Plains GP’s 2026 Earnings Calls Reveal Permian Growth and EBITDA Guidance Contradictions

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Date of Call: Aug 7, 2026

Financials Results

• Revenue: $2.88B, plus or minus $75M
• Operating Margin: $738M adjusted EBITDA, on track to deliver full-year EBITDA guidance

Guidance:

• Permian production growth for 2026 raised to 100,000 to 200,000 barrels per day, exit-to-exit.
• Maintenance CapEx increased to $400M-$450M. Growth CapEx increased to $450M from $350M.
• Pipeline loss allowance revenue approximately 70% hedged at ~$62 WTI average.
• Expect ~$1.75B free cash flow in 2026.
• Target ~$0.15 per unit quarterly distribution.
• Expect to capture an additional $50M in streamlining costs by end of 2027.

Business Commentary:

Revenue Growth and Strategic Investments:

• Plains All American reported second-quarter revenue of $2.88 billion, plus or minus $75 million, with adjusted EBITDA of $738 million, positioning the company to meet its full-year 2026 EBITDA guidance.
• This growth was driven by strategic initiatives such as the sale of the Canadian NGL business, which reduced leverage to 3.33x, and increased growth capital spending to $450 million.

Permian Production and Infrastructure Expansion:

• The company expects Permian production growth of 100,000 to 200,000 barrels per day for 2026, an increase from a previous forecast of flat production.
• This growth is attributed to natural gas egress coming online earlier than expected and the ongoing expansion of the Cactus III pipeline, which will add 75,000 barrels per day of capacity.

Capital Allocation and Financial Strategy:

• Plains All American plans to generate approximately $1.75 billion in free cash flow in 2026 while maintaining financial flexibility.
• The company is focused on returning significant cash to unit holders, with priorities including annual increases, accretive bolt-on acquisitions, and organic capital expenditures.

Market Volatility and Strategic Positioning:

• The company is well-positioned to capitalize on market volatility, with a flexible balance sheet and a leverage ratio at the low end of its target range.
• The ongoing conflict in the Middle East and supply disruptions have highlighted the importance of reliable energy infrastructure, increasing the value of Plains All American's existing assets.

Cost Efficiencies and Streamlining Initiatives:

• The company expects to capture $50 million in cost efficiencies by the end of 2026 and an additional $50 million by the end of 2027.
• These efficiencies are being realized through organizational streamlining, including a focus on a more efficient crude oil-focused business structure and cost-saving measures in trucking and marketing operations.

Sentiment Analysis:

Overall Tone: Positive

• Management stated they are 'well positioned to help play a critical role in meeting global energy demand,' 'successfully executing on our three key initiatives,' and 'very constructive' on the outlook. They noted 'significant increase' in EBITDA, 'positive momentum into 2027,' and being 'pleased with different things' regarding growth and balance sheet.

Q&A:

• Question from Gabriel Marine (Mizuho): Can you talk about the revised CapEx level of $450M and how sustainable it is given some Canadian, Permian, and >$100M in investment capital?
  Response: Spend will carry into 2027; similar to 2026 but trending higher than historical $300M-$400M range. 2027 guidance to be provided later.

• Question from Gabriel Marine (Mizuho): How long to fill and what is the potential for further Cactus expansions beyond the 75k bpd addition?
  Response: Marketing affiliate can fill space now; volatility presents opportunities. Future expansions evaluated, but timing depends on market.

• Question from Manav Gupta (UBS): How are new pipelines expected to alleviate 2027 supply? What are the puts and takes?
  Response: Declined to give 2027 guidance due to uncertainty; longer-term view is constructive as global inventories draw down, positioning company to capture value.

• Question from Manav Gupta (UBS): Earlier focus was on bolt-ons, now more on organic growth. What is the balance?
  Response: Evaluate all opportunities (organic, bolt-ons, capex, shareholder returns) based on the situation; balance sheet provides flexibility.

