PLAINS GP HOLDINGS LP (PAGP) stock intrinsic value fair value estimate & owner earnings analysis

What a share represents. Plains GP Holdings has no operations of its own. Its only asset is a stake in Plains All American Pipeline (PAA), a crude oil pipeline, storage and terminal operator. Each Class A share looks through to roughly one PAA common unit (the company held about 233 million PAA units at the end of 2025, about 31% of PAA's common and Series A preferred units combined). Its accounts consolidate all of PAA, so we measured what is left for a Class A holder after PAA's other claimants are paid: holders of Series A and Series B preferred units, and the minority partners in the Permian, Cactus II and Red River joint ventures. Those minority partners alone took $447 million of cash in 2025. How we measured earnings. We started with operating cash flow, removed working-capital swings (which are large at PAA because it buys and sells crude), deducted share-based pay, and deducted the company's own reported maintenance capital ($156 million in 2025, $187 million in 2024). We did not deduct growth spending (about $520 million of investment capital in 2025). Interest is already inside operating cash flow. This gives about $2.28 per share for 2025, $1.67 for 2024 and $1.92 for 2023. Earlier years, which include the Canadian NGL business now being sold, ran between $1.72 and $3.03 (2018: $3.03; 2020: $1.72). Because that business is being sold, we anchor on the last three years as restated for its sale and use the median, $1.92. The per-share figures depend on estimates of PAA's unit count derived from the ownership percentages in the filings, so treat them as approximate. PAGP also owes some income tax on its share; this is not separately modelled. Growth check. Per-share earnings rose about 36% in 2025 ($1.67 to $2.28). Our base case assumes no growth from the anchor, below that recent rate, because part of the 2025 gain came from lower maintenance spending and strong pipeline volumes that we cannot assume repeat. Base case: about $21.2 per share. Earnings start at $2.01: the $1.92 anchor plus about $0.09 from the pending sale of the Canadian NGL business. The 10-K says PAA expects roughly $3.2 billion of net proceeds, and that the sale triggers mandatory repayment of the $1.1 billion term loan; at about 5% that saves roughly $55 to 60 million of annual interest. We then hold earnings flat for 12 years and fade them to zero over the following 12 years, discounting at 6%. Flat is what the record supports: PAA's crude pipelines and terminals have carried per-share earnings between $1.6 and $3.0 through a pandemic and an oil price swing without growth being needed, and tariff escalators and 9.7 million barrels per day of pipeline volumes (up 8% in 2025) are structural. We do not credit further growth. The October 2025 purchase of the Cactus III (EPIC) crude pipeline for roughly $1.6 billion plus related deals added only two months to 2025 results and was financed with new debt, so we could not evidence a net earnings gain; the possible $193 million earn-out for expanding it to 900,000 barrels per day is not a commitment. The fade reflects that nothing named in the filings sustains earnings indefinitely. Bull case: about $29.5 per share. Earnings start at $2.48: the 2025 level of $2.28 held, plus about $0.20 from using the full sale proceeds to cut debt at around 5%. They stay flat for 15 years, then fade over 15 years. This requires the volume and tariff strength of 2025 to persist with no further step-up, and the sale to close on the stated terms. We excluded any Permian volume growth, new projects and margin expansion. Bear case: about $11.6 per share. Total debt rose from $7.6 billion to $11.3 billion in 2025, largely to fund acquisitions, and the joint-venture partners' share of cash keeps growing ($333 million in 2023, $447 million in 2025). We start at $1.50, below the 2020 pandemic-year result of $1.72, let earnings shrink 4% a year for ten years as a heavily indebted business with a shrinking share of joint-venture cash, then fade to zero over the next ten years. What could make this wrong. The sale of the Canadian NGL business had not closed at the time of the 10-K and we did not verify its status afterward. Oil-price or Permian volume declines, higher preferred distributions (the Series B rate floats with interest rates), or more cash flowing to joint-venture partners would lower these values. Earnings for 2017 to 2020 use preferred-distribution amounts and joint-venture minority cash that we could not fully verify. We used the company's reported maintenance capital rather than a revenue-based split, since PAA's revenue mostly follows commodity prices. Margin-of-safety price. The margin-of-safety price is about $12.0 per share, close to the bear case, because this is a leveraged, commodity-linked structure whose value depends on cash passing through PAA to a minority position, which calls for a wide margin of safety (about 43% below the base case).