Plains All American Pipeline, L.P. (NASDAQ: PAA) and Plains GP Holdings (NASDAQ: PAGP) have finalized agreements with Keyera Corp. (TSX: KEY) to sell most of their NGL business for approximately $3.75 billion USD. The deal, anticipated to close in the first quarter of 2026, will see Plains divesting its Canadian NGL business while retaining most NGL assets in the United States and all crude oil assets in Canada.
The sale is expected to result in significant changes for Plains. For one, it will transform the company into a premier midstream crude oil "pure play," which is likely to drive efficient growth and streamline opportunities. The company anticipates a more durable cash flow stream, with reduced commodity-related EBITDA contribution, seasonality, and working capital requirements.
The purchase price represents approximately 13x expected 2025 distributable cash flow (DCF), and the sale is expected to enhance the free cash flow profile, generating a higher percentage of "excess cash flow" with lower capital investments and taxes. This, in turn, is expected to provide significant financial flexibility, creating opportunities to redeploy capital and execute the existing capital allocation framework in a disciplined manner.
Proceeds from the transaction are expected to be approximately $3.0 billion USD net after taxes, transaction expenses, and a potential one-time special distribution. The estimated ~$0.35/unit special distribution is intended to offset potential individual tax liabilities associated with the transaction and is subject to board approval, ultimate tax implications, and the successful closing of the transaction.
Plains plans to continue executing its long-term capital allocation framework, prioritizing disciplined bolt-on M&A to extend and expand the crude oil-focused portfolio, capital structure optimization including potential repurchases of Series A & Series B preferred units, and opportunistic common unit repurchases.
The transaction is expected to have tax implications. PAA will incur approximately $360 million USD of entity-level taxes payable in Canada associated with the sale of the NGL business and the restructuring of the remaining Canadian crude assets. However, there are plans to recommend to the Plains board to approve a one-time special distribution currently estimated to be approximately $0.35 per unit to offset a significant portion of the anticipated tax impacts associated with the transaction.
As of June 30, 2025, Plains will re-classify the NGL assets associated with the transaction as discontinued operations.
For more detailed information regarding the transaction, a presentation has been posted to the Plains investor relations website at ir.plains.com. Today the company's shares have moved 0.21% to a price of $18.95. If you want to know more, read the company's complete 8-K report here.
