Good day, and thank you for standing by. Welcome to the PAA and PAGP Fourth Quarter 2025 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's call is being recorded. I would now like to hand it over to your speaker, Blake Fernandez, Vice President of Investor Relations. Please go ahead.

Blake Fernandez, Vice President of Investor Relations. Thank you, Victor. Good morning, and welcome to Planes All-American fourth quarter 2025 earnings call. Today's slide presentation is posted on the Investor Relations website under the News and Events section at ir.planes.com. An audio replay will also be available following today's call. Important disclosures regarding forward-looking statements and non-GAAP financial measures are provided on slide two. An overview of today's call is provided on slide three. A condensed consolidating balance sheet for PAGP and other reference materials are in the appendix. Today's call will be hosted by Willie Chang, Chairman and CEO and President, and Al Swanson, Executive Vice President and CFO, along with other members of the management team. With that, I'll turn the call over to Willie.

Thank you, Blake. Good morning, everyone, and thank you for joining us. Earlier this This morning, we reported fourth quarter and full-year adjusted EBITDA attributable to planes of $738 million and $2.833 billion, respectively. 2025 was a pivotal year for planes. The market environment presented multiple challenges, including geopolitical unrest, actions from OPEC to increase oil supply, and uncertainty on the economic impact from tariffs. As highlighted on slide four, despite these transactions or distractions, we remain focused on transitioning to a pure play crude company, which also serves as a catalyst to streamline our operations and better position planes for the future. This transition has accelerated through the sale of our NGL business, along with the recent acquisition of the EPIC pipeline now renamed Cactus 3. These transactions enhance the quality and the durability of our cash flow stream while improving distributable cash flow, and positioning us well for future market cycles. 2026 will be a year of execution and self-help, with a focus on three initiatives. First, we remain on schedule to close the NGL divestiture near the end of the first quarter, pending Canadian Competition Bureau approval. Second, we're integrating the recently acquired CACS III pipeline and expect to drive synergies related to that system to improve EBITDA. And third, we're streamlining the organization with a focus on efficiency. And over the past several months, we have advanced our streamlining initiatives and are targeting $100 million of identified annual savings through 2027, with approximately 50% expected to be realized in 2026. The key drivers of these efficiencies are outlined on slide five and including reducing G&A and OpEx to reflect a more simplified business, consolidating operations, and exiting or optimizing lower-margin businesses. One example that illustrates our focus on higher-margin businesses is the sale of our Mid-Continent's lease marketing business in the fourth quarter of 2025 for a total consideration of approximately $50 million with minimal impact to EBITDA. Working capital needs associated with line fill, it simplifies operations, which transaction It's an opportunity that we have executed on to streamline our business, improve margins, and do a position front. In January, we acquired the Wild Horse Terminal in Cushing, Oklahoma. This asset adds approximately... Looking to 2026, and as highlighted on slide 6, we are providing adjusted EBITDA guidance of 2.75 net-to-plains at the midpoint, plus or minus $75 million, with an oil segment EBITDA midpoint of $2.64 billion net-to-plains, which implies a 13% growth year-over-year in the crude segment. We expect $100 million of EBITDA from the NGL segment, assuming the divestiture closes at the end of the first quarter, and $10 million of other income. We forecast Permian crude production to be relatively flat year-over-year in 26 with overall basin volumes remaining about $6.6 million at the end of the year, similar to end of 2025 levels. That said, we expect growth to resume in 2027, underpinned by a more constructive oil market fundamentals, driven by ongoing global energy demand growth and diminishing OPEC spare. Regarding capital allocation, we recently announced a 10% increase in the quarterly distribution payable on February 13th for both PAA and PAGP. On an annualized basis, the distribution represents a $0.15 per unit increase from the November level bringing the annual distribution to $1.67 per unit representing an 8.5% yield based on the recent equity price for PAA. With the simplification and streamlining of our business, stable cash flow contributions from the Cactus III acquisition and reduced commodity exposure following the NGL sale, we are modestly reducing our distribution coverage ratio threshold from 160% to 150%. This reflects improved visibility for our business, better aligns us with peers, and it paves the way for future distribution growth while still maintaining a prudent level of Our targeted annualized distribution growth remains $0.15 per unit, and the lower distribution coverage gives us more confidence in our ability to deliver increasing returns to our unit holders. AL will cover specific CapEx guidance for the year, but we expect a meaningful reduction in growth spending versus 2025 levels, and maintenance capital will naturally decrease following the end. We remain committed to our efficient growth strategy, generating significant free cash flow, optimizing our asset base maintaining a flexible balance sheet and returning cash to unit holders via our discipline capital allocation framework with that

