PAA’s Supply and Logistics Segment Continued to Face Headwinds

Lower Volumes Hurt Plains All American’s 4Q15 Results

(Continued from Prior Part)

Lower EBITDA in 4Q15

Plains All American Pipeline (PAA) operates under the following three segments:

• Transportation

• Facilities

• Supply and Logistics

The company’s Transportation segment contributed nearly 45% of the company’s total adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in 4Q15. The segment reported an adjusted EBITDA of $256 million in 4Q15—5.2% lower compared to its 4Q14 EBITDA. The decrease was primarily driven by a lower realized average price per barrel during 4Q15. It was partially offset by higher earnings from its BridgeTex pipeline.

In 4Q15, Magellan Midstream Partners’ (MMP) Crude Oil segment benefited from contributions from a crude oil pipeline acquired in November 2014. Enterprise Products Partners’ (EPD) 4Q15 EBITDA for its Crude Oil Pipelines & Services segment grew 13% YoY (year-over-year). Energy Transfer Partners (ETP) is scheduled to report its 4Q15 results on February 24.

Facilities segment’s EBITDA was relatively flat

Plains All American’s Facilities segment’s adjusted 4Q15 EBITDA was 0.7% lower compared to 4Q14. The decrease was primarily driven by lower revenue from its rail and natural gas storage activities. It was partially offset by increased storage revenue at its West Coast terminals.

The above graph shows the segmental contribution to Plains All American’s EBITDA over the quarters. Plains All American accounts for ~2.7% of the First Trust North American Energy Infrastructure Fund (EMLP). EMLP invests in equity securities of companies in the energy infrastructure sector.

Supply and Logistics segment

Plains All American’s Supply and Logistics segment’s 4Q15 EBITDA fell by 9.2% YoY. The decrease was primarily driven by lower volumes and margins associated with crude oil lease gathering. Read more about the segment’s performance in Market Dynamics Impact Plains All American’s Supply and Logistics Segment. The decrease in the segment’s 4Q15 EBITDA was partially offset by increased margins in its natural gas liquid sales activities.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Why Plains All American Pipeline’s 4Q15 EBITDA Missed Estimates

• Part 3 - PAA’s 2016 Outlook Is Uncertain, 60% of Analysts Rate It a ‘Hold’