California State Lands Commission: Achieves $72.5 Million Settlement From Plains All American Pipeline

Plains All American Pipeline, L.P. reported third-quarter revenue growth of 5.6% year-over-year to $12.743 billion, missing the consensus of $13.087 billion.

Adjusted EPS was 37 cents, up from 35 cents a year ago, beating the consensus of 31 cents.

The company reported an operating income of $347 million, compared to $234 million a year ago. The margin expanded by 80 bps to 2.7%.

The adjusted EBITDA attributable to PAA remained relatively flat on year at $659 million.

The Crude Oil Segment Adjusted EBITDA rose 4% YoY to $577 million on higher tariff volumes, escalations, and acquisitions despite fewer market opportunities. NGL segment Adjusted EBITDA fell 26% YoY to $73 million due to lower frac spreads.

The company ended the quarter with a 3.0x leverage ratio, beating the target range of 3.25x to 3.75x. PAA’s operating cash for the nine months ended September 2024 was $1.763 billion compared to $1.716 billion. Adjusted free cash flow was $882 million.

2024 Outlook: Full-year Adjusted EBITDA for 2024 is projected at the high end of the $2.725 – $2.775 billion range.

The company expects Adjusted Free Cash Flow to reach around $1.45 billion (down from the prior view of $1.55 billion), excluding asset/liability changes but including acquisition costs and legal settlements.

“We delivered solid operational and financial results in the third quarter and we continue to make progress on our efficient growth strategy, which includes generating multi-year Free Cash Flow, maintaining capital discipline and returning capital to our investors while preserving financial flexibility,” said Willie Chiang, Chairman and CEO of Plains.

“Our company is well positioned, and we have grown increasingly confident in both the durability and cash generating potential of the asset base. The improved outlook for the year provides more confidence in our long-term return of capital framework, which should continue creating value for our unitholders.”

Price Action: PAA shares are trading lower by 2.76% at $17.29 at the last check Friday.

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Plains All American Pipeline, L.P. PAA reported third-quarter 2024 adjusted earnings of 37 cents per unit, which surpassed the Zacks Consensus Estimate of 31 cents by 19.4%. The bottom line also improved 5.7% from 35 cents in the year-ago quarter.

The company reported GAAP earnings of 22 cents per unit compared with 20 cents in the year-ago period.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

PAA’s Total Revenues

Net sales of $12.74 billion beat the Zacks Consensus Estimate of $12.56 billion by 1.4%. The top line also increased 5.6% from the year-ago quarter’s figure of $12.07 billion.

Plains All American Pipeline, L.P. Price, Consensus and EPS Surprise

Plains All American Pipeline, L.P. price-consensus-eps-surprise-chart | Plains All American Pipeline, L.P. Quote

Highlights of PAA’s Release

Total costs and expenses amounted to $12.4 billion, up 4.7% year over year. The increase was due to a rise in purchases and related costs.

Net interest expenses totaled $113 million, up 16.5% from the prior-year quarter’s level.

PAA’s Segmental Performance

The Crude Oil segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $577 million, up 4% from the year-ago quarter’s figure. This increase was due to higher tariff volumes on its pipelines, tariff escalations and contributions from acquisitions.

Adjusted EBITDA for the NGL segment came in at $73 million, down 26% from the prior-year period’s figure. This decrease was due to lower weighted average frac spreads in the third quarter of 2024.

PAA’s Financial Update

As of Sept. 30, 2024, cash and cash equivalents were $640 million compared with $450 million as of Dec. 31, 2023.

As of Sept. 30, 2024, long-term debt was $7.21 billion compared with $7.31 billion as of Dec. 31, 2023.

As of Sept. 30, 2024, long-term debt-to-total book capitalization was 41%, which remained unchanged from the figure recorded as of Dec. 31, 2023.

PAA’s Guidance

For 2024, Plains All American expects adjusted EBITDA in the range of $2.725-$2.775 billion. Adjusted free cash flow is anticipated to be $1.45 billion (excluding changes in assets and liabilities).

PAA remains focused on disciplined capital investments, anticipating full-year 2024 investment and maintenance capital of $360 million and $250 million, respectively.

PAA’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Zacks Investment Research

Energy stocks were leaning lower premarket Friday, with The Energy Select Sector SPDR Fund down 0.1%.

The United States Oil Fund was down 0.7% and the United States Natural Gas Fund was 0.1% lower.

Front-month US West Texas Intermediate crude oil was 1.5% lower at $71.29 per barrel at the New York Mercantile Exchange. Global benchmark North Sea Brent crude oil lost 1.2% to reach $74.69 per barrel, and natural gas futures were down 0.1% at $2.69 per 1 million British Thermal Units.

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NRG Energy stock was up over 5% after the company reported an increase in Q3 adjusted earnings.

Plains All American Pipeline shares were up more than 1% after the company reported higher Q3 adjusted net income and revenue.