PAA - Earnings call transcript Q3 2024 | Plains All American Pipeline, L.P.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to PAA and PAGP Third Quarter 2024 Earnings Call. [Operator Instructions] I would now like to hand the conference over to Blake Fernandez, Vice President of Investor Relations.

You may begin.

Blake Fernandez

Thank you, Towanda. Good morning, and welcome to Plains All American's Third Quarter 2024 Earnings Call. posted Events Investor section is the website presentation and News at slide on Relations the under Today's plains.com. are and An available audio financial statements following be Slide measures non-GAAP today's call. Important replay disclosures regarding will provided on also X. forward-looking provided call An X. Slide is of on overview today's other in our President A consolidating as Chairman the I as Willie Executive Vice are and CFO, that, for call Al will well other reference PAGP Willie. CEO, team condensed appendix. Today's and be and will Swanson, over sheet call materials balance members. With the management hosted by Chiang; turn to

Willie Chiang

Thank track and on And quarter expect of forecasted we volume range the the year, us. counts. guidance producer as growth the joining $X.XX be rig Good billion our and Based a exit. barrels That's EBITDA as you, operational continued for offsetting balance Plains of lower XXXX towards on adjusted business performance efficiencies our seeing horizontal Blake. billion for strengthen. to morning, thank to day XXXX. you to of exit top outlook now our solid we end Slide X. Permian on range to XXX,XXX everyone, delivered with of another to year-to-date show for we're original $X.XXX remains than XXX,XXX forecast our

schedule NGL Regarding on in on on and Fort of project track business, expansion budget XXXX. we're first Saskatchewan our to complete fractionation our the half

system efficient Rattler to opportunities the our pursue growth through gathering to advance recently continue Midstream. and from we acquired bolt-on strategy Additionally, Fivestones Permian acquisitions, we

is opportunities our a base complement opportunities framework, of we creating continue with these existing to transactions As financial on across incremental our shown we Consistent bolt-on execute X, runway enhance growth on believe investment what profile. and long our our portfolio. Slide

provide on charge booked lawsuits, recently [ our million related an of in Before to call efforts our to we oil resolve ]. the XXX I'd have contingencies overall a XXXX and We settled over to our X to remaining to Line update turning spill like the Al, California. $XXX accrual

we claims resolved believe we that, of settlements, our claim million claim, majority first quarter respect XXXX, which call believe With action XXX providing for we of expect these risk to material we more over to Line class we management, be on all as the regarding to carriers, which prior the the Plains. With we to from have to settlement a us with forward certainty X $XXX continue flow, settlement resolved I'll more in of insurance our to $XXX reimbursement million view turn entitled against that this confidently reimbursement. Overall, are future focus strategic Al. priorities. With us cash allows our our prudent the

Al Swanson

XXXX. Slide X X. Shifting in as X. contains net exit and XXXX Willie. on updated volumes segment footprint as performance. and gathering, A quarter higher We reported our PAA of provide of benefit is $XXX to adjusted guidance for our X details walks to crude across on third illustrated on we third that Thanks, Slide the Permian reflects momentum provides of allocation, our quarter capital summary This long-haul and today's intra-basin our Slide million. EBITDA presentation oil

million updated expect free changes liabilities allocated adjusted acquisitions $X.XX approximately excluding of in to billion For guidance. full XXXX, of flow, that be announcement, including legal assets updated guidance generate common to year settlements we bolt-on our has adjusted been reflect to charges our previously cash cash on and note to billion preferred free and commentary with and associated $XXX approximately $X.XX mentioned the with bolt-on recent and distributions. our Please flow

while financial advance flexibility. efficient our strategy maintaining to As Willie mentioned, we continue growth

at of to Willie. in all having resulting X achieved the with upgrade, BBB rating outlook, now Moody's, by BaaX recognized recently with target we that, to rating back I'll have stable turn call were the efforts credit an our Our upgrade a agencies. With a mid

Willie Chiang

Thanks, Al.

