管理層發言
Good day, and thank you for standing by. Welcome to the PAA and PAGP Second Quarter 2026 Earnings Conference Call. Please be advised that today's conference is being recorded.
Thank you, Danny. Good morning. Welcome to Plains All American Second Quarter 2026 Earnings Call. Today's slide presentation is posted on the Investor Relations website under the News and Events section at ir.plains.com. An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on Slide 2. An overview of today's call is provided on Slide 3. A condensed consolidated balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chiang, Chairman, CEO and President; Al Swanson, Executive Vice President and CFO; and other members of the management team. With that, I'll turn the call over to Willie.
Thank you, Blake. Good morning, everyone, and thank you for joining us. This morning, we reported second quarter adjusted EBITDA attributable to Plains of $738 million, which puts us on track to deliver our full year EBITDA guidance of $2.88 billion, plus or minus $75 million for 2026. Al will cover more details on our results in his portion of the call. The conflict in the Middle East and supply disruptions from the Strait of Hormuz illustrate the importance of reliable, secure and responsibly produced energy. We believe this increases the value of existing infrastructure, and we are well positioned to help play a critical role in meeting global energy demand well into the future. While the macro environment has been volatile, we are successfully executing on our three key initiatives for the year. In May, we closed on the sale of our Canadian NGL business, bringing our leverage down to 3.3x. Additionally, we have captured our targeted Cactus III synergies, which will enhance our connectivity to the Corpus Christi market and oil exports longer term. Finally, we expect to realize $50 million of efficiencies across the organization by year-end 2026, along with an additional $50 million by the end of 2027. Strong producer activity and customer demand, coupled with our premier crude oil footprint, are creating new organic investment opportunities. As we outlined in our June press release and detailed on Slide 5, we increased our growth capital spending for 2026 from $350 million to a range of $400 million to $450 million. These are predominantly quick-hit projects that will contribute to the 2027 EBITDA and will generate a rate of return above our hurdle rate. This includes a further build-out of our Permian gathering system to service additional dedicated acreage in the Midland and Delaware Basins. The acreage is backed by several high-quality producers and spans multiple counties. This brings our POPB JV total dedicated Permian acreage to approximately 5.1 million acres. Additionally, we're expanding our Canadian gathering systems. The additional capacity and connectivity will support strategic projects in the Clearwater and the Duvernay formations and are backed by producer commitments. Finally, we have sanctioned a very capital-efficient expansion of the Cactus III pipeline, adding an additional 75,000 barrels a day capacity. This brings the total capacity of the line to 725,000 barrels a day. The expansion will come online by the end of this month and will support increased demand for export barrels out of the Corpus Christi market. We continue to evaluate additional investment opportunities, both organic and inorganic, that strengthen our portfolio and complement our existing asset base. With regard to Permian production, we now expect approximately 100,000 to 200,000 barrels a day of growth in 2026 versus 2025 on an exit-to-exit basis. Upside from our previous forecast of relatively flat production is mainly due to natural gas egress coming online earlier than expected. Importantly, the ramp-up in Permian oil production will create meaningful momentum into 2027 while having minimal impact to EBITDA this year. Our capital allocation framework and efficient growth strategy remain intact. We have a commitment to capital discipline to optimize our asset base and maintain a very flexible balance sheet while returning significant cash to shareholders. With that, let me turn the call over to Al to cover our quarterly performance and other financial matters.
