01—Abstract
Summary
Summary of the 10-Q filed November 8, 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 $736 milliona for the first nine months of 2024, compared to $918 million in the same period of 2023, with the filing attributing the decrease to favorable 2023 items (gains on asset sales and the mark-to-market adjustment of the Preferred Distribution Rate Reset Option), higher Line 901 incident costs, and higher income tax expense. Results from the Crude Oil segment improved, with Segment Adjusted EBITDA of $1.707 billion for the nine months versus $1.600 billion a year earlier, partially offset by a decline in the NGL segment, where Segment Adjusted EBITDA fell to $326 million from $352 million. Consolidated Adjusted EBITDA rose to $2.459 billion from $2.292 billion, and Implied DCF increased to $1.493 billion from $1.423 billion.
The balance sheet shows total assets of $27.155 billionb and total debt of $7.977 billion at September 30, 2024. The company completed a $650 million 5.70% senior notes offering due 2034 in June 2024 and used proceeds to repay commercial paper and prepare for the redemption of its $750 million 3.60% notes due November 2024. Cash flow from operations was $1.763 billion for the nine months, and the company had approximately $3.3 billion of liquidity.
Common unit distributions remained at $0.3175c per unit for the quarter. The filing also highlights the Line 901 matter, where the company estimates aggregate total costs of approximately $870 million, has recognized a $120 million charge in the nine-month period, and has a receivable of approximately $225 million for insurance recoveries. The company has initiated arbitration against insurers denying coverage of the $230 million Class Action Settlement, with a decision expected in January 2025 on $175 million of the claim.
02—Key points
Key Highlights
- Net income attributable to PAA was $736 million for the nine months ended September 30, 2024, versus $918 million in the prior-year period; net income per common unit was $0.77 versus $1.04.
- Crude Oil segment Segment Adjusted EBITDA rose to $1.707 billion for the nine months from $1.600 billion, driven by higher tariff volumes, tariff escalations and acquisitions.
- NGL segment Segment Adjusted EBITDA declined to $326 million for the nine months from $352 million, primarily due to lower realized frac spreads.
- Consolidated Adjusted EBITDA increased to $2.459 billion for the nine months from $2.292 billion, and Implied DCF rose to $1.493 billion from $1.423 billion.
- The company recognized $120 million of Line 901 incident costs in the nine months ended September 30, 2024, and estimates total Line 901 costs at approximately $870 million, with insurers denying coverage for $185 million of the remaining $225 million reimbursement claim on the Class Action Settlement.
- Issued $650 million of 5.70% senior notes due 2034 in June 2024; net commercial paper repayments were $433 million for the nine months, and the $750 million 3.60% notes due November 2024 were redeemed on November 1, 2024.
- Liquidity was approximately $3.3 billion at September 30, 2024, and the company was in compliance with its credit agreement and indenture covenants.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Plains All American Pipeline kept $0.02.
- Revenue$12.46B100.0%
- Cost of revenue−$11.54B92.6%
- Gross profit$916.0M7.4%
- Operating costs−$720.0M5.8%
- Operating income$196.0M1.6%
- Interest, other & tax$24.0M0.2%
- Net income$220.0M1.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 8, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $12.46B$12.07B | +3.2% |
| Cost of Revenue | $11.54B$11.11B | +3.9% |
| Gross Profit | $916.00M$965.00M | −5.1% |
| Operating Expenses | $12.26B$11.84B | +3.6% |
| Operating Income | $196.00M$234.00M | −16.2% |
| Net Income | $220.00M$203.00M | +8.4% |
05—Questions
Frequently Asked Questions
Why did net income attributable to PAA decline year over year?
The filing states that the nine-month 2024 decline reflects that 2023 results included favorable impacts from gains on asset sales (a gain of approximately $140 million on the Keyera Fort Saskatchewan facility sale) and a $58 million mark-to-market gain on the Preferred Distribution Rate Reset Option. The 2024 period was also affected by increased Line 901 costs and higher income tax expense, primarily Canadian withholding tax on dividends in the second quarter of 2024.
How did the company's segments perform?
The Crude Oil segment improved, with Segment Adjusted EBITDA of $1.707 billion for the nine months ended September 30, 2024, up from $1.600 billion, due to higher tariff volumes, tariff escalations and acquisitions, partly offset by fewer market-based opportunities. The NGL segment's Segment Adjusted EBITDA decreased to $326 million from $352 million, mainly because of lower realized frac spreads, partly offset by higher propane and butane sales volumes.
What is the status of the Line 901 insurance recovery?
The company has recognized a receivable of approximately $225 million for probable insurance recoveries. Insurers responsible for $185 million of the remaining $225 million of coverage have denied coverage for the Class Action Settlement, and the company has initiated arbitration. A binding arbitration hearing for $175 million of the claim concluded in early October 2024, and a decision is expected in January 2025. The filing notes that an unfavorable resolution could have a material impact on results of operations.
What are the company's distribution and debt commitments?
On November 14, 2024, the company will pay a quarterly common unit distribution of $0.3175 per unit, unchanged from the August 2024 payment. Series A preferred unitholders will receive approximately $0.615 per unit and Series B preferred unitholders approximately $24.25 per unit on November 14 and 15, 2024, respectively. Total debt was $7.977 billion at September 30, 2024, including $765 million of short-term debt, which consisted primarily of the $750 million 3.60% senior notes that were redeemed on November 1, 2024.
How much liquidity does the company have and how did it fund its activities?
As of September 30, 2024, the company reported approximately $3.3 billion of liquidity, including $1.35 billion of availability under its senior unsecured revolving credit facility, $1.316 billion under its senior secured hedged inventory facility and $636 million of cash. Operating cash flow was $1.763 billion for the nine months, and the company used it along with the $650 million senior notes offering to reduce commercial paper borrowings.
06—Continue