alternative and a contained adjusted EBITDA walks that provide additional details on our fourth quarter we reported crude oil segment adjusted EBITDA of six hundred and eleven million dollars which includes two months of contribution from the cactus three acquisition partially offset by a four full quarter impact of recontracting. Moving to the NGL segment, we reported an adjusted EBITDA of $122 million, reflecting a seasonal uptick that was moderated somewhat by warm weather impacts on sales volumes and relatively weak cracks. A summary of 2026 guidance and key assumptions are on slide nine. We remain focused on making disciplined capital investments and expect to invest approximately $350 million of growth capital and approximately $165 million of maintenance capital net to PAA in 2026. Key drivers for EBITDA year-over-year include full-year contributions from acquisitions, primarily Cactus III, efficiency and optimization gains, partially offsetting the impact of the NGL sale and recontracting as provided on slide 10. Importantly, I would note that while headline EBITDA will decline slightly from the divestiture, distributable cash flow is expected to increase approximately 1% driven by lower corporate taxes and maintenance capital. As illustrated on slide 11, we remain committed to generating significant free cash flow and returning capital to unit holders while maintaining financial flexibility for 2026 we expect to generate approximately 1.8 billion dollars of adjusted free cash flow excluding changes in assets and liabilities and excluding sales proceeds from the NGL divestiture with regard to the potential special distribution previously communicated we expect the cactus 3 acquisition to mitigate a significant portion of the expected tax liability to unit holders resulting from the NGL sale from this perspective we now expect a special distribution of 15 cents per unit or less after closing and pending board approval regarding our balance sheet in November we issued 750 million dollars of senior unsecured notes consisting of 300 million dollars due in 2031 at a rate of 4.7 percent and 450 million dollars in 2036 at a rate of 5.6%. Proceeds were used to partially fund the EPIC acquisition. Additionally, in the fourth quarter, we paid off the $1.1 billion EPIC term loan assumed as part of the EPIC acquisition by issuing a $1.1 billion senior unsecured term loan at PAA. As a reminder, since we invested $2.9 billion to acquire Cactus III, the majority of the proceeds from the NGL sale will be used to reduce debt. Post-closing, we expect our leverage ratio to trend toward the middle of our established target range of 3.25 to 3.75 times. With that, I'll turn the call back to Willie.

Thanks, Al. 2025 is a transformational year for planes, and we're taking steps to further strengthen our company for the future. Despite a complex macro backdrop, we proactively executed several major transactions and implemented efficiency initiatives to position planes as the premier North American peer plan. 2026 will be a year of execution and self-help as we focus on closing the NGL sale, advancing our efficiency initiatives, and driving synergies on the Cactus III systems will help position planes more competitively for the future. I also want to take this moment to express thanks to our planes team whose dedication and profession achieved our best-ever safety performance as measured by our safety rate as well as the lowest severity of injuries. Thanks, Willie.

As we enter the Q&A session, please limit yourself to two questions. For those with additional questions, please feel free to return to the queue. This will allow us to address questions from as many participants as possible in our available time this morning. The IR team will also be available after the call to address any additional questions you may have. Victor, we're ready to open up the call, please.

Thank you. And to ask a question, you need to press star 11 on your telephone and wait for your name to be announced to withdraw a question, please press star 1-1 again. Please stand by. We'll compile the Q&A roster. One moment for our first question. Our first question will come to the line of Manav Gupta from UBS. Your line is open.

Good morning, guys. I actually wanted to focus a little bit more on the Cactus Pipeline and all the synergy benefits you're talking. And also, I know this is not the right macro, but eventually the macro will turn, and I'm trying to understand what's your ability to expand Cactus 3 without actually putting more pipe in the ground, if you could talk about some of those factors.

