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Plains Gp Holdings Finance

Connecting and delivering energy resources to fuel progress by building the premier midstream company with unmatched scale and efficiency

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Connecting and delivering energy resources to fuel progress by building the premier midstream company with unmatched scale and efficiency

Strengths

  • ASSETS: Extensive network of pipelines, terminals, and storage facilities
  • INTEGRATION: Vertically integrated model across the energy value chain
  • SCALE: Large-scale operations providing economies of scale advantages
  • DIVERSIFICATION: Balanced portfolio of fee-based and margin-based assets
  • RELATIONSHIPS: Strong partnerships with major producers and refiners

Weaknesses

  • DEBT: Higher leverage ratio compared to industry peers (4.0x)
  • MARGINS: Exposure to commodity price volatility affecting margins
  • LEGACY: Aging infrastructure requiring increased maintenance capex
  • COMPLEXITY: Complex corporate structure between PAA and PAGP
  • DIGITAL: Lagging digital transformation and automation capabilities

Opportunities

  • EXPORTS: Growing US energy export market to capitalize on
  • PERMIAN: Continued production growth in Permian basin operations
  • ESG: Enhanced sustainability initiatives to attract ESG-focused capital
  • ACQUISITIONS: Strategic M&A to strengthen network and capabilities
  • LNG: Synergies with expanding LNG infrastructure investments

Threats

  • REGULATION: Increasing environmental regulations and compliance costs
  • COMPETITION: Growing pipeline capacity creating competitive pressures
  • TRANSITION: Long-term energy transition away from fossil fuels
  • CYBERATTACKS: Heightened cybersecurity risks to operational technology
  • VOLATILITY: Unpredictable commodity price swings affecting volumes

Key Priorities

  • DELEVERAGING: Accelerate debt reduction to strengthen balance sheet
  • PERMIAN: Expand Permian Basin assets to capture production growth
  • DIGITAL: Implement advanced data analytics across financial operations
  • ESG: Develop comprehensive sustainability strategy and reporting
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Connecting and delivering energy resources to fuel progress by building the premier midstream company with unmatched scale and efficiency

SOLID FOUNDATION

Transform our balance sheet strength and financial health

  • DELEVERAGING: Reduce leverage ratio from 4.0x to 3.5x through $500M debt reduction by Q4 2025
  • EFFICIENCY: Implement zero-based budgeting to achieve $75M in sustainable cost savings by Q3 2025
  • LIQUIDITY: Increase available liquidity to $1.5B through refinancing and facility expansion by end-Q2
  • HEDGING: Deploy enhanced commodity risk management program covering 60% of price-sensitive volumes
GROWTH ENGINE

Capitalize on Permian opportunities for sustained growth

  • CAPACITY: Complete Permian-to-Gulf Coast pipeline expansion adding 200k bpd by Q4 2025
  • CONTRACTS: Secure $150M in additional annual fee-based revenue through long-term agreements
  • INTEGRATION: Acquire and integrate complementary Permian gathering assets for $300M by Q3
  • TERMINALS: Expand export terminal capacity by 15% to support increased Permian production flow
DIGITAL MASTERY

Revolutionize financial operations through data & AI

  • PLATFORM: Launch unified financial data platform integrating 100% of financial systems by Q3
  • AUTOMATION: Automate 80% of financial reporting processes reducing cycle time by 60% within 6 months
  • ANALYTICS: Implement predictive cash flow forecasting with 90% accuracy at 12-week horizon
  • DASHBOARD: Deploy real-time financial performance dashboard for all business segments by Q2 end
FUTURE-READY

Position for long-term success in evolving energy landscape

  • ESG: Publish comprehensive ESG report with TCFD-aligned financial disclosures by end of Q2
  • CARBON: Develop financial framework for achieving 30% carbon intensity reduction by 2030
  • ALTERNATIVES: Complete financial assessment of 3 energy transition investment opportunities
  • TALENT: Implement finance talent development program with 25% focus on future energy skills
METRICS
  • Adjusted EBITDA: $2.75B
  • Leverage Ratio: 3.5x
  • Fee-based Revenue: 85% of total
VALUES
  • Safety and Environmental Stewardship
  • Accountability and Ethics
  • Respect and Fairness
  • Excellence and Innovation
Plains Gp Holdings logo
Align the learnings

Plains Gp Holdings Finance Retrospective

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Connecting and delivering energy resources to fuel progress by building the premier midstream company with unmatched scale and efficiency

What Went Well

  • VOLUMES: Permian Basin transportation volumes exceeded forecast by 8%
  • EBITDA: Adjusted EBITDA of $647M for Q1 2023, above guidance by $12M
  • COSTS: Successfully implemented $50M in cost reduction initiatives
  • DISTRIBUTION: Increased quarterly distribution by 2.4% year-over-year
  • CONTRACTS: Secured new long-term transportation and storage contracts

Not So Well

  • CAPEX: Capital expenditures exceeded budget by 7% due to project delays
  • MARGINS: NGL segment margins compressed due to unfavorable market spread
  • COMPLIANCE: Regulatory compliance costs increased 12% above projections
  • INTEGRATION: Post-acquisition systems integration behind schedule
  • FINANCING: Higher interest expense from rising rate environment

Learnings

  • VISIBILITY: Need improved early warning indicators for margin compression
  • AGILITY: Finance organization requires more scenario planning capability
  • CORRELATION: Better understanding needed of volume/price relationships
  • PREPARATION: More robust hedging strategy required for volatile markets
  • METRICS: Current KPIs not fully aligned with value creation drivers

Action Items

  • PLATFORM: Implement unified financial data platform by end of Q3 2023
  • FORECASTING: Develop integrated ML forecasting models for key segments
  • DASHBOARD: Create real-time executive financial performance dashboard
  • AUTOMATION: Automate 75% of monthly close process within 6 months
  • EFFICIENCY: Consolidate shared service operations for 15% cost savings
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Connecting and delivering energy resources to fuel progress by building the premier midstream company with unmatched scale and efficiency

Strengths

  • DATA: Extensive operational and financial data assets to leverage
  • INFRASTRUCTURE: Robust IT infrastructure supporting core operations
  • EXPERTISE: Specialized finance team with deep industry knowledge
  • LEADERSHIP: Executive commitment to technology transformation
  • RESOURCES: Available capital for strategic technology investments

Weaknesses

  • SILOS: Disconnected systems creating data integration challenges
  • SKILLS: Limited AI/ML expertise within current finance organization
  • LEGACY: Outdated financial systems requiring modernization
  • ADOPTION: Cultural resistance to automation and AI solutions
  • GOVERNANCE: Underdeveloped data governance frameworks

Opportunities

  • FORECASTING: AI-powered cash flow and revenue forecasting models
  • OPTIMIZATION: ML algorithms for capital allocation optimization
  • AUTOMATION: RPA for routine transaction processing and reporting
  • ANALYTICS: Advanced analytics for cost reduction opportunities
  • RISK: Predictive risk assessment models for financial exposures

Threats

  • COMPETITORS: Rivals advancing faster with AI financial capabilities
  • TALENT: Difficulty attracting and retaining AI finance talent
  • SECURITY: Data breaches and privacy concerns with AI systems
  • COMPLIANCE: Regulatory uncertainty around AI in financial reporting
  • INVESTMENT: High implementation costs with uncertain ROI

Key Priorities

  • PLATFORM: Develop unified data platform for financial analytics
  • AUTOMATION: Implement intelligent automation for core processes
  • TALENT: Build specialized AI finance competency center
  • FORECASTING: Deploy predictive models for financial planning