While optimistic to global of benefit U.S. from and expect U.S. our industry's energy the energy to framework, security reliably the improved responsibly. to critical which energy ability streamlined we industry, energy and needs on future meet and all hopefully we safely, permitting are policy, regulatory

supply Our Plains more earnings, of well the is and improving over based the environment broader geopolitical China on volatile years, the to changes, portfolio work with positions and around macro on the a investments our potential us through durability past we've made unrest, navigate activity. resilient economic our several focus uncertainty OPEC which

well will continues multiyear unitholders. With initiatives in Q&A. our our lead and outlook return strategy company call of ake, over the [ our cash confidence and to goals X capital preserving provides flexibility. focus our us generate who financial tangible made to maintain deliver Our discipline I'll The across and the capital Plains to key positioned while into flow, that, to and improved of team remains return significant free our strategy, We've trajectory tenets our on progress the is proven business us capital Bl on ]. of more turn long-term increasing investors

Blake Fernandez

will after Instructions] have. questions Thanks, the we're to ready for Towanda, IR to questions, address available may The team also you the open please. Willie. be additional call [Operator call any

Operator

Wells [Operator Instructions] Michael question the comes line with Our first from of Fargo. Blum

Michael Blum

driven call how ask particularly this is I much you'd to your to -- terms special look volumes anything that versus quarter. items is from to And out They quarter? understand wanted better in this strong wanted about acquisitions? of there organically And being of contributions I us. gathering Permian

Jeremy Goebel

Jeremy. -- have this we So Michael, is

driver. was a completions from but We those out, side. acquisitions, growth was modest the there substantial but the from portion organic organic the system. the we've growth substantial haven't split growth across seen some primary probably on That's Year-over-year,

Michael Blum

question. wanted ask basically you I problem like Okay. high-class a to Great.

now leverage is your target your So meaningfully range. below

range going think may leverage. So wondering forward? target means what for that you you lower the Do

capital capacity to additional you got ticks trying through target. return, different think options leverage You've have excess your just the here for as below

Willie Chiang

execute on X.XX our confidence a to lower self-help intend We We the the we before to are. we've that, of got any our there. lower going efficiency where done the did the it acknowledgment capital for lot cash settlement And what we're against But X.XXx, focused call with the gives kind is free pleased shared, maximizing that's California of lower. don't We're is we this is group, strategy. more our is litigation lot efficient optimization. leverage. in us as to what And on. flow. Michael, we've announcement really is in Yes, which range, Willie. Thanks Certainly, of growth. on of leverage a We've

customers is win-wins. And with us working business, that the growth So pillar on second to we're acquisitions. also our that of capital without which kind bolt-on around assets, of with optimizing kind things execute around get allows our strategy, to our really trying our improve is efficient which our do of our margins

So we how of We've you've a think we the opportunities highest when unitholders. seen. for deploy return capital, the think number those, you for offer the done about bolt-ons us as

to years. -- point to then returns. Financial the as there. flexibility want cash able get and want to going evaluate what stay And shareholders. to continue pay Because but get back we just not want where focus We growing back we to think to more, we but want very last growing, and we we're to to disciplined returning bullet it. over do to the to stay going to on certainly multiple on ultimately we about we're That's them, true be remains think to we for

bit us little things, flexibility will like balance we gives and reoptimizing it unable to of more things options. bolt-ons, if And also to kind that for So of our helps. a look [ some those lots do opportunities ] sheet hopefully, of we're many find towards

Operator

the from Citi. of comes question line Dounis with next Our Spiro

Spiro Dounis

[ Maybe we ] to want could. back I volumes to go if

the and ready to on I perhaps discussions 'XX. provide So imagine with producers XXXX season budget a now final not in we head you're as into view

Just here? the these sense us going, early you if shaping curious conversations how year how give up is a of are

Willie Chiang

this Willie. Spiro, is

in haven't a high-level our comment obviously, The We in then and Permian he day the we'll year. as guidance make XXX,XXX see add to XXX,XXX I would barrels estimate Jeremy give can fits, in was -- this February.

although weighted. be specifics, don't similar of And within going forward. expect forward, expect We was It would more ranges that going growth have range. back-end we to we

Jeremy Goebel

with our year. a matching bit don't Spiro, won't. are into that. little We'll What would next I forecasts is from budgets producer I tie dialogue, their we get and they that for agree later, but that initial forecast would those say our into

Spiro Dounis

maybe And markers your other here wait just to We'll guess side, [ year? it. a is you is out thinking those different so. kind spread public Got means maybe markers bid-ask it the ] to and I'm the some bolt-on buybacks, healthy crude just over do any months last about back there specifically from tracking the that what stock around the we to guess of I'm I that approach of X of it. then. some way, as deals? that these go curious, of And this to public some value for here the I what what valuation but about allocation, the think guess on how I we've seen Got -- pipeline or curious, just current And relative perspective, does from capital as maybe,

Jeremy Goebel

part. first the take I'll Spiro,

the unique. is valuation, asset every On

that et forecasts, you saw attributes cetera. the of ones specific Some producer acreage have dedications, around