Manav, good morning. It's Jeremy. First on the synergies question, the $50 million of synergies we disclosed, we believe we're already on run rate for that now. Roughly half of that was associated with G&A and OPEX reductions as well as removing things like insurance and other things that the pipeline had to keep because it was a private equity-backed entity. Those were gone, so half the synergies were achieved in the fourth quarter as we shed those costs. The other 25% are associated with filling the pipeline with supply that we have, doing shorter-term deals just to fill that available capacity, associated with quality management. Those were ramping up now, so we would imagine during the first quarter we'll be substantially there on the run rate. question on the ability to expand the pipeline our team as we recontract the base pipeline in parallel Chris's team is taking a look at all the capital upstream connectivity our downstream connectivity and then for incremental expansions of the pipeline that don't require new pipe and that do require new pipe so we're looking at the most capital efficient ways to do that we should finish that during the first half of this year and in parallel like I said and we're recontracting for term the rest of the pipeline, and then we'll be in a position to discuss expansion, stabilize the base pipeline, and then let's look at capital-efficient expansions from there in increments that make sense to...

Manav, this is Willie. I think one key point that Jeremy highlighted is it's not a binary expansion.

Perfect. My very quick follow-up is can you also talk a little bit about the $100 million in cost savings through 2027, efficiencies and other initiatives that you are undertaking at the franchise level.

Good morning, Manav. This is Chris Chandler. So the sale of our NGL business in Canada really creates a unique opportunity for us to rethink how our company is structured and organized. So that business, as you might expect, carried a fair amount of operational and commercial complexity that simply won't exist once the assets are sold. So we're taking a fresh look from top to bottom at how we're organized, where we're located, a fresh look at, you know, some of the maybe non-core businesses that might be better in somebody else's hands or, for example, outsourced to third parties that could do it more efficiently. So it's really an across-the-board look that, you know, you don't get the opportunity to do this very often. As far as the capture rate, it's a $100 million run rate by the end of 2027 so we expect to achieve uh 50 million of that in 2026 and another 50 million in

2020. thank you so much for taking my questions i'll turn it over thanks banav thank you one

moment for our next question our next question offline of brandon bingham from scotia bank your

line is open hey good morning thanks for taking the questions um maybe first just looking at the Permian Basin Outlook and kind of some of the commentary you just went through just trying to harmonize it with some of the larger producer commentary from recent earnings calls how is the sentiment among your producer customers and maybe what are some of the current discussions like assuming that 60-65 dollar WTI scenario in your guide good morning

Brandon this is Jeremy uh first I would say that 60 to 60 it's a very volatile time more efficient So that continues to be the case.

And Brandon, this is Willie. A couple of other things to point out. It's an exercise in constraint removal. So one observation is gas has been tight, and there's a number of projects that are there to alleviate that. And when you alleviate the gas constraint, actually the break-evens for the producers improve, which allows them to be able to be more durable going forward. And I think just to reinforce your point, you know, we've had some consolidation in the upstream section with a couple of the producers recently announced. And for us, we like that because it bolsters the producer environment to develop the basins in a more thoughtful way. And I'm actually very encouraged by some of the technology improvements that some of the majors are focused on on resource recovery. So when you factor all that in, we're very, very, the ability for the Permian to be a key part of the incremental supply for the world for quite the comeback as fundamentals improve.

Very helpful. Thank you. And then maybe just looking at the capital allocation priorities, would be curious to hear if maybe there's a shift in any of them versus what they have been. And specifically thinking around the payout ratio, is that 150% level more so to just continue the bolt-on strategy or other priorities? Or is there room to maybe further reduce it and maintain that 15 cent per unit distribution growth cadence a little bit longer?

Brandon, this is Al. Our view on capital allocation, I noted in the prepared comments, there's two ways to look at it. We got the net proceeds coming from the divestiture. We really redeployed that already into Cactus 3. So the proceeds there are going to pay down debt. When you look ahead post that, it's all the same viewpoints that we had before. Our primary way of returning cash to shareholders is going to be through distribution growth. That's part of the 160 to 150. We're comfortable with the 150 level. We think it's actually consistent with a large number of our peers. And so we'll be looking to continue looking at bolt-ons where they make economic sense, distributing cash through distribution growth. Secondly, we do have some preferred securities as well as common unit repurchases those will be more on an opportunistic basis

very helpful thank you thanks brandon one moment for our next question our next question comes from line of michael bloom from wells fargo your line is open thanks good morning everyone um

maybe it could stay on the uh distribution uh coverage conversation i'm really just want to to get a little more of your thought process on how you landed at 1.5 and, you know, not 1.4 or 1.3, just exactly. Is there any kind of formulaic way we should be thinking about this? You know, you mentioned some of your peers, but, you know, I could take one peer off the top of my head that, you know, says 1.3 is the right coverage. So, just trying to get a little more insight into your thinking on that.

