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PLAINS ALL AMERICAN PIPELINE, L.P.

(PAA)
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Delayed Nasdaq  -  04:00:01 2023-02-06 pm EST
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Plains All American Pipeline L P : 2022 3Q PAA & PAGP Earnings Conference Call Script - Q&A - Slides � Non-GAAP Reconciliation

11/03/2022 | 08:53am EST

Houston, TX | November 2, 2022

3Q 2022 Earnings Package

Index

  • Conference Call Transcript
  • Conference Call Slides
  • PAA / PAGP Earnings Release and Guidance
  • PAA Non-GAAP Reconciliations

PAA

PAGP 2

Third-Quarter 2022 Earnings Conference Call

Wednesday, November 2, 2022

Roy Lamoreaux:

Thank you, Therese. Good afternoon, and welcome to Plains All American's third- quarter 2022 earnings call. Today's slide presentation is posted on the Investor Relations website under the "News & Events" section at plains.com, where an audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide 2. An overview of today's call is provided on slide 3. A condensed consolidating balance sheet for PAGP and other reference materials are located in the appendix.

Today's call will be hosted by Willie Chiang, Chairman and CEO, and Al Swanson, Executive Vice President and CFO. Other members of our team will be available for Q&A, including: Harry Pefanis, President; Chris Chandler, Executive Vice President and COO; Jeremy Goebel, Executive Vice President and CCO; and Chris Herbold, Senior Vice President, Finance and CAO.

With that, I will now turn the call over to Willie.

Willie Chiang:

Thanks Roy and thank you everyone for joining us this afternoon. Today we announced strong third-quarter results above our expectations, reflecting continued execution of our long- term goals and initiatives, and strong performance in both our Crude Oil and NGL segments. In summary:

  • Third-quarterAdjusted EBITDA attributable to PAA was $623 million
  • We increased our full-year 2022 Adjusted EBITDA guidance by $75 million to $2.450 billion, which is $250 million above our initial February guidance. The year-to-date

Page 1 of 7

increase is driven by outperformance in both our Crude Oil and NGL segments due to the capture of additional volumes, higher commodity prices and favorable margin-based opportunities.

  • Additionally, today we announced and closed an $85 million acquisition of an additional 5% interest in the Cactus II Pipeline, bringing our total ownership to 70%.
  • Importantly, we ended the quarter with leverage of 3.7x and expect to end the year at 3.8x, both below the midpoint of our targeted leverage range, supporting increasing returns of capital to our equity holders.
  • As such, within today's earnings release, we laid out a multi-year capital allocation and financial framework which I will discuss shortly.

Before that, I wanted to reiterate our views on why we remain constructive on long- term industry fundamentals. Notwithstanding global economic uncertainty and continued volatility in the commodity markets, we continue to expect global energy supply and demand to remain tight. As shown on slide 4, for the past number of years and for a number of reasons, there has been a lower level of investment in the upstream sector, reducing resource development. At the same time, energy demand continues to grow while historical supply buffers in the form of OPEC+ spare capacity and global inventories are greatly reduced and have been further impacted by recent geopolitical events. Year-to-date, we have seen US Strategic Petroleum Reserve draws of approximately 190 million barrels and commercial inventories remain at or below historic levels over the same timeframe. Global markets remain tight, and the world needs short-cycle North American production growth.

As summarized on slide 5, we have made meaningful progress on our long-term goals and initiatives, and as such, 2022 is a positive inflection point for Plains. For the last several years, we have focused on deleveraging by maximizing Free Cash Flow and reducing absolute debt. The success of this effort, when combined with solid operating, commercial, and financial performance, enabled us to achieve our leverage objectives well ahead of our initial expectations and to accelerate returns to equity holders while providing greater clarity on our

Page 2 of 7

multi-year capital allocation framework. As described in our press release this afternoon, we provided updates to our capital allocation and financial framework as follows:

  • We currently intend to recommend to the Board a $0.20 per unit annualized increase in our quarterly distribution payable in February of 2023.
  • Beyond 2023, as part of our annual budget review process with the Board, we anticipate targeting annualized distribution increases of approximately $0.15 per unit each year until reaching a targeted Common Unit Distribution Coverage Ratio of approximately 160%.
  • We anticipate leverage migrating below the low-end of our targeted range of 3.75 - 4.25 times in 2023, consistent with our objective of achieving and maintaining mid-BBB and equivalent credit ratings.
  • Additionally, opportunistic unit repurchases will remain a component of our capital allocation framework, which will be a dynamic assessment of business outlook, market

environment and capital allocation options.

As we look forward, we remain focused on driving shareholder value and improving the resilience of our earnings by leveraging our existing Crude Oil and NGL infrastructure. This includes capital-efficient brownfield expansions and debottlenecking opportunities underpinned by contractual commitments, potential bolt-on acquisitions such as the Advantage JV and the acquisition of additional interest in Cactus II, and optimizing and aligning existing assets with emerging energy opportunities. In Canada, we recently completed a win- win, non-cash transaction to gain full ownership of our existing Empress facilities in exchange for a long-term processing capacity lease at the facility, allowing us to further optimize and operate the assets more efficiently over time. Additionally, we continue to evaluate capital- efficient debottlenecking and expansion projects around our Fort Saskatchewan facilities and hope to be able to share additional detail over the coming quarters.

With that, I will turn the call over to Al.

Page 3 of 7

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Plains All American Pipeline LP published this content on 02 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2022 13:52:06 UTC.


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Financials (USD)
Sales 2022 59 687 M - -
Net income 2022 934 M - -
Net Debt 2022 8 786 M - -
P/E ratio 2022 9,80x
Yield 2022 7,08%
Capitalization 8 813 M 8 813 M -
EV / Sales 2022 0,29x
EV / Sales 2023 0,28x
Nbr of Employees 4 100
Free-Float 58,8%
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Number of Analysts 20
Last Close Price 12,62 $
Average target price 15,08 $
Spread / Average Target 19,5%
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Managers and Directors
Willie C. W. Chiang Chairman & Chief Executive Officer
Harry N. Pefanis President & Non-Independent Director
Alan P. Swanson Chief Financial Officer & Executive Vice President
Alfred A. Lindseth Senior VP-Technology, Process & Risk Management
Chris R. Chandler Chief Operating Officer & Executive VP
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