2011	6,870	26.13

	Nonvested	Weighted Average
	Options	Fair Value
Nonvested Options
Nonvested options, October 1, 2009	6,855	$	—
Granted	—	—
Vested	2,494	—
Forfeited	—	—
Nonvested options, September 30, 2010	4,361	—
Granted	—	—
Vested	2,494	145.58
Forfeited	—	—
Nonvested options, September 30, 2011	1,867	144.62

20

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 11 — STOCK OPTION PLAN (CONTINUED)

At September 30, 2011, vested, exercisable options were outstanding for 6,870 shares at a weighted average exercise price of $26.13.  The weighted average fair value of these options is $145.58.  These options have remaining terms between 5 and 8 years and expire between September 12, 2016 and March 27, 2019, respectively.

NOTE 12 — ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

For the years ended September 30, 2011 and 2010, the Company had interest rate swap agreements with notional amounts totaling $13,500,000, in connection with advances from the revolving credit note payable in the same amount.  The interest rate swaps were used by the Company to manage interest rate risk.  This agreement effectively changed the interest rate on the loan from a variable rate to a fixed rate ranging from 4.15% to 5.59%.

The Company recognizes the derivative on the balance sheet at fair value at the end of each period.  The derivative is designated as and meets all of the criteria for a cash flow hedge.  Changes in the fair value of the derivative are recorded in accumulated other comprehensive loss.  As of September 30, 2011, an accumulated unrealized net loss on the derivative instrument of $439,574 is recorded in other comprehensive loss.  Due to the sale of the Company assets (see note 17), the swap agreements are anticipated to be liquidated and the unrealized loss (estimated to be approximately $440,000) at the date of liquidation, will be reclassified into operations.

NOTE 13 — RELATED PARTY TRANSACTIONS

The Company pays management fees to its majority stockholder of preferred stock.  Management fees totaled $56,250 and $75,000 for the years ended September 30, 2011 and 2010, respectively.

The Company’s primary legal counsel is a stockholder of the Company.  For the years ended September 30, 2011 and 2010, the Company incurred approximately $201,000 and $150,000 of legal fees from this stockholder, respectively.

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NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 14 — COMMITMENTS AND CONTINGENCIES

The Company is obligated under non-cancellable operating leases for land, propane and distillate storage facilities, vehicles, equipment, and office space with initial or remaining terms of one year or more.  Certain of the land leases have terms that run through the year 2081.  The Company incurred lease expense of $494,084 and $416,603 for the years ended September 30, 2011 and 2010, respectively.

Future minimum annual commitments under non-cancellable leases are approximately as follows:

Year Ended September 30,
2012	$	228,000
2013	201,000
2014	187,000
2015	187,000
2016	117,000

The Company has contracts with major suppliers to purchase approximately 27,311,000 gallons of propane at market prices.  These contracts expire through April 2012.

At September 30, 2011, the Company has five outstanding letters of credit totaling $1,000,000, expiring through September 2012.

The Company has entered into an employment contract with the President and Chief Executive Officer of the Company that expires in June 2013.

Certain Company operations include activities that are subject to extensive federal and state environmental regulations.  As a result of these regulations, the Company may be required to dispose of certain items in accordance with applicable regulations.  Costs associated with the disposal are charged to operations as incurred.  At September 30, 2011 and 2010, there were no unpaid environmental costs accruing into future periods.

The Company is currently in litigation with the Teamsters Pension Union Trust fund over an assessed multi-employer pension fund liability in the amount of $679,325 that the Company is charged with responsibility.  The Company has vigorously challenged this litigation however is making quarterly payments to the Fund in the amount of $54,436.11 as part of a temporary agreement.  As of the date of the financial statements, an ultimate outcome or potential award as it relates to the case cannot be predicted with any certainty.

Certain legal actions, claims, and complaints arising in the ordinary course of business, primarily personal injury and property damage, have been filed or are pending against the Company.  In the opinion of management, there are adequate provisions and insurance to cover any potential losses.

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NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 15 — FAIR VALUE MEASUREMENTS

Fair value of liabilities measured on a recurring basis at September 30, 2011, using significant unobservable inputs (Level 3) are as follows:

	Interest Rate
	Swaps
Balance at October 1, 2010	$	(487,243	)
Total unrealized income:
Included in other comprehensive income (loss)	47,669
Balance at September 30, 2011	$	(439,574	)

The derivatives are not exchange traded but instead traded in over-the-counter markets where quoted market prices are not readily available.  The fair value of derivatives is derived using models that use primarily market observable inputs, such as interest rate yield curves and credit curves.  Any derivative fair value measurements using significant assumptions that are unobservable are classified as Level 3, which include interest rate swaps whose remaining terms extend beyond market observable interest rate yield curves.  The impacts of the derivative liabilities for the Company’s and the counterparties’ non-performance risk to the derivative trades is considered when measuring the fair value of derivative liabilities.

NOTE 16 — SOURCE OF SUPPLY OF LABOR

Approximately 16% of the Company’s employees are covered under collective bargaining agreements between management and the United Steel Workers of America and the Teamsters Local Union No. 312.  The agreement is with the Teamsters Local Union No. 312 covering employees at the Chester, PA and Elkton, MD locations.  The contracts were extended until June 30, 2014 subject to annual wage negotiations.  The agreement with the United Steel Workers of America covering employees at the Taunton, MA location expires on June 30, 2011 and the agreement with the United Steel Workers of America covering employees at the Lawrence, MA, Elliot, ME, and Portland, ME locations expires on September 30, 2013.

23

NORTH AMERICAN PROPANE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 AND 2010

NOTE 17 — SUBSEQUENT EVENTS

The Company has evaluated subsequent events through April 11, 2012, the date which the financial statements were available to be issued.

On January 16, 2012, the company agreed to sell all of its assets except cash balances for a purchase price of $66.8 million plus the assumption of certain liabilities and subject to a working capital adjustment as defined in the Asset Purchase Agreement (“Agreement”).  The Agreement contains certain representations and warranties by the Company, including but not limited to, litigation, environmental matters, taxes, and contracts.  The closing occurred on February 3, 2012.

24

EX-99.2

Exhibit 99.2

NGL ENERGY PARTNERS LP AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Introduction

The following represents the unaudited pro forma condensed consolidated balance sheet of NGL Energy Partners LP (“we”, “NGL” or “the Partnership”) as of December 31, 2011 and the unaudited pro forma condensed consolidated statements of operations for the year ended March 31, 2011 and for the nine months ended December 31, 2011.  NGL was formed in September 2010.  As part of our formation, we acquired and combined the assets and operations of NGL Supply, Inc. (“NGL Supply”), Hicks LLC and Gifford (collectively, “Hicksgas”) with an effective date of October 1, 2010.  We became a public company in May 2011 and filed our first Form 10-K for the six months ended March 31, 2011 in June 2011.  NGL Supply was deemed the acquirer for accounting purposes in our combination; therefore, the financial statements of NGL Supply for all periods prior to our combination became our prior period financial statements.

As discussed further below, subsequent to our year ended March 31, 2011, we had the following transactions which have a significant impact on our financial position and results of operations:

·During May 2011, we sold a total of 4,025,000 common units (including the exercise by the underwriters of their option to purchase additional common units from us) in our initial public offering at $21 per unit.  Our proceeds from the sale of 3,850,000 common units of approximately $72.0 million, net of total offering costs of approximately $9.0 million, were used to repay advances under our acquisition credit facility and for general partnership purposes.  Proceeds from the sale of 175,000 common units ($3.4 million) from the underwriters’ exercise of their option to purchase additional common units from us were used to redeem 175,000 of the common units outstanding prior to our initial public offering.

