Plains All American to Gain From Fee-Based Earnings & Volume

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We have recently issued an updated research report on Plains All American Pipeline, L.P. PAA . The company delivered second-quarter 2018 adjusted earnings of 38 cents per share, surpassing the Zacks Consensus Estimate of 23 cents by 65.2%. The bottom line also soared 81% from 21 cents in the year-ago period.

Plains All American continues to focus on systematic investments in expanding its existing operations coupled with increasing fee-based earnings. Also, new pipelines and storage facilities will allow the partnership to gain from a rising fossil fuel production.

What's Driving Plains All American?

Permian production continues to drive the performance of the firm. In the second quarter, Permian tariff volumes grew by nearly 500,000 barrels a day or 15% relative to the first-quarter of 2018. Also, in the second quarter, it reported fee-based EBITDA of $531 million, reflecting 11% growth compared with the prior-year period level. The partnership expects fee-based EBITDA to grow by approximately 14-15% over the 2018 fee-based guidance.

Estimates for Plains All American have been revised upward over the past 30 days. Notably, the Zacks Consensus Estimate for the company's 2018 and 2019 earnings has moved 0.7% and 9.6% north to $1.43 and $2.05 per share, respectively.

The partnership expects some debottlenecking projects to be in service by third-quarter 2018. It also plans to put its new pipeline capacity from Wink to McCamey online, partially by this year-end. Also, the firm is extending its operation in the Permian Basin to capitalize on the surge in demand. Recently, the partnership and ExxonMobil XOM entered into a joint venture agreement for construction of crude oil transportation pipeline from multiple locations in the Permian Basin to the Texan Gulf Coast.

The partnership intends to maintain a systematic capital investment strategy in broadening its scope of operations through organic growth initiatives. It anticipates to incur an expense of $1.95 billion in 2018. Also, the partnership has raised its capex guidance by nearly $650 million for 2018 to 2019 time period. Also, it consistently focuses on decreasing its debt-level year over year and has already reduced its total leverage from $11.8 billion at 2016 end to $9.8 billion at the end of second-quarter 2018.

Price Movement

Plains All American's units have surged 37.2% over the past year, outperforming the industry 's growth of 0.6%.

Zacks Rank & Other Key Picks

Plains All American carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

TC PipeLines, LP TCP sports a Zacks Rank #1. The stock has seen the Zacks Consensus Estimate for 2018 earnings move 8.7% north over the past 30 days to $3.75.

Archrock, Inc. AROC has a Zacks Rank of 1. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 30.4% upward over the past 30 days to 30 cents per share.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: PAA , TCP , AROC , XOM

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