Plains All American Pipeline (PAA), mcap=$6.9bn, price $9.92 vs $10.32

– Macro oil and political bet that the Permian basin will run out of effective takeaway capacity by FY24 due to resurgence in US oil production, resulting inland oil differentials.
– Midstream MLP PAA is well-positioned to benefit from this, with half of EBITDA derived from Permian pipelines.

– PAA trades at 16% ’22 FCF yield or 7.3x ’22 EBITDA.
– Multiple expansion expected.

Exp. gain: 220% to $33/share, based on ’24 distribution of $2.4/share (200% above current) and 7% dividend yield.

Full PAA write-up
(free guest account required):


Leave a Comment