Thanks, Willie. Slides 6 and 7 contain adjusted EBITDA walks that provide additional details on our performance. For the second quarter, we reported crude oil segment adjusted EBITDA of $690 million, representing a significant increase from the first quarter level. This was driven by a combination of Cactus III synergies, efficiencies, market-based opportunities and the absence of headwinds from the first quarter. I would note that second quarter results include approximately $14 million of one-off environmental remediation expenses. Moving to the NGL segment, we reported adjusted EBITDA of $40 million, which reflects the mid-May closing date on the sale of the business. We are contemplating removing NGL segment EBITDA from our reporting in the third quarter and instead reporting adjusted EBITDA with one segment. A summary of 2026 guidance and key assumptions are on Slide 8. As Willie outlined, we raised growth capital to a range of $400 million to $450 million and increased our Permian production forecast to 100,000 to 200,000 barrels a day exit to exit. Maintenance capital was decreased to $175 million, largely due to the timing of the NGL sale. Regarding our pipeline loss allowance revenue, we are approximately 70% hedged for the balance of the year at an average WTI price around $62. We plan to disclose our 2027 hedge position in February in conjunction with our full year outlook. As illustrated on Slide 9, we expect to generate approximately $1.75 billion of free cash flow in 2026 and return significant capital to unitholders while maintaining financial flexibility. Our pro forma leverage ratio at the end of the second quarter was 3.3x, reflecting approximately $2.9 billion of debt reduction driven by the NGL divestiture. With that, I will turn the call back to Willie.
Thanks, Al. Slide 10 highlights the 7% compounded annual growth of our crude over the past few years. Our efficient growth strategy and the sale of the NGL business position us well to execute through a range of market environments, generating a more durable cash flow and creating long-term value. We continue to build momentum into 2027 with increasing Permian production and a strong balance sheet with leverage at the low end of our target range. Our capital allocation framework priorities remain the same: one, return cash to unitholders through our targeted $0.15 per unit annual increases; two, execute on accretive bolt-on acquisitions and organic CapEx; and three, maintain a strong balance sheet with financial flexibility. We have already identified and expect to capture an additional $50 million of streamlining costs in 2027, and we are well positioned to capture potential tailwinds from the volatile oil macro environment. With that, I'll turn the call over to Blake to lead us into Q&A.
Thanks, Willie. Operator, please open the call for questions.
分析師問答
Our first question comes from Gabriel Moreen with Mizuho.
Just wanted to ask about the revised CapEx, which I know came out a couple of weeks ago. Can you just talk about this level of $400 million-plus in investment capital? Maybe how sustainable you think that will be given that some of it's Canadian, some of it's Permian, some of it's Cactus. Just curious how you're thinking about '27 and beyond? And then maybe if I could just ask about the Cactus expansion and adding the 75,000 barrels a day. Just how long do you think that takes to fill? And to what extent can you keep adding these bite-sized expansions to Cactus going forward before you have to contemplate something much bigger than that?
Sure. Gabe, it's Christopher Chandler. So Willie laid out in our slides also show the drivers that led us to change the guidance for 2026. Some of those are typical 18- to 24-month projects. So the spend will carry into '27 and maybe a little into '28. The way I think about it is I don't expect 2027 to look significantly different than 2026, but it is trending a little higher than our historical $300 million to $400 million range net to Plains. So we'll provide 2027 guidance, obviously, when we provide full year guidance in late January, early February.
Gabe, it's Jeremy Goebel. To answer your question, our marketing affiliate can fill the space now and capture the volatility that we're seeing. The expectation is to contract that over time when we see the market. So the reason we executed on it earlier than expected is you saw a lot of volatility, you saw growing production, a really short time period and very capital efficiency. And you see on the demand side, new buyers on the market. So our marketing affiliate can fill that role until someone wants to take the space from us. So we can fill it quickly and then turn it to a term basis, which is our ultimate goal. And then to your question on other opportunities, our team continues to evaluate capital-efficient opportunities, and we'll update you as we have them.
Our next question comes from Manav Gupta with UBS.
I wanted to go — I know it's a little early, but I was thinking maybe you could talk a little bit about how 2027 is shaping up for you, the puts and takes, especially given the number of new pipelines expected, which will alleviate the Permian egress problem so that crude could come to the market. So help us understand the puts and takes for 2027 versus 2026.
Manav, it's Willie. Let me try to address this. We're not going to give you guidance on '27 because the world continues to evolve. What we really want to convey to you is that longer term, whether it's the end of '26 or early '27 is really going to be determined by how things shape up in the Middle East. There remains a lot of uncertainty, as everyone knows. The oil markets are very extreme. But as we view this, the longer this goes, the more you draw global inventories to low levels, the more important North America is going to be to providing fuel for the rest of the world. So everything we're doing is positioning us to be able to capture that when it comes. You tell me the oil price and you tell me when things resolve, and we can put a number together, but that's probably the extent I'll share on our views other than it being very constructive. And we've got a lot of momentum going into '27.
