Plains' Earnings Have Likely Topped Out for a Few Years

We believe the returns from Plains All American's pipeline network have been materially negatively impacted by the oversupply of Permian oil takeaway capacity, which we expect to persist for years. 2022 saw more of a muted financial benefit as the volumes moved from wholly owned to joint-venture assets, which meant Plains only earned a fraction of the tariffs. However, with this transition in the past, Plains will earn the full tariff on more volumes in 2023, which should help. Unfortunately, weaker spreads, particularly at its natural gas liquids unit, will offset this improvement, resulting in flat overall EBITDA growth. Still, Plains is pursuing a balanced capital allocation approach, including a "no regrets" growth capital investment framework and a thoughtful distribution of its remaining excess cash flow.