Plains Earnings: Expect Lower for Longer From Crude Oil Business

Plains’ first-quarter results largely met our expectations. We don’t expect to change our $18 fair value estimate or no-moat ratings for the Plains entities. Management reaffirmed 2024 guidance at a midpoint of $2.675 billion, largely consistent with our $2.64 billion forecast, which represents a modest decline from 2023. The most attractive part of the Plains story remains its ability to return significant amounts of cash flows to shareholders, and we see this with a 19% annualized dividend increase. Plains’ free cash flow yield remains about 12%, by our estimates, and we expect this to flow through to unitholders in terms of double-digit dividend increases in 2025 and 2026 as well.