PLAINS GP HOLDINGS LP Q4 FY2024 earnings call

Results

• Demonstrated strong execution in Q4 2024 and full year 2024, with adjusted EBITDA exceeding expectations.

2025 Outlook

• Provided adjusted EBITDA guidance of $2.8 billion to $2.95 billion, a ~3% growth year-over-year at the midpoint.
• Expect Permian crude production to grow 200,000 to 300,000 barrels a day from year end 2024 to year end 2025, with overall basin volumes growing to approximately 6.7 million barrels a day by end 2025.

Recent Announcements

• Completed acquisition of Ironwood Midstream Energy on January 31, extending and expanding integrated asset base in Eagle Ford.
• Acquired remaining 50% interest in Midway Pipeline and subsidiary of Permian joint venture acquired Medallion Delaware Basin crude gathering business.
• Closed purchase of approximately 12.7 million units or 18% of outstanding Series A preferred units.
• Announced 20% increase in quarterly distribution payable on February 14th for both PAA common units and PAGP Class A shares.

Operational Highlights

• Continued high utilization on Corpus Christi bound Permian long-haul assets, increased volumes on basin pipeline, and modest NBC increase on Wink to Webster.
• Permian gathering JV benefits from operational synergies and producer activity on over 4.7 million dedicated acres.
• Outside Permian business performs well with selectively acquired complementary assets, including recently acquired Midway Pipeline and Ironwood gathering system, and explores additional bolt-on opportunities.

In the fourth quarter, Plains All American reported adjusted EBITDA attributable to Plains of $729 million. For the full year 2024, adjusted EBITDA was $2.78 billion, which was above the high end of the guidance range and exceeded initial 2024 guidance by approximately $105 million or 4%. The crude oil segment benefited from higher volumes and pipeline tariff escalation. The NGL segment had higher-than-expected order flows leading to increased C3+ back product sales. The outside Permian business continued to perform well and generate significant excess cash flow.

2025 Guidance

• Adjusted EBITDA guidance: $2.8 billion to $2.95 billion, ~3% growth year-over-year at midpoint.
• Permian crude production to grow 200,000 to 300,000 barrels a day from year end 2024 to year end 2025, with overall basin volumes to ~6.7 million barrels a day by end 2025.
• Expect to invest approximately $400 million of growth capital and approximately $240 million of maintenance capital in 2025 net to PAA.
• Anticipate generating approximately $1.15 billion of adjusted free cash flow in 2025, excluding changes in assets and liabilities, reduced by $580 million for bolt-on transactions closed in January.

• 2024 results include a $140 million noncash impairment related to 2 US NGL terminal assets (excluded from adjusted results).
• Regarding a $225 million claim for reimbursement from insurance carriers arising from a 2022 class action settlement: An arbitration panel ruled not entitled to $175 million claim, and remaining $50 million claim now regarded as less than probable, so entire $225 million receivable written off.

Q: Can you give background on how some of these tuck-ins came together in January and other bolt-on opportunities?

A: Willie Chiang stated deals didn't happen overnight, organization constantly looks for opportunities, more activity expected but timing hard to predict, and bolt-ons must go through capital discipline and strategic need lens.

Q: What could drive Plains towards the upper-end of 2025 guide and possibly over it as in 2024?

A: Willie Chiang mentioned volume growth and oil price as key factors; more activity and productive producers could drive higher volumes, with over 200,000 to 300,000 barrel a day growth expected in Permian.

Q: On Ironwood, can we think of more deeps to enhance East footprint?

A: Jeremy Goebel said Ironwood bolsters Western footprint with synergies, East side is new area being integrated into broader footprint, focus now on integrating and getting investments in place.

Q: Update on initiatives to streamline operations and if baked into 2025 guidance?

A: Willie Chiang said streamlining is continuous, baked into daily operations, with ERP project and synergies from bolt-ons contributing to efficiency, with continuous progress expected.

Q: Expand on M&A strategy and synergies in different regions?

A: Jeremy Goebel and Willie Chiang discussed examples like Stroud acquisition and CVR deal, highlighting synergies in different regions and optionality in the system.

Q: Views on macro side, crude oil prices, and growth basins?

A: Jeremy Goebel said macro is constructive with supply and demand fundamentals, policy enhancing, and growth in Permian, Rockies, Canada, and Eagle Ford areas.

Q: CapEx guide for 2025, moving pieces and deals from January?

A: Chris Chandler said deferred capital from 2024 to 2025, growth in Permian acreage dedication, Fort Sask expansion project in second quarter 2025, and investments in Mid-Con, within $300 million to $400 million net investment capital range.

Q: Long-haul open position and Plains' positioning in NGL business in Canada?

A: Jeremy Goebel said long-haul to Corpus contracted, Houston positions largely contracted with progress in restructuring, and Plains has unique assets in Canadian NGL footprint with competitiveness.

Q: Guidance for long haul and Permian growth, assumptions behind?

A: Jeremy Goebel said Permian growth includes step-up in contracts, physical flow on Cactus pipelines improving, and volume growth within guidance range.

Q: NGL business hedges and market rates?

A: Jeremy Goebel said hedges improved to 70% at low $0.70 per gallon level, with typical hedging in front due to steep backwardation.

Q: Timing of potential Eastern Eagle Ford opportunities and opportunistic buybacks?

A: Jeremy Goebel said Eastern Eagle Ford opportunities more next year, Al Swanson said buybacks opportunistic, preference is to return cash via distributions.

Q: Permian EBITDA and Cactus impact, re-contracting update?

A: Jeremy Goebel said Cactus impact and re-contracting gradual, with shorter-term contracts and optimization, and Willie Chiang noted capacity balance and future tightness potential.

Q: PLA volumetric exposure sensitivity to $75 EBITDA assumption?

A: Blake Fernandez said last update was four million barrels a year, $10 move equates to roughly $40 million of EBITDA.