Master limited partner, Plains All American Pipeline L.P. (PAA) has undertaken an expansion project aimed at increasing the capacity of its Basin Pipeline system enabling it to transport additional volumes for increased crude oil production in west Texas and New Mexico.
The expansion project entails making modifications to the pumping capacity of the pipeline, increasing the capacity of the pipeline segment from Colorado City, Texas to Cushing, Oklahoma. This segment presently transports 400,000 barrels of oil per day.
On completion of the project, Plains All American expects to expand the capacity of this segment of the pipeline to 450,000 barrels per day. The partnership expects the project to be completed by the first quarter of 2012.
The Basin Pipeline system transports crude oil produced in the Permian Basin of west Texas and southern New Mexico to Cushing, Oklahoma for further delivery to Mid-Continent and Midwest refining centers. Plains All American is the operator of the pipeline with an 87% ownership interest.
Houston, Texas based Plains All American Pipeline owns assets strategically located in well-established oil producing regions, catering to major U.S. refinery and distribution markets. Other than organic growth opportunities, the partnership also relies on acquisitions to spur growth.
Plains All American is expected to release its fourth-quarter and full year 2010 earnings results on February 09, 2011. The partnership expects its fourth-quarter earnings in the range of 76 – 98 cents per unit, bringing full year earnings in the range of $2.80 – $3.02 per unit. The partnership’s projected earnings ranges are well in line with the Zacks Consensus Estimate of 85 cents and $2.86 for the fourth quarter and for fiscal 2010.
Going forward, we believe Plains All American Pipeline’s low-risk and stable revenue stream will continue to give its earnings and cash flows a high degree of certainty. Also, the partnership’s strong balance sheet provides ample flexibility to continue raising distributions for unitholders, as well as pursuing its internal and acquisition-oriented growth projects.
Plains All American Pipeline currently retains a Zacks #3 Rank (short-term Hold rating). Its closest peers Enterprise Products Partners L.P. (EPD) and ONEOK Partners L.P. (OKS) also carry a Zacks #3 Rank. We maintain our Neutral recommendation on the stock.
ENTERPRISE PROD (EPD): Free Stock Analysis Report
ONEOK PARTNERS (OKS): Free Stock Analysis Report
PLAINS ALL AMER (PAA): Free Stock Analysis Report
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