Plains All American: MLP With an Excellent Track Record

| About: Plains All (PAA)

Plains All American Pipeline (NYSE:PAA), a large MLP with an emphasis on moving crude oil, engages in the transportation, storage, terminalling and marketing of crude oil, refined products, and liquefied petroleum gas and other natural gas-related petroleum products (LPG) in the United States and Canada. The company operates 3 segments:

(1) Transportation moves crude oil and refined products on pipelines, gathering systems, trucks, and barges. It has 16,000 miles of active crude oil and refined products pipelines; 28 million barrels of above-ground tank capacity; 84 trucks and 353 trailers; 68 transport and storage barges; and 39 transport tugs.

(2) Facilities provides storage, terminalling, and throughput services for crude oil, refined products, and LPG and natural gas.

(3) Supply and Logistics segment purchases crude oil at the wellhead, crude oil at pipeline and terminal facilities, and foreign cargoes at their load port; resells crude oil, refined products, and LPG; and transports crude oil, refined products, and LPG on trucks, barges, rail cars, pipelines, and ocean-going vessels.

Their track record for equity holders since its IPO in 1998 is impressive:

MLP Index__399%
Dow Jones___48%

Last year PAA invested $760 million in organic and acquisition projects. To finance growth, it raised $1.8 billion (debt and equity) in 5 offerings. 93% of their debt is fixed at an average rate of 6.4% with an average maturity of 11 years and no maturities until late 2012. Their debt credit rating is BBB.

Last week, PAA increased the quarterly distribution to $0.935 per unit ($3.74 annualized), a 3.3% increase over last year and a 0.8% increase over the prior payment in Q1. This was the 22nd increase in the past 24 quarters. The unit yields 6.3%, most is not taxable immediately. Since the public offering in 1998, the distribution has increased 108%. PAA has guided the distribution will be increased to a $3.80 annual rate by Q4 and then increased 3-5% annually for the next few years.

They are proud that quarterly performance has been in line with guidance for 8 straight years. PAA sees growth this year coming from organic growth and acquisitions, including a capital program of $360 million. They guided that adjusted EBITDA will be over $1 billion. The lower end of the range reflects a challenging environment throughout 2010 and the upper end reflects the start of an economic recovery in mid 2010.

Adjusted EBITDA (millions of $)

2010___1015-1065 (est)

In a decade when few stocks have records to proud of, PAA units have grown from $10 to %59 and distributions from the high yields were a bonus. Investors looking for companies with growth potential and high yields should consider PAA.

Disclosure: No position

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