1Q24 Earnings Call
May 3, 2024
Forward-Looking Statements & Non-GAAP Financial Measures Disclosure
- This presentation contains forward-looking statements, including, in particular, statements about the performance, plans, strategies and objectives for future operations of Plains All American Pipeline, L.P. ("PAA") and Plains GP Holdings, L.P. ("PAGP"). These forward-looking statements are based on PAA's current views with respect to future events, based on what we believe to be reasonable assumptions. PAA and PAGP can give no assurance that future results or outcomes will be achieved. Important factors, some of which may be beyond PAA's and PAGP's control, that could cause actual results or outcomes to differ materially from the results or outcomes anticipated in the forward-looking statements are disclosed in PAA's and PAGP's respective filings with the Securities and Exchange Commission.
- This presentation also contains non-GAAP financial measures relating to PAA, such as Adjusted EBITDA attributable to PAA, Implied DCF and Adjusted Free Cash Flow measures. A reconciliation of these historical measures to the most directly comparable GAAP measures is available in the Investor Relations section of PAA's and PAGP's website at www.plains.com, select "PAA" or "PAGP," navigate to the "Financial Information" tab, then click on "Non-GAAP Reconciliations." PAA does not provide a reconciliation of non-GAAP financial measures to the equivalent GAAP financial measures on a forward-looking basis as it is impractical to forecast certain items that it has defined as "Selected Items Impacting Comparability" without unreasonable effort. Definitions for certain non-GAAP financial measures and other terms used throughout this presentation are included in the appendix.
Investor Contacts
Blake Fernandez
Vice President, Investor Relations
Blake.Fernandez@plains.com
Michael Gladstein
Director, Investor Relations
Michael.Gladstein@plains.com
Investor Relations
866-809-1291plainsIR@plains.com
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1Q24 Results & Highlights
Strong execution & focus on Free Cash Flow generation
Executing on Plan | Segment Performance | Bolt-On Acquisitions | ||||
$718 | $553 / $159 | ~$110 | ||||
1Q24 Adj. EBITDA | 1Q24 Crude / NGL | Acquired a 10% interest in | ||||
Saddlehorn(1) and a Mid-Con | ||||||
attributable to PAA ($MM) | Segment Adj. EBITDA ($MM) | |||||
Terminal Asset(2) ($MM) | ||||||
Reaffirming | Generating Meaningful | Extending Permian | ||||
Full-Year Guidance | Adj. Free Cash Flow(3) | Long-Haul Contracts | ||||
$2.625 - $2.725 | ~$1.55B | ~5 yrs. | ||||
2024(G) Adj. EBITDA | Excluding changes in | Weighted Average | ||||
Assets & Liabilities; includes $110MM | ||||||
attributable to PAA ($Bln) | Long-Haul Contract Tenor | |||||
of bolt-on acquisitions | ||||||
2024(G): Furnished May 3, 2024. Please visit our websitefor a reconciliation of Non-GAAP financial measures. | 3 | |||||
(1) Acquisition closed on March 28, 2024. Plains now owns a 40% interest in Saddlehorn Pipeline Company, LLC. (2) Acquisition closed on April 26, 2024. (3) 2024(G). |
Key Financial Metrics Consistent with February Guidance
Continued focus on executing against our plan
Adj. EBITDA attributable to PAA
$2.625 - $2.725B
Long-term Leverage Ratio Target Range(2)
3.25x - 3.75x
Adj. Free Cash Flow
excluding changes in Assets & Liabilities; includes $110MM of bolt-on acquisitions
~$1.55B
~11% Yield(1)
Investment Capital
(Net to PAA)
+/- $375MM
2024 Guidance: Furnished May 3, 2024. Non-rangebound metrics align with midpoint of Adj. EBITDA attributable to PAA; amounts intended to be +/-. Please visit our websitefor a reconciliation of Non-GAAP financial measures. | 4 |
(1) Yield calculated as Adj. FCF excluding changes in Assets & Liabilities less preferred distributions compared to common unit market cap as of 5/2/24. (2) Includes 50% debt treatment for preferred equity. |
Permian Long-Haul Contracting Update
Extended contracts and increased volume of Plains' Permian long-haul portfolio
- Increased contracted volumes and extended the weighted average
contract duration of our Permian long-haul portfolio to ~5-years (through 2028) - Includes new contracts or extensions on Cactus I, Cactus II & Sunrise/Basin
- Effective September 2025, transactions related to 200 Mb/d of Cactus I capacity have been finalized on terms consistent with rates in the range of $1.25 - $1.50/bbl(1)
- Expect underlying growth in the business and contributions from efficient growth investments to offset lower contracted rates resulting in broadly flat Adj. EBITDA in 2026(2) as compared to 2024 guidance for the Crude Oil segment
- Strikes balance between commitments, tenor and uncontracted capacity across portfolio
Wink
C. City
Midland
Crane
Cushing
Permian Long-haul Contract Overview
CONTRACTED VOLUME | WEIGHTED AVG. CONTRACT DURATION | ||
(Mb/d) | (year) | ||
2028 | |||
1,395 | 1,485 | 2026 | |
PREVIOUS | TODAY | PREVIOUS | TODAY |
McCamey
PERMIAN JV PERMIAN LONG HAUL OTHER PLAINS ASSETS
Houston
Corpus
(1) Joint rate across Cactus I & Eagle Ford Pipeline. (2) Does not reflect formal guidance. Predicated on current investment profile and commodity environment.