• Question from Bernice (Wells Fargo): Why don't higher Permian volumes translate to raised EBITDA guidance this year?
  Response: Volume upside is mainly in the second half, setting up momentum for 2027 rather than significantly raising 2026 EBITDA guidance.

• Question from Bernice (Wells Fargo): How do you balance adding market capacity versus benefiting from tighter markets with Cactus expansion?
  Response: 75k bpd expansion is capital-efficient and backed by strong economics; market outlook remains net tighter, and expansion provides contracting opportunities.

• Question from Jeremy Tonnet (Franco-Nevada): What are you seeing in terms of volume expectations and puts and takes outside the Permian?
  Response: Seeing increased drilling activity across multiple basins; guidance is maintained but could represent an opportunity in Q3/Q4 volatility.

• Question from Jeremy Tonnet (Franco-Nevada): What are the near-term/longer-term Canadian organic growth opportunities?
  Response: Excited about long-term contracts in Clearwater, Duvernay, and other assets; see opportunities around gathering and egress for the broader portfolio.

• Question from Spiro Dunas (Citi): What is the outlook for market-based opportunities into the season, differentials, and volatility?
  Response: Not forecasting specific opportunities but positioned to capture any that arise; volatility in Q2/Q3 provides value capture potential.

• Question from Spiro Dunas (Citi): How are you thinking about flows to Corpus vs. Houston in the back half of 2026?
  Response: Both markets are tight; Corpus demands more WTI, Houston has broader mix. Cushing pipeline is contracted, but demand-pull model shift could change dynamics.

• Question from Keith Stanley (Wolfe Research): What are the returns and costs for future Cactus 3 expansion phases?
  Response: Recent expansion was highly economic (<$50M). Future phases likely more economic than originally premised; backed by customer commitments.

• Question from AJ O'Donnell (EPH): What are the long-term economics and contracting rates for Cactus 3 expansion?
  Response: Long-term rates similar to current levels; structuring (term, price) will determine specifics, but affiliate can contract at current market rates.

• Question from AJ O'Donnell (EPH): How soon could additional Cactus 3 expansions be expected?
  Response: Base pipeline has sufficient demand; future expansions depend on market evolution and sufficient long-term contracting.

• Question from Jackie Colitis (Goldman Sachs): What is the progress on capturing the $50M cost efficiencies by 2026?
  Response: On track to capture $50M in 2026, having realized some year-to-date through organizational streamlining and business process changes.

• Question from Jackie Colitis (Goldman Sachs): What are the moving pieces on Canadian egress and capacity for Rangeland?
  Response: Prioritize capital-efficient projects; Rangeland expansion is a main line/lateral project, but other opportunities around CapLine and Cushing may come first.

• Question from Gabe Dowd (Truist): What are views on when Permian crude volumes could accelerate toward 8 million barrels per day?
  Response: Positive bias on reaching >7 million barrels; acceleration depends on price, break-even improvements, and sustained high activity; operators are more efficient now.

• Question from Teresa Chen (Barclays): Has the commercial team capitalized on recent market volatility?
  Response: Yes, team captured values by sourcing barrels and facilitating movement, especially during record Q2 exports, and captured some PLA value.

• Question from Teresa Chen (Barclays): How does an influx of Venezuelan barrels affect heavy differentials and marketing opportunities?
  Response: Venezuelan barrels could add egress and widen differentials; dislocations present opportunities, but pace depends on egress additions and sustained production growth.

• Question from Sunil Sehgal (Seaport Global): Is there any recurring impact from the Q2 $14M environmental remediation expense?
  Response: No, the expense is one-off and not expected to recur.

• Question from Sunil Sehgal (Seaport Global): Are there outsized opportunities in regions outside Permian and Canada for the $400M-$450M growth CapEx?
  Response: Opportunities are return- and strategy-driven, not region-specific, but likely concentrated in Permian and Canada given asset base.

Contradiction Point 1

Permian Production Growth Outlook

Contradiction on whether Permian growth is expected to be significant in 2026.

