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Plains All American Pipeline LP PAA

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Plains and Oryx Combine Permian Assets in Joint Venture to Expedite Asset Rationalization

Stephen Ellis Sector Strategist

Analyst Note

| Stephen Ellis |

Plains and Oryx Midstream, which is owned by private equity firm Stonepeak Infrastructure Partners, have agreed to create a joint venture to hold the majority of Plains’ Permian assets (excluding long-haul pipes and certain intrabasin terminal assets) and all of Oryx’s assets in the region. We see the joint venture as an attractive way to expedite rationalization of assets in a basin that is currently oversupplied from a midstream perspective. Plains noted several times in the conference call that its focus was on optimization and efficiency, while growth opportunities were, in our view, a secondary consideration. We see the structure as smart as it does not involve adding debt, preserving Plains’ plans to reduce leverage. However, given the fairly minimal synergies expected, we don’t see the deal as material for our $13 fair value estimates or narrow moat ratings for the Plains entities.

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Company Profile

Business Description

Plains All American provides transportation, storage, processing, fractionation, and marketing services for crude oil, refined products, natural gas liquids, liquefied petroleum gas, and related products. Assets are geographically diverse, spanning the United States and Alberta, Canada, but heavily concentrated in major U.S. shale basins like the Permian, Stack, and Bakken.

Contact
333 Clay Street, Suite 1600
Houston, TX, 77002
T +1 713 646-4100
Sector Energy
Industry Oil & Gas Midstream
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 4,400

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