PAGP · Plains GP Holdings, L.P.

Plains GP Holdings delivered revenue growth of 3.8% to $12.5 billion in Q1 2026, up from $12.0 billion a year ago. This increase stemmed from our core merchant activities, which involve purchasing crude oil supply and transporting it via our assets or third-party systems to terminals, hubs, and refineries. Higher volumes underscore the resilience of our crude oil logistics network amid Permian basin expansions.

However, gross profit fell 21.8% to $977 million from $1.2 billion, compressing the gross margin to 7.8%. This erosion reflects heightened cost pressures in a competitive supply chain environment. Operating income declined further by 24.2% to $403 million, yielding a 3.2% operating margin. A key driver was the increase in depreciation and amortization, largely due to recently completed acquisitions that expanded our asset base. These investments enhance long-term capacity but elevate near-term expense recognition.

Net income attributable to PAGP shareholders plunged 76.2% to $20 million from $84 million. This sharp drop was exacerbated by recognition of tax expense within income from discontinued operations, as plans for certain future activities were finalized during the quarter and detailed in Note 2. Such one-time items highlight transitional dynamics in our portfolio optimization.

Cash generation remained a bright spot despite profitability challenges. Net cash provided by operating activities totaled $418 million, down from $638 million, but after $130 million in capital expenditures—lower than the prior year's $191 million—this produced $288 million in free cash flow. The reduction in capex reflects disciplined spending, though maintenance capital increased due to timing of pipeline integrity activities. These expenditures replace and refurbish depreciated assets to preserve operating and earnings capacity, forming a critical component of field operating costs or dedicated maintenance capital depending on their nature.