·In August 2011 and January 2012, we amended our credit agreement to increase our total facility to $330 million, consisting of a $130 million working capital facility and a $200 million acquisition facility and extended the final maturity to October 1, 2016, except for a $30 million portion of our working capital facility that terminates in August 2012.

·On October 3, 2011, we closed a business combination transaction with E. Osterman Propane, Inc., its affiliated companies and members of the Osterman family (collectively, “Osterman” or “the Osterman Associated Companies”) for retail propane operations in the northeastern United States.  We issued four million common units and paid $96 million in exchange for the receipt of the assets and operations from Osterman.  We have previously filed a Form 8-K/A to provide the financial statements of Osterman and the required pro forma financial statements on December 19, 2011.

·On November 1, 2011, we closed a business combination transaction with SemStream, L.P. (“SemStream”) for substantially all of SemStream’s natural gas liquids business and assets.  We issued 8,932,031 common units and paid approximately $93.1 million in exchange for the

1

receipt of the assets and operations of SemStream.  We have previously filed a Form 8-K/A to provide the financial statements of SemStream and the required pro forma financial statements on December 23, 2011.

·On January 3, 2012 we closed a business combination with seven companies associated with Pacer Propane Holding LP (collectively, “Pacer”) for substantially all of Pacer’s retail propane operations and assets.  We paid cash of $32.2 million and issued 1.5 million of our common units in exchange for the Pacer assets and operations.  We have previously filed a Form 8-K/A to provide the financial statements of Pacer and the required pro forma financial statements on March 19, 2012.

·On February 3, 2012, we completed a business combination with North American Propane, Inc. and its affiliated companies (collectively, “North American”) for substantially all of North American’s assets and operations.  We paid cash of $69.8 million in exchange for North American’s assets and operations.

The accompanying unaudited pro forma condensed consolidated balance sheet as of December 31, 2011 gives pro forma effect to the business combinations with Pacer and North American as if such transactions occurred on December 31, 2011.

The accompanying unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2011 gives pro forma effect to the following transactions as if such transactions occurred on April 1, 2010:

·Our combination with NGL Supply, Hicks LLC and Gifford;

·Our initial public offering;

·The modifications of the terms of our credit agreement;

·The business combination with Osterman;

·The business combination with SemStream;

·The business combination with Pacer; and

·The business combination with North American.

The accompanying unaudited pro forma condensed consolidated statement of operations for the nine months ended December 31, 2011 gives pro forma effect to the following transactions as if such transactions occurred on April 1, 2011:

·Our initial public offering;

·The modifications of the terms of our credit agreement;

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·The business combination with Osterman;

·The business combination with SemStream;

·The business combination with Pacer; and

·The business combination with North American.

Business Combination with Hicksgas

We purchased the retail propane operations of Hicksgas in October 2010 as part of our formation transactions.  The following table presents the final acquisition accounting for the assets acquired and liabilities assumed, based on their fair values, in the acquisition of the retail propane businesses of Hicksgas described above (in thousands):

Accounts receivable	$	5,669
Propane inventory	6,182
Other current assets	2,600
Property, plant and equipment:
Land	2,666
Tanks and other retail propane equipment (15 years)	23,016
Vehicles (5 years)	6,599
Buildings (30 years)	7,053
Other equipment (5 years)	523
Amortizable intangible assets:
Customer relationships (15 years)	2,170
Non-compete agreements (5 years)	550
Tradenames (indefinite life)	830
Goodwill, retail propane segment	3,716
Total assets	61,574
Accounts payable	1,837
Customer advances and deposits	12,089
Accrued and other current liabilities	2,152
	16,078
Long-term debt	5,768
Other long-term liabilities	274
Total liabilities assumed	22,120
Net assets acquired	$	39,454

The Hicksgas acquisition accounting was based on the estimated fair value of the assets acquired and liabilities assumed, based primarily on an independent appraisal completed in July 2011.  The assets acquired and liabilities assumed in the Hicksgas combination are included in our historical consolidated financial statements since October 1, 2010.  Additional information related to our business combination with Hicksgas is available in our Form 10-K for the year ended March 31, 2011.

3

Initial Public Offering

During May 2011, we sold a total of 4,025,000 common units (including the exercise by the underwriters of their option to purchase additional common units from us) in our initial public offering at $21 per unit.  Our proceeds from the sale of 3,850,000 common units of approximately $72.0 million, net of total offering costs of approximately $9.0 million, were used to repay advances under our acquisition credit facility and for general partnership purposes.  Proceeds from the sale of 175,000 common units ($3.4 million) from the underwriters’ exercise of their option to purchase additional common units from us were used to redeem 175,000 of the common units outstanding prior to our initial public offering.  The advances under our acquisition credit facility were used to fund our business combination with NGL Supply and Hicksgas.  Additional information related to our initial public offering is available in our Form 10-K for the year ended March 31, 2011 and our Form 10-Q for the three months ended June 30, 2011.

Immediately prior to our initial public offering we executed the following unit transactions:

·Effected a 3.7219 to one split of our common units; and,

·Converted 5,919,346 of our post-split common units to subordinated units.

Modification of Credit Facility

We expanded our revolving credit facility in August 2011 and modified the facility in January 2012.  Presently, our revolving credit facility provides for a total credit facility of $330 million, represented by a $130 million working capital facility and a $200 million acquisition facility.  Borrowings under the working capital facility are subject to a defined borrowing base.  The borrowing base is determined in part by reference to certain trade position reports and mark-to-market reports delivered to the administrative agent and is subject to immediate adjustment for reductions in certain components of those reports.  A reduction to the borrowing base could require us to repay indebtedness in excess of the borrowing base.  In addition, three times per year, we can elect to reallocate the lesser of $75 million or the unused portion of our acquisition facility to the working capital facility.  As of December 31, 2011, we elected to reallocate $30 million from our acquisition facility to our working capital facility.

During the nine months ended December 31, 2011, we borrowed approximately $42.5 million under our acquisition facility and approximately $102.5 million under our working capital facility, net of repayments, primarily in connection with our acquisitions of Osterman and SemStream and to fund our seasonal inventory build.  Subsequent to December 31, 2011, we borrowed approximately $32.2 million to finance our combination with Pacer and approximately $69.8 million to finance our combination with North American.  At March 31, 2012, we had outstanding borrowings of $41.5 million (including outstanding letters of credit of $13.5 million) and $186.0 million under our working capital and acquisition facility, respectively.

Our revolving credit facility has a final maturity on October 1, 2016.  However, a total of $30 million of our working capital facility matures in August 2012.  In addition to customary mandatory prepayment restrictions, we must once a year, prepay the outstanding working capital revolving loans

4

and collateralize outstanding letters of credit in order to reduce the total working capital borrowings to less than $10.0 million for 30 consecutive days.

Additional information related to our credit agreement is available in our Form 10-Q for the nine months ended December 31, 2011.

