Plains All American Pipeline, L.P.
) is expanding its existing Mississippian Lime Pipeline,
stretching from Coldwater in Comanche County, Kansas to Byron in
Alfalfa County, Oklahoma. This project is expected to be online
in the fourth quarter of 2013.
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This 55-mile pipeline project will enable Plains All American to
transport roughly 75,000 barrels of oil per day (Bbls/d). The
partnership is installing this pipeline to transfer crude oil
from the Mississippian Lime pipeline to its terminal in Cushing,
In Feb 2012, Plains All American had started the construction of
its 170-mile Mississippian Lime Pipeline. This pipeline, in
combination with earlier announced Medford-to-Cushing pipeline
renovation, is expected to supply approximately 175,000 Bbls/d of
crude oil to Cushing. This project is expected to be brought into
service in the middle of 2013.
High resource potential in the Mississippian oil play has
attracted big oil and gas operators. Plains All American was also
lured. This factor along with growing production propels the
partnership to deploy additional $150 million in 2013 for the
expansion of its Mississippian Lime Pipeline. Other operators
Devon Energy Corporation
Chesapeake Energy Corporation
) have strong acreage in this region.
Fourth-quarter 2012 Earnings Recap
Plains All American announced its fourth-quarter and full-year
2012 results on Feb 6. The partnership posted fourth-quarter 2012
pro forma earnings of $1.01 per unit, beating the Zacks Consensus
Estimate by 32 cents. Quarterly earnings were 23.2% higher than
the year-ago figure. Its full-year 2012 earnings were $3.35 per
unit, surpassing the Zacks Consensus Estimate by 39.6%. The
full-year result was 27.9% higher than last year's earnings.
We believe the strong cash position of the partnership enables it
to carry out strategic acquisitions and invest in its organic
projects. In 2012, Plains All American had acquired natural gas
liquids assets from a subsidiary of
). The partnership has already experienced positive effects out
of this acquisition in its fourth-quarter 2012 results. The
partnership intends to invest $1.1 billion under its full-year
2013 capital spending program.
According to an U.S. Energy Information Administration's report,
oil consumption in the U.S. will increase by 3.6% to 19.9 million
barrels per day in 2035. As demand for crude oil is increasing in
the region, we expect this pipeline expansion project to also act
as a positive catalyst for the partnership's future performance.
Houston, Texas-based Plains All American Pipeline, L.P. owns
assets strategically located in well-established oil producing
regions, catering to the major U.S. refinery and distribution
markets. The partnership currently has a Zacks Rank #3