Plains All American Reports Strong Q3 Performance Amid Industry Headwinds
Plains All American (PAA) delivered a solid operational quarter, bolstering its business amidst industry headwinds. Chairman and CEO Willie Chiang highlighted the company's resilience in a volatile macro environment, citing improved energy policy, regulatory framework, and streamlined permitting as critical to U.S. energy security.
According to Q3 2024 earnings call transcript, Plains All American reported adjusted EBITDA net to PAA of $659 million, reflecting higher Permian volumes across its gathering, intra-basin, and long-haul footprint. This provides momentum for the crude oil segment as they exit 2024.
Chiang expressed optimism about the U.S. energy industry's future, particularly with improved energy policy, regulatory framework, and permitting. He emphasized that Plains' portfolio is more resilient due to investments made over the past several years and a focus on improving earnings durability.
The company's Chairman and CEO also updated investors on ongoing efforts to resolve contingencies related to its 2015 oil spill in California. Two lawsuits were settled, resulting in a $120 million charge to their overall Line 901 accrual. The majority of the remaining claim for reimbursement of a prior class action settlement from insurance carriers is expected to be resolved in Q1 2025.
Regarding capital allocation, Executive Vice President and CFO Al Swanson reported that Plains expects to generate approximately $1.45 billion of adjusted free cash flow in 2024, excluding changes in assets and liabilities, including $140 million of bolt-on acquisitions. This will be allocated towards common and preferred distributions, with an updated commentary on full-year guidance.
Swanson also mentioned that the company continues to advance its efficient growth strategy while maintaining financial flexibility. The efforts were recognized by Moody's, resulting in an upgrade to Baa2 with a stable outlook, achieving their target of having a mid- BBB rating at all three credit rating agencies.
