Quarterly Earnings Discussion Transcript for Plains GP, dated Q2 2025
Plains GP Holdings, a leading energy infrastructure company, announced on August 8, 2025, that it will divest nearly all of its Natural Gas Liquids (NGL) business in Canada to Keyera for $3.75 billion. The transaction, subject to regulatory approvals and expected to close in the first quarter of 2026, will provide Plains GP with approximately $3 billion in net proceeds.
The sale represents a strategic shift for Plains GP towards a focused crude oil midstream operator. The company will retain its U.S. NGL and Canadian crude assets while exiting its Canadian NGL operations. The proceeds will be used to strengthen Plains GP’s balance sheet, enhance cash flow durability, reduce debt, fund share repurchases, and redeploy capital into higher-return crude oil operations and targeted mergers and acquisitions (M&A).
Despite the divestiture, Plains GP clarified that there is no change in intent regarding "multiyear sustainable" distribution growth. The company's future growth depends on the successful redeployment of divestiture proceeds.
Plains GP's second-quarter 2025 adjusted EBITDA stood at $672 million, including contributions from both the crude oil and NGL segments. The crude oil segment adjusted EBITDA was $580 million, benefiting sequentially from Permian volume growth, bolt-on acquisitions, and higher throughput as refiner customers returned from downtime. In contrast, the NGL segment reported an adjusted EBITDA of $87 million, with a sequential decrease attributable to seasonality and lower frac spreads.
The company has been active in M&A, having completed five bolt-on deals year to date in 2025, totaling approximately $800 million. Plains GP has also revised its full-year 2025 growth capital expenditure guidance up by $75 million to $475 million.
Jeremy Goebel, a representative from Plains, mentioned that the company takes all factors into consideration when considering assets in the Mid Con for potential bolt-on strategies and M&A, including sensitivity to basin-level growth. Goebel also stated that Plains is a Discounted Cash Flow (DCF) shop, looking for discounted cash flow over time and contributions, and they use market fundamentals to drive an outlook, book of cash flows, and a discounted cash flow, aiming to beat their return thresholds by 300 to 500 basis points.
The sale of the NGL business is expected to contribute $10 million to $15 million of EBITDA in 2025, with an indicated value of around $200 million for the retained U.S. NGL assets. Plains GP also expects $870 million of adjusted free cash flow for 2025, excluding changes in assets and liabilities.
Looking ahead, Plains GP is optimistic about oil markets, despite uncertainties. The company has a constructive view of the world's ability to continue to grow, as expressed by Willie Chiang, another representative from Plains. Chiang also mentioned that the company is positioned to absorb some of the $3 billion in proceeds from the NGL business sale and that they would like to redeploy them in a way that's accretive to DCF, which would further enhance their ability to grow the dividend.
Plains and ONEOK will jointly work to optimize BridgeTex pipeline capacity and fill. The company also expects lower contracted rates for Cactus II, Cactus I, and Sunrise in the second half of 2025, offset in part by Permian production growth and recontracting. Maintenance capital guidance is trending near $230 million for fiscal 2025, which is $10 million below the initial forecast.
[1] Plains GP Press Release, Aug. 8, 2025. [2] Seeking Alpha Transcript, Plains GP Earnings Call, Aug. 8, 2025. [3] Reuters, Plains GP to sell nearly all NGL business in Canada to Keyera for $3.75 billion, Aug. 8, 2025. [4] Bloomberg, Plains GP to Sell Canadian NGL Assets to Keyera for $3.75 Billion, Aug. 8, 2025. [5] S&P Global Platts, Plains GP to sell Canadian NGL business to Keyera for $3.75 billion, Aug. 8, 2025.
- The strategic sale of its Canadian NGL business by Plains GP Holdings, valued at $3.75 billion, signifies a shift towards a focused crude oil midstream operator within the energy industry.
- The company will use the $3 billion net proceeds from the deal to bolster its financial position, improve cash flow resilience, decrease debt levels, facilitate share repurchases, and reinvest capital into lucrative crude oil ventures and prospective mergers and acquisitions (M&A).
- Despite divesting its Canadian NGL operations, Plains GP intends to maintain multiyear sustainable distribution growth, which relies on the effective deployment of divestiture proceeds for future growth.
- The retained U.S. NGL assets of Plains GP are expected to generate $10 million to $15 million of EBITDA in 2025, while the sale of the Canadian NGL business could potentially contribute to higher returns and further dividend growth through Discounted Cash Flow (DCF) approaches.
