We're Upgrading Plains to a Wide Economic Moat; Permian Exposure Drives 20% Undervaluation
After taking a deeper dive into the Plains entities, we are upgrading our moat rating for Plains All American Pipeline LP and its GP (Plains GP Holdings LP) to wide from narrow. Our fair value estimate moves to $26 from $24 for both entities as a result of extending our period of excess returns over a longer time frame. We see both entities as about 20% undervalued, reflecting, in our view, a lack of appreciation for growth in Permian volumes over the next few years, a recovery in supply and log...Plains All American Pipeline is a holding company. Through its subsidiaries, the company owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGL) and natural gas. The company has three operating segments: Transportation, which provides activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges; Facilities, which provides storage, terminalling and throughput services for crude oil, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services; and Supply and Logistics, which provides merchant-related activities.
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