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Bolt-On Acquisitions
Enhancing Rockies & Mid-Con position through efficient growth
PLAINS' ROCKIES FOOTPRINT
Flows from Plains | Powder River |
Canadian Assets | Basin |
Casper
WY | NE |
Guernsey | |
Cheyenne | DJ Basin |
Jct. | |
Carr | |
Platteville |
Overview of Transactions
- Plains acquired an additional 10% interest in Saddlehorn Pipeline(1) and a Mid-Con terminal asset(2) for aggregate cash consideration of approximately $110 million
- Funded with excess Free Cash Flow
- Disciplined approach to efficient growth
- Expect to generate unlevered return consistent with Plains' return threshold of ~300 to ~500 bps above WACC
- Enhances Plains' position in the Rockies & Mid-Con
CO
SADDLEHORN PIPELINE PLAINS ASSETS
3rd PARTY INFRASTRUCTURE
Plains Cushing
Terminal
(1) Acquisition closed on March 28, 2024. Plains now owns a 40% interest in Saddlehorn Pipeline Company, LLC. (2) Acquisition closed on April 26, 2024. | 6 |
Free Cash Flow Priorities
Committed to capital discipline, significant return of capital & financial flexibility
2024(G) Capital Allocation
+/- $1.55B of Adj. Free Cash Flow
(excluding changes in Assets & Liabilities)
+/- $110 | Bolt-on Acquisitions |
+/- $390 | Adj. FCFaD |
Available for accretive opportunities | |
or net debt reduction |
Targeting multi-year, sustainable distribution growth
2024: $0.20/unit annual distribution increase to $1.27/unit
2024+: targeting ~$0.15/unit annual distribution growth
(until ~160% common unit coverage reached)
+/- $1,150 | Distributions | ||
Common & Preferred | |||
Disciplined
capital investments
Self-fund annual routine
capital with cash flow
Balance sheet stability &
financial flexibility
Resilient through cycles;
create dry powder
Uses 7
2024(G): Furnished May 3, 2024. Please visit our websitefor a reconciliation of Non-GAAP financial measures.
Plains' Investment Opportunity
Generating multi-year Free Cash Flow & increasing returns of capital to equity holders
Attractive Yield(1) of ~7.5%
Meaningful coverage, targeting multi-year distribution growth
Significant Free Cash Flow
2024(G): +/- $1.55B Adj. FCF(2) / $390MM FCFaD
Balance Sheet Strength
Long-Term Leverage Target 3.25x - 3.75x
Strategically Located in Growth Basins
Premier North American Crude & Canadian NGL Assets
2024(G): Furnished May 3, 2024. (1) Distribution yield based on closing unit price as of 5/2/24. (2) Excluding changes in Assets & Liabilities; includes $110 million of bolt-on acquisitions. | 8 |
Appendix
Incremental Updates:
- Segment Adj. EBITDA Walks
- Financial & Operational Updates
Key Drivers: 4Q23 to 1Q24
($ millions) | Crude Oil Segment Adjusted EBITDA |
$563 | +$17 | ($27) | $553 |
Operating Cost / | |||
Lower Volumes / | |||
Other | |||
Winter Weather | |||
4Q23 | 1Q24 |
- Crude Oil Segment
- Operating Cost / Other: primarily lower operating expenses and timing of PLA recognition offset by fewer market-based opportunities
- Lower Volumes: lower long-haul and Permian gathering volumes due to market dynamics and winter weather
NGL Segment Adjusted EBITDA
$169 | +$6 | ($16) | $159 |
Higher Volumes / | |||
Lower Frac Spread | |||
Other | |||
4Q23 | 1Q24 |
- NGL Segment
- Higher Volumes / Other: higher NGL pipeline tariff volumes
- Lower Frac Spread: lower frac spread and straddle production
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Disclaimer
Plains GP Holdings LP published this content on 03 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 May 2024 11:32:07 UTC.