Plains All American Pipeline, L.P. (NYSE: PAA) stock fell over 2% on 7th August, 2019 (as of 11:46 am GMT-4; Source: Google finance) despite a positive start.
The company posted better than expected results for the second quarter of FY 19. PAA has reported second quarter adjusted EBITDA of $784 million, which represents a year-over-year increase of 55%, driven by strong performance in the S&L segment.
PAA in the second quarter of FY 19 has reported the adjusted earnings per share of 67 cents, while adjusted revenue of $8.25 billion in the second quarter of FY 19.
Meanwhile, on the Diamond Capline JV, the company had sanctioned an expansion and extension, which will connect the Diamond Pipeline to the Capline system. These projects are expected to be placed into service in late 2020 for light crude grades and early 2022 for heavy crude grades. The Saddlehorn JV partners recently announced a capacity expansion of up to 100,000 barrels a day plus a new Fort Laramie origin on the Saddlehorn pipeline, which is underpinned by long-term volume commitments. Further, in May, the company has announced an expansion and new joint venture on the Red River pipeline system through which Delek increased their long-term minimum volume commitment from 35,000 barrels to 100,000 barrels a day and acquired a 33% equity interest in the project for $128 million. This transaction expands the long-term and alignment with a strategic partner and shipper, it supports and more than funds the 85,000 barrels a day capacity expansion, it increases Plains’ net committed annual cash flow, and it provides an additional source of funding for the capital program or debt reduction.
Additionally, PAA has increased the 2019 adjusted EBITDA guidance by $125 million to plus or minus $2.975 billion. 2019 DCF guidance is also increased by $65 million.
In addition, on Red Oak, the company is proceeding with pre-construction activities on this 50-50 joint venture with Phillips 66 that was officially sanctioned in June. The system will enable volumes from Cushing, Oklahoma and the Permian Basin to access multiple Gulf Coast destinations, including Corpus Christi, Ingleside, Houston and Beaumont, Texas. The company expects the project, which is underpinned by long-term shipper agreements, to begin initial service as early as the first quarter of 2021.