Plains All American Pipeline(US:PAA)2023-08-08 16:00Financial Performance - Net income attributable to PAA for the first six months of 2023 was $715 million, an increase of 83% compared to $390 million in the same period of 2022[114]. - Net income for Q2 2023 was $349 million, a 39% increase from $251 million in Q2 2022, and for the first half of 2023, it was $824 million, up 73% from $476 million in the same period last year[136]. - Adjusted EBITDA for Q2 2023 was $700 million, a slight decrease of 1% from $704 million in Q2 2022, while for the first half of 2023, it increased by 9% to $1,513 million from $1,394 million[137]. - Adjusted EBITDA attributable to PAA for Q2 2023 was $597 million, a decrease of 3% from $615 million in Q2 2022, while for the first half of 2023, it increased by 7% to $1,312 million from $1,228 million[136]. - Other income increased significantly to $85 million for the six months ended June 30, 2023, compared to a loss of $155 million in the same period of 2022[128]. - Free Cash Flow for the three months ended June 30, 2023 was $650 million, compared to $688 million in the same period of 2022, while Free Cash Flow after Distributions was $404 million, down from $473 million[166]. Revenue and Sales - Product sales revenues decreased by 21% to $23.145 billion for the six months ended June 30, 2023, down from $29.388 billion in 2022, primarily due to lower commodity prices[117]. - Services revenues increased by 20% to $798 million for the six months ended June 30, 2023, compared to $665 million in 2022, driven by higher volumes and tariff escalations[121]. - Crude Oil segment revenues decreased by 29% to $11,295 million for the three months ended June 30, 2023, compared to $15,940 million in 2022[144]. - NGL segment revenues decreased by 33% to $381 million for the three months ended June 30, 2023, compared to $570 million in 2022[153]. Expenses and Costs - General and administrative expenses increased by 7% to $171 million for the six months ended June 30, 2023, primarily due to higher information systems and employee-related costs[123]. - Interest expense decreased by 6% to $193 million for the six months ended June 30, 2023, due to a lower weighted average debt balance[127]. - Field operating costs for the NGL segment decreased by 28% to $177 million for the six months ended June 30, 2023, compared to $138 million in 2022[153]. - Field operating costs increased due to higher utility-related costs and increased ownership in Empress straddle plants, partially offset by operating cost recoveries[160]. Capital Expenditures and Investments - The company’s maintenance capital expenditures for Q2 2023 were $62 million, a 44% increase from $43 million in Q2 2022[137]. - Maintenance capital expenditures for the Crude Oil segment increased by 44% to $36 million for the three months ended June 30, 2023, compared to $25 million in 2022[144]. - Total investment capital for the year ending December 31, 2023 is projected to be approximately $420 million, with about half allocated to Permian JV assets, while maintenance capital is projected at $205 million[171]. - Proceeds from asset divestitures in the first six months of 2023 amounted to $284 million, significantly higher than $57 million in the same period of 2022, primarily from the sale of a 21% interest in the Keyera Fort Saskatchewan facility[172]. Liquidity and Financial Position - As of June 30, 2023, the company had approximately $3.5 billion in liquidity available, including $915 million in cash and cash equivalents[163]. - The company redeemed $400 million of 2.85% senior notes on January 31, 2023, using cash on hand and borrowings[178]. - As of June 30, 2023, the company had outstanding letters of credit of approximately $127 million[189]. - As of June 30, 2023, the company had approximately $1.1 billion of unsold securities available under its Traditional Shelf registration statement[180]. Market and Risk Management - The company remains subject to business and operational risks that could adversely affect cash flow, including energy price volatility and macroeconomic conditions[164]. - The company is exposed to various market risks, including commodity price risk and interest rate risk, and uses derivative instruments to manage these risks[197]. - The risk management function has direct responsibility for risk policies and approves all new risk management strategies[197]. Derivatives and Fair Value - The fair value of the company's crude oil derivatives as of June 30, 2023, was $25 million, with a potential effect of a 10% price increase or decrease being $14 million and $15 million, respectively[200]. - The fair value of NGL and other derivatives was $173 million, with a potential effect of a 10% price increase or decrease being $18 million each[200]. - The total fair value of all derivatives was $163 million[200]. - The fair value of interest rate derivatives was a net asset of $42 million as of June 30, 2023[202].