PAA - Plains All American sees strong growth this year in Permian pipeline volumes

2023-05-05 12:52:29 ET

Plains All American ( NASDAQ: PAA ) +4.1% in Friday's trading after beating expectations for Q1 adjusted earnings and forecasting strong growth in Permian Basin production this year.

Q1 net income more than doubled to $422M, or $0.52/unit, from $187M, or $0.19/unit, in the year-earlier quarter, adjusted EBITDA rose to $715M from $614M a year ago, and free cash flow before distributions more than quadrupled to $823M from $200M.

Q1 implied distributable cash flow available to common unitholders increased to $498M from $438M a year earlier, while the distribution coverage ratio fell to 2.37x from 3.16x.

Plains ( PAA ) reaffirmed guidance for full-year adjusted EBITDA of $2.45B-$2.55B and free cash flow of $1.6B.

Q1 crude oil pipeline volumes rose 15.6% to 8.28M bbl/day from 7.16M bbl/day a year ago on the back of production growth in the Permian Basin, where volumes jumped 20.7% to 6.3M bbl/day.

In its post-earnings conference call, Plains ( PAA ) forecast ~500K bbl/day of Permian Basin production growth exit-to-exit this year, with output reaching ~6.15M bbl/day by year-end 2023 compared with 5.65M bbl/day at the end of 2022.

Plains ( PAA ) said Permian Basin production is filling its pipelines, but company executives said on the call that they have no plans to expand capacity of its systems including Cactus I and II, according to Bloomberg.

More on Plains All American Pipeline:

• See financial and valuation comparisons to sector peers
• SA analysis: Plains All American: Reasonable, Well-Financed Play In Crude Oil Midstream
• Stock price return: Up 10.5% YTD, up 17% in the past 12 months

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