Plains All American Pipeline (PAA) Ups Q1 Distribution by 21%
Plains All American Pipeline, L.P PAA announced that its board of directors has approved a 21% annualized increase in cash distribution per unit. The new quarterly cash distribution per unit for first-quarter 2022 will be 21.75 (annualized 87 cents) compared with 18 cents (annualized 72 cents) distributed in the prior quarter.
The quarterly distribution will be paid out on May 13, 2022, to common unitholders of record as of the close of business on Apr 29, 2022. The increase in cash distribution rates reflects PAA’s strong performance and generation of stable cash flows.
Strong Asset Base
Plains All American Pipeline has been expanding operations through systematic investments. The firm is gradually expanding operations in the Permian Basin to capitalize on the improving demand. With producers having started to gradually resume idled production, volumes are expected to recover in 2022. Annual production in the Permian Basin is expected to increase by 600 thousand barrels per day (Mbl/d) over the next few years. The partnership is poised to benefit from the rise in production from the Permian region, with a gradual revival in oil and natural gas demand.
Over the long term, the firm expects capital investment in the range of $250-$350 million per year and maintenance capital to be less than $200 million. These planned expenditures will allow the firm to expand operations and maintain the reliability of its services.
Hence, strong demand for PAA’s pipeline services and contribution from the expanding operations will provide enough funds to management to sustain cash distribution hikes over the long term.
Price Performance
In the past 12 months, units of the firm have gained 15.3% compared with the industry’s 19.3% rally.
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Zacks Rank & Key Picks
Plains All American Pipeline currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the same industry include Delek Logistics Partners, LP DKL, Energy Transfer LP ET and ONEOK, Inc. OKE, each currently having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delek Logistics Partners, Energy Transfer LP, and ONEOK reported an average surprise of 2.7%, 78.3%, and 3.2%, respectively, in the last four quarters.
The Zacks Consensus Estimate for 2022 earnings of Delek Logistics Partners, Energy Transfer LP, and ONEOK has moved up 0.9%, 6.3%, and 2.7%, respectively, in the past 60 days.
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