Osterman Combination

On August 15, 2011, we entered into a business combination agreement with Osterman for retail propane operations in the northeastern United States in order to expand our retail propane operations.  The combination closed on October 3, 2011 and was funded with cash of $96 million and the issuance of four million common units.  The agreement also contemplates a working capital payment post closing for certain specified working capital items (currently estimated as a liability of $3.9 million).  The cash payments were funded with advances under our acquisition facility.  We have valued the four million common units based on the closing price of our common units on the closing date ($20.47 per unit) net of equity issuance costs of $122,000.  We also incurred and charged to general and administrative expense through December 31, 2011 approximately $750,000 of costs incurred in connection with the Osterman transaction.

Our total consideration paid in the Osterman combination consists of the following (in thousands):

Cash (including estimated working capital settlement)	$	99,937
Common units	81,880
	$	181,817

We have included the results of Osterman’s operations in our consolidated financial statements beginning October 3, 2011.  As discussed further below, we have not completed the initial accounting for the Osterman business combination.  We are in the process of identifying and obtaining an independent appraisal of the fair value of the assets acquired in the combination.  We expect to complete this process prior to the filing of our Form 10-Q for the quarter ended December 31, 2012.  On a preliminary basis, we have estimated the fair values of the acquired assets and liabilities as follows (in thousands):

Accounts receivable	$	4,802
Inventory	3,981
Other current assets	212
Property, plant and equipment	97,520
Intangible assets	73,479
Goodwill	7,254
Assumed current liabilities	(5,431		)
	$	181,817

These estimates of fair value are preliminary and are subject to change as additional information is obtained, including the impact of the post closing working capital settlement.  Such changes could be material.  Additional information as to the fair value estimates is provided in Note 2 to the unaudited pro forma condensed consolidated financial statements.

5

SemStream Combination

On August 31, 2011, we entered into a business combination agreement with SemStream and closed the transaction on November 1, 2011.  We entered into this business combination in order to expand our midstream and wholesale supply and marketing operations.  SemStream contributed substantially all of its natural gas liquids business and assets to us in exchange for 8,932,031 of our common units and a cash payment of approximately $93 million, which we funded with $10 million from our acquisition facility and $83 million from our working capital facility.  We have valued the 8.9 million limited partner common units at the closing price of our common units on the combination closing date reduced by the estimated present value of distributions for the units which are not eligible for full distributions until the quarter ending September 30, 2012 (see Note 5 to the unaudited pro forma condensed consolidated financial statements) and net of equity issuance costs of $300,000.  The agreement also contemplated a working capital payment post closing for certain specified working capital items, for which we received approximately $2.1 million.  In addition, in exchange for a cash contribution, SemStream acquired a 7.5% interest in our general partner.  We incurred and charged to general and administrative expense through December 31, 2011 approximately $603,000 of costs related to the SemStream transaction.

The assets comprise 12 natural gas liquids terminals in Arizona, Arkansas, Indiana, Minnesota, Missouri, Montana, Washington and Wisconsin, 12 million gallons of above ground propane storage, 3.7 million barrels of underground leased storage for natural gas liquids and a rail fleet of approximately 350 leased and 12 owned cars and approximately $104 million of natural gas liquids inventory.

Our total consideration paid in the SemStream combination consists of the following (in thousands):

Cash	$	93,054
Common units	184,775
	$	277,829

6

We have included the results of SemStream’s operations in our consolidated financial statements beginning November 1, 2011.  We have not completed the initial accounting for the business combination.  We are in the process of obtaining an independent appraisal of the fair value of the assets acquired in the business combination.  We expect to complete this process prior to the filing of our Form 10-K for the year ended March 31, 2012.  On a preliminary basis, we have estimated the fair values of the acquired assets and liabilities as follows (in thousands):

Accounts receivable	$	2,089
Inventory	104,226
Derivative financial instruments	3,578
Prepaid expenses and other current assets	9,736
Assets held for sale	3,000
Property, plant and equipment	48,678
Investment in capital lease	3,112
Intangible assets	32,958
Goodwill	75,043
Assumed liabilities	(4,591		)
	$	277,829

These estimates of fair value are preliminary and are subject to change as additional information is obtained.  Such changes could be material.  Additional information as to the fair value estimates is provided in Note 2 to the unaudited pro forma condensed consolidated financial statements.

Pacer Combination

On December 12, 2011, we entered into a business combination agreement with Pacer in order to expand our retail propane operations.  The combination closed on January 3, 2012 and was funded with cash of $32.2 million (including a $4.4 million post-closing working capital settlement payment) and the issuance of 1.5 million common units.  We have valued the 1.5 million common units based on the closing price of our common units on the closing date.  We incurred and charged to general and administrative expense through December 31, 2011 approximately $262,000 of costs related to the Pacer transaction.

The assets contributed by Pacer consist of retail propane operations in Colorado, Illinois, Mississippi, Oregon, Utah and Washington.  The contributed assets include 17 owned or leased customer service centers and satellite distribution locations.

Our total consideration paid in the Pacer combination consists of the following (in thousands):

Cash	$	32,213
Common units	30,375
	$	62,588

7

As discussed further below, we have not completed the initial accounting for the Pacer business combination.  We are in the process of identifying, and obtaining an independent appraisal of, the fair value of the assets acquired in the combination.  We expect to complete this process prior to the filing of our Form 10-Q for the quarter ended December 31, 2012.  On a preliminary basis, we have estimated the fair values of the acquired assets and liabilities as follows (in thousands):

Accounts receivable	$	4,389
Inventory	965
Other current assets	43
Property, plant and equipment	20,100
Intangible assets	22,980
Goodwill	15,585
Assumed liabilities	(1,474		)
	$	62,588

These estimates of fair value are preliminary and are subject to change as additional information is obtained.  Additional information as to the fair value estimates is provided in Note 2 to the unaudited pro forma condensed consolidated financial statements.

North American Combination

On January 16, 2012, we entered into a business combination agreement with North American, primarily to expand our retail propane operations.  The combination was completed on February 3, 2012 and was funded with cash of $69.8 million.  The agreement also contemplates a working capital payment post-closing for certain specified working capital items.  We incurred and charged to general and administrative expense through December 31, 2011 approximately $82,000 of costs related to the North American acquisition.

The assets acquired from North American include retail propane and distillate operations and wholesale supply and marketing operations in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Pennsylvania, and Rhode Island.

As discussed further below, we have not completed the initial accounting for the North American acquisition.  We are in the process of identifying, and obtaining an independent appraisal of, the fair value of the assets acquired in the combination.  We expect to complete this process prior to the filing of our Form 10-Q for the quarter ended December 31, 2012.  On a preliminary basis, we have estimated the fair values of the acquired assets and liabilities as follows (in thousands):

Accounts receivable	$	10,189
Inventory	3,764
Other current assets	388
Property, plant and equipment	41,400
Intangible assets	10,800
Goodwill	14,685
Assumed liabilities	(11,396		)
	$	69,830

8

Pro Forma Financial Statements

The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and should be read in conjunction with the audited and unaudited historical financial statements of NGL Supply, Hicks LLC and Gifford which were included in our Form S-1, the audited and unaudited historical financial statements of Osterman included in our Form 8-K/A filed on December 19, 2011, the audited and unaudited historical financial statements of SemStream included in our Form 8-K/A filed on December 23, 2011, the audited historical financial statements of Pacer included in our Form 8-K/A filed on March 19, 2012, the audited historical financial statements of North American included in this Form 8-K/A, our Form 10-K for the year ended March 31, 2011, and our Form 10-Q for the three and nine months ended December 31, 2011.  The unaudited pro forma condensed consolidated financial statements include the following:

·The unaudited pro forma condensed consolidated balance sheet of NGL Energy Partners LP as of December 31, 2011 as if the modification of our credit agreement in January 2012 and the combination transactions with Pacer and North American occurred on December 31, 2011;

·The unaudited pro forma condensed consolidated statement of operations of NGL Energy Partners LP for the year ended March 31, 2011 as if the combination transactions with NGL Supply, Hicks LLC, Gifford, Osterman, SemStream, Pacer, and North American, our initial public offering, and the modification of our credit agreement had occurred on April 1, 2010; and,

·The unaudited pro forma condensed consolidated statement of operations of NGL Energy Partners LP for the nine months ended December 31, 2011 as if the combination transactions with Osterman, SemStream, Pacer, and North American, our initial public offering, and the modification of our credit agreement had occurred on April 1, 2011.

