Analyst Note| Stephen Ellis |
During a challenging environment, Plains reported a solid quarter, in our view. Overall adjusted EBITDA fell to $524 million from $784 million last year, mainly due to the loss of nearly $200 million in supply and logistics EBITDA contributions. We will maintain our $18 fair value estimate and narrow moat rating. Adjusted 2020 EBITDA is now expected to be around $2.5 billion, up around $75 million due to slight improvements across all areas of its business, while capital spending has been trimmed $100 million to $1.45 billion over 2020-21. Beyond 2021, growth capital spending will be in the $350 million to $450 million range, by our estimates. Broadly, Plains expects more Permian completions activity in the second half of the year tempered by demand and production declines, as well as producer capital discipline. The firm also expects to repay its $600 million 2021 maturity in the fourth quarter, and after a $750 million note issuance in June, it does not expect to need to access the capital markets for the time being.