Outlook For Plains All American Remains Bullish
The war in Iran rages on and there is no real end in sight. West Texas Intermediate and Brent crude oil are all trading higher as disruptions in the Strait of Hormuz intensify.
Iran has said the strait, which is responsible for more than 20% of all global crude oil traffic, will stay closed until Washington meets its conditions. At the same time, the U.S has said it has “total control” of the strait.
Interestingly, Treasury Secretary Scott Bessent said that the Strait of Hormuz could be irrelevant within two years as the U.S pushes the importance of pipelines to offset Iran’s leverage of the global oil supply. (Source: “Scott Bessent Calls the Strait of Hormuz “Irrelevant.” Chevron Shows Exactly How It Happens,” Yahoo.com, August 10, 2026.)
Whether pipelines can replace the volume of crude that passes through the Strait of Hormuz in the next two years is a bit of a stretch, but, it does put reliable U.S midstream companies like Plains All American Pipeline, L.P. (NASDAQ:PAA). in the spotlight.
Plains All American is a midstream oil company with an extensive network of pipeline infrastructure and assets that run from Corpus Christi, Texas to Northern Alberta, Canada. (Source: “What We Do,” Plains Al American Pipeline, L.P., last accessed August 13, 2026.)
On average, the mid-cap midstream energy play handles approximately 10 million barrels of crude oil and petroleum product volume across its extensive North American network.
As a point of interest, this past May the company completed the previously announced $3.3 billion sale of all of the issued and outstanding shares of Plains Midstream Canada ULC, the PAA subsidiary that owns substantially all of PAA’s natural gas liquids to Keyera Corp., an Alberta-based corporation. (Source: “Plains All American Pipeline and Plains GP Holdings Announce Completion of Canadian NGL Divestiture,” Plains Al American Pipeline, L.P., May 12, 2026.)
This transaction completes its transformation to a premier pure play crude oil midstream company.
Its infrastructure currently includes approximately:
- 20,000 miles of active crude oil pipelines and gather systems
- 75 million barrels of storage capacity
- 40 million barrels of above-ground tank capacity
- 5 marine facilities
- 1 condensate processing facility with 120,000 barrels/day capacity
- 8 crude oil rail terminals
- ~675 trucks and ~1,200 trailers
Another Solid Quarter
Plains All American continues to have a solid year. Second quarter revenue jumped 66% to $17.7 million. (Source: “Plains All American Reports Second-Quarter 2026 Results,” Plains All American Pipeline, L.P, August 7, 2026.)
Net income came in at $1.83 billion, including a net gain of approximately $1.6 billion from the Canadian NGL Business divestiture. Second quarter 2025 net income was $210 million.
Adjusted net income was up 12% on an annual basis at $348 million, from $312 million in the same prior year period. Net cash provided by operating activities was up 38% at $956 million.
Plains All American delivered strong second-quarter adjusted earnings before interest, tax, depreciation, and amortization of $738 million. Adjusted free cash flow was $4.18 billion, up from $348 million in the same period last year.
Over the last number of months Plains All American has:
- Successfully closed on its NGL sale in May
- Captured $50 million of synergies on its Cactus III acquisition
- Is delivering on $50 million of targeted cost reductions through year-end 2026
- Increased its 2026 organic growth capital from $350 million to a range of $400 to $450 million
Declares Quarterly Distribution at $0.4175/Unit
Thanks to reliable free cash flow, Plains All American Pipeline has a history of raising its quarterly payout; six years and counting. Most recently, it paid a second quarter distribution of $0.4175 per common unit, or $1.67 per unit on an annualized basis. This works out to an annual forward distribution of 7.05% per share. That’s more than double the current inflation rate of 3.4%.
PAA Units Trading At Highest Level Since 2014
PAA units have been on a run since the 2020 health crisis and continue to outpace the S&P 500. On July 31, PAA units hit a 52-week high of $24.62 per unit; it was also its highest trading level since 2014.
It has given up some short-term ground to profit taking, but continues to trade near that level at around $23.30 per unit. Still, PAA units are seriously outpacing the broader market, up:
- 37% year to date
- 42% on an annual basis
- 95% over the last two years
- 222% over the last five years
The outlook for PAA units remains solid with Wall Street analyst’s providing a 12 month share price target range of $24.47 to $27.00. This points to potential upside of approximately five percent to 16%.
Chart courtesy of StockCharts.com
The Lowdown on Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. is a great midstream energy play. It has been reporting strong results, its units are outpacing the broader energy sector, and it provides a reliably growing distribution.
The outlook remains solid for Plaina All American in 2026 with the partnership well-positioned to generate strong free cash flow and increase returns to unitholders.