Plains All American weakens as NGL divestiture and cost-cutting framework mute 2026 growth
Plains All American Pipeline, LP (PAA.NASDAQ)a mid-sized US-listed partnership with a market capitalization of approximately $14 billion, operates crude oil and natural gas transportation, storage and transportation assets throughout North America.
Units fell about 2.7% in early New York trading after the company reported results for the fourth quarter and full year 2025. The stock has fallen sharply in recent months and is still well below its 52-week high, reflecting broader pressure across the energy sector amid soft crude prices and expectations of increased volume.
Stock Performance and Market Content
Plains units have traded in a narrow range in recent weeks and are sitting near the bottom of their 52-week band. Recent stock trends reflect pressure on the entire North American midstream sector as crude oil prices fluctuate, expectations for US production growth and tighter monetary policy threaten pipeline operators’ catalysts.
Fourth Quarter Results
Quarter ended Dec. 31, 2025, Plains reported:
- Adjusted EBITDA due to PAA was $738 million, up modestly year over year.
- GAAP net income generated by PAA was $342 million, compared to $36 million last year, driven primarily by asset contributions and acquisition-related benefits.
- Revenues declined year-over-year, reflecting lower commodity prices and contract rate resetting on certain long-running pipelines.
Quarterly performance was driven by strength in the crude oil segment, partially offset by weakness in natural gas liquids (NGLs).
Financial Performance Full Year 2025
For the full year 2025, Plains posted:
- Total GAAP revenue generated by PAA was $1.435 billion, up 86% from 2024.
- Total cash provided for operating activities of $2.94 billion.
- Adjusted EBITDA due to PAA of $2.833 billion, an increase of 2% year over year.
Adjusted free cash flow for the year was $875 billion, reflecting $2.651 billion of net cash outflows for acquisitions, primarily related to the EPIC Crude discovery, now renamed Cactus III.
Component Performance
Part of Crude Oil
- Adjusted EBITDA for the fourth quarter increased 7% year over year to $611 million.
- Adjusted EBITDA for the full year reached $2.344 billion, up 3% from 2024.
- Growth was supported by bolt-on acquisitions, higher pipeline prices and tariff increases, partially offset by lower commodity prices and repricing in certain Permian Basin pipelines.
Natural Gas Liquids component
- Adjusted EBITDA for the fourth quarter fell 21% to $122 million.
- Adjusted EBITDA for the full year fell 2% to $469 million.
- Results were depressed by lower sales rates linked to warmer weather and weaker medium-weight frac distribution.
Strategic Transition and portfolio simplification
Plains is also positioned as a North American crude oil midstream operator.
- Canadian NGL Divestiture: The company agreed to sell most of its Canadian NGL business to Keyera Corp. The transaction is expected to close by the end of the first quarter of 2026 and generate approximately $3.2 billion in proceeds after taxes and fees.
- Composition of Cactus III: The EPIC Crude program posted two months of cash in the fourth quarter. Plains expects approximately $50 million of incremental EBITDA from Cactus III synergies by 2026.
2026 Guidelines and Effectiveness Program
Plains’ 2026 forecast is adjusted EBITDA of $2.75 billion, plus or minus $75 million, which includes an estimated $100 million contribution from the NGL business in the first quarter before the divestiture closes.
The company expects adjusted free cash flow of about $1.8 billion in 2026, excluding the proceeds from NGL sales.
Administrators have outlined “self-help” plans targeting $100 million in cost savings through 2027, about half of which are expected to be realized by 2026. The measures include consolidation of operations, closure of regional offices and reduction of general business and administrative costs. The plan is designed to lower expectations for a flat Permian production profile next year.
Capital Allocations and Allocations
Plains increased its annual distribution by 10% to $1.67 per unit, with an increase of $0.15 per unit due in February 2026. Management is aiming for sustained annual distribution growth of $0.15 per unit.
The partnership also lowered its distribution margin to 150% from 160%, indicating greater confidence in the stability of post-demerger cash flows. After the Canadian NGL sale, Plains said it may consider a one-time special distribution of up to $0.15 per unit to help pay potential tax liabilities to unitholders.
Balance Sheet and Liquidity
At year-end 2025, Plains reported a pro forma leverage ratio of 3.9 times, above its long-term target range of 3.25x to 3.75x. Management expects a pullback back to the midpoint of the target range soon after the NGL shutdown.
The company ended the year with $2.0 million in committed funds and an investment-grade credit profile. In 2025, Plains issued $750 million of senior unsecured notes and raised a $1.1 billion term loan to finance the acquisition and debt incurred in the EPIC transaction.
Sector and Global Competitiveness
The Plains results come as the broader middle class faces pressure from lower crude prices, muted manufacturing growth and higher liquidity. Peers including Enterprise Products Partners, Kinder Morgan and Magellan Midstream reported similar trends, with fee-based sustainability offset by limited volume growth.
Commentary reaction
There were no immediate, widely reported analyst upgrades or downgrades after the earnings release. The market reaction reflected investors’ focus on the decline in revenue, the imminent EBITDA outlook and the execution of the Plains strategy.
Outlook
Plains enters 2026 with a simplified asset base, higher distribution and a focus on cost control. While the company expects stable cash generation, its near-term performance remains tied to crude oil market conditions and the successful implementation of its NGL diversification and efficiency programs.