Perfect. My quick follow-up that I just wanted to understand from you is that your balance sheet is fixed. I think earlier in the year last year, you were looking at more bolt-on opportunities. Now I think you have been looking at more organic growth projects also. Can you help us understand the balance between future growth driven by bolt-ons versus organic opportunities?
Manav, this is Willie again. The answer is we look at all of them. We've got lots of levers to pull. If the organic opportunities present themselves, we do it. If it's the bolt-ons, we execute on those. I'm really pleased where we are with our balance sheet where it is and the ability to pull levers. There are lots of different things, whether it's bolt-ons, whether it's CapEx, returning more cash to shareholders and even taking out the preferred. Those are some of the options that we have. So it's a good position to be in, and we'll play the right card when the time comes.
Our next question comes from Praneeth Satish with Wells Fargo.
So just going back to the guidance, you raised the exit-to-exit Permian production growth by 100,000 to 200,000 barrels per day on improving gas egress. I guess you had strong Q2 results, but you left the 2026 EBITDA guidance unchanged. Intuitively, I would have expected at least some of those flush volumes to reach your system and contribute to earnings upside this year. So maybe you can just help us understand why the higher volume outlook doesn't necessarily translate into higher EBITDA guidance for this year and how you're thinking about the timing of when you realize those benefits?
Yes. This is Al. First-quarter crude was kind of the low point for us. In 2Q, we reported the $690 million I mentioned, which is up over $100 million from the first quarter. Our guide at the midpoint currently for the second half is above the $690 million. The math would say it'd be in the low $700s. So we've modeled in a very strong kind of exit to the year. We do believe that we will be seeing and capturing volumes. We had a bit of that already, but we do expect that this sets us up for the momentum that Willie mentioned for 2027 more so than a raise for the second half of the year since we've already modeled a pretty strong second half of the year.
Got you. That's helpful. And then maybe switching gears on the Cactus III expansion. You guys have one of the last meaningful brownfield expansion opportunities in the Permian with Cactus. I'm trying to understand how you balance adding incremental capacity versus maintaining a tighter market where you could benefit from stronger recontracting rates. With you going forward with this expansion, can we assume that the expected returns are compelling enough to outweigh the benefits of a tighter market? How should we think about that?
Praneeth, good question. First of all, the 75,000 barrels a day won't change the market. And our outlook for production is substantially higher than 75,000 barrels a day. So the market from a supply and demand takeaway will be net tighter. The economic return is very capital efficient — that's not in question. They'll be very good. From our standpoint, we're executing on it. The basin is very well contracted. Cactus I is very well contracted. Cactus II is very well contracted, and we're working to continue on Cactus III. So we don't think this impacts our ability to contract at strong rates across the system. We think the volatility will present some opportunities to pay for the expansion in a short period of time and give us the opportunity to contract more space.
Our next question comes from Jeremy Tonet with JPMorgan Securities.
This is Francina on for Jeremy. Just wanted to dig a bit deeper on the guide that appears to present declines outside of regions other than the Permian. Can you walk us through what you're seeing with volume expectations and where that leads us in terms of puts and takes to the current maintained guide?
Sure. We're seeing increased activity. The Permian has added 30 rigs from the trough. The Eagle Ford has added 10 rigs. The Powder River Basin is up 33%, from 9 to 12 rigs. Canada continues to grow. So we're seeing opportunities across the system as evidenced by the expansion capital across the system. From our standpoint, we're cautiously optimistic that that will continue, and it should be good for both our assets in the Permian and outside the Permian. As for the guide, I think Al covered that. We are certainly in position to continue to execute as volatility presents itself. The most volatile piece was the second quarter. The third quarter price volatility was slower. Volatility in margins across the regions got pretty narrow. It's just a different quarter. Given that ships are moving all over the place, that could represent itself in the third and fourth quarter. So we certainly expect to continue to do as well as we can. Right now, we're maintaining guidance flat, but we think we're going to execute on what we've already put in the plan and hope to beat it.
