Submitted by Ron Hiram of Wise Analysis using our Trefis Contributors tool
In a prior article I presented the definition of distributable cash flow (DCF) used by Plains All American Pipeline, L.P. (PAA) and provided a comparison to definitions used by other master limited partnerships (MLPs). Using PAA’s definition, DCF has shown impressive growth. Indeed, this master limited partnership has reported an increase in DCF and DCF per unit in each of the last 7 consecutive quarters, as shown in the table below:
| Period: | 4Q11 | 3Q11 | 2Q11 | 1Q11 | 4Q10 | 3Q10 | 2Q10 | 1Q10 |
| Revenues | 8,884 | 8,837 | 8,859 | 7,694 | 7,231 | 6,414 | 6,124 | 6,125 |
| EBITDA | 426 | 421 | 367 | 326 | 277 | 205 | 259 | 277 |
| Adjusted EBITDA | 471 | 414 | 366 | 348 | 322 | 264 | 248 | 272 |
| Distributable Cash Flow (“Implied DCF”) | 343 | 310 | 259 | 241 | 229 | 168 | 161 | 201 |
| Weighted average units (millions) | 154 | 150 | 150 | 144 | 139 | 137 | 137 | 137 |
| DCF per unit | $2.23 | $2.07 | $1.73 | $1.67 | $1.65 | $1.23 | $1.18 | $1.47 |
Figures in $ Millions, except units and per unit amounts
To review a comparison of sustainable DCF (as I define it) to reported DCF for the period ending 9/30/11, click here. That report indicated for the 9 months ended 9/30/11 there were no significant differences between reported and sustainable DCF. It also pointed out that a significant surplus ($1,063 million) remained after deducting from net cash from operations: (i) maintenance capital expenditures; (ii) net income from non-controlling interests; and (iii) distributions. Even after taking into account that $785 million of the $1,063 million surplus is due to reduction in working capital, the remaining cushion was still sizable.
After the company provides additional cash flow information as part of its 10-K filing expected around February 25, I will report on sustainable DCF for the 12 months ended 12/31/11. Based on what I have seen to date, I do not see DCF sustainability as a cause for concern with respect to PAA.