We understand respect it and we very We'll with to certainly intensive market at that. dynamics requirements. we our individually. asset we the highly one the be look But each are It assets the at understand assets happy valued, for transactions. at pay think does and of very set approach to them to We and valuation midstream don't that our markets, how So take each look look the And and we'll that asset, disciplined. doesn't everything. own. impacts a flow I we'll how with attention say necessarily we're we cash assets

As far Willie. as to the turn I'll that valuation question,

Willie Chiang

do, others of think we're capture base to I of you this, lot our realized integrated able because asset us, we aren't. synergies what that and a nature for Spiro, of the times,

our than that we'll Jeremy others on that to view adds -- to should evaluation comments an value the the more at that really able talks bolt-ons. be we on capture and about So

short As it's think far our efforts it's be, to give as should and than you the value lower I'll valuation higher. for a drive We Plains, it the answer.

Operator

line question JPMorgan comes the from of next Our Tonet with Securities. Jeremy

Jeremy Tonet

fit as I far if I part wondering, And real concerned, the a the or see And water to in on wanted doesn't little going as see the what on a just just the I guess, where business I just activity could. more is forward you base activity profile? bolt-ons, disposals thoughts, could current line of are your wanted that business important business a your Permian. just bit to of touch

Willie Chiang

is Well, to I'm Jeremy, specifics. comment Willie. going not on this

and more asset knitting synergies are, or If not into it, to we the exposure and whether that something For fit real get can got the our -- base any we asset own have to there don't we to to absolutely you was but that. business. business on bit. look tenants an that little look would business, it We would we offer was We've get water. at tended with a We something on been We've the don't on at share us, now. around really we've there would into focusing well not could nothing tending our specifics into the -- wouldn't it.

Jeremy Tonet

helpful That's your just there. up minute, north maybe it. for And platform. Canadian Got looking a then

how or I growth how initiatives what's see guess, you via you do competitive think juncture, more yourself, this within you Just about at bolt-ons announced the see wondering there? that Or do landscape organic? beyond

Willie Chiang

Well, I'll start.

around project done opportunities fee-based that fee-based the we about shifting the is are but expansion something right on, one margin that Saskatchewan of -- core a improving that. would of lens synergies over around and same the think on, other if business, around there is the Canadian Saskatchewan to now integration Edmonton the we're in of put Fort We really schedule to benefit critical in our definitely other efforts team that focus that. up you flow Eastern quite bit areas, has big we've there. and X cash There get one the open we on We're versus can related. have work The our and done to Fort our complete is Canada, more if durability -- the there it's focus budget. some to on up get to

Operator

of next comes the from America. question Micra with of Our line Bank Neel

Indraneel Mitra

that's are I how Gulf to heavy directed impacting coming is crude Jeremy. maybe how down this entire assets wanted maybe just shipping guess flows at storage some less to your just [ and their I understand ] of changing system all. with the even Rockies, if the changes Basin, there's Coast, your to

Jeremy Goebel

Thanks, Neel.

about XX,XXX day, barrels like has by of Gulf XXX,XXX Coast of day. to running to looking barrels light. XXX,XXX XXX,XXX reduced that's a to from start-up, TMX heavy So close it's barrels a exports XXX,XXX a That the day

impact ] the that's all-time side. were records. Throughputs [ So the heavy Cushing been are summer on through that the

assets facility So close and and in specific our to our record. are out and refinery focused pipes

impact So assets we there. our haven't seen to much

On the the of that the being exported, in light Permian actually improved expect light flows and continue. dynamics those we the has you DJ and barrels that as and side, quarter, Rockies saw plus grows combination production in of some the and reductions to flows, continue base in

Indraneel Mitra

of you integrated is the Okay. want I of there case, your is a does Perfect. And understand there. your can to in on know I every you there? the business? Or well. whether in own as general go the to can I an wanted and the would Corpus the system on the so that's the does all customer the biggest customer choose? acquire exposure context like bolt-on create side, NGL seen pipeline? size is kind direct gathering get But you've side Or or NGL something some down barrels customer people pipeline, to actually choose to it any been And ask We've question. your Permian, crude peers doing on

Willie Chiang

is this Neel, Willie.

Let clarify. integrated about or Permian? crude NGL in me Were you ask you asking oil to Canadian

Indraneel Mitra

Or in for the Permian. collect gathering choice the barrels have barrels customers to you pipeline them they move sorry, the acquired, crude that on? you choosing have some the crude do their oil systems of optionality I'm that The those do on?

Jeremy Goebel

a it's are to It's customer gathering a shippers who question. function who of the on the the is the lines good So connected and system.

