Energy Prospectus

Feb 05, 2019
Plains All American Pipeline, L.P. and Plains GP Holdings Report Fourth-Quarter and Full-Year 2018 Results
Plains All American Pipeline, L.P. (NYSE: PAA) and Plains GP Holdings (NYSE: PAGP) today reported fourth-quarter and full-year 2018 results.

Fourth-Quarter and Full-Year 2018 Highlights

Delivered 4Q and full-year 2018 financial and operating results ahead of expectations
Executed Permian-focused capital program, including early completion of Sunrise Expansion
Actively developed additional growth capital projects
Significantly advanced deleveraging plan and enhanced financial flexibility
"Our fourth-quarter and full-year 2018 results exceeded our guidance and reflect solid execution of our business plan," stated Willie Chiang, Chief Executive Officer of Plains All American Pipeline. "Looking forward, we believe we are well positioned with a strategic asset base and business model and improved financial flexibility."
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I am updating the forecast/valuation model for PAA now. PAA's Q4 Adjusted EPS of $0.80 compares to my forecast of $0.66 per share. Their Q4 DCF of $0.90/share compares to their quarterly dividend of $0.30/share. NOW you know why I think they are going to SIGNIFICANTLY increase their dividend in 2019.

PS: This morning Keith Kohl at The Energy Investor listed PAA as one of his Top Five Picks for yield investors.

WOW! PAA's net income went from $856 million in 2017 to $2,216 million in 2018. Plus, they have several large projects that will increase revenues by another 10% in 2019.

Looking forward, Plains’ 2019 adjusted EBITDA guidance is set around $2.75 billion, which would represent a 32% year-over-year increase.

In the last 3 months, 6 ranked analysts set 12-month price targets for PAA. The average price target among the analysts is $27.60.
> NONE of the analysts have submitted new reports to Reuters since PAA announced Q4 results that crushed all of their forecasts.
> The valuations range from $25 to $30 per share.

My valuation is now $31.00/unit.

If you don't like MLPs, then check out PAGP (a C-Corp).