Plains All American Pipeline LP Announces Bolt-on Acquisitions, Capital Structure Optimization & Distribution Increase

On January 7, 2025, Plains All American Pipeline, L.P. (PAA) issued a press release detailing significant corporate developments. The company unveiled three bolt-on acquisitions, the acquisition of around 18% of its outstanding Series A Preferred Units, and a notable 20% increase in its annualized distribution rate.

These strategic moves were aimed at advancing Plains All American Pipeline’s growth strategy and enhancing its asset base. The acquisitions included purchasing Ironwood Midstream Energy for approximately $475 million, acquiring Medallion Midstream’s Delaware Basin crude oil gathering business for about $160 million ($105 million net to PAA’s interest), and obtaining the remaining 50% interest in Midway Pipeline LLC for roughly $90 million.

Additionally, Plains opted to optimize its capital structure by agreeing to purchase about 12.7 million units, equating to 18% of its outstanding Series A Preferred Units from EnCap Flatrock Midstream. This transaction, set at “par” ($26.25), involves a purchase price of approximately $330 million plus accrued and unpaid distributions and is expected to conclude by the end of January 2025. The company anticipates that these actions will result in a leverage ratio at or below the low-end of its target range of 3.25x to 3.75x, providing ample balance sheet flexibility.

Furthermore, Plains All American Pipeline’s Board of Directors greenlit an increase in the quarterly distribution, from $0.3175 per unit to $0.38 per unit, effective for February 2025. Annually, this adjustment represents a 20% rise from the previous distribution paid in November 2024.

Willie Chiang, the Chairman and CEO of Plains, highlighted that these acquisitions align strategically with the company’s efficient growth strategy. He emphasized the immediate value creation through sustainable earnings accretion, enhanced distributable cash flow, and an accelerated return of capital to unitholders. Chiang reiterated Plains’ commitment to financial flexibility, capital discipline, generating significant free cash flow, and boosting return of capital to unitholders.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership primarily engaged in the midstream energy infrastructure sector. The company’s portfolio includes pipeline gathering and transportation systems, terminalling, storage, processing, fractionation assets, and other infrastructure supporting crude oil and natural gas liquids logistics in the United States and Canada. Plains handles approximately eight million barrels per day of crude oil and NGL and continues to focus on strategic growth and value creation for its stakeholders.

For further information on Plains All American Pipeline, L.P., and Plains GP Holdings, interested parties can visit the company’s website at www.plains.com.

Investor relations inquiries can be directed to Blake Fernandez and Michael Gladstein at [email protected] or by calling (866) 809-1291.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Plains All American Pipeline’s 8K filing here.

Plains All American Pipeline Company Profile

Plains All American Pipeline, L.P., through its subsidiaries, engages in the pipeline transportation, terminaling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada. The company operates through two segments, Crude Oil and NGL. The Crude Oil segment offers gathering and transporting crude oil through pipelines, gathering systems, trucks, and on barges or railcars.