Willie, this is Willie. Michael you know when you think about how we came up with the 160 right that was in November of 22 and it was intended to be a coverage threshold that was conservative reflecting in our focus on the balance sheet I wouldn't try to read too much into the Delta other than at 150 it's still a conservative approach to distribution and for us it sets a nice balance for us as we look forward on the ability that for multi-year distribution growth so I would I would look at it as kind of a reset to the a modest reset consistent with our peers as we go forward we think we have a much more durable cash flow stream and it's really set there to allow us to to feel good about our multi-year

distribution got it thanks for that and then just wanted to ask on the growth capex of 350 million uh i guess twofold one can you give us any details about any discrete projects that that make that up or just some color around or what's what's in that number and then uh is this a good way to think about a run rate going forward now that you're really focused in the

crude markets thanks good morning michael it's chris chandler so uh yes our guide for 2026 is 350 million that brings us into our more typical 300 to 400 million dollar range which we do think is a good number going forward absent any large investments which we would call out separately when I think about how we got to 350 and comparing it to prior years we of course finished up the NGL fractionator expansion last year in Canada we finished up a number of Permian crude infrastructure projects and we finished a project unload you into wax crude in the mid-continent. So, those obviously all brought the number down on a year-on-year basis. As far as how we build up into the 350, we have a healthy permeant connection program that's ongoing. In 2025, we connected more wells than we connected in 2024, and 2026 looks to be on a similar pace so far. We're also, of course, doing some modest investment to integrate the Cactus III pipeline to capture synergies, as Jerry mentioned, with additional connectivity and opportunities for quality optimization and cross-connecting between our other Cactus pipes for energy efficiency. And then we see some good opportunities to potentially invest capital into our Canadian crude oil business. We're pursuing a number of potential contracts that would underwrite expansions there and and have assumed some of that moves forward in 2026 as part of our capital spend.

Thank you. One moment for our next question. Our next question will come from the line of Jeremy Tonette from JPMorgan Securities. Your line is open.

Good morning. Good morning, Jeremy. Thanks for the caller today. I just wanted to take a step back here, and there's been some geopolitical developments recently you know particularly up you know what's been happening in Venezuela and it seems like there could be a domino effect in a lot of different directions of what happens there so just wondering if you might be able to share any thoughts on how things could unfold how could it impact Queens flows and assets utilization or even repurposing of assets hey Jeremy Jeremy goble how are

you. The idea around Venezuela, think of the initial response of 50 million barrels sold. You restructure some of the slates and get consistent with what maybe Pascagoula or the St. James refiners or the Houston refiners had run. That immediate impact was widening of Canadian differentials in the Gulf Coast, the other heavy sour differentials, the MedCon and Canada. That That creates opportunities, quality optimism. Going forward, if you look out a few years and maybe add 200,000 to 300,000 barrels a day, that might change some buying habits that shouldn't be enough with those materially. They'll have to price to move. So that would probably be a little bit wider Canadian differentials and otherwise would have been, it would take, if you added a million barrels a day, that does now may push Canadian barrels to the west. So I think it's first you need stability in the government. need substantial reinvestment near term I think it creates got it that's very

helpful there and one other high-level question if I could points has been active in you know industry consolidation both on M&A what have you over time and I was just wondering from your perspective Willie where do you think what inning are we in right now for consolidation in the crude oil infrastructure industry both on larger consolidation what have you well I

