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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (79102)	2/6/2026 8:33:27 PM
From: E_K_S	1 Recommendation Recommended By roguedolphin Respond to of 79146

Re: Plains Gp Holdings LP (PAGP) - Part 1 I own DVN/CTRA (recent merger), WMB, KMI & SOBO. My comparison and analysis provides a general review from CLAUD AI, then I had CLAUD AI compare these other oil/NG/pipeline companies. I too am focused on 'qualified' dividends but also want minimal leverage and a dividend that is sustainable. I will break this up into two posts. SOBO is the closest fit & I started a small position in this name in 4/2025 w/ 6 Buys and have an average cost of $23.75. This name was mentioned on Big Dog's Boom Boom Room post 205988 ( tinyurl.com ) 3/25/2025 by DinoNavarre to robert b furman. --------------------------------------------------------------------- Claud AI review of PAGP The C-corp structure with qualified dividends is huge. You're right that PAGP often gets confused with PAA (the MLP), which immediately creates a valuation discount for anyone not paying attention. That's exactly the kind of inefficiency you want to exploit. The EPIC acquisition is genuinely interesting. Vertical integration from customer to owner-operator typically unlocks 10-15% cost synergies in midstream, and PAGP management has guided toward the conservative end of that range. More importantly, EPIC gives them a second Permian takeaway route that doesn't rely on their existing infrastructure—operational diversification that reduces bottleneck risk. Corpus Christi versus Houston matters more than most people realize. VLCC-capable terminals command 8-12% higher netbacks on exports, and Corpus has become the preferred export hub as Houston channels get more congested. PAGP's positioning there is a structural advantage. The NGL sale is the right move. NGL margins have compressed 40% since 2022, and they were diluting returns on capital. Using proceeds to de-lever rather than chase growth shows genuine capital discipline. The Concerns: Debt timing is awkward. They're sitting at 3.8x leverage (mid-point of their 3.5-4.0x comfort zone) until the NGL sale closes. If oil prices crack below $65 for an extended period, you could see covenant pressure before that cash arrives. The sale requires regulatory approval, which adds 3-6 months of uncertainty. The dividend increase to $1.67 annualized (8.25% yield at $20) is aggressive given current leverage. They're paying out roughly 75% of distributable cash flow. That's sustainable in a stable environment, but leaves limited room for distribution growth or unexpected maintenance capex. Volume risk is real. EPIC is 90% Permian-sourced, and while Permian production has been resilient, you're heavily concentrated in one basin. If shale producers shift capital allocation away from oil toward natural gas (as some have signaled), throughput could disappoint. Your Put Strategy: Selling $20 puts for March and May makes sense with one caveat: you need to be genuinely happy owning this at $20. The stock traded at $16.61 just nine months ago, and midstream names can gap down 15-20% on earnings misses or surprise maintenance capex announcements. At $20 with an 8.25% yield, you're getting paid 2x the S&P yield to wait, which is reasonable compensation. But the real question is whether that dividend is as safe as KMI's. KMI has investment-grade credit ratings and 2.5x leverage. PAGP is sub-investment grade (BB+) with higher leverage and more basin concentration. The Comparison to KMI: Dan Steffen is right that pipelines are undervalued relative to their cash flow durability, but PAGP isn't quite KMI. KMI has geographic diversification across multiple basins, multiple commodity types, and a balance sheet that can weather $50 oil. PAGP is more levered to Permian volume growth and has less financial cushion. That said, if you believe Permian production stays flat-to-up for the next 3-5 years (which I do), PAGP offers better yield for modestly higher risk. The 8.25% dividend is probably sustainable, but don't expect much growth until they hit their target 3.5x leverage. Bottom Line: This is a reasonable value play for someone with your risk tolerance, but I'd size it as a 3-5% portfolio position rather than a core holding like KMI. The yield is attractive, the asset base is improving with EPIC, and management seems rational about capital allocation. The risk is you're catching a falling knife if oil prices weaken or if the NGL sale falls through. Your put strategy limits that downside—just make sure you're comfortable owning shares at an effective cost basis around $18.50-19.00 after premium. If the stock does trade sideways around $20-21 for the next 6-12 months, systematically selling puts and collecting 8%+ yields is a perfectly sensible way to build a position. Just watch that leverage ratio and be ready to reassess if they don't de-lever as planned after the NGL sale closes.

To: robert b furman who wrote (79102)

2/6/2026 9:21:05 PM

From: E_K_S

Read Replies (1) | Respond to of 79146

Re: Plains Gp Holdings LP (PAGP) - Part 2

Discuss the value proposition of PAGP vs DVN/CTRA vs KMI vs WMB vs SOBO

( Analysis done by Claud AI including CAGR calculations w/ my Buys I uploaded to Claude)
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Quick Comparison:

DVN (Post-Merger)

Current Price: ~$44
P/E: ~10x (TTM)
FCF Yield: ~13-14% (at $70 WTI post-synergies)
Dividend Yield: 3% (increasing to $1.26/share post-merger)
Expected CAGR: Mid-single digits with $5B+ buyback program

PAGP

Current Price: ~$19
P/E: ~25x (TTM), ~10-12x forward
FCF Yield: Not applicable (midstream fee-based model)
Dividend Yield: 8.1-8.3%
Expected CAGR: Low single digits (2-4%)

Key Differences:

DVN is commodity-exposed growth. The merger unlocks $1B in annual synergies by 2027, generates $4B+ discretionary FCF post-dividend, and provides 13-14% FCF yield at $70 oil. You're betting on oil prices, Permian production durability, and synergy execution. P/E of 10x is cheap for 550k boe/d with 10+ years of sub-$40 inventory.

