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Higher Permian Volumes Drove Plains All American’s 1Q18 Results

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EBITDA grew 16%

Plains All American Pipeline (PAA) reported its 1Q18 results on May 8 after the market closed. Plains All American reported 16% YoY (year-over-year) growth in its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) for the quarter. The adjusted EBITDA excludes gains from derivative activities. Plains All American reported $285 million in gains from derivative activities in 1Q17.

The company’s distributable cash flow grew 46% YoY. The above graph shows the trend in Plains All American’s distributable cash flow and per unit distribution over five years.

Earnings drivers

Plains All American Pipeline’s Transportation segment’s EBITDA grew 23% YoY to $335 million in 1Q18. The growth was driven by increased volumes in its Permian Basin systems. The results also benefited from the Diamond pipeline, which became operational in late 2017. Plains All American’s Facilities segment’s EBITDA fell 2% YoY due to asset sales.

Plains All American’s Supply and Logistics segment’s EBITDA grew 41% to $72 million in 1Q18.

2018 guidance

Plains All American Pipeline reiterated its guidance for 2018. The company expects an adjusted EBITDA of $2.3 billion for 2018 with fiscal 2018 distribution coverage of ~1.7x. Plains All American expects 14%–15% fee-based segment adjusted EBITDA growth in 2019.

“We remain on track to achieve our deleveraging objectives and targeted credit metrics by early 2019 while maintaining substantial distribution coverage underpinned by predominantly fee-based cash flow,” said Willie Chiang, Plains All American Pipeline’s executive vice president and COO.

“Additionally, strong Permian fundamentals provide visibility for continued momentum for PAA’s fee-based growth, further complemented by the execution of our capital program,” added Chiang.

ONEOK (OKE) reported 24% growth in its 1Q18 earnings. MPLX’s (MPLX) earnings rose 80% in 1Q18, while Enterprise Products Partners’ (EPD) distributable cash flow rose 23% in 1Q18.

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