That's helpful. And then I wanted to also touch on what you're seeing for the Canadian organic growth opportunity set and whether those opportunities present near term or longer term. If you could talk about that?
Sure. We're very excited about Canada. The Clearwater around our Rainbow asset, we are continuing to add capacity. Every time we add it, it gets full. So we're excited about it, and those are long-term contracts. Same with our Rangeland asset, which sits in the Duvernay, and we can bring those either north to Edmonton or south to the U.S. markets. Both of those areas are seeing capital. Our Manitou asset, which we haven't talked about much, is seeing substantial activity. There may be an opportunity to partner with some of the egress that's coming out of Canada. So I think we see a lot of opportunities in and around our gathering footprint and how that might fit with assets like our Cushing terminal or our Capline assets downstream. We're excited about Canada and the knock-on effects for the rest of our business.
Our next question comes from Spiro Dounis with Citi.
I want to start off first with market-based opportunities. Can you maybe talk through the outlook into the second half of '26 and where you still expect to see some areas for opportunities? Also, how are you thinking about differentials, volatility, curve structure, storage and how much of that is contemplated in the guide here?
We're not forecasting market-based opportunities other than what we've captured. From our standpoint, if those opportunities present themselves, we will play time, quality and location spreads across the system, and we will capture them. We feel very well positioned with where the guide is, and as volatility presents itself, we'll capture it just as we did in the second quarter.
Got it. Second question, maybe focusing on exports. Are you seeing changes in customer behavior? Jeremy, you mentioned seeing new customers show up. Does that apply to exports? How are you thinking about flows to Corpus versus Houston into the back half of '26?
Yes, we are seeing different customers be interested in expanding where they purchase barrels for some level of security of supply, rather than relying only on spot purchases or term contracts from the Middle East. That's a different behavior than we've seen historically. We'll continue to look at that as the ability to term up additional space. Corpus versus Houston — both are very good markets. The Corpus market tends to demand a premium because it's a single-quality barrel that's largely WTI; Houston has a broader mix of what gets exported and has more refining capacity. Both markets are largely tight, with close to 90% utilization in both markets. We're cautiously optimistic that both will continue to grow as the markets tighten, moving closer to longer-term margins where we'll contract additional space.
Spiro, you know our assets well, but I wanted to highlight that in our visits with people, we've been talking about the market shifting to a demand-pull model. We've been in a supply-push model for quite some time with surplus supply in the world. I do think this shift is occurring. With the inventory drawdowns, North America becomes more important as a supplier. The question you're asking about others wanting to access barrels for security of supply is very true. In the second quarter, we had record crude exports out of the Gulf Coast. Because of the long supply chain with ships, flows shifted, and more volumes went up to Cushing, but that could easily shift back as global events occur. The key thing for us is we have great assets that can play all these different options. It's hard to predict exactly what will happen, but when it does, we'll be in the right place to capture it.
Our next question comes from Keith Stanley with Wolfe Research.
Only one question for me. I wanted to dig into the Cactus III economics a little more. Your Permian CapEx this year is only up $35 million. You have the $40 million earn-out. That kind of implies the Cactus III project is around $50 million to $75 million, which would be a really high return for you guys. Looking forward, how can we think about the cost of future phases of expansion of Cactus III? Do they get a lot more expensive than this? Or can you replicate this a few more times?
Keith, it's Chris Chandler. I'll take that. Regarding the phase we just completed — the 75,000 barrels a day — without sharing the exact number, I think you're reading into our numbers well in that the expansion we just completed was highly economic. We were able to do it for far less than we anticipated when we acquired the asset, and we were able to do it more quickly. I would think of it in terms of tens of millions of dollars, and that doesn't include the earn-out that we disclosed in the slide. So it was very economic and very quick to market. We're taking a close look at future expansion opportunities. Those will have to be backed by customer commitments, of course. But it's safe to say that the costs for those future phases are looking more economic than we originally premised when we acquired the asset. We're really pleased overall; we've been able to capture the synergies with Cactus III and expansion opportunities are ready to go and look very economic when the customer support is firmed up.
