Plains All American Pipeline Q1 Earnings Call Highlights

Key Points

• Plains reported Q1 adjusted EBITDA attributable to Plains of $730 million and raised its full-year 2026 adjusted EBITDA midpoint by $130 million to $2.88 billion, driven by NGL timing, Cactus III synergies and captured optimization opportunities.
• The company expects roughly $3.3 billion of net proceeds from the NGL sale, which would lower pro forma leverage from ~4.1x to about 3.5x and be used primarily to pay down debt (Plains no longer expects a special distribution after the sale).
• Management forecasts about $1.85 billion of adjusted free cash flow for 2026 (excluding sale proceeds), is targeting $100 million of cost savings through 2027, and sees additional upside if commodity prices remain elevated and Permian constraints ease.

Plains All American Pipeline NASDAQ: PAA reported first-quarter 2026 adjusted EBITDA attributable to Plains of $730 million, as management pointed to a sharply changed macro backdrop and raised full-year guidance on the back of stronger-than-expected results and updated assumptions around its NGL divestiture timing.

Macro backdrop and management’s outlook

Chairman, CEO, and President Willie Chiang said recent geopolitical events have “reiterated the importance of reliable, secure, and responsibly produced energy,” adding that the closure of the Strait of Hormuz has disrupted global shipping channels and Middle East supply and contributed to stronger commodity prices in recent months.

Chiang said excess floating storage has been drawn down and strategic petroleum reserves (SPRs) are being released globally to help balance a short-term market deficit, but he characterized the longer-term setup as “more constructive.” He said Plains expects a destocking environment to continue for “the next number of months,” potentially followed by longer-term restocking demand as countries replenish SPRs, possibly above pre-war levels. On supply, he said OPEC capacity “post-war remains uncertain” and suggested spare capacity could be tighter due to slower recovery of shut-in production and infrastructure damage.

Against that backdrop, Chiang said North America, including the Permian Basin, is “well positioned to play a critical role in meeting global demand,” adding that the value of existing infrastructure “should continue to increase over time.”

Quarterly segment performance

Management discussed segment results using the prepared remarks tied to the company’s slide presentation. For the first quarter, Plains reported crude oil segment adjusted EBITDA of $582 million, described as “broadly in line” with internal estimates. The result included a full quarter contribution from the Cactus III acquisition, offset by “one-off items,” including winter weather impacts in the Permian, system maintenance, and the timing of minimum volume commitments (MVCs).

The NGL segment posted adjusted EBITDA of $145 million, which management attributed to a stronger-than-expected contribution from higher straddle production and improving frac spreads in March.

During Q&A, EVP and Chief Commercial Officer Jeremy Goebel added detail on the NGL outperformance, citing higher border flows than expected. He said very full storage in Canada and continued production required exports, which moved through Plains’ Empress asset. Higher border flows increased straddle production, which he said would be unhedged, and he also pointed to higher frac spreads late in the quarter. Goebel said those dynamics “continued into the second quarter,” supporting the increased NGL guidance through the closing of the sale.

Guidance raised; drivers include NGL timing and optimization

Plains increased the midpoint of its full-year 2026 adjusted EBITDA guidance by $130 million to $2.88 billion. Chiang said the company’s 2026 growth trajectory is underpinned by three drivers: the sale of its NGL assets, Cactus III synergy capture, and streamlining initiatives.

In prepared remarks, management said NGL segment EBITDA is now expected to be $170 million for 2026, following first-quarter outperformance of $45 million and updated divestiture timing in May 2026.

On the $130 million guidance increase, management attributed changes to both segments:

• NGL segment: Increased by $70 million, driven by first-quarter outperformance and ownership of NGL assets into May.
• Oil segment: Increased by $60 million, driven by captured optimization opportunities, FERC tariff escalators, increased spot tariff volumes, and increased West Coast volumes.

Chiang said the uplift reflects optimization efforts the company has “captured that roll off through the year,” and he added that if the macro environment remains stronger with higher prices, “there definitely is upside.” Management also noted that if an elevated commodity environment persists into the second half, it would expect to capture incremental opportunities.

