Plains All American Pipeline (NASDAQ:PAA) reported fourth-quarter 2025 adjusted EBITDA attributable to Plains of $738 million and full-year adjusted EBITDA of $2.833 billion, as management outlined a transition toward becoming a “pure-play crude” midstream operator. Chairman, CEO and President Willie Chiang said 2025 was a “pivotal year” despite what he described as a challenging macro backdrop that included geopolitical unrest, OPEC actions to increase oil supply, and uncertainty around the economic impact of tariffs.
Management emphasized that the company’s strategic shift is being accelerated by two major portfolio moves: the pending divestiture of its NGL business and the acquisition of the EPIC Pipeline, now renamed Cactus III. Chiang said these transactions are intended to enhance the “quality and durability” of cash flows, improve distributable cash flow, and better position the company for future market cycles.
2026 priorities: close NGL sale, integrate Cactus III, streamline costs
- Closing the NGL divestiture near the end of the first quarter of 2026, pending Canadian Competition Bureau approval.
- Integrating Cactus III and delivering synergies intended to improve EBITDA.
- Streamlining the organization to improve efficiency and reduce costs.
Plains is targeting $100 million of identified annual savings through 2027, with approximately 50% expected to be realized in 2026. Management attributed the opportunity to a simplified post-divestiture business and described planned actions including reducing G&A and operating expenses, consolidating operations, and exiting or optimizing lower-margin businesses.
As an example of simplification efforts, Chiang pointed to the sale of the Mid-Continent lease marketing business in the fourth quarter of 2025 for total consideration of about $50 million, which he said had “minimal impact to EBITDA” while reducing working capital needs and simplifying operations.
Cactus III synergies and expansion planning
In response to analyst questions, management provided additional color on expected synergies from Cactus III. Jeremy Goebel said the company had disclosed $50 million of synergies and believed it was “already on run rate” for that amount. He said roughly half of the synergies were tied to G&A and OPEX reductions and removing costs associated with operating as a private-equity-backed entity (such as insurance structures), with those savings achieved in the fourth quarter. The remaining synergies were described as coming from filling available capacity with supply and initiatives associated with quality management, with the company expecting to be “substantially there” in the first quarter and to hit the synergy figure during 2026.
On potential expansion, management said it was evaluating capital-efficient optimization options—including upstream and downstream connectivity and incremental expansions that may or may not require new pipe—while first prioritizing stabilization and recontracting of the base system. Chiang added that expansion is not necessarily “binary” and could be executed in phases to match capacity to market demand.
Guidance: adjusted EBITDA midpoint of $2.75 billion in 2026
Plains issued 2026 adjusted EBITDA guidance of $2.75 billion net to Plains at the midpoint (±$75 million). The company’s oil segment EBITDA midpoint is $2.64 billion net to Plains, which management said implies 13% year-over-year growth in the crude segment. The company expects $100 million of EBITDA from the NGL segment assuming the divestiture closes at the end of the first quarter, plus $10 million of other income.
On volumes, Chiang said the company forecasts Permian crude production to be “relatively flat” year-over-year in 2026, with overall basin volumes around 6.6 million barrels at year-end, similar to end-of-2025 levels. Management said it expects growth to resume in 2027, citing ongoing global energy demand growth and diminishing OPEC spare capacity as supporting factors.
CFO Al Swanson said crude oil segment adjusted EBITDA in the fourth quarter was $611 million, including two months of Cactus III contribution and partially offset by a full-quarter impact from recontracting on the long-haul system. NGL adjusted EBITDA in the quarter was $122 million, reflecting seasonal uplift but moderated by warm weather impacts on sales volumes and relatively weak frac spreads.
Capital allocation: higher distribution, lower coverage threshold
Plains announced a 10% increase in the quarterly distribution payable February 13 for both PAA and PAGP. On an annualized basis, management said the distribution increased by $0.15 per unit from the November level to $1.67 per unit, which Chiang said represented an 8.5% yield based on PAA’s recent equity price.
In conjunction with its portfolio simplification and the expected reduction in commodity exposure following the NGL sale, Plains said it is reducing its distribution coverage ratio threshold to 150% from 160%. Management described the change as reflecting improved visibility and aligning with peers while still maintaining a “prudent” coverage level. Chiang reiterated that Plains’ targeted annualized distribution growth remains $0.15 per unit.
When asked about how coverage is assessed, Swanson said the company sets the threshold based on distributable cash flow coverage with the intent of funding routine organic capital—generally in the $300 million to $400 million range—plus a small amount for bolt-on opportunities. Larger investments, he said, would be funded with the balance sheet.
2026 capital spending, free cash flow, and balance sheet
Plains guided to $350 million of growth capital and $165 million of maintenance capital net to PAA in 2026. Chris Chandler said the $350 million level brings Plains back into its more typical spending range and reflected the completion of several projects in 2025, including the NGL fractionator expansion in Canada, Permian crude infrastructure projects, and a Midcontinent project to unload Uinta wax crude.
Swanson said distributable cash flow is expected to increase about 1% in 2026 even though “headline EBITDA” would decline slightly from the divestiture, citing lower corporate taxes and maintenance capital as drivers. Plains expects to generate about $1.8 billion of adjusted free cash flow in 2026, excluding changes in assets and liabilities and excluding sale proceeds from the NGL divestiture.
Regarding a previously discussed special distribution tied to the NGL sale, Swanson said the Cactus III acquisition is expected to mitigate a significant portion of the tax liability to unitholders, and Plains now expects a special distribution of $0.15 per unit or less after closing, pending board approval.
On financing, management noted the issuance of $750 million of senior unsecured notes in November, consisting of $300 million due 2031 at 4.7% and $450 million due 2036 at 5.6%, with proceeds used to partially fund the EPIC acquisition. The company also paid off the $1.1 billion EPIC term loan assumed in the deal by issuing a $1.1 billion senior unsecured term loan at PAA. Management said the majority of NGL sale proceeds would be used to reduce debt and expects leverage to trend toward the middle of its 3.25x to 3.75x target range after closing.
In closing remarks, Chiang said Plains achieved its “best-ever” safety performance, citing its best TRIR safety rate and lowest injury severity as measured by total lost workdays. Management reiterated its framework of generating free cash flow, maintaining balance sheet flexibility, and returning capital to unitholders.
About Plains All American Pipeline (NASDAQ:PAA)
Plains All American Pipeline (NASDAQ: PAA) is a publicly traded energy infrastructure company that provides midstream services for crude oil and natural gas liquids (NGLs). The company’s core activities include gathering, transporting, storing and marketing hydrocarbons, using an integrated network of pipelines, storage terminals, rail and truck transloading facilities. Plains also offers logistics and marketing services that connect upstream producers with refiners, traders and export markets.
Plains owns and operates a portfolio of pipeline and terminal assets concentrated in major U.S.
