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Plains All American Pipeline LP (PAA - Analyst Report) upheld its practice of sharing more benefits with its unitholders by increasing the cash distribution rate once more. This distribution incidentally is the first one after the unit split. The partnership announced a new quarterly cash distribution rate of 54.25 per unit on all of its outstanding limited partner units.

The partnership has a long history of increasing distribution to unitholders. With this, the distribution rate climbed for the 13th straight quarter. Plains has also hiked the quarterly distribution to limited partners in 32 out of the past 34 quarters.

The new distribution reflects 1.9% growth over the quarterly distribution of 53.25 per unit paid in August 2012 and 9.0% growth from the quarterly distribution of 49.75 cents per unit paid in November 2011. This distribution will be paid on November 14, 2012, to unitholders of record as of November 2, 2012. The previous distribution rates are adjusted for the recently concluded two-for-one unit split.

Plains’ cash distributions depend primarily on cash flow that includes cash flow from financial reserves and working capital borrowings. The cash distribution does not solely depend on profitability, which can be affected by non-cash items. Hence, the partnership can sustain its cash distribution even when it is incurring losses.

Plains reported strong second quarter results which surpassed the year-ago performance as well as our expectation. The partnership is optimistic about maintaining its growth momentum for the remainder of the year and expects to share more with unitholders by increasing the distribution rate by 8% to 9% in 2012. We believe the partnership is presently on track to meet its expected distribution growth.

Enterprise Products Partners LP (EPD - Analyst Report), a Plains All American peer, also increased its quarterly cash distribution rate in July 2012. The increased quarterly distribution of 63.50 cents per unit, paid in August 2012, represented growth of 4.9% over the quarterly distribution of 60.50 per unit paid in August 2011 and an increase of 1.2% from the quarterly distribution of 62.75 cents per unit paid in May 2012.

Plains All American Pipeline currently retains a short-term Zacks #3 Rank (Hold rating). The partnership competes with Enterprise Products Partners LP and Sunoco Logistics Partners L.P. (SXL - Analyst Report) among others.

Houston, Texas-based Plains All American Pipeline is engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. The partnership is also involved in the development and operation of natural gas storage facilities.

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