In response to a question on how much higher crude prices flow through to results, CFO Al Swanson said the company’s original 2026 guidance assumed a $60–$65 per barrel environment, and Plains entered the year “highly hedged at roughly those levels.” Swanson said the sensitivity Plains provides is a “raw sensitivity” and that first-quarter performance and the remaining nine months of the guide are “very minimally impacted by actual PLA pricing” due to hedging.

Permian activity, constraints, and commercial opportunities

Management reiterated that its 2026 guidance assumes Permian crude production to be “relatively flat year-over-year,” though Swanson said any increase in activity would likely benefit “2027 and beyond.” Chiang said higher activity tends to occur when WTI moves to “75 and above,” and he cited natural gas takeaway constraints in the Permian as a current limiter, with new egress projects expected to start up later in the year.

Goebel told analysts that about 15 rigs have already been added back since the recent market disruption began, but he said additional activity is constrained by natural gas limitations and flaring restrictions. He emphasized that rigs added now would mainly affect 2027 production. Goebel also estimated there is “close to 200,000 to 300,000 barrels a day of oil that’s behind pipe in the Permian Basin,” which could contribute to a “flush” of production as constraints ease.

On commercial opportunities and marketing, Goebel said Plains benefits from volatility across time, location, and quality spreads due to its asset footprint and trading function, but he cautioned it is “hard to forecast” these opportunities. He said the company has “substantially captured what’s in this forecast,” and expects more if volatility persists.

Chiang added that long-haul volumes and margins have increased, and said the company is moving toward a “more structurally full pipe situation,” which he described as constructive. Asked about long-haul opportunities and expansions, Goebel said Plains is in “constructive dialogue” with existing and new customers and expects the potential to contract at higher rates than before, including for recontracting and expansions, with potential updates in coming quarters.

On Cactus III, Chiang said the company has expansion capacity and intends to pace it with market demand and commercial contracting. He also said Plains can pursue expansion in a phased, flexible approach rather than a “binary big expansion.”

Capital allocation, leverage, and the NGL divestiture

Plains reiterated its focus on free cash flow and returning capital while maintaining flexibility. Management expects approximately $1.85 billion of adjusted free cash flow for 2026, excluding changes in assets and liabilities and excluding sales proceeds from the NGL divestiture.

Swanson said pro forma leverage at the end of the first quarter was 4.1x, reflecting the Cactus III acquisition, and that leverage pro forma for the NGL sale would be approximately 3.5x. He said the company expects leverage to migrate toward the low end of its 3.25x to 3.75x target range by year-end.

Swanson also said Plains expects net proceeds from the NGL sale to be approximately $3.3 billion, about $100 million higher than the prior estimate. He noted that the Cactus III acquisition mitigated the tax liability to unit holders from the NGL divestiture, and as a result Plains “no longer expect[s] to pay a special distribution” following the closing of the NGL sale. He added that current and deferred taxes were elevated this quarter due to restructuring activities associated with the NGL sale, but said there was “no cash tax impact in the quarter.”

In discussing post-sale capital allocation, Swanson said Plains anticipates using a little over $3 billion of proceeds to pay down debt, including the term loan, outstanding commercial paper, and a $750 million note maturing later in the year. After that, he said priorities would include maintaining distribution growth, funding organic and M&A investments, and potentially redeeming preferred securities if leverage remains at or below the bottom end of the target range, along with opportunistic repurchases.

Separately, EVP and COO Chris Chandler said Plains remains on track with its cost reduction initiatives, targeting $50 million of efficiencies by the end of 2026 and an additional $50 million in 2027. He said the company has already implemented several changes and remains confident in the $100 million target through 2027, while continuing to look for additional opportunities.

Chiang also briefly addressed the pending transaction with Keyera, saying Plains and Keyera are targeting to close “this month” despite a challenge from the Competition Bureau. He said the lawsuit does not prevent the parties from closing and that both companies are “committing to do so,” while declining to comment further.

About Plains All American Pipeline NASDAQ: PAA

Plains All American Pipeline NASDAQ: PAA is a publicly traded energy infrastructure company that provides midstream services for crude oil and natural gas liquids (NGLs). The company’s core activities include gathering, transporting, storing and marketing hydrocarbons, using an integrated network of pipelines, storage terminals, rail and truck transloading facilities. Plains also offers logistics and marketing services that connect upstream producers with refiners, traders and export markets.

Plains owns and operates a portfolio of pipeline and terminal assets concentrated in major U.S.

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