Thu, Aug. 6, 3:58 PM
- Plains All American Pipeline (PAA -2.8%) suffers at least five analyst downgrades following yesterday's cut in 2015 distribution growth guidance to 6% from the 7% figure achieved in 2014, and that it is evaluating leaving the distribution flat in 2016 as a “transition year” before returning to distribution growth.
- "With PAA trading at a 7.7% yield, management may decide it is more effective to fund its substantial capex backlog with more internally generated cash vs. maintaining a below-average growth rate for PAA,” Wunderlich's Jeff Birnbaum writes in downgrading shares to Hold from Buy with a $37 price target, reduced from $56.
- With transportation and facilities projects ramping up, PAA's S&L margins could contract, the analyst adds.
- In downgrading PAA as well as Plains GP Holdings (PAGP -0.7%) to Neutral, Baird notes that much sooner than firm expected, the impact of infrastructure overbuild due to over-financed, overspending midstream players looks to reduce 2016 marketing margins as differentials collapse.
- PAA also was downgraded at Goldman, Deutsche Bank and UBS.
Wed, Aug. 5, 4:57 PM
- The recent oil spill from a ruptured Plains All American (NYSE:PAA) pipeline that fouled beaches for miles near Santa Barbara, Calif., may have been larger in volume than earlier projected.
- PAA had estimated the May 19 spill at up to 101K gallons, but today it said alternate calculations found the spill might have totaled 143K gallons; the company said it is continuing its analysis and the figures are preliminary.
- PAA also said it does not expect to see the pipeline back in service this year, and expects the spill clean-up to cost ~$257M; it booked a $65M Q2 charge related to the incident.
- Earlier: Plains All American punished after distribution warning
Wed, Aug. 5, 3:21 PM
- Plains All American Pipeline (PAA -11.1%) and Plains GP Holdings (PAGP -20.4%) are both sharply lower even as the companies met analyst expectations for Q2 earnings (I, II).
- But PAA lowered its estimate for FY 2015 adjusted EBITDA by $50M to $2.278B, not including contributions from its Line 901, which ruptured and spilled oil along the California coastline in May; PAA booked a $65M Q2 charge related to the incident.
- PAA also issued a cautious outlook, saying high crude oil and refined product inventory levels will influence oilfield activity and crude oil production levels over the next 6-12 months.
- Even worse, management hinted on this morning's earnings conference call that distribution growth could be in jeopardy in 2016 as competition increases among pipelines while oil prices fall.
- In response, PAA is downgraded to Neutral from Buy at UBS.
Tue, Aug. 4, 4:51 PM
Thu, Jul. 23, 6:20 PM
- July is shaping up to be one of the worst months for MLPs in years amid cratering energy prices, but with average yields hitting 7%, J.P. Morgan analysts say the selloff is getting overdone.
- The JPM team highlights four high-quality names as oversold: Plains All American Pipeline (NYSE:PAA), Plains GP Holdings (NYSE:PAGP), Energy Transfer Partners (NYSE:ETP) and Sunoco (NYSE:SUN).
- The analysts also like Valero Energy Partners (NYSE:VLP), Phillips 66 Partners (NYSE:PSXP), NuStar Energy (NYSE:NS) and Macquarie Infrastructure (NYSE:MIC).
Mon, Jul. 20, 11:58 AM
- A flurry of recent acquisitions in the energy MLP sector suggests it is becoming undervalued, according to a Barron's weekend report.
- Rob Thummel of Tortoise Capital Advisors still sees energy as a growing sector over the long term; some of his favorite MLPs include Spectra Energy Partners (NYSE:SEP) and Plains All American Pipeline (NYSE:PAA).
- Marcus McGregor, who runs the MLP equity strategy for Conning, suggests sticking with the largest, most liquid midstream MLP players which should be a step or two removed from the price of crude; he prefers Enterprise Products Partners (NYSE:EPD) and Magellan Midstream Partners (NYSE:MMP).
- But many analysts say only long-term investors should be buying now, since the next few years could be rocky; “Too many MLP investors are taking the ostrich route,” says one who believes the energy sector will get worse before it gets better. “They see such great yields and think they don’t have to worry.”
Tue, Jul. 14, 8:37 AM
- Phillips 66 (NYSE:PSX) says it does not anticipate any impact on operations at its 336K bbl/day Wood River, Ill., refinery following the shutdown of the Capwood pipeline.
- Plains All American Pipeline (NYSE:PAA) said on Friday it experienced a crude oil leak at its Pocahontas pumping station, which is part of the Capwood line, but did not specify if the spill had an impact on the overall flow of the line.
- The Wood River refinery sources crude from the 277K bbl/day Capwood line, which runs from Patoka, Ill., to Wood River.
Mon, Jul. 13, 9:45 AM
- A pipeline owned by Plains All American Pipeline (PAA +0.8%) spilled ~4,200 gallons of crude oil in southwest Illinois near St. Louis on Friday, with some reaching a nearby creek.
- PAA says it has initiated its emergency response plan to contain the release and work crews are on site.
- It is the second leak for PAA in less than two months, following the May 19 leak near Santa Barbara, Calif., that created a nine-mile oil slick along the coastline.
