Plains All American Pipeline, L.P. (PAA) | Investment Case

1. Company Snapshot

1.a. Company Description

Plains All American Pipeline, L.P., through its subsidiaries, engages in the pipeline transportation, terminalling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada.The company operates in two segments, Crude Oil and NGL.The Crude Oil segment offers gathering and transporting crude oil through pipelines, gathering systems, trucks, and at times on barges or railcars.

This segment provides terminalling, storage, and other facilities-related services, as well as merchant activities.As of December 31, 2021, this segment owned and leased 18,300 miles of active crude oil transportation pipelines and gathering systems, as well as an additional 110 miles of pipelines that supports crude oil storage and terminalling facilities; 74 million barrels of commercial crude oil storage capacity; 38 million barrels of active, above-ground tank capacity; four marine facilities; a condensate processing facility; seven crude oil rail terminals and 2,100 crude oil railcars; and 640 trucks and 1,275 trailers.The Natural Gas Liquids segment engages in the natural gas processing, NGL fractionation, storage, transportation, and terminalling activities.

As of December 31, 2021, this segment owned and operated four natural gas processing plants; nine fractionation plants; 28 million barrels of NGL storage capacity; approximately 1,620 miles of active NGL transportation pipelines, as well as an additional 55 miles of pipeline that supports NGL storage facilities; 16 NGL rail terminals and approximately 3,900 NGL rail cars; and approximately 220 trailers.The company was founded in 1981 and is headquartered in Houston, Texas.Plains All American Pipeline, L.P. operates as a subsidiary of Plains GP Holdings, L.P.

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1.b. Last Insights on PAA

The recent 3-month performance of Plains All American Pipeline, L.P. was negatively impacted by a decline in oil and gas markets, leading to a correction in the stock price. The unfavorable market conditions resulted in a 16% drop from the April 2025 high. Despite this, the company's business remains in a solid shape, with a strong asset base and strategic positioning in key North American energy corridors. The recent financial performance demonstrates resilience and supports continued distribution growth for income-focused investors.

1.c. Company Highlights

Last Price	20.75
Change Percentage	-0.65%
Open	20.89
Previous Close	20.89
Market Cap ( Millions)	14643
Volume	636357.08
Year High	21.06
Year Low	15.58
M A 50	18.82
M A 200	17.75

FCF Yield	20.05%
Dividend Yield	7.50%
ROE	14.75%
Debt / Equity	114.90%
Net Debt / EBIDTA	221.85%
Price To Book	1.49
Price Earnings Ratio	10.21
Price To FCF	4.99
Price To sales	0.33
EV / EBITDA	7.16

2. Plains All American Pipeline's Q4 2025 Earnings: A Year of Execution and Growth

Plains All American Pipeline reported fourth quarter and full-year adjusted EBITDA attributable to Plains of $738 million and $2.833 billion, respectively. The company's financial performance was marked by a reported EPS of $0.4, slightly below analyst estimates of $0.47. Revenue growth is expected to be modest at 0.4% next year. With a P/E Ratio of 12.01 and an EV/EBITDA of 7.66, the company's valuation metrics indicate a relatively stable outlook.

Publication Date: Feb -10

                                    📋 Highlights
                                    Adjusted EBITDA Growth::
                                                Full-year 2025 adjusted EBITDA attributable to Plains reached $2.833 billion, with $738 million in Q4 and a $2.75 billion guidance midpoint for 2026 (±$75 million).
Cost-Cutting Target::
                                                $100 million in annual cost savings by 2027, with 50% ($50 million) expected in 2026 through operational streamlining and Cactus III integration synergies.
Crude Segment Expansion::
                                                Oil segment EBITDA midpoint of $2.64 billion in 2026 (13% YoY growth) following NGL divestiture closure and Cactus III synergies ($50 million already on a run rate).
Capital Allocation Plan::
                                                $350 million growth capital expenditure in 2026 for Permian infrastructure, Cactus III integration, and Canadian opportunities, alongside $165 million maintenance capex.
Distribution Growth Target::
                                                15¢ per unit annualized distribution increase, supported by $1.8 billion in adjusted free cash flow (excluding NGL proceeds) and a 150% distribution coverage threshold.