I would say it's not a perfectly smooth trajectory if you think about consolidation. And specifically for us, we've made a couple of large transactions. Our focus right now is really to execute on those. We look at all kinds of opportunities that are out there. So you can be assured that as we look at things, we'll stay capital disciplined on being able to acquire things. But I do think there will be more opportunities that are out there. And frankly, to your earlier question, when you think about the macro and you look at the North American infrastructure, you asked about Venezuela. Everyone has a different outlook and view of what might happen there. I personally think it's going to be very challenged to get a significant amount of growth out of Venezuela, which leads us to a more constructive crude oil environment going forward. And when you think about the infrastructure that we have in ground and the ability to repurpose, if it makes sense, there's a lot of neat opportunities there. And, you know, I mentioned this on one of the last calls. If you think about the basins that you want to be involved in, the Permian Basin obviously is key, close to markets, growth, low break-evens, but you also have Western Canada. And everyone's aware of the desire for them to go to the West Coast. And, you know, we stay very involved in potential of bringing more barrels down to the U.S. So there's a lot of neat opportunities, and you can expect us to stay on track at looking at those with financial discipline.

Got it. That's helpful. Thank you.

Thanks, Jeremy.

Thank you. One moment for our next question. Next question will come from the line of Keith Stanley from Wolf Research. Your line is open.

Hi. Good morning. I wanted to ask on coverage. So the release specifically says that the change in thresholds 150% provides a multi-year runway for $0.15 increases. So I want to confirm, should we interpret that as the plan would be $0.15 increases for at least two more years? And if that's right, it implies a fair amount of growth since, you know, you'd have to stay above that 150%. So can you just talk to some of the growth drivers you see in the next, in 27 and 28 that would

support that yeah Keith this is Willie you're very astute as you as you did your calculations the message we wanted to send is we have the ability to continue to grow beyond 2026 so if you think of our EBITDA this year we've got 100 million of NGL contribution and if you think about 27 plus we've got self help that that chews up easily half of that our our comments earlier about additional growth in the Permian gives us a confidence in that and we know we're going to be able to extract additional efficient growth synergies out of that so out of our asset base so we are telegraphing that we think we can grow

beyond okay great and then one one other coverage one so you've talked to the rationale for 150% of DCF when you assess where you want to go from a coverage perspective do you look at it on a free cash flow basis too because I you have pretty steady 300 400 million a year of investment capital just how do you look at it I guess on a free cash flow perspective as well Keith this is

Al we've really set it based on DCF in the view that the DCF coverage of say 160 or now 150 would allow us to fund what we would call routine organic capital the 300 to 400 million kind of range that we think is more of a normalized level plus a small bit for bolt-ons so we think of it more of the coverage funding routine investments clearly if we see investments that are outside of what is routine or larger that we'll use the balance sheet for that so it's not a precision on free cash flow it's really or a percentage of free cash flow but we are allowing for that kind of self-funding of what we think is a routine kind of profile of investment capital. Thank you. Thanks,

Keith. Thank you. One moment for our next question. Next question comes from the line of John McKay

from Goldman Sachs. The line is open. Hey guys, thank you for the time. I want to touch on the long haul per mean volume guidance for a second. You know, it's a little, maybe you can just talk a little bit about the year over year bridge i think it's a little stronger than what we were looking for um but maybe the overall margins intact it's a little bit of that volume versus

uh margin mix and and bridging us to that that pretty uh high 26 number thanks that's

really helpful jeremy i appreciate that second one um maybe just looking a little more near term what did you guys see in terms of storm impacts on volumes across the board um i think that the the visibility on the gas side's been clear, but maybe just walk us through kind of what you saw the last week or two and kind of where the recovery stands right now.

Thanks, John. To start with the recovery, that's already happened. So it was roughly a seven to 10 day period when you had back to back. That impacted the gas infrastructure, made it difficult. And then once gas infrastructure's impacted, it shuts in the crude. So we saw almost like-

Super interesting, appreciate the color. Thank you guys.

And that's all been considered in our guidance.

Thank you. Our next question will come offline. Sunil Sibal from Super Global. Your line is open.

Yeah. Hi. Good morning. Thanks for the time. Most of my questions have been hit, but just a couple of clarifications. So in regards to your loading of distribution coverage to 150 percent, so obviously you have more contracted cash flows coming in through Cactus. Anything else in terms of how you manage your other assets in terms of contracting that we should be thinking about there?

