Plains All American (PAA) will inject ~$3.0B of net proceeds into its war chest following the sale of its Canadian NGL assets to Keyera (KEY.TO) for $3.75B (C$5.15B). The transaction includes all of PAA’s Canadian NGL assets as well as certain US-based assets.
The Strategy: The deal announced last Tuesday (June 17) advances Plain’s transition into a midstream pure play serving crude oil. PAA will retain ownership of the remaining US NGL assets along with its crude oil business in Canada. The sale reduces its direct commodity exposure and provides PAA with capital to redeploy into higher-return opportunities.
Calgary-based KEY said it anticipates C$100MM (US$73MM) of annual synergies in the first 12 months from merging the assets with its own NGL business in Canada. The companies expect to close the deal in 1Q26.
Looking Ahead: As detailed in the Financial Blueprint, Plains delivered 1Q25 Adj. EBITDA of $754MM and exited the quarter with a leverage ratio of 3.3x and $427MM of cash vs $8.2B of long-term debt. The company's leverage ratio is at the low end of its 3.25x–3.75x target. The disciplined credit profile underpins PAA’s capacity to deploy capital without threatening its covenant headroom.
With plenty of dry powder available after the Keyera transaction, what is Plains next move? The company could use proceeds from the sale to consolidate its Permian Basin joint venture with Oryx Midstream. On a consolidated basis, Plains Oryx Permian Basin FY24 Adj. EBITDA was ~$1.45B, 65% (~$940MM) attributable to PAA and 35% (~$506MM) to Oryx (see chart).
Recent bolt-on transactions have traded at multiples ranging from 6.3x (ONEOK’s (OKE) Medallion gathering acquisition) to 9.5x (Sunoco's (SUN) acquisition of NuStar Energy LP). Applying a mid-cycle 7x EBITDA multiple to the Oryx JV implies an enterprise value of ~$10.15B, so a 35% interest would cost ~$3.6B – likely within PAA’s allocation of capital.
With sub-3.5x leverage, ~$3B of firepower and clear historical EBITDA multiples, PAA is well positioned to execute a near-term, accretive purchase of the remaining 35% JV stake. Such a move would simplify governance, capture full cash-flow upside, and reinforce PAA’s disciplined M&A and value-creation thesis.
PAA could also target sizeable crude oil infrastructure disposals by its peers. Kinder Morgan’s (KMI) Products Pipelines & Terminals segment includes condensate processing, crude gathering pipelines and related terminals that are largely ancillary to its natural gas transmission business. Phillips 66’s (PSX) FERC-regulated crude oil and products pipelines generated ~$518MM of Adj. EBITDA. These non-core assets represent acquisition opportunities that dovetail with PAA’s disciplined growth thesis. – London Spivey, CFA and Gage Dwan Tickers: KEY.TO, KMI, OKE, PAA, PSX.
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