Plains All American Pipeline, L.P. (PAA) Provides Infrastructure for Growing U.S. Oil Production

April 8, 2013

Plains All American Pipeline, L.P. (PAA) has oil infrastructure which analysts expect will see growth due to the oil production growth under way in North America. They also highlight this master limited partnership’s dividend as attracting investors and also the organic growth potential of the MLP.

“We continue to like Plains All American. That is also levered to the oil infrastructure thesis, and they put up terrific numbers for the quarter. We continue to believe that we’ll see high single-digit to low double-digit distribution growth rates from them,” said John Edwards, Director and Senior Equity Research Analyst at Credit Suisse Group.


The distribution growth over the next couple of years is expected to scratch the double digits, and PAA currently has exposure to some of the most growthy unconventional resources names in the United States.

Plains has a well-positioned asset base. Its footprint covers many of the growing oil plays, including the Permian basin, the Bakken shale, the Mississippian Lime and others. Plains has exposure to the strong crude oil logistics environment, and given its well-positioned asset base, its supply and logistics business should continue to generate strong margins as North American crude oil production grows. Plains also has a large slate of organic growth projects, plans to spend over $1 billion on organic growth projects this year alone, and we believe this provides visibility into future distribution growth potential. We’re expecting about 8% to 10% distribution CAGR over the next couple of years for Plains,” said Elvira Scotto, Director at RBC Capital Markets.