Plains All American Pipeline, L.P. (NYSE:PAA) shares were up 1.03% on Tuesday when approximately 1.44M shares were traded, against the average daily trading volume of 2.71M. Analysts at Credit Agricole recently upgraded the stock to Underperform from Buy. Plains All American Pipeline, L.P. (NYSE:PAA) has a consensus buy rating, according to Zacks Investment Research. No analyst has rated the stock with a sell rating, 11 have assigned a hold rating, 2 says it’s a buy, and 6 have assigned a strong buy rating to the company.
Analysts have a consensus target price of $33.40 in the 12-month period. The price objective is 6.40% higher than the recent closing price of $31.39. The 52-week price range is $13.57-$33.37 and the company has a market capitalization of $20.65 billion.
Plains All American Pipeline, L.P. (PAA) on January 25, 2017 announced it had entered into definitive agreements to acquire a Permian Basin crude oil gathering system for approximately $1.2 billion. PAA also announced it had entered into definitive sales agreements totaling $380 million, which includes two pending transactions aggregating approximately $310 million and the completion of a third transaction in January 2017 for approximately $70 million. The acquisition and pending sale transactions are subject to customary closing conditions, including receipt of regulatory approvals, and are expected to close during the first half of 2017.
The crude oil gathering system is located in the northern portion of the Delaware Basin and is supported by substantial acreage dedications from several producers active in this portion of the Delaware Basin.
“The Permian Basin is a world class resource play and we are pleased to announce this strategic acquisition, which complements our existing assets that provide transportation and related services throughout the Permian Basin,” said Greg Armstrong, Chairman and CEO of PAA. “The Northern Delaware Basin is an area that is experiencing increased activity levels and significant industry investment. We expect aggregate crude oil production on the dedicated acreage to double over the next two to three years, and we believe that overall Permian Basin crude oil volumes have the potential to grow as much as 50% or more during this same time period. Additionally, we expect to realize meaningful synergies with our existing assets and generate attractive investment returns relative to our cost of capital.”
Armstrong also stated that this system and planned enhancements will provide additional flexibility and a greater range of options for area producers, including connectivity to PAA’s pipelines with access to markets in Cushing, Houston and Corpus Christi. PAA recently announced it was expanding the capacity on its Cactus pipeline from McCamey to Gardendale, Texas to approximately 390,000 barrels per day. This expansion is anticipated to be completed in the third quarter of 2017 and will allow PAA to move increasing production volumes from the Permian Basin to Corpus Christi and other delivery points along the system. Additionally, BridgeTex Pipeline Company, LLC, in which PAA owns a 50% interest, yesterday announced it was expanding the capacity on the BridgeTex pipeline from Colorado City to Houston, Texas to approximately 400,000 barrels per day. This expansion is anticipated to be completed in the second quarter of 2017 and will also move increasing production volumes from the Permian Basin to the Houston Gulf Coast area.