And we're it and the get purchaser on at buy customer in we that different and it the is back many and marketing first a of shipper our where answer the can to so But depends. cases, assets. Plains structure lot we locations. is sell or to that

barrel we different So we then give we there, a another purchase market and it them location. move it to the at back

So of go to and there's assets. anyone of one anywhere. We that's flexibility, our force lots the of don't benefits

[ We else's. of ] everyone substantially pipes fill do have -- to and what our most to

to the So our the get force destinations destination. the They asset to can the is Midland, don't a get basin. of any or export of pipes them of and uniqueness other Crane of to we they any out

location us to anyone pipelines think of position uniqueness our the liquidity our do not and to to is substantial having one allows full and keep I grow So that. forcing that a specific

Willie Chiang

control you our I'll thank Neel, with you us flow in advance, It's reliability, multiple customers. helped our with quality calling markets. access to assurance, and card

to So we all those competitors. some and customers the other of think our us offer we perhaps differentiates from things have to ability be able

Operator

from of comes line Our next question O'Donnell, the TPH. A.J.

Andrew John O'Donnell

for quick Just a of me question for couple a questions me. or

to some wondering there? with cost anything savings came something CapEx budget. XXXX. First, looks expand down or related maybe starting details like the could for a timing, it it the on was with I just It bit change driving else? Is of you if of the project

Chris Chandler

is Chris A.J., Chandler. this

we XXXX, I'd construction investment spending on our stated while of had by in phase. $XXX for begin net was million deferred the guidance and $XXX as is Plains. being to to Plains. timing be our also This million change deferred does we not Sask in you development previously XXXX currently spending still primarily track the from $XXX project million earlier, lower driven half. the first note yes, range heard net This, to the projects to several million So of to to within that $XXX that's field Fort to expansion capital expect in

Andrew John O'Donnell

on Maybe in oil Permian. just growth the one more Okay. Great.

that if I'm you've we how just some curious about from gas the Now Matterhorn? that incremental us expect much so of online maybe way can give guidelines through more the year? most now And how this have seen in could year. far you we're much egress we QX

Jeremy Goebel

real down see ] as year A.J. [ then This the quarter, would fourth within December things you was and used certainly systems because basin, system in, a year in we've is XXX,XXX I weather barrel go certainly some we and in slow this growth year. had steady But you July, into Jeremy. in typically, across to the range the day confident the you growth feel of January of seen But which our since now. in strong a other we're the particularly say reduction you this potential XXX,XXX last range. and go the

Operator

next comes Manav of question UBS. with Our from the line Gupta

Manav Gupta

the Last question. guidance. you quarter, raise did Quick

guidance. coming you of the top obviously, that you're in Now have indicated

So things you help few of going now. us have guidance raise for X which a which to a your in are understand quarters row kind way, allowed

Al Swanson

Al. is this Yes,

across crude fracs. had performance side. recoveries little have the basically, assumed volumes stronger we're been the NGL as than and seeing the bit slightly business better better off And well, NGL business, on Permian. the on our Just the both side a we

say And small percentage type so it's thing. one And no is fairly would of what I change. it's a

the end, the to indicating the is no look you the there's and If inside end of across attribute. multiple each guidance the take we're high areas trending segments segments. It's of towards end, year high and beginning of relative both one X.X%. But kind of high

Manav Gupta

Perfect. get right Why Fivestone gathering this benefits around follow-up it of some can more deal? system My fit acquisition? and is, quick the commentary the was you the

Jeremy Goebel

mainline system. with guys, closer to asset butter Sure. them intra-basin business to us. and integrated barrels an into the offhaul and It's just flow [ it the to already is and for some do got connected that the they bread us. we us This was Rattler The us ]

a other done, but of just this scale. So many was very on to similar ones smaller the

Operator

the comes with Mackay Sachs. Goldman of Our next question John line from

John Mackay

Does know you we I continue to I the 'XX that able I I'm mean here. in just about be effective high guys versus whether barrel more efficient see million trying wanted plans, But capital come to the framing per be laterals, continue kind high-level on basically to of here? guess Permian, can for to down circle the longer $XXX time? as think to to your up million just producers rate, cetera. that from CapEx of et run aren't that kind over $XXX gathering just back further guidance decline side. level efficiency giving your maybe

Jeremy Goebel

Sure.

components think wells and to higher recoveries, is there's connection there's X less I points One to chase. fewer it.

that's They The They pads locations to emissions points. X-well development, pads. to us. want historical recoveries, X larger for X second fewer with is versus connecting higher want X-well fewer aligned

batteries, for So -- fine us. which that's the bigger

of emissions example or X fewer they it you connection, a just everyone are One and wells when well perfect virgin The come this pipe already size, new there. out we've can one [ our was is in already meters meaning connect other means the to points piece all Permian rotating that back existing the are each behind in historically, of now location XX% ], close facilities. sites. connections all got based -- pumps it's is of of We're on and facilities territory, but behind

capital that to business years, involved for continue we'll how to team we've and X the do efficiency And So in do manage seeing they and his Chris the producers. that. is been something changes

Willie Chiang

is Yes, John, this Willie.

