Plains All American Plans IPO - Analyst Blog

Plains All American Pipeline L.P. (PAA), recently, announced plans for an initial public offering of PAA Natural Gas Storage L.P. (PNGS), a master limited partnership subsidiary, which the company plans to create for its natural-gas storage business. 

Plains said it will register for the offering during the first quarter of 2010. The company plans to use the proceeds of the offering to repay debt and for general partnership purposes. 

Plains intends to own 2% general partner interest and incentive distribution rights of PNGS. It also expects to retain a substantial portion of the MLP’s common and subordinated units.
 
A master limited partnership is a tax advantaged instrument in which the bulk of the company's earnings are paid out to shareholders in the form of dividends. 

Houston, Texas based Plains All American Pipeline L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. The Partnership is also engaged in the development and operation of natural gas storage facilities.
 
In the third quarter of 2009, Plains reported revenues of $4.86 billion, down 45% year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter improved 5% to $234 million from $223 million a year ago. 

For the fourth quarter, Plains expects adjusted EBITDA to be in the range of $240−$265 million and adjusted net income of $114−$143 million or 56−76 cents per unit. For the full year 2009, it expects adjusted EBITDA in the range of $985 million to just over $1 billion and adjusted net income of $520−$549 million or $2.88−$3.10 per unit. 

Plains All American expects maintenance capital expenditures for the full year of 2009 to range from $85 million to $95 million. Based on the recent distribution announcement, the company expects the distribution per unit for 2009 to be slightly over $3.62 per common unit, an approximate 4% increase over the average distribution paid in 2008 of $3.50 per unit.
Read the full analyst report on "PAA"
Read the full analyst report on "PNGS"
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