                                

Operational Highlights and Guidance

The company is focused on transitioning to a pure-play crude company, accelerating this transition through the sale of its NGL business and the recent acquisition of the EPIC pipeline, now renamed Cactus III. For 2026, Plains expects to drive synergies related to the Cactus III system, improve EBITDA, and streamline the organization with a focus on efficiency and cost structure. The company is targeting $100 million of identified annual savings through 2027, with approximately 50% expected to be realized in 2026.

Segment Performance and Outlook

The oil segment is expected to drive growth, with an EBITDA midpoint of $2.64 billion net to Plains, implying a 13% growth year-over-year in the crude segment. The Permian Basin outlook is cautiously optimistic, with larger producers less sensitive to price swings and working to preserve inventory and improve recoveries. The company expects a strong year-over-year volume increase due to the full-year run rate of the Cactus III integration and an uptick in contracted capacity on the basin pipeline system.

Capital Allocation and Distribution

Plains remains committed to generating significant free cash flow, maintaining a flexible balance sheet, and returning capital to unitholders. The company expects to invest approximately $350 million of growth capital and $165 million of maintenance capital net to PAA in 2026. The targeted annualized distribution growth remains 15¢ per unit, with a lower distribution coverage giving the company more confidence in delivering increasing returns to unitholders.

Valuation and Return Metrics

With a Dividend Yield of 8.08% and a Free Cash Flow Yield of 16.29%, Plains offers an attractive return profile. The company's ROE stands at 11.62%, indicating a relatively healthy return on equity. The Net Debt / EBITDA ratio of 2.94 suggests a manageable debt burden.

3. NewsRoom

Plains All American Pipeline: 8%+ Yield, 10% Dividend Growth

Feb -18

Source: seekingalpha.com

Red-Hot Jobs Report Will Delay Fed Rate Cuts—Lock In These 5 Ultra-High-Yield Dividend Giants

Feb -11

Source: 247wallst.com

These Analysts Increase Their Forecasts On Plains All American Pipeline Following Q4 Results

Feb -09

Source: benzinga.com

Plains All American Pipeline, L.P. (NYSE:PAA) Given Average Rating of “Hold” by Analysts

Feb -09

Source: defenseworld.net

8%+ Dividends: 2 Retirement Income Powerhouses

Feb -08

Source: seekingalpha.com

Plains All American Pipeline Q4 Earnings Call Highlights

Feb -08

Source: defenseworld.net

Plains All American Pipeline, L.P. Common Units (PAA) Q4 2025 Earnings Call Transcript

Feb -06

Source: seekingalpha.com

Plains All American Q4 Earnings Miss Estimates, Sales Decline Y/Y

Feb -06

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.52%)

6. Segments

Crude Oil

Expected Growth: 2.5%

Plains All American Pipeline's 2.5% growth in Crude Oil is driven by increasing demand from refineries, expansion of pipeline infrastructure, and strategic acquisitions. Additionally, growing production from Permian Basin and Canada, coupled with improving crude oil differentials, contribute to the growth. Furthermore, the company's focus on operational efficiency and cost savings initiatives also support the growth momentum.

Natural Gas Liquids

Expected Growth: 3.5%

Plains All American Pipeline's 3.5% growth in Natural Gas Liquids (NGLs) is driven by increasing demand from petrochemicals and refining, coupled with growing production from the Permian Basin and other key shale plays. Additionally, the company's strategic pipeline infrastructure and storage assets position it to capitalize on the rising NGL export market.

Intersegment Revenues Elimination

Expected Growth: 0.0%

With 0.0% growth in Intersegment Revenues Elimination, Plains All American Pipeline, L.P. is experiencing stagnant internal sales. This may be due to optimized operations, lack of new projects, or a saturated market. The company's focus on efficiency and cost-cutting measures could be contributing to this flat growth, as they prioritize profitability over revenue expansion.

7. Detailed Products

Crude Oil Transportation

Plains All American Pipeline, L.P. provides transportation services for crude oil from production areas to refineries and other destinations.

Crude Oil Gathering

The company gathers crude oil from production areas and transports it to central locations for further transportation.

