New York Stock Exchange June 11, 2019 2019 INVESTOR DAY
2019 Investor Day Agenda Approximate Timing Activity / Presentation Presenter 12:30pm - 1:30pm Registration / Lunch 1:30pm Welcome & Opening Remarks Brett Magill Positioned For The Long Term Willie Chiang Strategic Overview Harry…
Investor Relations Contact Information Phone: (866) 809-1291 Email: InvestorRelationspaalp.com Roy Lamoreaux, Brett Magill, Vice President Director
Presenters Willie Chiang Chief Executive Officer Willie Chiang is Chief Executive Officer of Plains All American GP LLC, the general partner of Plains All American Pipeline, L.P. Mr. Chiang has served as a director of our general partner…
Presenters Al Swanson Executive Vice President and CFO Al Swanson has served as Executive Vice President and Chief Financial Officer of Plains All American GP LLC, the general partner of Plains All American Pipeline, L.P. since February…
Presenters Jeremy Goebel Executive Vice President, Commerical Mr. Goebel joined Plains in 2013 and previously served in various roles for Simmons & Company Internationals corporate finance practice including including advisor advisor…
Other Participants Jason Balasch President, Plains Midstream Canada Jason Balasch serves as President of Plains Midstream Canada (PMC) and is responsible for the day-to-day operations of our Canadian business activities, including…
Other Participants Chris Herbold Senior Vice President and CAO Chris Herbold has served as Senior Vice President and Chief Accounting Officer of Plains All American GP LLC, the general partner of Plains All American Pipeline, L.P. since…
Other Participants Dean Gore Vice President, Environmental and Regulatory Compliance Dean Gore is Vice President, Environmental and Regulatory Compliance. He joined Plains in 2011, having previously worked as an environmental and…
Other Participants Brett Magill Director, Investor Relations Brett Magill joined Plains as Manager, Investor Relations in 2014 while completing the full-time MBA program at Rice University where he concentrated in Energy Finance. Mr.…
Other Participants Alafair Hotze Senior Analyst, Investor Relations Alafair Hotze joined Plains in January 2018. Prior to her current role in Investor Relations, she worked in various Controllers roles at ExxonMobil for 7 years,…
Other Participants Brad Strake Analyst, Investor Relations Brad Strake joined Plains in 2015. Prior to his current role in Investor Relations, he served as an analyst for the Rockies, Gulf Coast, & West Coast regions in Plains Pipeline…
Brett Magill, Director Investor Relations OPENING REMARKS
SAFETY ANNOUNCEMENT
Presentation Agenda WELCOME & OPENING REMARKS Brett Magill, Director IR POSITIONED FOR THE LONG TERM Willie Chiang, CEO STRATEGIC OVERVIEW Harry Pefanis, President & CCO COMMERCIAL UPDATE Jeremy Goebel, EVP - Commercial OPERATING…
Financial Structure Overview Dual Securities Provide Flexibility & Optionality PAA GP Holdings, Financial Profile(1) 28bln 6% current 5% targeted LLC Unified Board (PAGP GP) Enterprise Value Distribution Yield Distribution…
Willie Chiang, CEO POSITIONED FOR THE LONG TERM
Discussion Outline Plains Overview Macro Industry Observations Plains Positioning 2019 Investor Day Takeaways PAA PAGP 8
Plains All American: Positioned for the Long Term Supply aggregation, quality segregation, flow assurance, and access to multiple markets Built over 20+ years through multiple cycles. Well positioned for continued growth. 1 mmb/d…
Constructive Global Demand Long-term growth driven by developing nations & Asia -- current directional illustration(2)-- Global Liquids Demand (1) (mmb/d) Population Consumption (millions) (mmb/d) 110 300 20 100 90 80…
U.S. & Canada Leading World Liquids Growth (1) Permian projected to be a top 4 global producer by YE 2019 (mmb/d) 11.7 5.2 20.1 Russia Canada 5.5 3.0 Iran Iraq 4.8 6.3 12.0 3.2 China United States Kuwait Permian…
U.S. & Canada Oil Production to Grow 5 mmb/d by 2023 Permian driving growth: 3.3 mmb/d, or 65% of potential total growth (mmb/d) U.S. & Canada Crude Oil Production 25 +4.6 mmb/d +5.0 mmb/d 20 (YE13 YE18) (YE 18 YE 23) 15…
U.S. Refiners Approaching Light-end Limitations Incremental light-crude production poised for export (mmb/d) Key L48 Onshore Basins Crude Oil Production Growth (by gravity) (1) 14 Est. Growth (YE 18 23) 12 50+ + 1.5 mmb/d 10…
2019 Investor Day Overview 1. U.S. & Canada Supplying Global Needs. World needs North American hydrocarbons; Permian is the primary growth engine. U.S. becoming net exporter; domestic midstream is a critical link. 2. Plains is well…
Harry Pefanis, President and CCO STRATEGIC OVERVIEW
Strategic Focus Areas 1. Operational excellence 2. Capturing North American production growth 3. Delivering value chain solutions 4. Optimizing operations and assets 5. Solid financial positioning PAA PAGP 20
Integrated Approach Reinforces Positioning: Enables Delivery of Value Chain Solutions; Supports Constructive Long-term Relationships Business Model Optimize Performance Build or Acquire Understand Markets Increase utilization & Key…
North American Liquids Production Growing Plains is well positioned to benefit (key onshore basins YE 18-23) + 900 YE 2018 (mb/d) + 150 YE 2023 est. (mb/d) Western Canada Western Canada Williston Williston + 300 + 250 Rockies…
Plains Growth Underpinned by Pipeline Investments 1998 to Present: 6mmb/d of tariff volume growth Acquisitions / Projects 5.9 mmb/d(1) All American Pacific BridgeTex JV Diamond JV Alpha Crude Connector Scurlock Permian Rainbow…
Handle Significant Liquids Volumes Across Major Producing Regions W. Canada (mb/d) Western (mb/d) Transportation(1) 532 Transportation 182 Lease Purchase 38 Western Canada Lease Purchase 19 Rockies (mb/d) Transportation 302…
Plains Footprint Provides the Opportunity for Capital Efficient Expansion Projects Creates the opportunity to develop brownfield projects Cost efficient capacity expansions Extend into new supply / market areas Potential reversals…
Industry Environment Production growth & logistical constraints created significant location differentials Benefitted those with transportation capacity Created opportunities to develop new infrastructure Attracted new capital /…
Commercial Strategy Utilize lease gathering activities to generate and support BD efforts Create optionality with our intra-basin pipeline segments and our storage terminals Develop capital efficient long-haul transportation…
Jeremy Goebel, EVP - Commercial COMMERCIAL UPDATE
Commercial Strategy Focus 1. Leverage system to sanction strategic / accretive growth projects Alignment with markets, customers, and partners Capital efficient / high-return brownfield Strategic / accretive greenfield 2. Operate a…
Optimizing Pipeline & Terminal Systems Through Supply Aggregation & Market Access (Directional Illustration) Supply Aggregation -- Serving supply-push and demand-pull customers -- Supply Hub Market Access Demand Hub -- Flow…
Supply Aggregation Direct & Indirect Connectivity to Vast Majority of Permian Gathering Capacity Colorado City Jal Midland Odessa Wink El Mar Orla Blacktip Crane PAA Pipelines Wolfbone McCamey 3rd Party Connectivity…
Securing Volumes at the Lease Permian Example Step-change increase over last five years in acreage dedications & tariff volumes Permian Acreage Dedicated to Plains Systems Permian Tariff Volumes(1) 3,700 mb/d 1.5 million acres…
Hub Terminal Connectivity & Capabilities Strategic & complementary to base business, enable new pipeline opportunities (direct connections underlined) Cushing Inbound Pipelines Outbound Pipelines St. James Cushing Storage…
Market Access: Direct & Indirect Connectivity to Vast Majority of USGC Dock Capacity Port PAA Connected Pipeline Dock / Owner Capline 1 Corpus Christi Cactus II BPL/Trafi 12 2 Corpus Christi EFJV PAA/EPD 8 Mobile 3 Corpus…
Aggregation & Connectivity Drive Long-haul Opportunities Delivering value-chain solutions supporting long-term relationships Cushing Sunrise II Wichita Falls PAA, VLO, PSX Midland Colorado City Wink Red Oak PAA, PSX Orla…
Value Chain Solutions: Balance of Supply Push & Demand Pull, Strong Alignment with Industry Partners Asset* Producers Peers Marketers Refiners Advantage EF JV White Cliffs BridgeTex Saddlehorn Cactus II Sunrise II W2W Stack…
Continuing to Enhance Project Returns and Alignment with Strategic Partners Midland LOI executed with MPLX to enter JV / shipping commitment Meaningfully enhances expected Wink project returns beyond Plains investment hurdle…
Red Oak Pipeline JV Leveraging Plains existing system capacity, connectivity & capabilities Cushing Project Overview 30 Wichita Falls Ownership (PAA / PSX): 50% / 50% Scope: 30 / 20 Red Oak Origins: Cushing & Midland…
Red River Expansion & JV (announced May 28 ) th Capital-efficient expansion of demand-pull system (Cushing / Permian to USGC Markets) Cushing Strategic / accretive expansion; strong alignment with industry partner Expansion from…
