Recently, Plains All American Pipeline increased its quarterly distribution by 10%, agreed to sell its Canadian NGL business for US$3.80 billion, and completed the US$2.90 billion purchase of the EPIC Crude Oil Pipeline, moves that, alongside analyst downgrades and mixed ratings, have sharpened focus on its crude-focused operations.
These developments, coupled with elevated options activity and rising implied volatility ahead of the February earnings release, highlight how capital recycling and concentration in oil pipelines are reshaping perceptions of Plains All American Pipeline’s risk and income profile.
We’ll now examine how this portfolio reshaping around the EPIC Crude Oil Pipeline acquisition influences Plains All American Pipeline’s investment narrative.
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To own Plains All American Pipeline today, you have to be comfortable backing a crude-heavy midstream business that is leaning even further into oil pipelines while maintaining a high distribution. The EPIC Crude Oil Pipeline acquisition and the US$3.80 billion Canadian NGL sale tighten that focus and, in my view, make Permian crude volumes and contract quality even more central short term catalysts than they were before. The 10% distribution hike and recent price strength suggest the market was warming to that story, but the Bank of America downgrade and mixed analyst views underline how exposed Plains is to any disappointment around the February 6 earnings, capital allocation plans, or leverage. Elevated options activity and higher implied volatility simply confirm that more investors are now treating these catalysts and risks as live issues.
However, investors should also be aware of how the higher crude exposure could affect Plains’ risk profile. Plains All American Pipeline’s shares have been on the rise but are still potentially undervalued. Find out how large the opportunity might be.
PAA 1-Year Stock Price Chart
Simply Wall St Community members place Plains’ fair value between US$18.50 and about US$56.76, across four independent views. Against that backdrop, the sharpened focus on crude pipelines and the upcoming earnings update could meaningfully influence how those investors reassess both income reliability and balance sheet risk.
Explore 4 other fair value estimates on Plains All American Pipeline – why the stock might be worth 6% less than the current price!