• Adjusted Attributable Plains: $729 million for Q4 2024; $2.78 billion for the full year 2024.
• Adjusted EBITDA Guidance for 2025: $2.950 billion, approximately 3% growth year over year at the midpoint.
• Permian Crude Production: Expected to grow to 300,000 barrels a day in 2025.
• Annual Distribution Increase: $0.25 per unit increase, bringing the annual distribution to $1.52 per unit, representing a yield of approximately 7.5%.
• Fourth Quarter Adjusted EBITDA: $729 million, benefiting from higher volumes and pipeline tariff escalation.
• 2025 Capital Investments: Approximately $400 million of growth capital and $240 million of maintenance capital.
• Adjusted Free Cash Flow for 2025: Approximately $1.15 billion, excluding changes in assets and liabilities.
• Senior Unsecured Notes: $1 billion raised at a rate of 5.95%, maturing in 2035.
• Noncash Impairment Charge: $140 million related to two US NGL terminal assets.
• Insurance Claim Write-off: $225 million receivable written off due to arbitration ruling.
• Leverage Target Ratio for 2025: Expected to operate at or below the low end of 3.25 times to 3.75 times.

• Warning! GuruFocus has detected 7 Warning Signs with PAGP.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Plains GP Holdings LP (NASDAQ:PAGP) exceeded its expectations for the fourth quarter and full year 2024, with adjusted EBITDA of $729 million and $2.78 billion respectively, surpassing initial guidance by approximately $105 million.
• The company provided a positive outlook for 2025, with an adjusted EBITDA guidance of $2.950 billion, representing approximately 3% growth year over year.
• Plains GP Holdings LP (NASDAQ:PAGP) completed strategic acquisitions, including Ironwood Midstream and the remaining interest in Midway Pipeline, enhancing its asset base and operational synergies.
• The company announced a 20% increase in the quarterly distribution, reflecting its commitment to returning capital to unit holders and optimizing its capital structure.
• Plains GP Holdings LP (NASDAQ:PAGP) maintains a strong balance sheet, providing significant financial capacity and flexibility, and expects to operate at or below the low end of its leverage target ratio in 2025.

Negative Points

• The company faced a $140 million noncash impairment related to two US NGL terminal assets, impacting its GAAP results.
• Plains GP Holdings LP (NASDAQ:PAGP) experienced a $225 million write-off due to an arbitration ruling against its insurance reimbursement claim related to a 2015 incident.
• The NGL segment's adjusted EBITDA is expected to be slightly lower year over year, with a shift to approximately 45% fee-based in 2025.
• Certain long-haul contract tariffs are expected to reset and step down in the second half of 2025, potentially impacting revenue.
• The company remains exposed to potential impacts from tariffs on Canadian crude, which could affect its NGL and crude business dynamics.

Q & A Highlights

Q: Can you give a little background on how some of these tuck-ins came together in January, and if there are other meaningful opportunities you're working on currently? A: These deals don't happen overnight. Our organization is constantly looking for opportunities, and several came together simultaneously. We are nurturing more opportunities, but timing is unpredictable. We focus on capital discipline and strategic need, ensuring good returns for unit holders. - Wilfred Chiang, CEO

Q: If tariffs on Canada are eventually implemented, how could that impact Plains' NGL and crude business? A: There are many scenarios, but our guidance range encompasses probable outcomes. We have been mitigating potential impacts proactively, and any tariffs would fall within our guidance range. - Wilfred Chiang, CEO

Q: What could drive you towards the upper end of your 2025 guidance, as happened in 2024? A: Volume growth and oil prices are key factors. More activity could drive higher volumes, and we have a 200,000 to 300,000-barrel per day growth guidance for the Permian. I would take the over on momentum into 2025. - Wilfred Chiang, CEO

Q: Could you provide an update on your initiatives to streamline operations and whether any of that is included in the 2025 guidance? A: Streamlining is a continuous process, and some efficiency numbers are included in this year's guidance. We are integrating acquisitions and driving synergies, which will continue to show progress throughout the year. - Wilfred Chiang, CEO

Q: How do you view the macro environment for crude oil prices and which basins do you see growing over time? A: The backdrop is constructive with low inventories and policy factors like sanctions affecting prices. We see growth in the Rockies, Canada, and the Permian, with new developments in the Eagle Ford and midcontinent areas. - Jeremy Goebel, Chief Commercial Officer

For the complete transcript of the earnings call, please refer to the full earnings call transcript.