Plains All American Reports Second-Quarter 2023 Results and Provides Updated 2023 Guidance

HOUSTON, Aug. 04, 2023 (GLOBE NEWSWIRE) -- Plains All American Pipeline, L.P. ( PAA) and Plains GP Holdings ( PAGP) today reported second-quarter 2023 results and provided updated 2023 guidance as highlighted below. Plains also announced a bolt-on acquisition in the Permian and provided updates regarding its NGL segment.

Second-Quarter Results

• Reported Net income attributable to PAA of $293 million & Net cash provided by operating activities of $888 million.
• Delivered strong results with Adjusted EBITDA attributable to PAA of $597 million.
  

Permian Bolt-on Acquisition

• A subsidiary of Plains Oryx Permian Basin LLC acquired Diamondback Energy’s 43% interest in OMOG JV LLC for approximately $225 million ($145 million net to PAA’s interest), which closed on July 28th.
  

NGL Segment Updates

• Sanctioned Plains Fort Saskatchewan (PFS) Train 1 debottlenecking project (~30 Mb/d of additional capacity) and additional connectivity projects to both Co-Ed Pipeline & Fort Sask complex. Substantially increased weighted average contract tenor to approximately 10-years across Fort Sask fractionation capacity and Co-Ed Pipeline.
• Expect sanctioned projects and new contracts on existing assets to largely offset a third-party NGL supply agreement expiring year-end 2024, that reduces frac spread exposed volumes by ~15 Mb/d.
  

2023 Guidance Update

• Expect to be at the high end of our guidance range of $2.45 - $2.55 billion Adjusted EBITDA attributable to PAA for full-year 2023; year-end 2023 leverage now expected to be <3.5x.
• Maintaining 2023 investment and maintenance capital guidance of $325 million and $195 million respectively, net to PAA (inclusive of sanctioned NGL project); demonstrating a continued focus on capital discipline.
• Free cash flow generation remains robust with approximately $1.6 billion of Free Cash Flow expected in 2023, while meaningfully increasing returns of capital to equity holders and further reducing absolute debt.
  

“Our team remains focused on execution while continuing to identify and progress capital efficient growth opportunities; as a result, we expect to be at the high-end of our 2023 EBITDA guidance range,” said Willie Chiang, Chairman & CEO of Plains. “We announced multiple strategic actions this quarter including a bolt-on acquisition in the Permian that will complement our existing geographic footprint. Additionally, we took steps to improve the long-term durability and quality of our cash flow stream in the NGL segment by sanctioning the debottlenecking project at our Fort Sask complex and extending the duration of our contracts across our NGL portfolio. This will help offset commodity exposed NGL contracts that are expiring at the end of next year and should result in increased contribution from the more stable fee-based part of our business. These actions align with our ongoing goals of remaining capital disciplined, generating multi-year Free Cash Flow, reducing leverage and increasing returns of capital to our unitholders.”

Plains All American Pipeline

Summary Financial Information (unaudited)
(in millions, except per unit data)

Summary of Selected Financial Data by Segment (unaudited)
(in millions)

Second-quarter 2023 Crude Oil Segment Adjusted EBITDA increased 7% versus comparable 2022 results primarily due to higher tariff volumes across our asset base, tariff escalations and Canadian market-based opportunities. These items were partially offset by the impact of increased operating expenses, minimum volume commitment deficiency payments received in the second quarter of 2022 and lower commodity prices.

Second-quarter 2023 NGL Segment Adjusted EBITDA decreased 48% versus comparable 2022 results primarily due to lower propane sales volumes, impacted by turnarounds and deferring sales due to market structure, and the absence of weather events that benefited the 2022 period.

Plains GP Holdings

PAGP owns an indirect non-economic controlling interest in PAA’s general partner and an indirect limited partner interest in PAA. As the control entity of PAA, PAGP consolidates PAA’s results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement tables attached hereto.

Conference Call and Webcast Instructions

PAA and PAGP will hold a joint conference call at 9:00 a.m. CT on Friday, August 4, 2023 to discuss second-quarter performance and related items.

To access the internet webcast, please go to https://edge.media-server.com/mmc/p/w4wbvvbs.

Alternatively, the webcast can be accessed on our website (www.plains.com) under Investor Relations (Navigate to: Investor Relations / either “PAA” or “PAGP” / News & Events / Quarterly Earnings). Following the live webcast, an audio replay in MP3 format will be available on our website within two hours after the end of the call and will be accessible for a period of 365 days. Slides will be posted prior to the call at the above referenced website.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future and to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. The primary additional measures used by management are Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied Distributable Cash Flow (“DCF”), Free Cash Flow and Free Cash Flow after Distributions.

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities), gains and losses on asset sales and asset impairments, goodwill impairment losses and gains or losses on and impairments of investments in unconsolidated entities, adjusted for certain selected items impacting comparability. Our definition and calculation of certain non-GAAP financial measures may not be comparable to similarly-titled measures of other companies. Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied DCF and certain other non-GAAP financial performance measures are reconciled to Net Income, and Free Cash Flow and Free Cash Flow after Distributions are reconciled to Net Cash Provided by Operating Activities (the most directly comparable measures as reported in accordance with GAAP) for the historical periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our Condensed Consolidated Financial Statements and accompanying notes. In addition, we encourage you to visit our website at www.plains.com (in particular the section under “Financial Information” entitled “Non-GAAP Reconciliations” within the Investor Relations tab), which presents a reconciliation of our commonly used non-GAAP and supplemental financial measures. We do not reconcile non-GAAP financial measures on a forward-looking basis as it is impractical to do so without unreasonable effort.

Non-GAAP Financial Performance Measures

Management believes that the presentation of Adjusted EBITDA, Adjusted EBITDA attributable to PAA and Implied DCF provides useful information to investors regarding our performance and results of operations because these measures, when used to supplement related GAAP financial measures, (i) provide additional information about our core operating performance and ability to fund distributions to our unitholders through cash generated by our operations and (ii) provide investors with the same financial analytical framework upon which management bases financial, operational, compensation and planning/budgeting decisions. We also present these and additional non-GAAP financial measures, including adjusted net income attributable to PAA and basic and diluted adjusted net income per common unit, as they are measures that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These non-GAAP financial performance measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our core operating results and/or (v) other items that we believe should be excluded in understanding our core operating performance. These measures may be further adjusted to include amounts related to deficiencies associated with minimum volume commitments whereby we have billed the counterparties for their deficiency obligation and such amounts are recognized as deferred revenue in “Other current liabilities” in our Condensed Consolidated Financial Statements. We also adjust for amounts billed by our equity method investees related to deficiencies under minimum volume commitments. Such amounts are presented net of applicable amounts subsequently recognized into revenue. Furthermore, the calculation of these measures contemplates tax effects as a separate reconciling item, where applicable. We have defined all such items as “selected items impacting comparability.” Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We do not necessarily consider all of our selected items impacting comparability to be non-recurring, infrequent or unusual, but we believe that an understanding of these selected items impacting comparability is material to the evaluation of our operating results and prospects.

Although we present selected items impacting comparability that management considers in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions, divestitures, investment capital projects and numerous other factors. These types of variations may not be separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

Non-GAAP Financial Liquidity Measures

Management also uses the non-GAAP financial liquidity measures Free Cash Flow and Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Free Cash Flow is defined as Net Cash Provided by Operating Activities, less Net Cash Provided by/(Used in) Investing Activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and the impact from the purchase and sale of linefill, net of proceeds from the sales of assets and further impacted by distributions to and contributions from noncontrolling interests. Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Free Cash Flow after Distributions.

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)