Our next question comes from A.J. O'Donnell with TPH.
Maybe if I could just follow on to the last question a little bit. Could you talk a little bit more about the economics of the expansion? I believe you said the affiliate could fill the space right now. As you work to contract that over the longer term, where do you see the rates on that project falling? Largely where they are at right now, or does that get a premium?
Good question. It depends on how we contract that. If it's with shippers similar to those we have in the past, it's going to look like the rates we disclosed last year and the year before when we did our recontracting efforts. So the long-term rates are in that ballpark, and we'll continue to look there. If we opportunistically find other markets, the structure of the term could be different. We don't necessarily want to give away our playbook on the earnings call, but long term, expect it to be consistent with where we have been executing.
Okay. Great. And then just one more on Cactus III. In February, you described stabilizing the base pipeline, then looking at capital-efficient expansions. In May, you said an expansion would be phased and paced to demand. Now that the first 75 is sanctioned, is the base pipeline fully recontracted and stabilized? How soon could we expect to see additional phases?
Good question. The duration of the next phases will be longer than this one, so it will take some time for those next phases. As far as the base contract, we have sufficient demand right now to contract the pipeline and the expansion; it just becomes a matter of price. We see sufficient demand to contract the base pipeline. Future expansions will take time to come up.
A.J., a lot of that depends on our earlier comments about how much people need barrels back for security of supply — essentially tenor versus price — and that's going to evolve. At some point, we think capacity will continue to be scarce, and that's why we're constructive with the market going forward, including the export markets.
Our next question comes from Jackie Koletas with Goldman Sachs.
You reiterated your confidence in capturing the $50 million of cost efficiencies by the end of this year and then another $50 million in 2027. Can you provide a progress update on where these savings are materializing and what could drive incremental efficiencies from here?
Jackie, it's Chris Chandler. We've made good progress on our commitment to capture $50 million in 2026 of efficiencies. The NGL sale was a catalyst in that area, but not the entire driver. We've made a number of changes that contribute to the $50 million and an additional $50 million that we expect to capture in 2027. In terms of reassessing and streamlining our organizational structure, we looked at the number of employees in leadership and management roles. We're a more focused crude oil pure-play company, which demands a different level of oversight and a different approach to running the business and our business processes. We've done some targeted rightsizing of our trucking business, closed and consolidated some marketing offices, and taken a fresh look at everything we do and how we do it from a business process standpoint. Year-to-date, it's fair to say we've realized a little less than half of the $50 million so far this year and we're on track to capture the remainder by year-end 2026. We feel good about capturing an additional $50 million in 2027.
Very helpful. A follow-up on the Canadian gathering system: could you provide more color on the moving pieces, the incremental Canadian egress, timing and potential size or capacity on Rangeland?
Good question. Think of Rangeland as a gathering system where expansions are filling latent capacity. Rainbow is an expansion of mainline capacity and building laterals. As far as egress, we'll first look to fill our existing capacity, which we do on Rangeland today. There are other capital-efficient projects that may be pursued, and we may partner with counterparties on opportunities around assets like Capline and Cushing. I don't think the Rangeland expansion would be competitive with some of those larger egress projects based on scale.
Our next question comes from Gabe Daoud with Truist.
I was hoping to ask another Permian macro question. Given conversations with producers now for '27, any views on where the rig count could go from here? Also, when do you think there could be an acceleration in crude volumes at a basin level toward higher levels like 7 to 8 million barrels per day? If crude remains elevated, you could see some acceleration. What are your overall views?
The gas egress has come on quicker than we expected, and as plants fill up quickly, the G&P operators are seeing their plants fill. The 100,000 to 200,000 barrels estimate for 2026 is supported by volume from July into August that trends favorably to those numbers. We could see it go higher — we have a positive bias based on the last few weeks, so we could see momentum into 2027. Productivity has improved, so the rig count today is more efficient than in 2025. We're excited about the opportunity to grow through the second half of this year and into next year. It's a matter of the duration of that activity as to where the basin ultimately gets to. There's a favorable path to north of 7 million barrels a day; getting to 8 million would require continued improvements and supportive commodity prices, but it's not unreasonable.
