Plains All American Pipeline, L.P. (PAA)

How it makes money

Two very different revenue streams sit inside the same segments. Pipeline transportation earns a contracted fee per barrel moved, largely independent of the oil price. Alongside it, Plains buys crude oil from producers and resells it to refiners at close to market price — a business that books enormous revenue because it passes through the full commodity price, but keeps only a thin margin. That mix is why segment revenue figures look dominated by trading rather than by the pipeline economics that actually drive profit.

Building a new pipeline network across the Permian Basin requires billions of dollars, years of permitting and secured rights of way, so an established gathering system is hard to replicate quickly. But several large rivals have built competing pipelines out of the same basin, so the advantage protects Plains' existing footprint more than it keeps competitors from entering new corridors.

Pipeline volumes follow how much oil producers are pumping, which follows the price of oil — when producers cut drilling, less crude needs moving. Long-term contracts and minimum-volume commitments cushion the tariff business from quarter-to-quarter swings, but the marketing side is directly exposed to oil price moves, so overall results still rise and fall with the commodity cycle.

Key risks

• Revenue concentrated in one customer — ExxonMobil accounted for 30% of 2024 revenue and the share has grown each of the prior two years; a change in that single relationship would move results materially.
• Exposed to crude oil prices and drilling activity — Pipeline volumes and the marketing business both depend on how much crude producers extract and ship, which falls when oil prices or drilling economics weaken.
• Concentrated in the Permian Basin — A large share of assets and growth sits in one producing region; a slowdown, infrastructure bottleneck or regulatory setback there affects the company more than a diversified peer.
• Regulatory and permitting opposition — New pipeline capacity requires government permits and rights of way that face growing environmental and community opposition, which can delay or block projects the company is counting on.

Top customers account for 30% of revenue

In its 2024 fiscal year, ExxonMobil and its subsidiaries alone accounted for 30% of revenue, up from 26% in 2023 and 20% in 2022 — a concentration that has been rising, not falling.