Plains All American Pipeline Expects 9% Growth in 2017 Earnings

EBITDA guidance for 2017

Plains All American Pipeline (PAA) provided financial and operating guidance for 2017 on February 7, 2017. The company expects its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for 2017 to be 9% higher compared to 2016. The expected EBITDA growth will be driven by PAA’s Transportation segment, which is expected to see a 15% rise in EBITDA by 2017.

Plains All American Pipeline Expects 9% Growth in 2017 Earnings

The above table shows PAA’s 2017 financial guidance. The company expects 13% growth in distributable cash flow in 2017.

Plains All American expects an increase in volumes for all three of its segments in 2017. However, it expects a fall in per barrel adjusted EBITDA for its Supply and Logistics segment. The segment’s margins on crude oil lease gathering activities have been negatively impacted over the last several quarters due to “less favorable market conditions.”

Expansion capital

Plains All American Pipeline expects to spend $800 million on expansion projects in 2017. This is a reduction of $605 million compared to $1,405 million that PAA spent in 2016.

1Q17 EBITDA expected to be lower

Plains All American Pipeline expects its 1Q17 adjusted EBITDA to be $543 million. This is 14% lower than PAA’s 1Q16 adjusted EBITDA. Despite higher expected adjusted EBITDA for 2017, PAA expects its 1Q17 EBITDA to be lower, accounting for 23% of 2017 expected EBITDA. In comparison, PAA earned 29% of its 2016 full-year EBITDA in the first quarter of 2016.

Greg Armstrong, chair and CEO of Plains All American, said, “Looking forward, we are encouraged by the significant increase in drilling and completion activities in the Permian Basin observed over the latter half of 2016 and continuing into 2017.”

ONEOK (OKE) is expected to report 4Q16 results on February 21, 2017.