High-Dividend Stocks Become More Secure Following a $3.8 Billion Agreement
Plains All American Pipeline (PAA) has announced the sale of its Canadian natural gas liquids (NGL) business to Keyera for approximately $3.8 billion. This move has put the company in a stronger financial position, characterized by enhanced flexibility, reduced leverage, and a focus on fee-based crude oil operations.
The deal is expected to generate around $3 billion in net proceeds for PAA after taxes and costs. These funds will be used for bolt-on acquisitions, repurchasing preferred units, and opportunistic repurchases of common units.
With the sale, PAA aims to sharpen its strategic focus on crude oil infrastructure, particularly growth opportunities in the Permian Basin, a key oil-producing region. The company’s leverage ratio is expected to be at or below the low end of its target range (3.25–3.75x), improving from 3.3x as of Q1 2025.
The sale will retain most of PAA's U.S. NGL business and all its crude oil assets in Canada. The company expects to get 85% of its earnings from predictable fee-for-service agreements, up from 80% before the deal.
Operationally, while the sale has contributed to a margin contraction, PAA’s adjusted EBITDA remains robust. The company reported a robust adjusted EBITDA of $754 million in Q1 2025, supported by increased volumes and hedging strategies.
Despite some margin pressure from the divested segment, PAA continues to demonstrate financial discipline and stability by maintaining consistent cash distributions to shareholders. Distributions for Q2 2025 were held steady at $0.38 per unit/share (annualized $1.52), reflecting confidence in its cash flow and earnings stability post-sale.
In conclusion, the sale of Plains All American Pipeline’s Canadian NGL business has strengthened its balance sheet and positioned the company for focused growth in crude oil infrastructure. The move has preserved distribution levels and an attractive yield, despite some margin pressure from the divested segment.
The sale of Plains All American Pipeline's Canadian NGL business will generate approximately $3 billion in net proceeds, which the company plans to use for bolt-on acquisitions, repurchasing preferred units, and opportunistic repurchases of common units in the context of further investments. Due to the sale, the company aims to maintain focus on crude oil infrastructure, particularly growth opportunities in the Permian Basin, while expecting to get 85% of its earnings from predictable fee-for-service agreements, up from 80% before the deal. Despite some margin pressure from the divested segment, PAA continues to demonstrate financial discipline and stability by maintaining consistent cash distributions to shareholders.
