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Plains All American (PAA) Benefits From Business Expansion
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Plains All American Pipeline (PAA - Free Report) has been gaining from steady investments in regulated infrastructure, cost-saving initiatives, joint ventures and asset divestitures.
PAA - which currently carries a Zacks Rank #3 (Hold) – has high operating expenses owing to the stringent government regulations and safety measures implementation.
Tailwinds
Plains All American maintains a systematic capital investment strategy to expand its operations through organic growth initiatives. It projects a capital investment of $625 million for 2023. The revival in oil and natural gas demand has led to expanding operations in the Permian Basin.
It has been successful in capturing synergies from joint ventures (JVs). The Plains Oryx Permian JV was completed, and the W2W Pipeline JV was announced, in which the company owns 20% interest.
PAA continues to enjoy a favorable financial position. It has enough liquidity to meet operating, investing and financing requirements. The planned divestiture of non-core assets allows the firm to focus on and strengthen its core operations.
Headwinds
Plains All American’s business is subject to risks associated with changing interest rates, extreme weather conditions and extensive government regulations.
New upstream players have entered the midstream market by forming master limited partnerships. This will create tough competition for PAA. The restriction on Hydraulic fracturing, a method used to produce hydrocarbons from unconventional geological formations, will further lower the demand for midstream services provided by the partnership.
The Zacks Consensus Estimate for Enterprise Product Partners’s 2023 earnings per unit indicates year-over-year growth of 2.4%. EPD delivered an average earnings surprise of 4.1% in the last four quarters.
The Zacks Consensus Estimate for DrilQuip’s 2023 earnings per share indicates year-over-year growth of 82.1%. DRQ delivered an average earnings surprise of 119.8% in the last four quarters.
The Zacks Consensus Estimate for Weatherford International’s 2023 earnings per share indicates year-over-year growth of 466.3%. WFRD delivered an average earnings surprise of 0.5% in the last four quarters.
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Plains All American (PAA) Benefits From Business Expansion
Plains All American Pipeline (PAA - Free Report) has been gaining from steady investments in regulated infrastructure, cost-saving initiatives, joint ventures and asset divestitures.
PAA - which currently carries a Zacks Rank #3 (Hold) – has high operating expenses owing to the stringent government regulations and safety measures implementation.
Tailwinds
Plains All American maintains a systematic capital investment strategy to expand its operations through organic growth initiatives. It projects a capital investment of $625 million for 2023. The revival in oil and natural gas demand has led to expanding operations in the Permian Basin.
It has been successful in capturing synergies from joint ventures (JVs). The Plains Oryx Permian JV was completed, and the W2W Pipeline JV was announced, in which the company owns 20% interest.
PAA continues to enjoy a favorable financial position. It has enough liquidity to meet operating, investing and financing requirements. The planned divestiture of non-core assets allows the firm to focus on and strengthen its core operations.
Headwinds
Plains All American’s business is subject to risks associated with changing interest rates, extreme weather conditions and extensive government regulations.
New upstream players have entered the midstream market by forming master limited partnerships. This will create tough competition for PAA. The restriction on Hydraulic fracturing, a method used to produce hydrocarbons from unconventional geological formations, will further lower the demand for midstream services provided by the partnership.
Stocks to Consider
Some better-ranked utilities in the same sector are Enterprise Product Partners (EPD - Free Report) , DrilQuip (DRQ - Free Report) and Weatherford International (WFRD - Free Report) . Enterprise Product Partners and Weatherford International sport a Zacks Rank #1 (Strong Buy), while DrilQuip carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Enterprise Product Partners’s 2023 earnings per unit indicates year-over-year growth of 2.4%. EPD delivered an average earnings surprise of 4.1% in the last four quarters.
The Zacks Consensus Estimate for DrilQuip’s 2023 earnings per share indicates year-over-year growth of 82.1%. DRQ delivered an average earnings surprise of 119.8% in the last four quarters.
The Zacks Consensus Estimate for Weatherford International’s 2023 earnings per share indicates year-over-year growth of 466.3%. WFRD delivered an average earnings surprise of 0.5% in the last four quarters.