PLAINS ALL AMERICAN PIPELINE LP Q3 FY2024 earnings call

Key Points - Operational Quarter: Plains delivered a solid operational quarter with adjusted EBITDA expected to be towards the top end of the 2024 range of $2.725 billion to $2.775 billion. - Permian Volume: Permian volume growth is on track with exit-to-exit forecast of 200,000 to 300,000 barrels a day. - NGL Project: Fort Saskatchewan fractionation expansion project scheduled for H1 2025, on schedule and budget. - Acquisition: Recently acquired the Fivestones Permian gathering system from Rattler Midstream. - Legal Settlements: Settled two lawsuits related to 2015 oil spill in California, booked $120 million charge, and expect majority of $225 million claim reimbursement in Q1 2025. - Credit Upgrade: Moody's upgraded to Baa2 with stable outlook, achieving mid BBB rating at all three credit agencies.

In the third quarter, adjusted EBITDA net to PAA was $659 million. Permian volume growth remains on track with the original forecast of 200,000 to 300,000 barrels a day range for 2024 exit-to-exit. The NGL business is on track to complete the Fort Saskatchewan fractionation expansion project in the first half of 2025. Revenue contribution details aren't explicitly broken down by segment in absolute terms beyond the EBITDA figure, but the Permian and NGL segments are highlighted as key areas.

Guidance - 2024 Adjusted EBITDA: Expected to be towards the top end of $2.725 billion to $2.775 billion range. - 2024 Adjusted Free Cash Flow: Approximately $1.45 billion, with ~$1.15 billion allocated to distributions. - 2025 Capital Investment: Expected to be within $300 million to $400 million net to Plains range.

Risks - Geopolitical unrest, potential OPEC supply changes, uncertainty around China and broader economic activity. - Legacy legal issues related to 2015 oil spill in California, though most claims resolved with recent settlements.

Q: Michael Blum asked about Permian gathering volumes, how much organic vs acquisition driven and special items.

A: Jeremy Goebel said substantial growth on organic side, primary driver, modest growth from acquisitions, no major special items this quarter.

Q: Michael Blum asked about leverage below target range.

A: Willie Chiang said don't intend to lower leverage range, focused on maximizing free cash flow, efficient growth including bolt-on acquisitions and returning cash to shareholders.

Q: Spiro Dounis asked about Permian volumes outlook, capital allocation valuation.

A: Willie Chiang and Jeremy Goebel said 2025 volumes expected within range, midstream assets highly valued, disciplined on transactions, sees Plains valuation lower than it should be.

Q: Jeremy Tonet asked about water business disposals and Canadian platform.

A: Willie Chiang said no specific comment on water business disposals, Canadian focus on Fort Saskatchewan project, open to bolt-ons with integration benefits.

Q: Neel Mitra asked about crude flows impact, NGL customer pipeline choice.

A: Jeremy Goebel said TMX start-up impacted heavy crude exports, Cushing throughput records, NGL business has flexibility as Plains marketing is shipper in many cases, customers can get to multiple markets.

Q: AJ O'Donnell asked about CapEx budget change, oil growth in Permian.

A: Chris Chandler said CapEx lowered due to deferred spending, still expect 2025 within $300M to $400M range; Jeremy Goebel said within 200,000 to 300,000 barrel a day range, steady growth since July.

Q: Manav Gupta asked about raising guidance and Fivestones acquisition.

A: Al Swanson said better performance across business led to raised guidance; Jeremy Goebel said Fivestones acquisition was right fit as asset was connected, integrated barrels into system.

Q: John Mackay asked about capital efficiency, Oryx strategy.

A: Jeremy Goebel said higher recoveries, fewer connection points, larger development leading to capital efficiency; Oryx JV has given shippers more choices, been better than expected.

Q: Neal Dingmann asked about producer volumes, NGL segment.

A: Jeremy Goebel said New Mexico gas evacuation was a constraint but being solved, industry efficient; Willie Chiang said NGL segment shifted from margin-based to fee-based, expect steadier volumes as contracts roll off.