Plains Secures Strategic Majority Stake in EPIC Crude Holdings

Plains All American Pipeline Expands Its Horizons

Recently, Plains All American Pipeline, L.P. (NASDAQ: PAA) made headlines by announcing its intention to acquire a significant 55% interest in EPIC Crude Holdings, LP, which oversees the management and operation of the EPIC Crude Oil Pipeline. This strategic move follows an agreement with subsidiaries of Diamondback Energy, Inc. and Kinetik Holdings Inc., with the transaction valued at approximately $1.57 billion, inclusive of around $600 million in debt.

Details of the Acquisition

This acquisition is not just another corporate maneuver; it reflects Plains' commitment to enhancing its operational capacity and service offerings. The EPIC Crude Holdings acts as a pivotal conduit for crude oil, connecting the prolific Permian and Eagle Ford basins to the vital Gulf Coast market at Corpus Christi. With a robust asset base, EPIC Crude Holdings boasts the following strengths:

Key Infrastructure Assets

• Approximately 800 miles of long-haul pipelines, including the notable EPIC Pipeline.
• Operating capacity exceeding 600,000 barrels per day, with significant low-cost expansion potential.
• Storage capacity approaching 7 million barrels.
• Export capability of over 200,000 barrels per day.

Transaction Highlights and Benefits

The acquisition is expected to bear immediate financial benefits for Plains, notably making the operation accretive to distributable cash flow. Along with synergistic opportunities, this move presents a pathway to mid-teen unlevered returns.

Strategic Advantages

• Improved upstream connectivity for customers, enriching downstream market options.
• Augmented existing strategies within the Permian area.
• Potential for increased acquisition multiples due to enhanced growth in the Permian region.
• Backed by long-term volume commitments from high-quality customers, ensuring stable returns.
• Affirmation of pro forma leverage ratios within desired targets.

Leadership Insight

Willie Chiang, Plains' Chairman, CEO, and President, articulated his enthusiasm regarding this transaction: "We are excited to work with the EPIC Management team. This transaction strengthens our position as the premier crude oil midstream provider, complements our asset footprint, and enhances our customer offering." He emphasized the importance of enhancing connectivity for customers and ensuring they have reliable and cost-effective routes.

Additionally, he stated, "The combined assets will allow us to capture synergies through additional service offerings, and drive value via expanded scale and integration. This acquisition heightens our financial flexibility, enabling us to effectively leverage our balance sheet for this transaction while adhering to our target leverage ratios, ultimately benefiting all stakeholders involved."

Completion Timeline

The closing of this acquisition is anticipated by early 2026, subject to customary conditions, including the clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, ensuring compliance with all regulatory frameworks.

About Plains All American Pipeline

PAA, a publicly traded master limited partnership, plays a vital role in North America's energy infrastructure landscape. The company provides comprehensive logistics services for crude oil and natural gas liquids, boasting an expansive network of pipeline systems that effectively gather and transport these vital resources. On a typical day, Plains manages approximately eight million barrels of crude oil and natural gas liquids, underscoring its significance in energy logistics.

In tandem, Plains GP Holdings (NASDAQ: PAGP) holds an indirect general partner interest in Plains, further bolstering its status in the energy sector.

Connecting with Plains

Those seeking more information can visit www.plains.com. For investor relations, contact Blake Fernandez or Michael Gladstein via email at PlainsIR@plains.com, or by phone at (866) 809-1291.

Frequently Asked Questions

What is the significance of the acquisition by Plains All American?

This acquisition enables Plains to strengthen its operational capabilities and enhance service offerings in the midstream sector, specifically targeting improved connectivity for customers.

What are the strategic advantages of the EPIC Pipeline?

The EPIC Pipeline facilitates crucial long-haul crude oil transport from key U.S. basins to market hubs, enhancing Plains' logistics and market access.

What is the expected impact on distributable cash flow?

The acquisition is projected to be immediately accretive to distributable cash flow, presenting opportunities for additional returns of capital.

When is the transaction expected to close?

The acquisition is anticipated to be finalized by early 2026, pending customary regulatory approvals.

How does this acquisition influence Plains' market position?

This strategic purchase reinforces Plains' status as a leading crude oil midstream provider, enhancing its service offerings and market connectivity.

About The Author

Hi there I'm 38-year-old author and financial consultant Owen Jenkins. Having worked in the financial sector for more than ten years, I am well-versed in the subtleties and complexity that mold our financial environment. Following a degree in finance, I worked in a number of financial institutions honing my abilities in market analysis, financial planning, and investment strategies.

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