Sunil, this is Al. No, I mean, we are comfortable with the 150. We think the crude segment is a stable cash flow stream. Clearly, the epic contract or pipeline is highly contracted. But as we look at it, we think the 150 coverage is actually still remains a conservative coverage level relative to our company. And we also think it funds what I described as a routine kind of investment capital going forward.

Okay. Thanks for that. And then I think in your prepared remarks, you mentioned about some storage acquisition, the Wild Horse Terminal. could you walk through that a little bit again I think you said 4 million barrels of storage but what's the approximate cost for that

Sudeel hi this is Jeremy good morning here's what I would say so that's four to five million barrels for the Jason tar existing facility our net cost is anticipated to be ten million it'll may take us some time to integrate the facility it's got an existing operations today we feel like we have to sufficient demand. Our existing Cushing facility is fully contracted to downstream partners, and we would just think of this as an addition to that business with a low-cost basis.

Okay, thanks for that.

Thank you. One moment for our next question. Our next question comes from the line of AJ O'Donnell from PPH. Your line is open.

Hey, thanks for your time, everyone. Just one question for me. I'm not sure where the developments of Venezuela kind of fit on the timeline of your budget but just curious as you sit here today and think about where diffs are and how quality diffs have moved just curious how you think about the market-based opportunities trending above or below kind of that 50 million mark that you outlined in your deck. AJ good morning what I would say

is the current market reflects what our budget is so those happened towards the end of last year giving us the opportunity to lock it significantly de-risk the moved out so things move all the time but when you have a movement like this it gives you the opportunity to lock some things in so i'd say it okay thanks for the color thank you one moment for our next question our next question

will come from line uh jeremy tonit from jp morgan securities your line is open hi there

thank you for squeezing me back in um just a couple quick ones if i could add we talked a good amount about the 60 of the business at the permian but just wondered if you could provide maybe a little bit more color on the other 40 of the business and what trends you're seeing there and i get that there's cross currents or it's influenced by you know cost cut savings you're seeing there and that'll have some impacts but just you know how do you think about volumes and EBITDA for that other 40% of the business kind of trending over time.

Jeremy, good morning. What I would say is let's start from the north. Excited about Canada, as Chris mentioned, opportunities around our rainbow system to expand our rangeland system, seeing more activity. The rest of the business is largely flat in Canada. So if you take our Rockies position, everything north of Cushing and west of Cushing, that's relatively stable and contracted. So, flattish would be the view of that position. Cushing throughput continues at all-time highs year over year for us. So, we think that those assets in Cushing and the refinery feed assets consistent with the refiner's performance, that should perform well this year. The South Texas is really somewhat of an extension of the Permian Basin business. It's a wellhead gathering business with trucking to support it. And so that step down from the Cactus contract did impact that business as well. But as far as volumes and opportunity sets in the system, we're excited about what we see in South Texas. Now, east of pushing the CapLine system and Liberty in Mississippi, those are assets we're looking to fill longer term and working on some longer term contracting. And St. James continues to provide exciting things across that platform. It's not as volatile. Got it. That's helpful there. Thanks.

And, Jen, just one last one, if I could, as it relates to the sensitivities for the 100,000 barrels per day change in total Permian production, having a 10 to 15 million impact on the business. Just wondering if there's any more color you could provide there, how that sensitivity might change if volumes grow over time. Is it linear, or could there be an inflection, realizing there's an interplay with differentials there? But just any other color, I guess, on how that could fall out.

Jeremy, here's what I'd say. I think the business is very large, right? So when we talk 100,000 barrels a day out of a basin that's over 6 million barrels a day, the impact of the gathering system is going to be relatively modest. So that's 10 to 15 million, the integrated benefit may grow over time. I think that's more of the impact of the price to go to Midland and what could change it might be on the margins and differentials around WTL and WTI. But I think just because of the size of that business, it's probably going to stay in a fairly tight band. The impact might be to the long-haul margin. Since we've been reset to what is the new market, our expectations would be those would widen out over time.

Got it. That's helpful. All you've been there, thanks.

We'll see you next time, Jeremy.

Thank you. I'm not sure any questions in the queue right now. I want to turn it back over to management for closing remarks.

Thanks, Victor, and thanks to all of you for dialing in. We look forward to visiting with you on the road, and I hope you have a safe weekend. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.