Fri, Jul. 10, 4:47 PM
- The California beach fouled by oil will reopen July 17 to swimmers and campers two months after a pipeline owned by Plains All American Pipeline (NYSE:PAA) ruptured and spewed thousands of gallons of crude along the coast.
- Crews still need to finish scraping oil off cobblestones before the public can use the beach next week, and certain areas will remain off limits as cleanup continues, but officials say the work would not affect beachgoers.
- An underground pipeline ruptured May 19, releasing up to 101K gallons of oil, ~20% of which flowed into the Pacific Ocean.
Tue, Jul. 7, 4:21 PM
Fri, Jun. 26, 9:53 AM
- Plains All American Pipeline (PAA -1.1%) is facing increased scrutiny from U.S. regulators and lawmakers over the recent oil spill off the coast near Santa Barbara, Calif., which released up to 101K gallons and washed up goo on beaches as far as 100 miles away.
- PAA is being criticized for how long it took to relay information on the break to federal authorities.
- A PAA employee at the scene initially suggested to firefighters that the spill “was too big to be from their pipeline," according to the documents obtained by Associated Press.
- A congressional committee has opened a probe into the spill, wanting to know what PAA did in the hours leading up to the break and how it reported the problem.
- Meanwhile, PAA says the cost of cleaning up the spill has climbed to $92M.
Tue, Jun. 23, 10:15 PM
- Exxon Mobil (NYSE:XOM) says it has been forced to suspend production at three offshore platforms off the Santa Barbara, Calif., coast following the shutdown of a pipeline that spilled 100K gallons of oil on the area's beaches last month.
- XOM blames the recent refusal by Santa Barbara County authorities to approve an emergency application to transport its offshore crude by truck from its Las Flores Canyon processing facility while the crippled line owned by Plains All American Pipeline (NYSE:PAA) remains shut down.
- Current output from XOM's shuttered platforms was estimated at 30K bbl/day out of California's daily crude diet of ~1.7M bbl/day.
Wed, Jun. 17, 8:47 AM
- Magellan Midstream Partners (NYSE:MMP) is considering opening an oil trading operation for the first time, CEO Michael Mears tells Reuters, a move that could help it take advantage of wide price gaps that have become a fixture of the shale oil revolution.
- Mears says that while MMP is considering trading oil, the company is first looking at supporting a service that would buy barrels at the wellhead from producers, provide logistics to get it to a long haul pipeline or to a delivery hub in Cushing, Okla., and then sell it in bulk; traders would manage the price risk.
- MMP always has declined to run its own trading operation because it would compete with its own oil drilling customers, who often also trade, but as a result, it has been handing off potential profits to traders making a large margin off market inefficiencies.
- Two of Magellan's main rivals, Enterprise Product Partners (NYSE:EPD) and Plains All American (NYSE:PAA), have been trading oil for years, adding over $1B/year to their books.
Thu, Jun. 11, 6:25 PM
- MLPs and other yield-oriented securities have been hit in recent weeks by rising interest rates, but Rob Thummel, portfolio manager at energy investment firm Tortoise Capital Advisors, thinks the downturn may provide an opportunity to buy some of the strongest companies at a lower price.
- Thummel says there is still a lot of need for improved energy infrastructure, and his favorite MLPs are Plains All American Pipeline (NYSE:PAA), Enterprise Products Partners (NYSE:EPD) and Magellan Midstream Partners (NYSE:MMP) for their strong management, current yields of 4%-6%, and backlogs of new projects.
- Thummel says despite the recent oil spill, PAA has a history of operating its assets safely and spill costs should not be material to its finances; earlier today, PAA filed an 8-K that estimates clean-up costs through June 9 at $65M, or $3M/day.
- Earlier: Plains All American is defended by some portfolio managers, analysts
Wed, Jun. 10, 7:28 PM
- The cost of cleaning up the oil spill near Santa Barbara, Calif., last month has reached $62M so far, according to Plains All American Pipeline (NYSE:PAA), operator of the onshore pipeline that ruptured and leaked ~100K gallons of crude.
- PAA's on-scene coordinator says costs are running at $3M/day and there is no timetable for when the cleanup will be complete, but that "the responsibility here is to get [the spill] cleaned up as quickly as possible."
- About 76% of 97 miles of coastline, mostly sandy beaches, have been cleared of oil.
Tue, Jun. 9, 9:49 PM
- A local official in Santa Barbara, Calif., has rejected an emergency request by Exxon Mobil (NYSE:XOM) to use large trucks to haul its crude oil until the pipeline that recently ruptured and caused a spill is fixed, saying there is not enough evidence that a defined emergency exists.
- XOM was using the pipeline owned by Plains All American Pipeline (NYSE:PAA) to haul 30K bbl/day of crude oil, and is now being forced to cut production at offshore California fields as its storage facilities fill up.
- In XOM's request for an emergency permit, it said it needed to maintain crude oil supply for California refineries so it could also maintain natural gas supplies to local utilities.
- Environmentalist groups had urged Santa Barbara to reject the request, saying it might lead to another oil spill.
Plains All American Pipeline LP is engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids.
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