01—Abstract
Summary
Summary of the 10-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(PAA) reported net income attributable to PAA of $1.230 billiona for 2023, up from $1.037 billion in 2022, on consolidated total revenues of $48.71 billion. The filing attributes the higher results to higher crude oil pipeline tariff volumes, tariff escalations and acquisitions, partly offset by fewer market-based merchant opportunities and lower commodity prices. Adjusted EBITDA attributable to PAA was $2.711 billion, versus $2.510 billion in 2022, and Implied DCF was $1.967 billion.
The company describes a targeted investment grade credit profile, a leverage multiple of 3.25x to 3.75x, and over $2.6 billionb of liquidity at year-end 2023. Net cash provided by operating activities was $2.727 billion, and Adjusted Free Cash Flow after Distributions was $809 million. Common unit distributions paid in 2023 totaled $748 million, with the quarterly distribution raised to $0.3175 per unit for the fourth quarter.
Management plans 2024 investment capital of about $465 millionc and maintenance capital of about $250 million. The filing also highlights ongoing Line 901 exposure: estimated total costs of about $750 million, with a long-term insurance receivable of about $225 million, and insurers covering $185 million of the Class Action Settlement having formally denied coverage. Approximately 99% of long-term debt is publicly traded senior notes, and total consolidated debt face value was about $7.8 billion.
02—Key points
Key Highlights
- Net income attributable to PAA rose to $1.230 billion in 2023 from $1.037 billion in 2022; net income per common unit was $1.40 versus $1.19.
- Adjusted EBITDA attributable to PAA increased 8% to $2.711 billion; Implied DCF was $1.967 billion versus $1.794 billion in 2022.
- Total crude oil pipeline tariff volumes averaged 8,460 thousand barrels per day in 2023, up 12% from 7,565 in 2022, supported by the Permian Basin and acquisitions.
- Liquidity exceeded $2.6 billion at December 31, 2023, and the company reported a working capital deficit of $90 million.
- Total consolidated debt face value was approximately $7.8 billion, with fixed-rate senior notes comprising about 99% of long-term debt; the company repaid $1.1 billion of senior notes during 2023.
- Quarterly common unit distribution increased to $0.3175 per unit for the fourth quarter of 2023, compared with $0.2675 in the prior three quarters.
- Line 901 incident estimated total costs are about $750 million, with a long-term insurance receivable of about $225 million; insurers have denied coverage for $185 million of the Class Action Settlement, and arbitration is pending.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Plains All American Pipeline kept $0.03.
- Revenue$47.34B100.0%
- Cost of revenue−$43.94B92.8%
- Gross profit$3.40B7.2%
- Operating costs−$2.14B4.5%
- Operating income$1.26B2.7%
- Interest, other & tax$242.0M0.5%
- Net income$1.50B3.2%
Where FY2023 revenue went
$47.34B- Cost of revenue: $43.94B, 93% of revenue
- Operating income: $1.26B, 2.7% of revenue
- Operating costs: $2.14B, 4.5% of revenue
Kept 2.7% as operating incomeOperating income $1.26B · 2.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 29, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $47.34B$57.34B | −17.4% |
| Cost of Revenue | $43.94B$53.18B | −17.4% |
| Gross Profit | $3.40B$4.17B | −18.4% |
| Operating Expenses | $46.08B$56.05B | −17.8% |
| Operating Income | $1.26B$1.29B | −2.6% |
| Interest Expense | $386.00M$405.00M | −4.7% |
| Net Income | $1.50B$1.23B | +22.0% |
05—Questions
Frequently Asked Questions
How did Plains All American's profitability change in 2023?
Net income attributable to PAA was $1.230 billion for 2023, compared with $1.037 billion for 2022. The filing cites higher tariff volumes, tariff escalations and acquisitions, along with a $140 million gain on the Keyera Fort Saskatchewan sale and a favorable mark-to-market adjustment on the Preferred Distribution Rate Reset Option. These were partly offset by lower commodity prices and fewer market-based merchant opportunities.
What is the company's financial strategy and leverage target?
The company targets a leverage multiple averaging 3.25x to 3.75x (total debt plus 50% of preferred units divided by Adjusted EBITDA attributable to PAA), an average long-term debt-to-total capitalization of about 50% or less, and an Adjusted EBITDA-to-interest coverage of about 3.3x or better. It aims to maintain an investment grade credit profile while returning capital to equity holders, primarily through distributions.
What capital spending is planned for 2024?
The filing projects 2024 total investment capital of about $465 million ($375 million net to the company's interest), with over half associated with the Permian JV, and maintenance capital of about $250 million ($230 million net to its interest). The company expects to fund these primarily with retained cash flow.
What are the main risks related to the Line 901 incident?
The company estimates total Line 901 costs of about $750 million and has collected about $280 million from insurers. It has recognized a long-term receivable of about $225 million. Insurers responsible for most of the remaining coverage have formally denied coverage, and the company has initiated arbitration. The filing states that an unfavorable resolution could have a material impact on results of operations.
How much debt does the company carry and when does it mature?
Consolidated debt face value was approximately $7.8 billion at December 31, 2023, including about $7.3 billion of long-term debt and about $446 million of short-term borrowings. Senior notes maturities include $750 million due in 2024, $1.0 billion in 2025 and $750 million in 2026. Total liquidity was over $2.6 billion, including $444 million of cash.
06—Continue