The following unaudited pro forma condensed consolidated financial statements are based on certain assumptions and do not purport to be indicative of the results which actually would have been achieved if the combination transactions with NGL Supply, Hicks LLC, Gifford, Osterman, SemStream, Pacer, and North American and our initial public offering and related equity issuances and the modification of our credit agreement had been completed on the dates indicated.  Moreover, they do not project NGL Energy’s financial position or results of operations for any future date or period.

The accompanying pro forma condensed consolidated financial statements reflect asset and liability fair value estimates which are preliminary, as our identification of the assets and liabilities acquired, and the fair value determinations thereof, for the Osterman, SemStream, Pacer, and North American business combinations reflected in the pro forma financial statements have not been completed.  We have engaged or will engage an independent appraisal firm to prepare an appraisal of the assets and liabilities acquired in those combinations.  The fair value determinations are also impacted by working capital adjustment provisions contained in the respective combination agreements.  The fair value estimates reflected in the accompanying pro forma condensed consolidated financial statements are based on the best estimates available at this time.  There is no guarantee that the preliminary fair value estimates, and consequently the pro forma condensed consolidated financial statements, will not change.  To the extent that the final acquisition accounting results in an increased allocation to goodwill, this

9

amount would not be subject to amortization, but would be subject to annual impairment testing and if necessary, written-down to a lower fair value should circumstances warrant.  To the extent the final acquisition accounting results in a decrease to the preliminary computation of goodwill done for the purpose of preparing these pro forma financial statements, the amount would be subject to depreciation or amortization which would result in a decrease to the estimated pro forma income reflected in the accompanying pro forma condensed consolidated statements of operations for the respective periods.

10

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of December 31, 2011

(U.S. Dollars in Thousands)

	Historical
	NGL		Pacer		North American		Pro Forma Adjustments
	As of		As of		As of					Note				Note	NGL
	Dec. 31, 2011		Dec. 31, 2011		Sept. 30, 2011		Pacer			2	North American			2	Pro Forma
ASSETS
Current Assets:
Cash and cash equivalents	$	10,368	$	1,849	$	—	$	(1,849	)	(a)	$	—			$	10,399
							31			(a)	—
Accounts receivable- trade	115,202		4,389		5,456		—				4,733			(c)	129,780
Accounts receivable- affiliates	2,770		15		—		(15		)	(a)	—				2,770
Inventories	184,698		965		3,967		—				(203		)	(c)	189,427
Derivative assets	4,424		—		—		—				—				4,424
Product exchanges	3,793		—		—		—				—				3,793
Prepaid expenses and other current assets	7,389		43		8,277		—				(7,889		)	(c)	7,820
Assets held for sale	3,500		—		—		—				—				3,500
Total current assets	332,144		7,261		17,700		(1,833		)		(3,359		)		351,913
Property, Plant and Equipment, net	227,893		10,483		31,189		9,617			(a)	10,211			(c)	289,393
Goodwill	92,930		3,617		2,787		11,968			(a)	11,898			(c)	123,200
Intangible Assets, net	99,264		300		5,058		22,680			(a)	5,742			(c)	133,044
Other Long-Term Assets	2,974		—		1,703		—				(1,703		)	(c)	2,974
Total assets	$	755,205	$	21,661	$	58,437	$	42,432			$	22,789			$	900,524
LIABILITIES AND PARTNERS’ EQUITY
Current Liabilities:
Trade accounts payable	$	107,933	$	2,026	$	3,844	$	(1,915	)	(a)	$	2,695		(c)	$	114,583
Accrued expenses and other payables	9,698		—		3,377		—				(3,266		)	(c)	9,809
Product exchanges	19,524		—		—		—				—				19,524
Advance payments received from customers	29,082		1,363		6,063		—				(1,992		)	(c)	34,516
Payable to related parties	9,868		623		—		(623		)	(a)	—				9,868
Current maturities of long-term debt (Note 4)	92,968		643		26,835		3,757			(a)	(26,627		)	(c)	97,576
Total current liabilities	269,073		4,655		40,119		1,219				(29,190		)		285,876
Long-Term Debt, net of current maturities (Note 4)	117,590		2,128		12,547		25,685			(a)	57,750			(c)	215,700
Other Non-Current Liabilities	222		—		2,476		—				(2,476		)	(c)	222
Partners’ Equity (Note 5):
General partner	409		—		—		31			(a)	—				440
Limited partners-
Common units	349,112		—		—		30,375			(a)	—				379,487
Subordinated units	18,781		—		—		—				—				18,781
Accumulated other comprehensive income	18		—		—		—				—				18
Total partners’ equity	368,320		—		—		30,406				—				398,726
Equity of Combined Businesses	—		14,878		3,295		(14,878		)	(b)	(3,295		)	(d)	—
Total liabilities and partners’ equity	$	755,205	$	21,661	$	58,437	$	42,432			$	27,789			$	900,524

See accompanying notes.

11

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Year Ended March 31, 2011

(U.S. Dollars in Thousands, Except Per Unit Amounts)

(Page 1 of 3)

	Historical												Pro Forma Adjustments							Preliminary
	NGL			NGL Supply			Hicks LLC			Gifford										Pro Forma
	Six Months Ended			Six Months Ended			Six Months Ended			Six Months Ended			Combination			Note	Offering		Note	NGL
	March 31, 2011			September 30, 2010			September 30, 2010			September 30, 2010			Transaction			2	Transaction		2	To Page 2 of 3
REVENUES:
Retail propane	$	72,813		$	6,868		$	18,339		$	4,583		$	(2,349	)	(e)				$	100,254
Wholesale supply and marketing	546,782			309,029			—			—			(595		)	(e)				855,216
Midstream	2,637			1,046			—			—			—							3,683
	622,232			316,943			18,339			4,583			(2,944		)		—			959,153
COST OF SALES:
Retail propane	46,985			4,749			11,520			2,622			(2,349		)	(e)				63,527
Wholesale supply and marketing	535,755			305,965			—			—			(595		)	(e)				841,125
Midstream	292			194			—			—			—							486
	583,032			310,908			11,520			2,622			(2,944		)		—			905,138
Gross Margin	39,200			6,035			6,819			1,961			—				—			54,015
OPERATING COSTS AND EXPENSES:
Operating and general and administrative	20,922			8,441			9,306			2,869			(2,064		)	(f)				39,474
Depreciation and amortization	3,441			1,389			1,061			150			689			(g)				6,730
Operating Income (Loss)	14,837			(3,795		)	(3,548		)	(1,058		)	1,375				—			7,811
OTHER INCOME (EXPENSE):
Interest expense	(2,482		)	(372		)	(240		)	(3		)					120		(k)	(1,187		)
																	1,790		(l)
Other, net	324			190			87			54										655
Income (Loss) Before Income Taxes	12,679			(3,977		)	(3,701		)	(1,007		)	1,375				1,910			7,279
INCOME TAX (PROVISION) BENEFIT	—			1,417			1,845						(3,262		)	(h)				—
NET INCOME (LOSS)	12,679			(2,560		)	(1,856		)	(1,007		)	(1,887		)		1,910			7,279
INCOME (LOSS) ALLOCABLE TO GENERAL PARTNER	13												(8		)	(i)	2		(m)	7
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST	—			45									(45		)	(j)				—
NET INCOME (LOSS) ALLOCABLE TO LIMITED PARTNERS	$	12,666		$	(2,515	)	$	(1,856	)	$	(1,007	)	$	(1,924	)		$	1,908		$	7,272
Basic and Diluted Earnings per Unit (Note 3) -
Common	$	1.16
Subordinated	$	—
Weighted Average Units Outstanding -
Common	10,933,568
Subordinated	—

See accompanying notes and continuation on Page 2 of 3.

