{"id":68896,"date":"2023-10-05T04:00:40","date_gmt":"2023-10-05T08:00:40","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/plains-all-american-pipeline-stock-more-distribution-on-the-way-nasdaqpaa\/"},"modified":"2023-10-05T04:00:48","modified_gmt":"2023-10-05T08:00:48","slug":"plains-all-american-pipeline-stock-more-distribution-on-the-way-nasdaqpaa","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68896","title":{"rendered":"Plains All American Pipeline Stock: More Distribution On The Way (NASDAQ:PAA)"},"content":{"rendered":"
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Plains All American Pipeline (NASDAQ:PAA<\/span>) reported its 2nd quarter earnings with a modest decline quarter over quarter. After updating the 2023 guidance at the top end of the number given during the 4th quarter report, it appears that more distribution increases are on the way. To confirm this, <\/span>in previous article, we estimated cash flows going forward, a practice we continue. The company has consistently guided for $600M in excess cash this year, a number considerably lower than <\/span>a previous estimate of $1B+. With the company adding a mysterious distribution of $300M last year, the primary difference, this lowered the number. In spite, the company appears marching toward higher returns. This isn’t a 6″ sub, rather it is a full foot-long one. Let’s head for lunch, and no need for ordering that small one.<\/span><\/p>\n

The 2nd Quarter Announcements<\/span> <\/h3>\n

Management updated with confidence “as a result of our year-to-date performance and the Bolt-on Acquisition, we now expect to be at the high-end of our $2.45 billion to $2.55 billion, adjusted EBITDA range for 2023.” They also reiterated the excess cash flow for the year at $600M. This reiteration was accompanied even with “slightly lower-than-expected Permian production driven by lower commodity prices and some weather-related impacts that occurred in June and July.” The of the 2nd quarterly report is summarized in the next two slides:<\/p>\n

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\"2nd<\/span>
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Plains All American <\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Continuing:<\/p>\n

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\"2nd<\/span>
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Plains All American <\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Of importance to investors is the significant drop quarter over quarter in EBITDA displayed next:<\/p>\n

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\"Comparison<\/span>
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Plains All American <\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The 2nd quarter crude oil segment outperformed the 1st, but the NGL segment dropped from $192M to $62M with approximately half from quarter over quarter seasonality and also more from turnaround losses. The quarter over quarter difference totaled $715M minus $597M or $120M. The total YTD through June equaled $1.3B. To reach the high-end of guidance, the last quarters must average near $650M. It should also be noted the NGL business is heavily hedged and will continue to perform at its hedged rate regardless of NG or NGL pricing.<\/p>\n

The Distribution<\/h3>\n

Now let’s get to that sandwich, the full sized one. The next slide lays out management’s distribution plan.<\/p>\n

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\"Distribution<\/span>
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Plains All American Pipeline<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The company currently pays out approximately $750M per year on 700 million common units. Each 15 cent target increase adds $100M in cash towards distribution.<\/p>\n

This next slide was included in reaffirming cash balances for the past few years. Investors may want to take a peek in that it reflects a different view with slightly difference numbers.<\/p>\n

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\"Cash<\/span>
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Plains American<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Continuing, we developed next a recent history for the company’s EBITDA performance.<\/p>\n

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