01—Abstract
Summary
Summary of the 10-Q filed May 10, 2024. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P. reported net income attributable to PAA of $266 milliona for the first quarter of 2024, compared to $422 million in the first quarter of 2023.
The filing states that the 2023 period included favorable impacts from gains on asset sales and the mark-to-market adjustment of the Preferred Distribution Rate Reset Option, which contributed to the year-over-year decline. Total revenues were $11.995 billionb versus $12.341 billion, and operating income was $370 million versus $473 million. Management said stronger Crude Oil segment results were substantially offset by weaker NGL segment results.
Crude Oil Segment Adjusted EBITDA rose to $553 millionc from $517 million, while NGL Segment Adjusted EBITDA fell to $159 million from $192 million, driven mainly by lower realized frac spreads. Consolidated Adjusted EBITDA was $847 million versus $813 million. Liquidity remained substantial at approximately $2.4 billion as of March 31, 2024, although the company had a working capital deficit of $143 million.
Operating cash flow was $419 milliond versus $743 million, with the 2024 period affected unfavorably by margin requirements related to hedging. Adjusted Free Cash Flow after Distributions was negative $217 million for the quarter. Total debt was $7.862 billion, and the company borrowed a net $107 million under its commercial paper program during the quarter.
The filing also details the Line 901 incident litigation. The company estimates total Line 901 costs of approximately $750 million, has collected approximately $280 million of the $505 million it believes is probable of recovery from insurance, and has recognized a long-term receivable of approximately $225 million. Insurers have denied coverage for $185 million of the remaining claims, and the company has initiated arbitration.
02—Key points
Key Highlights
- Net income attributable to PAA was $266 million, down from $422 million in Q1 2023, which included a $154 million gain on asset sales and a $58 million preferred rate reset gain.
- Crude Oil Segment Adjusted EBITDA increased to $553 million from $517 million, driven by higher pipeline tariff volumes, tariff escalations and acquisitions.
- NGL Segment Adjusted EBITDA declined to $159 million from $192 million, primarily due to lower realized frac spreads.
- Operating cash flow was $419 million versus $743 million, with the decline attributed largely to hedging-related margin requirements.
- Liquidity of approximately $2.4 billion was available at March 31, 2024, alongside a working capital deficit of $143 million.
- Line 901 total estimated costs are approximately $750 million; the company has recognized a long-term insurance receivable of approximately $225 million, and insurers have denied $185 million of coverage, which is subject to arbitration.
- Investment capital for 2024 is projected at approximately $465 million and maintenance capital at approximately $250 million, to be funded primarily with retained cash flow.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Plains All American Pipeline kept $0.02.
- Revenue$11.64B100.0%
- Cost of revenue−$10.92B93.8%
- Gross profit$722.0M6.2%
- Operating costs−$366.0M3.1%
- Operating income$356.0M3.1%
- Interest, other & tax−$90.0M0.8%
- Net income$266.0M2.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 10, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $11.64B$12.34B | −5.7% |
| Cost of Revenue | $10.92B$11.32B | −3.6% |
| Gross Profit | $722.00M$1.02B | −29.1% |
| Operating Expenses | $11.63B$11.87B | −2.0% |
| Operating Income | $356.00M$473.00M | −24.7% |
| Interest Expense | $95.00M$98.00M | −3.1% |
| Net Income | $266.00M$422.00M | −37.0% |
05—Questions
Frequently Asked Questions
Why did net income decline year over year?
Net income attributable to PAA fell to $266 million from $422 million. The filing states the 2023 period benefited from gains on asset sales, including roughly $140 million tied to the Keyera Fort Saskatchewan sale, and a $58 million mark-to-market gain on the Preferred Distribution Rate Reset Option. Stronger Crude Oil results were substantially offset by weaker NGL results.
How did the two operating segments perform?
Crude Oil Segment Adjusted EBITDA rose to $553 million from $517 million on higher tariff volumes, tariff escalations and acquisitions, partially offset by fewer market-based opportunities. NGL Segment Adjusted EBITDA fell to $159 million from $192 million, mainly due to lower realized frac spreads and lower propane and butane sales volumes.
Is the partnership's liquidity position adequate?
As of March 31, 2024, the company reported approximately $2.4 billion of liquidity, including $1.35 billion available under its senior unsecured revolver, $1.323 billion under its hedged inventory facility, and $316 million of cash, less $540 million outstanding under commercial paper. It also reported a working capital deficit of $143 million and stated it was in compliance with its credit agreement and indenture covenants.
What is the status of the Line 901 insurance recovery?
The company has collected approximately $280 million of the $505 million of release costs it believes are probable of recovery, and has recognized a long-term receivable of approximately $225 million. Insurers responsible for $185 million of the remaining coverage have denied coverage, and the company has initiated arbitration. The filing states that an unfavorable resolution could have a material impact on results of operations.
06—Continue