12

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Year Ended March 31, 2011

(U.S. Dollars in Thousands, Except Per Unit Amounts)

(Page 2 of 3)

	Preliminary			Historical														Preliminary
	Pro Forma			Osterman			SemStream			Pro Forma Adjustments								Pro Forma
	NGL			12 Mo. Ended			Year Ended						Note				Note	NGL
	From Page 1 of 3			March 31, 2011			December 31, 2010			Osterman			2	SemStream			2	To Page 3 of 3
REVENUES:
Retail propane	$	100,254		$	105,061		$	—						$	—			$	205,315
Wholesale supply and marketing	855,216			—			707,405							(56,768		)	(r)	1,505,853
Midstream	3,683			—			7,059							—				10,742
	959,153			105,061			714,464			—				(56,768		)		1,721,910
COST OF SALES:
Retail propane	63,527			64,076			—							—				127,603
Wholesale supply and marketing	841,125			—			691,823							(56,768		)	(r)	1,476,180
Midstream	486			—			—							—				486
	905,138			64,076			691,823			—				(56,768		)		1,604,269
Gross Margin	54,015			40,985			22,641			—				—				117,641
OPERATING COSTS AND EXPENSES:
Operating and general and administrative	39,474			21,549			15,095							—				76,118
Depreciation and amortization	6,730			3,752			5,040			7,443			(n)	650			(s)	23,615
Operating Income	7,811			15,684			2,506			(7,443		)		(650		)		17,908
OTHER INCOME (EXPENSE):
Interest expense	(1,187		)	(191		)	(3,703		)	(3,420		)	(o)	(1,502		)	(t)	(10,003		)
Other, net	655			(218		)	2,983											3,420
Income (Loss) Before Income Taxes	7,279			15,275			1,786			(10,863		)		(2,152		)		11,325
INCOME TAX (PROVISION) BENEFIT	—			(502		)	—			502			(p)					—
NET INCOME (LOSS)	7,279			14,773			1,786			(10,361		)		(2,152		)		11,325
INCOME ALLOCABLE TO GENERAL PARTNER	7									4			(q)	—				11
NET INCOME (LOSS) ALLOCABLE TO LIMITED PARTNERS	$	7,272		$	14,773		$	1,786		$	(10,365	)		$	(2,152	)		$	11,314

See accompanying notes and continuation on Page 3 of 3.

13

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Year Ended March 31, 2011

(U.S. Dollars in Thousands, Except Per Unit Amounts)

 (Page 3 of 3)

				Historical
	Preliminary			Pacer			North American			Pro Forma								Pro Forma
	Pro Forma			For the Year			For the 12 Months			Adjustments								NGL
	NGL			Ended			Ended						Note				Note	Year Ended
	From Page 2 of 3			December 31, 2010			March 31, 2011			Pacer			2	North American			2	March 31, 2011
REVENUES:
Retail propane	$	205,315		$	35,768		$	100,633		$	—			$	—			$	341,716
Wholesale supply and marketing	1,505,853			—			—			—				—				1,505,853
Midstream	10,742			—			—			—				—				10,742
	1,721,910			35,768			100,633			—				—				1,858,311
COST OF SALES:
Retail propane	127,603			22,348			70,780			—				—				220,731
Wholesale supply and marketing	1,476,180			—			—			—				—				1,476,180
Midstream	486			—			—			—				—				486
	1,604,269			22,348			70,780			—				—				1,697,397
Gross Margin	117,641			13,420			29,853			—				—				160,914
OPERATING COSTS AND EXPENSES:
Operating and general and administrative	76,118			8,272			24,653			—				—				109,043
Depreciation and amortization	23,615			1,285			5,523			2,062			(u)	(1,065		)	(x)	31,420
Operating Income	17,908			3,863			(323		)	(2,062		)		1,065				20,451
OTHER INCOME (EXPENSE):
Interest expense	(10,003		)	(126		)	(2,541		)	(901		)	(v)	20			(y)	(13,551		)
Other, net	3,420			51			(95		)	—				—				3,376
Income (Loss) Before Income Taxes	11,325			3,788			(2,959		)	(2,963		)		1,085				10,276
INCOME TAX (PROVISION) BENEFIT	—			—			—			—				—				—
NET INCOME (LOSS)	11,325			3,788			(2,959		)	(2,963		)		1,085				10,276
INCOME ALLOCABLE TO GENERAL PARTNER	11			—			—			1			(w)	(2		)	(z)	10
NET INCOME (LOSS) ALLOCABLE TO LIMITED PARTNERS	$	11,314		$	3,788		$	(2,959	)	$	(2,964	)		$	1,087			$	10,266
Basic and Diluted Earnings per Unit (Note 3) -
Common																		$	0.35
Subordinated																		$	0.35
Weighted Average Units Outstanding -
Common																		23,296,253
Subordinated																		5,919,346

See accompanying notes.

14

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Nine Months Ended December 31, 2011

(U.S. Dollars in Thousands, Except Per Unit Amounts)

(Page 1 of 2)

