Plains All-American Pipeline LP (PAA & PAGP) Update - June 8

Plains All-American Pipeline LP (PAA & PAGP) Update - June 8

Postby dan_s » Tue Jun 08, 2021 1:50 pm

Rising oil prices + deleveraging makes PAA and PAGP very attractive at the current share prices.

HOUSTON, June 08, 2021 (GLOBE NEWSWIRE) -- Plains All American (Nasdaq: PAA & PAGP) and Hartree Partners, LP (“Hartree”) today announced the execution of definitive agreements whereby Plains will sell its Pine Prairie and Southern Pines natural gas storage facilities to an affiliate of Hartree for a total cash consideration of $850 million (the “transaction”).

“Today’s announcement marks a key step in the execution of our 2021 Plan and deleveraging program. Successful completion of this transaction will enable Plains to exceed our 2021 asset sales target of $750 million, generating additional free cash flow and building momentum to reduce debt and increase investor returns,” said Willie Chiang, Chairman and CEO of Plains. “This is a win-win transaction for both parties. Plains is exiting at an attractive valuation within a timeframe consistent with our expectations, while Hartree is receiving high-quality critical infrastructure in a strategic market. We thank our PAA Natural Gas team members for their dedication to excellence over the past decade plus, and we know they will contribute as part of Hartree to continue to unlock further value.”

“The Pine Prairie and Southern Pines natural gas storage facilities are two of the highest performing natural gas storage facilities in the United States,” said Steve Semlitz, co-founder of Hartree Partners. “We are attracted to the facilities’ strategic location in the Gulf Coast and diverse mix of pipeline, utility and LNG customers. Hartree looks forward to working with the existing management and operating teams to build upon their outstanding customer relationships and operating track record.”

The assets included in the transaction consist of approximately 70 billion cubic feet of total working gas capacity across nine caverns, along with associated base gas, header pipelines and compression facilities. Subject to the receipt of regulatory approvals and customary closing conditions, the transaction is expected to close in the third quarter of 2021. As of June 30, 2021, Plains will re-classify the assets associated with the transaction to “held for sale” on its balance sheet and recognize a corresponding non-cash loss of approximately $480 million in accordance with GAAP requirements.

The following advisors served in their respective roles for the transaction: Wells Fargo Securities, LLC served as Plains’ exclusive financial advisor, Vinson & Elkins LLP acted as legal counsel to Plains, and Milbank LLP acted as legal counsel to Hartree.

About Plains
PAA is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL"), and natural gas. PAA owns an extensive network of pipeline transportation, terminalling, storage, and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles more than 5 million barrels per day of crude oil and NGL in its Transportation segment.

PAGP is a publicly traded entity that owns an indirect, non-economic controlling general partner interest in PAA and an indirect limited partner interest in PAA, one of the largest energy infrastructure and logistics companies in North America.

PAA and PAGP are headquartered in Houston, Texas. For more information, please visit www.plainsallamerican.com.
Dan Steffens
Energy Prospectus Group
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Re: Plains All-American Pipeline LP (PAA & PAGP) Update - Ju

Postby dan_s » Wed Jun 09, 2021 9:49 am

From Stifel on 6-9-2021

Plains All American Pipeline, L.P. (PAA, $12.07, Hold; Target $13.00)
PAA Divests Natural Gas Storage Assets for $850 Million - Selman Akyol
- PAA announced the divestiture of the Pine Prairie and Southern Pines natural gas storage facilities to Hartree Partners for $850 million. Closing is expected in 3Q21 and management expects a sale multiple of ~11x 2020 EBITDA. We view the transaction favorably given it removes the overhang of PAA achieving its 2021 asset sale target, generates incremental FCF and divests assets less-integrated into Plains' core business. Given the divestiture equates to approximately 9% of the partnership's 1Q21 debt levels we believe PAA will have meaningful FCF to allocate towards debt reduction and unit buybacks. While specific allocation guidance was not given, management expects to update its 2021 guidance on its 2Q21 earnings call (August 4th). Given we already assumed $750 million of asset sales in FY21, our leverage estimates remain relatively unchanged with the agreements of the sales. We are maintaining our Hold rating and $13.00 target price.

Plains GP Holdings, L.P. (PAGP, $12.66, Hold; Target $13.00)
PAGP: Updating for $850 Million Asset Sale - Selman Akyol
- Plains Holdings GP, LP is a tracking stock to Plains All American Pipeline, LP (PAA, $12.07, Hold) and provides investors a 1099 option to gain exposure as opposed to PAA’s K-1 tax form. We are updating our model for PAGP given the announced $850 million natural gas storage asset sale. Similar to PAA, we are maintaining a Hold rating and target price of $13.00.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 25579
Joined: Fri Apr 23, 2010 8:22 am

Re: Plains All-American Pipeline LP (PAA & PAGP) Update - Ju

Postby Fraser921 » Wed Jun 09, 2021 6:41 pm

>recognize a corresponding non-cash loss of approximately $480 million

I love it when they say "non cash loss" THATS BECAUSE they already spent the $480 m cash in a prior period!!
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