Just one stable that's us, volume more add. for us. better companies for like Obviously, thing to is

avoid efficiency more help as coming large, progress So our big and capital has efficient us and my be advantages and goes partners. We that allows expectations new obviously are large out continued declines smooths on, producer to and wells that on anything hopefully technology.

John Mackay

the back Plains Oryx some Part of think looking I one, volumes the those That's Neel's We're out ] standing was the a going JV. eventually big now maybe helpful. to the time onto just from question. [ up of pipes. a at second story the redirect long-haul Maybe to, few acquisition That's years great.

the out? how back flexibility could that Oryx giving played earlier specifically, into and you around if strategy your shippers, of that maybe just of you tie has are guys on then maybe update an So general comments kind kind

Jeremy Goebel

at better have very it What would to say and with service to before. partners And them one Sure. I'd location I give now and offer they than the barrel the happy JV. than more better expected, say did both we Oryx is back. get it's actually we hope been the are shippers choices us our

So they ones. old still the They have have options. new their

been point It's because big Our pipes pipe customers. Wink-to-Webster, third connectivity We're has been they're there. Basin. consumer the maintained maintain full. the largest being for good our It's Permian long-haul of good for in a we barrels for and parties our origin Wink-to-Webster our

in a the the more but So of aren't our the that's pipes defensive grow basins and case full. remain full, continue pipes strategy to

and So give do options with integrate didn't optionality business it's integrate at this allow their where let them with good to more them business, other trade our of customers. to has point, it's parts maybe them been platform. candidly and And to the their we more us fine been pieces of acreage perfectly across

Operator

the Truist Our Neal Securities. next from question with comes line of Dingmann

Neal Dingmann

sort and and track start material, next is don't just now are on down still is volumes, you and curious look are any noticing at that other -- kind producer the question impacting are year which activity? your doing with the of higher on -- year infrastructure constraints My really either to wind when on know, Delaware be were I operators what end even or currently what might oil I'm there you you to of thinking overall and NGL activity. just to volumes year

Jeremy Goebel

question. good a that's So

we've Mexico biggest constraint New gas this the it's evacuation probably is seen So year.

help away. referenced gas well. are of the industry While systems bottlenecks. New Northern gathering look, dealing still I solves and those their Mexico -- Kinetic will but Water with that the it our solving on it. seen That not perfect, there's most the one, market. getting some to call is another bottlenecks. and in that's industry getting gas large, by is That's go But you've the as others think bottlenecks They

say us, industry has by heard the driven the their upstream would folks, and the whole. direction development us surprise as biggest you've the I in actually in I And get to right continued continue efficiencies producers. they on is to consolidation prudently that the for what the the call, that of and think responsible a so And was better

into -- year. optimistic on So to better expected or we're next and as good going we is than track everything cautiously

Neal Dingmann

Yes. NGL It's segment. So financially just last just wondering to curious, different you've about described then really on hear. how you segment think follow-up now just that, integrated [ now that nice contracts. quick do the sort this I'm ], maybe should that a I'm operation able And you're is differences the we think for again XX-year-plus now more should to quarter financially. we looking that done after chain value what now of of those operation be

Wilfred Chiang

Yes.

Al Swanson

Go ahead, Willie.

Willie Chiang

biggest I business. been is takeaway to as is think as And goal able more that that. we've to obviously the swap we do margin-based fee-based of business to our forward, go

So little the on you should saddle. see flatness a more

it's We to have to Anything sharing higher price less -- add, Jeremy? roll steadier that through were we some benefits spreads, now contracts systems. have going with volumes off the be of the some fresh but we in going

Jeremy Goebel

No.

Operator

Ladies queue. I no remarks. turn to closing the and the now showing Willie in like I'm would call gentlemen, to questions further for Chiang over back

Wilfred Chiang

Plains. in Well, continued give you the February, interest see dialing your in weekend, Thank updates a road, on more everyone. but thanks much, you. have for in everyone, We'll you and so we'll nice

Operator

and gentlemen, your you today's concludes Thank for Ladies call. participation. conference this

disconnect. may You now

Plains All American Pipeline (PAA) 8 Nov 242024 Q3 Earnings call transcript