Plains Is One of the Best Capital Return Stories in US Midstream

We believe the oversupply of Permian oil takeaway capacity, which we expect to persist for years, had a material negative impact on the returns from Plains All American's pipeline network. Higher Permian volumes will help Plains earn the full tariff on more volumes in 2023, as it only earned partial tariffs in 2022 due to the volumes being on partially owned assets. Combined with higher tariffs due to inflation, we are seeing modest EBITDA growth on the oil side. 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. For example, we think the recent acquisition of the remaining portion of the Northern Midland Basin gathering system from Diamondback is an immediate winner. It is geographically very close to existing joint-venture assets, and it better aligns Plains with a critical Permian producer in Diamondback. The recent addition of Rattler Midstream and LM Energy assets seems to follow a similar playbook.