Gabe, many producers have highlighted the ability to produce more with improved technologies. That's good for the industry; we want to produce at the most efficient and economic point, and people are starting to crack that code.
No, that's right. Many operators have highlighted surfactants and other technologies to improve productivity and recovery factors, which could be a tailwind. Maybe a quick follow-up: in your conversations, is there a specific price for '27 where you feel operators could be more active? I see $70 on the screen now for '27. Is $75 getting folks more excited? Is there a signal that seems obvious as to where producers could add?
I'll let Jeremy discuss activity rather than specific price points.
Less about price and more about activity. You'll see operators talk about deeper benches in the Midland Basin that are productive. You'll continue to see capital move into those areas. In the Delaware Basin, New Mexico continues to expand in all directions — vertically into deeper benches and horizontally. New Mexico continues to expand and surprise to the upside. You're even seeing some deeper benches work in other basins in certain areas. The basin continues to expand its resource base, which is positive for us since it sits under our footprint.
Our next question comes from Theresa Chen with Barclays.
Willie, going back to your comments about your organization's ability to capture tailwinds from this macro environment and Jeremy's comments: over the past several months of heightened market volatility, has anything about the performance of your commercial organization exceeded your expectations? Are there specific examples where the team capitalized on market dislocations or emerging opportunities in ways that surprised you?
Theresa, it's good to hear your voice. We have a good team that captures different opportunities. I would point to the response in getting barrels down to the Gulf Coast. We had record exports during the second quarter. We were able to source barrels and help facilitate moving those, so that volume strategy worked. We've also captured some value around the shape of the forward curve. Another piece of value is the discussions we have with our producer partners on their pinch points, which set up some of these capital projects we're now putting into place. As Al shared, we've hedged a good portion of PLA, so we didn't have a lot left to play with, but we still have some barrels out there that could help for the rest of the year.
It does. And on marketing-related earnings related to wide quality differentials: how do you think about the growing volume of Venezuelan barrels in the Gulf Coast, increasing heavy supply in PADD III, and incremental westbound egress for heavy Canadian grades over time? How does that change your views on heavy differentials across North America and your marketing and optimization opportunities?
It's a dynamic picture. The pace of growth in Canada and Venezuela will dictate outcomes. If Venezuela grows, it could push Canadian barrels back and widen differentials. West Coast egress could also change dynamics. So it's a function of how quickly egress is added in Canada, how quickly Venezuela production gets to the Gulf Coast and whether that growth is sustained. All three are moving at different speeds. Any time there's a dislocation, our team can capture it, but our preference is to move barrels first. We'll look to move barrels and capture dislocations when possible. Growth is good and dislocations create opportunities; we'll help customers navigate them.
Theresa, on the Venezuela question specifically, increased heavy barrels into the Gulf Coast are healthy because those barrels are designed for the Gulf Coast, and that pushes other barrels back, which creates further opportunities for us.
Our next question comes from Sunil Sibal with Seaport Global.
First, a clarification: Al, you mentioned that in Q2 you had $14 million of environmental remediation expense. Is there any impact of that in the second half in terms of ongoing efforts?
This is Al. No, those were one-off expenses. We do not expect that to recur in the second half.
Then on the $400 million to $450 million of CapEx, are there other regions where you see outsized opportunities, or is the spend primarily in Permian and Canada?
Sunil, the better chance to get higher returns is around our existing assets. While we don't target assets only by region, strong returns anywhere along our value chain are considered. The chances are higher in areas with more activity, but we remain disciplined on hurdle rates — it's return-driven and strategy-driven rather than region-driven.
So you're implying that the $400 million to $450 million can be achieved primarily in those two regions?
That would be a good assumption.
I'm showing no further questions at this time. I would now like to turn it back to Willie Chiang for closing remarks.
Thanks, Daniel, and thanks, everyone, for joining us today. We look forward to seeing you on the road. Take care, and have a safe weekend.
This concludes today's conference call. Thank you for participating. You may now disconnect.