Natural Gas Liquids (NGL) Transportation

Plains All American Pipeline, L.P. transports NGLs from processing plants to fractionation facilities and other destinations.

Refined Products Transportation

The company transports refined products such as gasoline, diesel, and jet fuel from refineries to terminals and other destinations.

Terminaling and Storage

Plains All American Pipeline, L.P. provides terminaling and storage services for crude oil, NGLs, and refined products.

8. Plains All American Pipeline, L.P.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Plains All American Pipeline, L.P. is medium due to the availability of alternative modes of transportation, such as trucks and trains, which can substitute for pipelines. However, the high cost and complexity of building new pipelines create barriers to entry, reducing the threat of substitutes.

Bargaining Power Of Customers

The bargaining power of customers for Plains All American Pipeline, L.P. is low due to the company's diversified customer base and the lack of concentration among its customers. Additionally, the company's pipelines are critical infrastructure for its customers, giving Plains All American Pipeline, L.P. a strong bargaining position.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Plains All American Pipeline, L.P. is medium due to the company's dependence on a few large suppliers for materials and services. However, the company's scale and diversification of suppliers reduce the bargaining power of individual suppliers.

Threat Of New Entrants

The threat of new entrants for Plains All American Pipeline, L.P. is low due to the high barriers to entry, including the need for significant capital investment, regulatory approvals, and expertise in pipeline construction and operation.

Intensity Of Rivalry

The intensity of rivalry for Plains All American Pipeline, L.P. is high due to the competitive nature of the pipeline industry, with several large players competing for market share and customers. Additionally, the company faces competition from other modes of transportation, such as trucks and trains.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	42.87%
Debt Cost	5.25%
Equity Weight	57.13%
Equity Cost	11.69%
WACC	8.93%
Leverage	75.03%

11. Quality Control: Plains All American Pipeline, L.P. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Western Midstream Partners

A-Score: 7.8/10

Value: 5.9

Growth: 6.6

Quality: 9.0

Yield: 10.0

Momentum: 6.0

Volatility: 9.3

1-Year Total Return ->

Plains All American Pipeline

A-Score: 7.1/10

Value: 9.0

Growth: 3.6

Quality: 5.5

Yield: 10.0

Momentum: 5.0

Volatility: 9.3

1-Year Total Return ->

International Seaways

A-Score: 7.0/10

Value: 6.3

Growth: 8.2

Quality: 6.9

Yield: 10.0

Momentum: 4.5

Volatility: 6.0

1-Year Total Return ->

Plains GP Holdings

A-Score: 6.7/10

Value: 7.6

Growth: 3.6

Quality: 5.1

Yield: 10.0

Momentum: 4.5

Volatility: 9.3

1-Year Total Return ->

DT Midstream

A-Score: 6.5/10

Value: 3.3

Growth: 5.8

Quality: 6.4

Yield: 7.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

EnLink Midstream

A-Score: 4.5/10

Value: 2.5

Growth: 5.4

Quality: 2.7

Yield: 4.0

Momentum: 5.5

Volatility: 6.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-0.88%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.93%

Plains All American Pipeline, L.P. - US7265031051

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on PAA

1.c. Company Highlights

Less Volatile

Higher Yield

Fairly Valued

Earnings Beats

Revenues Miss

Average Quality

Cheaper

Revenues Beats

Stable Momentum

Earnings Miss

Average Growth

2. Plains All American Pipeline's Q4 2025 Earnings: A Year of Execution and Growth

Operational Highlights and Guidance

Segment Performance and Outlook

Capital Allocation and Distribution

Valuation and Return Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.52%)

6. Segments

Crude Oil

Expected Growth: 2.5%

Natural Gas Liquids

Expected Growth: 3.5%

Intersegment Revenues Elimination

Expected Growth: 0.0%

7. Detailed Products

Crude Oil Transportation

Crude Oil Gathering

Natural Gas Liquids (NGL) Transportation

Refined Products Transportation

Terminaling and Storage

8. Plains All American Pipeline, L.P.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Plains All American Pipeline, L.P. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

20.75$

Current Price

20.75$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA