DEF 14A: Plains All American Pipeline to Hold Annual Meeting on May 22, 2024

Plains All American Pipeline is inviting investors to its annual meeting on May 22, 2024, to vote on director elections, auditor ratification, executive compensation, and the frequency of future compensation votes.

Summary

• Plains All American Pipeline, L.P. (PAA) will hold its annual meeting of unitholders on May 22, 2024, in Houston, Texas.
• Unitholders will vote on the election of three Class III directors, ratification of PricewaterhouseCoopers LLP as the independent accounting firm, an advisory vote on executive compensation, and the frequency of future compensation votes.
• The Board recommends voting FOR the election of directors, FOR the ratification of the accounting firm, FOR the approval of executive compensation, and for ONE YEAR as the frequency of future compensation votes.
• The Board highlights accomplishments in 2023, including exceeding financial targets with $2.71 billion in Adjusted EBITDA and $2.46 Implied Distributable Cash Flow per Common Unit Equivalent.
• The company generated $1.60 billion in Adjusted Free Cash Flow, returned approximately $989 million to equity holders, and invested approximately $524 million in capital projects.
• Plains lowered its long-term leverage ratio target range to 3.25x-3.75x and ended 2023 with a leverage ratio of 3.1x.
• The company completed two asset sales and three bolt-on acquisitions to optimize its asset base.
• Plains increased its annual distribution by $0.20 per unit (23%) in 2023 and by $0.20 per unit (19%) in February 2024, and achieved a TSR of 38% in 2023.
• The company believes hydrocarbons will remain essential to ensuring global stability and quality of life, and that worldwide hydrocarbon demand will remain robust well into the future.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook, highlighting strong financial performance and strategic positioning. The tone is optimistic and confident, reflecting management's belief in the company's ability to deliver long-term value.

Positives

• The company exceeded its 2023 financial targets.
• Plains successfully navigated a dynamic business landscape and macroeconomic environment.
• The company is focused on generating meaningful free cash flow and exercising capital discipline.
• Plains is committed to increasing returns of capital to equity holders while maintaining a strong balance sheet and financial flexibility.
• The company optimized its asset base and streamlined operations through asset sales and acquisitions.
• Plains remains constructive on the long-term fundamentals that underpin its business.

Risks

• The challenging political and macroeconomic environment demonstrates the increasing importance of North America as a key supplier of global energy.
• The company acknowledges the need to remain a safe, reliable, and responsible operator.

Future Outlook

Plains remains constructive on the long-term fundamentals that underpin our business, with recent events serving as a reminder that all forms of energy are needed to satisfy growing global energy demand.

Management Comments

• Willie Chiang, Chairman of the Board & CEO: '2023 was a year of strong execution for Plains, in which we were able to navigate a dynamic business landscape and macroeconomic environment.'
• Willie Chiang, Chairman of the Board & CEO: 'We exceeded our 2023 financial targets, helping us to accelerate progress on our long-term strategy most notably our focus on generating meaningful free cash flow, exercising capital discipline and maintaining a clear and concise capital allocation framework that prioritizes increasing returns of capital to equity holders while maintaining a strong balance sheet and financial flexibility.'

Industry Context

The document highlights the increasing importance of North America as a key supplier of global energy, suggesting a favorable outlook for midstream companies with strategically located assets.

Comparison to Industry Standards

• The document mentions that the company's governance structure, together with other factors, produces a degree of alignment with our investors that places us at the top of our master limited partnership peers for the midstream sector regarding governance structure and voting rights.
• The document mentions Energy Transfer LP (ET), Enterprise Products Partners LP (EPD), Kinder Morgan Inc. (KMI), The Williams Companies Inc. (WMB), MPLX LP (MPLX), ONEOK Inc. (OKE), Targa Resources Corp. (TRGP), Western Midstream Partners LP (WES), EnLink Midstream LLC (ENLC), Magellan Midstream Partners LP (MMP), Equitrans Midstream Corporation (ETRN), Crestwood Equity Partners LP (CEQP), Genesis Energy LP (GEL), NuStar Energy LP (NS), S&P 500 Index (SPX), Alerian Midstream Energy Index (AMNA) as comparible companies.

Related Party Transactions

• During 2023, the company purchased approximately $2.3 million of petroleum products from companies affiliated with EMG.
• During 2023, the company purchased approximately $118 million of petroleum products from companies affiliated with EnCap.

Stakeholder Impact

• The company's performance and strategic decisions are expected to impact shareholders, employees, customers, and other stakeholders.
• The company is committed to increasing returns of capital to equity holders.

Next Steps

• Unitholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its annual meeting on May 22, 2024.

Key Dates

Keywords

annual meeting, proxy statement, directors, executive compensation, adjusted EBITDA, distributable cash flow, leverage ratio, distributions, free cash flow, governance, Plains All American Pipeline, PAA