On Monday, Citi reiterated its Neutral rating on shares of Plains All American (NASDAQ:PAA) with a steady price target of $18.00. The firm's assessment suggests Plains All American's EBITDA may outperform the consensus estimates, citing a projected $658 million compared to the Street's $625 million average. The potential for stronger-than-anticipated results is linked to several factors within the company's operations.
In the Crude segment, Plains All American has seen recent M&A activities, including Saddlehorn and Mid-continent acquisitions, which could provide a boost. Additionally, Plains All American Pipeline LP benefits from increased volume and pricing, the absence of adverse winter weather conditions, and the possibility of maintaining cost savings achieved in the first quarter of 2024.
The NGL segment is also showing promise, with frac spreads holding above the company's hedges of approximately $0.65 per gallon. This could lead to a smaller sequential decline than seen in previous years. Looking ahead to the full year, Citi anticipates that Plains All American might guide towards the higher end of its current EBITDA forecast range of $2.625 billion to $2.725 billion or could even slightly raise the forecast if the company's performance exceeds expectations.
Despite these positive indicators, Citi does not foresee any changes to the company's capital expenditure guidance for growth, which remains around $375 million for 2024. The neutral stance reflects a balance between the potential for positive performance and the broader financial outlook for Plains All American.
In other recent news, Plains GP Holdings (NASDAQ:PAGP) LP and Plains All American Pipeline have made significant strides in their financial and operational strategies. The companies have successfully issued $650 million in senior unsecured notes, set to mature in 2034. This issuance is part of an indenture agreement with U.S. Bank Trust Company and is a component of Plains GP Holdings' broader strategy to manage its capital structure and finance its operations.
On the earnings front, the company reported an adjusted EBITDA of $718 million for the first quarter and reaffirmed its 2024 EBITDA forecast. It has also acquired an additional 10% in Saddlehorn Pipeline Company and Mid-Con Terminal asset, a move expected to generate returns in line with the company's return threshold.
Despite an anticipated flat performance in 2026 and upcoming maintenance on the Wink-to-Webster pipeline, the outlook for Plains All American's Canadian assets and Permian production growth remains positive. The company expects Permian production growth to be between 200,000 to 300,000 barrels per day by the end of 2024. These recent developments underscore Plains All American's strategic focus on long-term consistent cash flow and asset optimization.
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