	Nine Months Ended December 31, 2011
				Historical			Historical														Preliminary
				Osterman			SemStream														Pro Forma
				Six Months			Seven Months			Pro Forma Adjustments											NGL
	Historical			Ended			Ended						Note				Note	Offering		Note	To Page 2
	NGL			Sept. 30, 2011			Oct. 31, 2011			Osterman			2	SemStream			2	Transaction		2	of 2
REVENUES:
Retail propane	$	94,787		$	32,625		$	—		$	—			$	—			$	—		$	127,412
Wholesale supply and marketing	773,253			—			408,097			—				(25,340		)	(F)	—			1,156,010
Midstream	3,504			—			—			—				—				—			3,504
	871,544			32,625			408,097			—				(25,340		)		—			1,286,926
COST OF SALES:
Retail propane	61,825			20,669			—			—				—				—			82,494
Wholesale supply and marketing	765,044			—			403,563			—				(25,340		)	(F)	—			1,143,267
Midstream	356			—			—			—				—				—			356
	827,225			20,669			403,563			—				(25,340		)		—			1,226,117
Gross Margin	44,319			11,956			4,534			—				—				—			60,809
OPERATING COSTS AND EXPENSES:
Operating and general and administrative	37,408			12,313			9,862			(750		)	(A)	(603		)	(G)	—			58,230
Depreciation and amortization	8,480			1,701			2,213			3,910			(B)	1,106			(H)	—			17,410
Operating Income (Loss)	(1,569		)	(2,058		)	(7,541		)	(3,160		)		(503		)		—			(14,831		)
OTHER INCOME (EXPENSE):
Interest expense	(4,989		)	(22		)	(1,732		)	(1,710		)	(C)	(895		)	(I)	476		(K)	(8,872		)
Other, net	637			334			2,152			—				—				—			3,123
Income (Loss) Before Income Taxes	(5,921		)	(1,746		)	(7,121		)	(4,870		)		(1,398		)		476			(20,580		)
INCOME TAX (PROVISION) BENEFIT	(158		)	(238		)	—			238			(D)	—				—			(158		)
NET INCOME (LOSS)	(6,079		)	(1,984		)	(7,121		)	(4,632		)		(1,398		)		476			(20,738		)
LOSS ALLOCABLE TO GENERAL PARTNER	(6		)							(7		)	(E)	(9		)	(J)	—			(22		)
NET INCOME (LOSS) ALLOCABLE TO LIMITED PARTNERS	$	(6,073	)	$	(1,984	)	$	(7,121	)	$	(4,625	)		$	(1,389	)		$	476		$	(20,716	)
Basic and Diluted Earnings per Unit (Note 3) -
Common	$	(0.41	)
Subordinated	$	(0.20	)
Weighted Average Units Outstanding -
Common	12,491,836
Subordinated	4,929,201

See accompanying notes and continuation on page 2 of 2.

15

NGL ENERGY PARTNERS LP

Unaudited Pro Forma Condensed Consolidated

Statement of Operations

For the Nine Months Ended December 31, 2011

(U.S. Dollars in Thousands, Except Per Unit Amounts)

(Page 2 of 2)

	Preliminary			Historical			Historical
	Pro Forma			Pacer			North American
	NGL			Nine Months			Nine Months			Pro Forma Adjustments
	From Page 1			Ended			Ended						Note				Note	NGL
	of 2			Dec. 31, 2011			Dec. 31, 2011			Pacer			2	North American			2	Pro Forma
REVENUES:
Retail propane	$	127,412		$	26,487		$	64,231		$	—			$	—			$	218,130
Wholesale supply and marketing	1,156,010			—			—			—				—				1,156,010
Midstream	3,504			—			—			—				—				3,504
	1,286,926			26,487			64,231			—				—				1,377,644
COST OF SALES:
Retail propane	82,494			17,452			46,557			—				—				146,503
Wholesale supply and marketing	1,143,267			—			—			—				—				1,143,267
Midstream	356			—			—			—				—				356
	1,226,117			17,452			46,557			—				—				1,290,126
Gross Margin	60,809			9,035			17,674			—				—				87,518
OPERATING COSTS AND EXPENSES:
Operating and general and administrative	58,230			6,694			18,964			(402		)	(L)	(82		)	(O)	83,404
Depreciation and amortization	17,410			974			3,766			1,536			(M)	(422		)	(P)	23,264
Operating Income (Loss)	(14,831		)	1,367			(5,056		)	(1,134		)		504				(19,150		)
OTHER INCOME (EXPENSE):
Interest expense	(8,872		)	(99		)	(3,921		)	(681		)	(N)	2,030			(Q)	(11,543		)
Other, net	3,123			57			(49		)	—				—				3,131
Income (Loss) Before Income Taxes	(20,580		)	1,325			(9,026		)	(1,815		)		2,534				(27,562		)
INCOME TAX (PROVISION) BENEFIT	(158		)	—			8,357			—				(8,357		)	(R)	(158		)
NET INCOME (LOSS)	(20,738		)	1,325			(669		)	(1,815		)		(5,823		)		(27,720		)
LOSS ALLOCABLE TO GENERAL PARTNER	(22		)				—			—				(6		)	(S)	(28		)
NET INCOME (LOSS) ALLOCABLE TO LIMITED PARTNERS	$	(20,716	)	$	1,325		$	(669	)	$	(1,815	)		$	(5,817	)		$	(27,692	)
Basic and Diluted Earnings per Unit (Note 3) -
Common																		$	(0.95	)
Subordinated																		$	(0.95	)
Weighted Average Units Outstanding -
Common																		23,296,253
Subordinated																		5,919,346

See accompanying notes.

16

NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

Note 1 — Basis of Presentation

See “— Introduction” for more information regarding the basis of presentation for our unaudited pro forma condensed consolidated financial statements.

The entities included in the unaudited pro forma condensed consolidated financial statements are identified as follows due to space limitations:

·NGL Energy Partners LP - “NGL”

·NGL Supply, Inc. - “NGL Supply”

·Hicks LLC

·Gifford

·Osterman Associated Companies - “Osterman”

·SemStream, L.P. - “SemStream”

·Pacer Propane — “Pacer”

·North American Propane — “North American”

The results of operations of Osterman for the twelve months ended March 31, 2011 were compiled by reducing the individual amounts for the year ended September 30, 2010 by the results for the six months ended March 31, 2010, and increasing the amounts for the six months ended March 31, 2011.  The results of operations for the six month periods ended March 31, 2010 and 2011 are not separately included herein.

The historical results of operations of Pacer included in the unaudited pro forma condensed consolidated statements of operations for the year ended March 31, 2011 represent the results of its operations for the year ended December 31, 2010, which financials are not included herein.  The audited combined Pacer financials for the year ended December 31, 2011 are included herein.  However, we are unable to recast the financials to reflect a period ended March 31, 2011.  The Pacer financial statements for the nine months ended December 31, 2011 are not separately included herein.

The results of operations of North American for the twelve months ended March 31, 2011 were compiled by reducing the individual amounts for the year ended September 30, 2011 by the results for the six months ended September 30, 2011, and increasing the amounts by the results for the six months ended September 30, 2010.  The results of operations for the six month periods ended September 30, 2011 and 2010 are not included separately herein.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

Note 2 — Pro Forma Adjustments

Our unaudited pro forma condensed consolidated financial statements reflect the impact of the following pro forma adjustments:

Balance Sheet as of December 31, 2011

The historical condensed consolidated balance sheet of NGL as of December 31, 2011 includes the consolidation of Osterman and SemStream and reflects the impact of the January 2012 modification of our credit facility.

Pacer Combination

(a)Represents the consideration paid in the combination and the resulting adjustments to the historical net assets at December 31, 2011 to reflect the elimination of the Pacer historical assets and liabilities not included in the combination and the preliminary acquisition accounting based on the following estimate of the fair values of the assets acquired and liabilities assumed (in thousands):

	Fair Value Estimates
Accounts receivable	$	4,389
Propane and other inventory	965
Other current assets	43
Property, plant and equipment:
Land	1,400
Tanks and other retail propane equipment (15 years)	11,200
Vehicles (5 years)	5,000
Buildings (30 years)	2,300
Other equipment (3-5 years)	200
Amortizable intangible assets:
Customer relationships (15 years)	21,980
Tradenames (indefinite life)	1,000
Goodwill	15,585
Assumed current liabilities	(1,474		)
Consideration paid	$	62,588

The pro forma adjustment includes borrowings of $32.2 million on our credit facility to fund the acquisition.  The pro forma adjustment also includes a contribution from our general partner of approximately $31,000 in order to maintain its 0.1% interest in the Partnership.