Advancing Multiple Expansion / Optimization Opportunities Integrated system enables volume pull-through from growing supply basins to USGC Patoka Saddlehorn: evaluating potential expansion Saddlehorn DJ & Powder River Basin…
Continuing to Grow Portfolio of Strategic JVs to Optimize Value Chain Upstream of Cushing Canada Rockies Cross-border pipes Saddlehorn JV (PAA, MMP*, APC) (Rangeland & Wascana) UJI with NGL (Grand Mesa) Western corridor systems…
Executing NGL Strategy to Reinforce, Optimize & Grow Core Canadian Asset Positioning & Market Access MONTNEY / GRANDE PRAIRIE Advancing multiple key initiatives, including: Positioning assets / contracts to increase predictability of…
Chris Chandler, EVP & COO OPERATING EXCELLENCE & CAPABILITIES
Operating Strategy Focus 1. Commitment to operating excellence 2. People, assets & systems 3. Operational capability and quality segregation 4. Project execution capability Drives long-term success for Plains PAA PAGP 44
Commitment to Operating Excellence Safety Environmental Beyond compliance Personal & process Asset integrity Motor vehicle & trucking Partnering with regulators Reliability Optimization Underpins safety & environmental…
Plains Aspires to be a Leading Industry Operator Safe, reliable & responsible operations Operations Regulatory Social Management System Compliance Responsibility (ESG) PHMSA FERC OSHA Business Community Building…
Our People: Plains Most Valuable Asset 4,900 employees and multiple regional offices throughout North America Calgary: 500 employees Selected 2018 Operating Highlights (1) Pipeline: 2 billion bbls transported Casper Denver…
Plains Operates One of the Largest Crude Oil Midstream Systems in North America Crude oil: linking key supply regions, demand centers, and export outlets NGL: assets in low-cost liquids-rich Canadian gas supply centers and niche…
Extensive Supply-to-Market Connectivity & Capabilities Operational capabilities critical to delivering value chain solutions throughout North America CAD crude to USGC Empress NGL to US demand Delaware Basin crude to…
Operational Capability Delaware Basin Case Study (next 4 slides) Colorado City Gathering Intra-Basin Jal Midland Long-Haul El Mar Wink Orla Odessa Blacktip Wolfbone Crane McCamey Large-scale supply Quality control Flow…
1. Expanding Permian System Capacity Enhancing volume pull-through on broader system Permian System Capacity Project Highlights Sunrise II (mb/d, rounded) +400 7,200 +900 6,800 1,500 Cactus II (underway) +800 5,900 5,100…
2. Expansions Enable Tariff Volume Growth Pull-through benefit across system PAA Permian Tariff Volumes (mb/d) 4,268 CAGR 4,063 3,880 Last 8 Quarters: 6% 3,734 1,081 Long-Haul Last 4 Years: 26% 3,219 3,240 1,019 1,175 Last 10…
3a. Quality Segregation Capability Differentiates System Directional Illustration Condensate WTL WTI WTS Common Stream --ability to segregate at the lease is critical-- PAA PAGP 53
3b. Quality Segregation Capability Differentiates System Directional Illustration Dedicated Gathering Dedicated Terminalling Condensate WTL WTI WTS Cond. WTL WTI WTS Batch Segregation --ability to segregate at the lease…
4. Quality Segregation in Practice Plains System Multi-grade lease segregation, large-scale capacity dedication and batch transportation 4 grades 2 grades produced produced West of Wink East of Wink Colorado City Jal Midland…
Safe & Responsible Project Execution: Focused on delivering projects on time & on budget while minimizing impact to communities & environment Last 5 Years: 4,000 miles of pipe placed into service Next 3 Years: 1,800 miles of new…
Cactus II Construction underway, targeting initial service late 3Q19 Project Overview 670 mb/d capacity (90% contracted on original 585 mb/d) Midland Wink Targeted In-Service: Partial service late 3Q19 / Orla Full-service 1Q20…
Wink to Webster JV Project sanctioned and progress advancing Project Overview Up to 1.5 mmb/d capacity (36, 650-miles) Targeted In-Service: 1H21 Midland Multi-grade segregation and…
Meeting Break
Roy Lamoreaux, VP Investor Relations, Communications & Government Relations ESG (SOCIAL RESPONSIBILITY)
Commitment to Social Responsibility (ESG) Focus and alignment throughout the organization Focused on socially responsible operations throughout our history Executive direction & oversight Working group tasked with implementation…
ESG: Built on Values / Three Pillars Do the Right Thing motto embraced Plains Values ESG Pillars Safety & Environmental Stewardship Ethics & Integrity Accountability Community Business Building Integration Respect & Fairness…
