Plains All American Pipeline LP (NASDAQ:PAA) stock traded lower Friday after the company reported second-quarter results that topped Wall Street estimates while reaffirming its full-year outlook and raising its Permian production growth forecast.
The pipeline operator reported adjusted earnings of 41 cents per unit, beating the analyst consensus estimate of 36 cents. Revenue totaled $17.69 billion, exceeding estimates of $12.50 billion.
CEO Willie Chiang said the company made progress on three key 2026 priorities, including completing the sale of its Canadian NGL business in May, capturing synergies from the Cactus III acquisition and advancing organizational efficiency initiatives.
Plains All American Second-Quarter Results
Adjusted EBITDA attributable to Plains increased to $738 million from $672 million in the year-ago quarter.
The crude oil segment generated adjusted EBITDA of $690 million, up from $580 million a year earlier, benefiting from the Cactus III acquisition, higher pipeline volumes and market opportunities and optimization initiatives.
The NGL segment generated adjusted EBITDA of $40 million, down from $87 million in the prior-year quarter.
Operating cash flow totaled $956 million during the quarter.
Plains paid a quarterly cash distribution of $0.4175 per unit, or $1.67 on an annualized basis, representing a yield of about 7%.
The company ended the quarter with a pro forma leverage ratio of 3.3 times after reducing debt by approximately $2.9 billion following the NGL divestiture.
Project Progress
Plains said it achieved its targeted Cactus III synergies, improving connectivity to the Corpus Christi market and crude export infrastructure.
The company also approved a 75,000-barrel-per-day expansion of the Cactus III pipeline, increasing total capacity to 725,000 barrels per day. The expansion is expected to enter service by the end of August and support higher crude export volumes from Corpus Christi.
In addition, Plains expanded the dedicated Permian acreage under its POP joint venture to about 5.1 million acres through commitments from multiple producers.
Plains All American Outlook
Plains reaffirmed its full-year 2026 adjusted EBITDA guidance of $2.88 billion, plus or minus $75 million.
The company expects to achieve $50 million in organizational efficiencies by the end of 2026 and another $50 million by 2027.
Management raised its 2026 Permian production growth outlook to 100,000 to 200,000 barrels per day on an exit-to-exit basis, compared with its prior expectation for largely flat production. The improved outlook reflects earlier-than-expected natural gas takeaway capacity, which the company said should support stronger momentum into 2027.
Plains also increased its 2026 growth capital guidance to $400 million-$450 million from $350 million. The additional spending will fund high-return projects, including Permian gathering expansions in the Midland and Delaware basins, Canadian gathering system expansions supporting the Clearwater and Duvernay formations, and additional Cactus III pipeline capacity.
The company lowered its 2026 maintenance capital guidance by $10 million to $175 million, primarily due to the timing of the Canadian NGL divestiture.
Plains continues to expect approximately $1.75 billion in free cash flow in 2026 while maintaining capital returns to unitholders.
During the earnings call, Chiang said the conflict in the Middle East and supply disruptions through the Strait of Hormuz underscore the importance of reliable and secure energy supplies.
Chiang said the disruptions increase the value of existing energy infrastructure and position Plains All American to play a critical role in meeting global energy demand over the long term.
PAA Price Action: Plains All American shares were down 2.55% at $22.92 at the time of publication on Friday, according to Benzinga Pro data.
Photo via ShutterstockÂ
Recent Comments