(b)Reflects the elimination of the historical net equity of Pacer as of December 31, 2011.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

North American Combination

(c)Represents the consideration paid in the combination and the resulting net adjustments to the historical net assets at September 30, 2011 to reflect the elimination of the North American historical assets and liabilities not included in the combination and the preliminary acquisition accounting based on the following estimate of the fair values of the assets acquired and liabilities assumed (in thousands):

	Fair Value Estimates
Accounts receivable	$	10,189
Inventory	3,764
Other current assets	388
Property, plant and equipment:
Land	2,600
Tanks and other equipment (15 years)	27,100
Vehicles (5 years)	9,000
Buildings (30 years)	2,200
Office and other equipment (3-5 years)	500
Amortizable intangible assets:
Customer relationships (15 years)	9,800
Tradenames (indefinite life)	1,000
Goodwill	14,685
Assumed liabilities	(11,396		)
Consideration paid	$	69,830

The pro forma adjustment includes borrowings of $69.8 million on our credit facility to fund the acquisition.

(d)Reflects the elimination of the historical equity of North American as of September 30, 2011.

Statement of Operations for the Year Ended March 31, 2011

Hicksgas/NGL Supply Combination Transaction Adjustments

(e)Eliminates the effects of intercompany propane sales between Hicks LLC and Gifford and between NGL Supply and Hicks LLC on revenues and cost of sales.

(f)Reflects the elimination of expenses incurred directly in connection with our combination with NGL Supply and Hicksgas.

(g)The assets acquired in the Hicksgas combination are included in our historical balance sheet as of December 31, 2011.  The final fair value determination was made using an independent appraisal of the tangible and intangible assets and the results of the working capital adjustment.  The pro forma depreciation and amortization adjustment reflects the estimated net adjustment to historical Hicks LLC and Gifford depreciation and amortization expense resulting from the

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

final fair value computation of property, plant and equipment, identifiable intangible assets and goodwill acquired in the combination.  Goodwill is an indefinite-lived asset subject to annual tests for impairment, thus no amortization has been reflected in our unaudited pro forma condensed consolidated statement of operations for the amount allocated to goodwill.

(h)Reflects the elimination of the historical income tax benefit of NGL Supply and Hicks LLC.  NGL Supply and Hicks LLC each made elections to be treated as pass through entities for federal income tax purposes just prior to our combination.

(i)Reflects the general partner’s 0.1% share of the income of NGL Supply, Hicks LLC and Gifford after the effect of the pro forma adjustments.

(j)Reflects the effect of the acquisition of the noncontrolling interest in the initial combination transactions with NGL Supply and Hicksgas.

Initial Public Offering Transaction Adjustments

(k)Reflects the elimination of historical interest expense related to the acquisition facility of NGL Supply prior to our combination transaction with NGL Supply.

(l)Reflects the elimination of our historical interest expense on the amount borrowed under our acquisition credit facility to finance the Hicksgas combination which was paid using the proceeds from our initial public offering.

(m)Represents the general partner’s 0.1% share of the pro forma adjustments for the initial public offering.

Osterman Combination Transaction Adjustments

(n)Reflects the increase in historical depreciation and amortization expense of the Osterman long-lived assets based on the estimated fair value of the assets contributed in the Osterman combination.  The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 6.93%.  An increase in the current estimated fair value of the long-lived assets of $1 million would result in an increase of approximately $69,000 of pro forma depreciation and amortization expense for the year ended March 31, 2011.

(o)Represents the additional interest expense resulting from the advances from our acquisition facility of $96.0 million to finance the Osterman combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56%.  A change in the interest rate of 0.125% would result in a change of approximately $120,000 in pro forma interest expense.

(p)Represents the elimination of the historical income tax provision for Osterman.

(q)Represents the general partner’s 0.1% share of the Osterman income after the effect of the pro forma adjustments.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

SemStream Combination Transaction Adjustments

(r)Represents the elimination of sales between NGL and SemStream.

(s)Reflects the increase in historical depreciation and amortization expense of the SemStream long-lived assets based on the current estimated fair value of the assets contributed in the SemStream combination.  The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 7.28%.  An increase in the estimated fair value of the long-lived assets of $1 million would result in an increase of approximately $73,000 of pro forma depreciation and amortization expense for the year ended March 31, 2011.

(t)Represents the additional interest expense resulting from the advances from our acquisition and working capital facilities (advances of $10.0 million and $83.0 million, respectively) to finance the SemStream combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56% for acquisition facility borrowings and 3.31% for working capital facility borrowings for the estimated period in which the advances would have been outstanding (one year for the acquisition facility and five months for the working capital facility).  A change in the interest rate of 0.125% would result in a change of approximately $56,000 in pro forma interest expense.

Pacer Combination Transaction Adjustments

(u)Reflects the increase in historical depreciation and amortization expense of the Pacer long-lived assets based on the estimated fair value of the assets contributed in the Pacer combination.  The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 7.98%.  An increase in the estimated fair value of long-lived assets of $1 million would result in approximately $80,000 of additional annual pro forma depreciation and amortization expense.

(v)Represents the additional interest expense resulting from the advances from our acquisition and working capital facilities (advances of $27.8 million and $4.4 million, respectively) to finance the Pacer combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56% for acquisition facility borrowings and 3.31% for working capital facility borrowings for the estimated period in which the advances would have been outstanding (one year for the acquisition facility and three months for the working capital facility).  A change in the interest rate of 0.125% would result in a change of approximately $36,000 in pro forma interest expense.

(w)Represents the general partner’s 0.1% share of the income of Pacer after the effect of the pro forma adjustments.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

North American Combination Transaction Adjustments

(x)Reflects the decrease in historical depreciation and amortization expense of the North American long-lived assets based on the estimated fair value of the assets acquired in the North American combination.  To pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 9.17%.  An increase in the estimated fair value of long-lived assets of $1 million would result in approximately $92,000 of additional annual pro forma depreciation and amortization expense.

(y)Represents the elimination of interest expense incurred by North American on its historical credit facilities, partially offset by additional interest expense resulting from the advances from our acquisition facility of $69.8 million to finance the North American combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56%.  A change in the interest rate of 0.125% would result in a change of approximately $88,000 in pro forma interest expense.

(z)Represents the general partner’s 0.1% share of the losses of North American after the effect of the pro forma adjustments.

Statement of Operations for the Nine Months Ended December 31, 2011

Osterman Combination Transaction Adjustments

(A)Reflects the elimination of expenses incurred directly in connection with our combination with Osterman.

(B)Reflects the increase in historical depreciation and amortization expense of the Osterman long-lived assets based on the estimated fair value of the assets contributed in the Osterman combination.  The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 6.93%.  An increase in the estimated fair value of the long-lived assets of $1 million would result in an increase in the pro forma adjustment for depreciation and amortization expense of approximately $35,000 for the nine months ended December 31, 2011.

(C)Represents the additional interest expense resulting from the advances of $96.0 million from our acquisition facility to finance the Osterman combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56%.  A change in interest rate of 0.125% would result in a change of approximately $60,000 in pro forma interest expense for the nine months ended December 31, 2011.

(D)Represents the elimination of the historical income tax provision for Osterman.

(E)Represents the general partner’s 0.1% share of the losses of Osterman after the effect of the pro forma adjustments.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

SemStream Combination Transaction Adjustments

(F)Represents the elimination of sales between NGL and SemStream.

(G)Reflects the elimination of expenses incurred directly in connection with our combination with SemStream.