Jeremy Tonnet (Francina on for Jeremy) - Jeremy Tonnet (Francina on for Jeremy)

2026Q2: Increased drilling activity is evident across multiple basins (Permian, Eagleford, Powder River). The company is cautiously optimistic about volumes, with guidance reflecting this. - [Jeremy Goble](CFO)

Can you walk us through the crude segment's volumes and puts/takes in line with the guidance, and discuss Canadian organic growth opportunities? - Gabriel Morin (Mizuho)

2026Q1: The 2026 assumption is for flat Permian production. Any upside would benefit the company, but formal guidance for growth is not provided. - [Willie Chang](CEO)

Contradiction Point 2

Drivers of Crude EBITDA Guidance

Contradiction on whether elevated crude prices are a primary driver for increased EBITDA guidance.

Pranee Satish (Wells Fargo) - Pranee Satish (Wells Fargo)

2026Q2: The 2026 EBITDA guidance midpoint already incorporates this strength, with strong exit momentum expected. The volume increase sets up favorable momentum for 2027 EBITDA more than it impacts the second half of 2026. - [Al Swanson](CFO)

Why hasn't the increased 2026 Permian production guidance of 100-200k boe/day led to a higher EBITDA guidance for this year? - Brandon Bingham (Scotiabank)

2026Q1: The $130 million EBITDA guidance increase is driven by captured optimization opportunities and the NGL sale timing, not significantly by actual crude price movements in the first quarter. - [Al Swanson](CFO)

Contradiction Point 3

Growth CapEx Guidance and Sustainability

Guidance shifts from a stable run rate to a newly increased level with uncertain sustainability.

What are Gabriel Marine's earnings under Mizuho? - Gabriel Marine (Mizuho)

2026Q2: The 2026 growth CapEx increase... trending higher than the historical $300-$400 million range. Full 2027 guidance will be provided later. - [Chris Chandler](CFO) and [Jeremy Goble](CFO)

How sustainable is the revised $450 million CapEx level given the split between Canadian, Permian, and other investments? - Michael Blum (Wells Fargo Securities)

2025Q4: This brings spending back into the typical $300-$400 million range, which is considered a good normalized run rate absent large investments. - [Chris Chandler](CFO)

Contradiction Point 4

Outlook for Permian Crude Volume Acceleration

Outlook shifts from a more certain, near-term constructive view to a conditional, long-term positive bias.

Gabe Dowd (Truist) - Gabe Dowd (Truist)

2026Q2: The company sees a positive bias for reaching 8 million barrels per day... However, this will require continued improvements in recovery, reductions in break-even prices, and supportive commodity prices. - [Willie Chang](CFO)

When do you expect acceleration in Permian crude volumes, potentially reaching 8 million barrels per day by 2030? - Brandon Bingham (Scotiabank)

2025Q4: 2027 and beyond are expected to be more constructive due to improved efficiency, diminishing OPEC spare capacity, and technology advances in resource recovery. - [Willie Chang](CFO)

Contradiction Point 5

Capital Allocation Philosophy and Distribution Growth Strategy

Contradiction on strategy for using proceeds from asset sales for distributions versus acquisitions.

What was the question from Manav Gupta (UBS)? - Manav Gupta (UBS)

2026Q2: The NGL sale proceeds have been largely redeployed into the Epic acquisition. Future growth will be driven by bolt-on acquisitions and operational performance, with no change to the capital allocation philosophy. - [Al Swanson](CFO) and [Willie Chiang](CEO)

Can you discuss the 2027 outlook considering the new Permian pipelines, the key factors (puts and takes), and the balance between bolt-on acquisitions and organic growth opportunities? - Brandon Bingham (Scotiabank)

2025Q3: [Question #8] With sales proceeds effectively utilized, what are your thoughts on the FREF retirement and its role in the capital allocation strategy? Remaining proceeds will be used for debt reduction to reach the midpoint of the leverage target. Future capital allocation will prioritize bolt-on acquisitions with strong returns, alongside distribution increases and potential common unit repurchases. - [Al Swanson](CFO)

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