Plains All American Pipeline, L.P. and Plains GP Holdings have announced that it has executed definitive agreements with Keyera Corp. pursuant to which Plains will sell substantially all of its NGL business to Keyera for a total cash consideration of approximately CAN$5.15 billion (US$3.75 billion).
The transaction is expected to close in the 1Q26, and is subject to customary closing conditions, including regulatory approvals. As a result of the transaction, Plains will divest its Canadian NGL business but will retain substantially all NGL assets in the US and will also retain all crude oil assets in Canada.
Transaction benefits
- Results in premier midstream crude oil ‘pure play’: positioned to drive efficient growth and streamlining opportunities.
- More durable cash flow stream: reduces commodity related EBITDA contribution, seasonality, and working capital requirements.
- Attractive valuation: purchase price represents approximately 13 times expected 2025 distributable cash flow (DCF).
- Enhances free cash flow profile: pro-forma business expected to generate higher percentage of ‘excess cash flow’ with disproportionately lower capital investments and taxes.
- Provides significant financial flexibility: creates optionality to redeploy capital and execute existing capital allocation framework in a disciplined manner.
Capital allocation
Proceeds from the transaction are expected to be approximately US$3.0 billion net after: 1) taxes 2) transaction expenses and 3) a potential one-time special distribution. The estimated ~US$00.35/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 successful closing of the transaction.
Plains expects to continue executing on its long-term capital allocation framework. Proceeds from the transaction will be prioritised toward:
- Disciplined bolt-on M&A to extend and expand the crude oil focused portfolio.
- Capital structure optimisation including potential repurchases of Series A & Series B Preferred units.
- Opportunistic common unit repurchases.
“Today’s announcement is a win-win transaction for both Plains and Keyera. Plains is exiting the Canadian NGL business at an attractive valuation while Keyera is receiving highly complementary and critical infrastructure in a strategic market,” said Willie Chiang, Chairman and CEO. “Successful completion of this transformative transaction advances our efficient growth strategy and establishes Plains as the premier pure play crude oil midstream entity with highly strategic assets linking North American supply to key demand centres. Importantly, the transaction enhances our free cash flow profile and reduces both commodity exposure and working capital requirements into the future. Post-closing our financial framework should be enhanced, with leverage at or below the low-end of our target range, providing significant financial flexibility and allowing us to continue optimising our crude oil focused asset base in a disciplined manner while increasing return of capital to our unitholders.”