(H)Reflects the increase in historical depreciation and amortization expense of the SemStream long-lived assets based on the estimated fair value of the assets contributed in the SemStream combination.  The pro forma average annual depreciation and amortization rate based on the current estimated fair value and useful lives of the long-lived assets is 7.28%.  An increase in the estimated fair value of the long-lived assets of $1 million would result in an increase of approximately $42,000 in pro forma depreciation and amortization expense for the nine months ended December 31, 2011.

(I)Represents the additional interest expense from the advances from our acquisition and working capital facilities (advances of $10.0 million and $83.0 million, respectively) to finance the SemStream combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56% for acquisition facility borrowings and 3.31% for working capital facility borrowings for the estimated period in which advances would have been outstanding (nine months for the acquisition facility and five months for the working capital facility).  A change in interest rate of 0.125% would result in an increase in the pro forma adjustment for interest expense of approximately $33,000 for the nine months ended December 31, 2011.

(J)Represents the general partner’s 0.1% share of the losses of SemStream after the effect of the pro forma adjustments.

Offering Transaction Adjustments

(K)Reflects the elimination of our historical interest expense on the amount borrowed under our acquisition credit facility to finance the Hicksgas combination which was paid using the proceeds from our initial public offering.

Pacer Combination Transaction Adjustments

(L)Reflects the elimination of expenses incurred directly by us and by Pacer in connection with our combination with Pacer.

(M)Reflects the increase in historical depreciation and amortization expense of the Pacer long-lived assets based on the estimated fair value of the assets contributed in the Pacer combination.  The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 7.98%.  An increase in the estimated fair value of long-lived assets of $1 million would result in approximately $60,000 of additional pro forma depreciation and amortization expense for the nine months ended December 31, 2011.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

(N)Represents the additional interest expense resulting from the advances from our acquisition and working capital facilities (advances of $27.8 million and $4.4 million, respectively) to finance the Pacer combination at the actual interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56% for acquisition facility borrowings and 3.31% for working capital facility borrowings for the estimated period in which the advances would have been outstanding (nine months for the acquisition facility and three months for the working capital facility).  A change in the interest rate of 0.125% would result in a change of approximately $27,000 in pro forma interest expense.

North American Combination Transaction Adjustments

(O)Reflects the elimination of expenses incurred directly by us in connection with our combination with North American.

(P)Reflects the decrease in historical depreciation and amortization expense of the North American long-lived assets based on the estimated fair value of the assets acquired in the North American combination.  The pro forma average annual depreciation and amortization rate based on the estimated fair value and useful lives of the long-lived assets is 9.17%.  An increase in the estimated fair value of long-lived assets of $1 million would result in approximately $69,000 of additional annual pro forma depreciation and amortization expense.

(Q)Represents the elimination of interest expense incurred by North American on its historical credit facilities, partially offset by additional interest expense resulting from the advances from our acquisition facility of $69.8 million to finance the North American combination at the interest rate in effect on LIBOR option borrowings at December 31, 2011 of 3.56%.  A change in the interest rate of 0.125% would result in a change of approximately $66,000 in pro forma interest expense.

(R)Reflects the elimination of the historical income tax provision of North American.

(S)Represents the general partner’s 0.1% share of the losses of North American after the effect of the pro forma adjustments.

Note 3 — Pro Forma Earnings per Unit Computation

Our net income for financial statement presentation and partners’ capital purposes is allocated to our general partner and limited partners in accordance with their respective ownership interests, and in accordance with our partnership agreement after giving effect to priority income allocations for incentive distributions, if any, to our general partner, the holders of the incentive distribution rights pursuant to our partnership agreement, which are declared and paid following the close of each quarter.  These incentive distributions could result in less income allocable to the common and subordinated unitholders.

For purposes of computing pro forma basic and diluted net income per common and subordinated unit, we have assumed that (a) the minimum quarterly distributions would have been paid to all unitholders for all outstanding units for each quarter during the periods presented, (b) there would

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

be no incentive distributions to the general partner and (c) no restrictions on distributions apply during the periods presented.  Any earnings in excess of distributions are allocated to our general partner and limited partners based on their respective ownership interests.

The pro forma earnings per unit have been computed under the two-class method based on earnings or losses allocated to the limited partners after deducting the total earnings allocation to the general partner.  The computation is based on the number of common and subordinated units outstanding after the initial public offering and after the Osterman, SemStream, Pacer, and North American combinations.  The pro forma basic and diluted earnings per unit are equal as there are no dilutive units.

Earnings per unit are computed as follows (dollars in thousands except unit and per unit information):

	Year Ended				Nine Months Ended
	March 31, 2011				December 31, 2011
			Pro					Pro
	Historical		Forma		Historical			Forma
Net income (loss)	$	12,679	$	10,276	$	(6,079	)	$	(27,720	)
General partner 0.1% share of income (loss)	13		10		(6		)	(28		)
General partner incentive distributions	—		—		—			—
Income (loss) allocated to limited partners	$	12,666	$	10,266	$	(6,073	)	$	(27,692	)
Common unitholders	$	12,666	$	8,186	$	(5,111	)	$	(22,081	)
Subordinated unitholders	$	—	$	2,080	$	(962	)	$	(5,611	)
Basic and Diluted Earnings per Unit —
Common unitholders	$	1.16	$	0.35	$	(0.41	)	$	(0.95	)
Subordinated unitholders	$	—	$	0.35	$	(0.20	)	$	(0.95	)
Weighted Average Units Outstanding —
Common	10,933,568		23,296,253		12,491,836			23,296,253
Subordinated	—		5,919,346		4,929,201			5,919,346

For the pro forma earnings per unit computation, we have assumed that all units were outstanding during the entire period for each of the periods presented.

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NGL ENERGY PARTNERS LP

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements (Continued)

Note 4 — Long-Term Debt

Our historical and pro forma long-term debt as of December 31, 2011 are as follows:

	Historical		Pro Forma
Working capital facility	$	102,500	$	106,900
Acquisition facility	107,500		205,143
Other	558		1,290
	$	210,558	$	313,333
Less - Current maturities	92,968		97,596
Long-term debt	$	117,590	$	215,737

Note 5 — Partners’ Equity

Outstanding general and limited partner units on a historical and pro forma basis as of December 31, 2011 are as follows:

	Historical	Pro Forma
General partner notional units	27,743	29,245
Limited partner -
Common units	21,796,253	23,296,253
Subordinated units	5,919,346	5,919,346

Of the 8,932,031 common units issued in the SemStream combination, (1) 5,000,000 are eligible for 67% of the distribution for the quarter ended December 31, 2011 and full distributions thereafter, and (2) 3,932,031 common units are not eligible for distributions until the distribution for the quarter ending September 30, 2012.

Note 6 — Other Income of SemStream

Other income of SemStream in the unaudited pro forma condensed consolidated statement of operations for the year ended March 31, 2011 includes a $1.2 million gain on the settlement of a dispute related to the cancellation of a contract by a counterparty during 2008, and a gain of $1.2 million related to the settlement of a dispute related to certain transportation fees charged to SemStream by an unaffiliated party during the years 2005-2009.  Other income of SemStream in the unaudited pro forma condensed consolidated statement of operations for the nine months ended December 31, 2011 includes the receipt of approximately $2 million of proceeds from a class-action litigation settlement.  This non-recurring income is not excluded from pro forma income as it does not result directly from the SemStream combination.  We do not expect to realize similar income in the future.

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