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Highlights
- Plains All American Pipeline, L.P. and Plains GP Holdings executed three bolt-on acquisitions worth approximately $670 million to enhance their crude oil footprint.
- The company plans to repurchase 18% of its Series A Preferred Units for $330 million.
- Annualized distribution rate increased by 20%, with February 2025 quarterly payouts rising to $0.38 per unit.
Plains All American Pipeline, L.P. (Nasdaq:PAA) and Plains GP Holdings (Nasdaq:PAGP) have announced strategic steps to expand their crude oil operations and optimize their capital structure. The company disclosed three acquisitions totaling approximately $670 million and outlined significant shareholder benefits, including a 20% increase in dividend payouts.
Bolt-On Acquisitions
Plains revealed the following acquisitions to bolster its footprint across key U.S. oil basins:
- Ironwood Midstream Energy: Plains signed an agreement to acquire this Eagle Ford Basin gathering system from EnCap Flatrock Midstream for $475 million. The transaction is set to close in the first quarter of 2025 following customary approvals.
- Medallion Midstream Delaware Basin Assets: Effective January 1, 2025, Plains' joint venture, Plains Oryx Permian Basin LLC, acquired Medallion Midstream’s Delaware Basin crude oil gathering business for $160 million ($105 million net to Plains’ interest).
- Midway Pipeline LLC: On December 23, 2024, Plains acquired the remaining 50% stake in Midway Pipeline LLC from CVR Energy for $90 million.
These acquisitions strengthen Plains’ position in the Permian, Eagle Ford, and Mid-Continent regions and align with its bolt-on acquisition framework. The company expects these moves to generate incremental capital return opportunities for unitholders.
Capital Structure Optimization
In addition to acquisitions, Plains has agreed to repurchase approximately 12.7 million Series A Preferred Units (18%) at par value ($26.25) from EnCap Flatrock Midstream. This transaction, valued at $330 million plus accrued distributions, is expected to close by late January 2025.
Post-acquisition, Plains’ leverage ratio is projected to remain at the low end of its target range (3.25x to 3.75x), maintaining flexibility and balance sheet strength.
Return of Capital
To reward unitholders, Plains announced a 20% increase in its annualized distribution rate. Starting February 2025, the quarterly payout will rise to $0.38 per unit, up from $0.3175 per unit in November 2024. This equates to an additional $0.25 per unit annually.