ESG Reporting Data-driven disclosure allowing stakeholders to effectively assess our practices Recent Activities Engagement with ESG rating firms, banks ESRM groups, investors, peers, and API & AOPL on recommended ESG disclosures…
Business Integration Living our values & further integrating ESG practices into operations Environmental and social risk management embedment in operations Part of our Operations Management System (OMS) continuous improvement…
Community Building Responsible engagement in our communities Employee engagement across North America Company donations & employee contribution matching Responsible development / Community engagement on key projects Meaningful SR…
Governance Leadership alignment & other attributes similar to C-Corp governance Board of Directors: Unified & Aligned Significant equity ownership (PAA, PAGP & AAP) Eight elected to rotating 3 yr. terms (majority independent) 2…
Al Swanson, EVP & CFO FINANCIAL UPDATE
Financial Strategy Updated April 2019 Achieve and maintain mid-BBB / Baa credit ratings Target a credit profile of: LT Debt / Adj. EBITDA Multiple 3.0x 3.5x (lowered 0.5x; S&L normalized) LT Debt / Book Capitalization Ratio 50% or…
Senior Notes Maturity Profile As of March 31, 2019 Senior Notes Senior Notes(1): 9.0 Billion Wtd. Average Tenor: 10.5 years Percentage Fixed: 100% Wtd. Average Rate on Senior Notes: 4.5% Oct Dec Jan Feb Jun Jan (…
PAA Historical Performance & 2019 Guidance Consistent focus on growing fee-based cash flow ( in millions, except per unit profit) Segment Adjusted EBITDA 462 450 Fee-based growth driven by: 60 651 568 359 711 665 Permian…
Key Company Level Guidance Metrics ( in millions, except per unit data) 2018 2019 (G) (Y/Y) % (Y/Y) Fee-based EBITDA 2,219 2,400 181 8% Supply & Logistics and Other, Net 465 450 (15) Adjusted EBITDA 2,684 2,850 166 6% Adjusted Net…
DCF and Adjusted Net Income Focused on Per Common Unit Results ( in millions, except per unit data) DCF Per Common Unit DCF DCF Profile Profile DCF per Common Unit 2,170 2.98 1,948 2.71 2.46 1,474 1,414 2.24 1,565 1,312 1.83…
Executing 2019 Capital Program (80% Permian) Multiple project completions, ramping cash flow over next 12-24 months Project Highlights Expansion Capital Summary ( in billions) 1.9 Cactus II: partial service 3Q19, full service 1Q20…
Illustrative Calculation for Cost of Capital As of May 31, 2019 Cost of Equity: use DCF / unit for calculating cost of equity Cost of Debt: estimated cost of 10-year fixed rate notes Equity Cost Weighted Average Cost of Capital DCF…
Return on Invested Capital Overview ROIC = Adj. EBITDA / Average Invested Capital Historical Return on Invested Capital(1) Avg. Invested Capital(2) (50/50 current & prior year) ROIC is an unlevered return (CY EBITDA / ITD…
PAGPs Assets and Tax Attributes PAGPs sole asset is its indirect ownership of the same number of PAA common units as it has Class A shares outstanding PAGP indirectly owns 167 million PAA units, has 167 million Class A shares…
Financial Positioning Key Takeaways Significant financial progress made over last few years August 2017 Deleveraging Plan complete Updated Financial Strategy embraces Midstream 2.0 Focus on further reducing leverage / improving…
Q&A
Willie Chiang, CEO CLOSING REMARKS
Key Takeaways: 2019 Investor Day 1. U.S. & Canada Supplying Global Needs. World needs North American hydrocarbons; Permian is primary growth engine. U.S. becoming net exporter; domestic midstream is a critical link. 2. Plains is well…
New York Stock Exchange June 11, 2019 2019 INVESTOR DAY
APPENDIX
Overview of Plains Reporting Segments High-level summary of business activities and scale 2019(G) Adj. EBITDA 2.85 Billion(1) Transportation Segment transportation of crude oil and NGL on pipeline systems, trucks, and barges…
S&L Segment Overview Supports fee-based business, with opportunity for margin capture 1,400 700 651 Adj. EBITDA driven by: supply and demand 1,200 568 1,309 1,300 600 balances for crude oil and NGL with no 1,157 1,153 1,219…
Value Chain Solutions History of Facilitating & Executing Strategic Alignment with Industry Partners Saddlehorn White Cliffs Midway STACK JV Diamond Sunrise II Red River Capline BridgeTex Caddo Red Oak Advantage W2W…
Strong Positioning Enables Capital Efficient Opportunities Connecting supply to multiple markets, U.S. refiners and multiple export docks Primary focus: delivering the pipeline solution (*projects under construction / planned /…
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