PAGP is pure infrastructure income. You're getting 8.3% qualified dividends with minimal commodity exposure—volumes drive revenue, not prices. The EPIC acquisition adds operating leverage, but growth is capped at 2-4% annually. P/E looks high at 25x TTM, but forward is 10-12x once NGL sale completes and debt normalizes.

Which fits your portfolio better?

If you want growth + dividends and can handle oil price volatility: DVN wins. FCF yield of 13% crushes PAGP's 8% dividend, and you get equity upside if oil stays above $65.

If you want pure yield with stability: PAGP wins. Qualified dividends at 8.3%, minimal price volatility, and fee-based cash flows that don't crater when oil drops to $50.

My take: DVN is better value if you believe oil averages $65-75 for 3+ years. PAGP is better for pure income with less drama. At current prices, DVN offers 60% more cash yield (13% vs 8%) with optionality on oil. But PAGP sleeps better at night.
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Pipeline Comparison:

Metric______PAGP____________KMI_____WMB___________SOBO

Price	~$19	~$30	~$60	~$27 USD
P/E Ratio	25x TTM, 10-12x fwd	22x	30x	17x
Div Yield	8.3%	3.9%	3.3%	7.4%
Leverage	3.8x (temp) ? 3.5x	2.5x	High	Moderate
Credit	BB+	BBB+	Investment grade	Not rated
Growth	2-4%	3-5%	4-6%	Low single digit
Geography	Permian-focused	Diversified	Gas-focused	Canada?US crude

Quick Takes:

SOBO = Closest Comp to PAGP

Both are pure-play crude pipelines with 7%+ yields
Both have elevated payout ratios (SOBO at 130%, PAGP at 75%)
SOBO is Canadian tar sands?US Gulf Coast; PAGP is Permian?Corpus
SOBO trades at 17x P/E vs PAGP's 25x—cheaper valuation
SOBO yield of 7.4% is slightly lower than PAGP's 8.3%, but payout is riskier

KMI = Gold Standard

Investment-grade credit, 2.5x leverage, diversified assets
Lower yield (3.9%) but safest dividend in the group
22x P/E is reasonable for quality and stability
Natural gas infrastructure exposure (70%+ of EBITDA)
Your existing position—stick with it as core holding

WMB = Natural Gas Pure-Play

Highest quality gas infrastructure (Transco pipeline)
Lowest yield (3.3%) reflects premium valuation
30x P/E is expensive—paying for growth optionality
Best positioned for LNG export demand growth
Not a value play—this is a quality/growth premium

PAGP vs SOBO (The Real Decision):

PAGP wins on:

Lower leverage (3.5x target vs SOBO's higher ratio)
EPIC acquisition creates operating synergies SOBO lacks
US-based qualified dividends (simpler tax treatment)
Corpus Christi export advantage

SOBO wins on:

Cheaper valuation (17x vs 25x P/E)
Established cash flows (no integration risk)
Canadian energy infrastructure remains undervalued
Payout ratio concern is offset by contracted revenues

My Take: If you want pure yield with less hair, SOBO at 17x P/E and 7.4% yield is better value than PAGP. But SOBO's 130% payout ratio is unsustainable—they're either cutting or refinancing debt. PAGP's 75% payout is healthier.

Bottom line: PAGP and SOBO are close cousins. SOBO is cheaper today, but PAGP has better optionality. KMI remains your safest midstream hold. WMB is too expensive for pure income.
----------------------------------------------------------------------

My portfolio results:

WMB trading at $67/share near an All Time High (23.1% CAGR includes dividends for the 16 year period based on my first buy in 2009 and 4 buys in 2020) avg cost $9.84/share.

KMI trading at $30.05/share ( 22.93 % CAGR includes dividends from a buy starting in 12/2018 and 7 Buys in 2020) avg cost $11.87/share.

SOBO trading at $29.18/share ( 36.92% CAGR but only 9 months w/ 6 Buys 4/2025 ) avg cost $23.74/share.

Summary Table

Ticker	Primary Status (2025/2026)	Tax Paperwork	Key Action
WMB	Mixed (Qualified + ROC)	1099-DIV	Reduce basis for the ROC portion.
KMI	Qualified	1099-DIV	Pay capital gains rate on full amount.
SOBO	Qualified	1099-DIV	Watch for Canadian withholding tax.

I will pass on PAGP. I have been peeling off shares of WMB & KMI but still have over sized positions. SOBO ia a long term hold and can use my Foreign Tax credit for any Canadian witholdings. The recent addition of DVN/CTRA worked out extremely well:

DVN $43.97 w/ avg cost (including CTRA shares converted) $32/share. 82.79% CAGR based on my combined DVN ( 11 DVN Buys in 2025 & 1 Buy in 2026 & 1 CTRA Buy 9/2025); that CAGR includes dividends paid. I plan to hold this for years and the dividends are "qualified". Let's see where the CAGR comes in after 5 years & after 10 years. I suspect it will be close to 23% similar to WMB & KMI.

Summary of Energy Portfolio Tax Status

Stock	Dividend Type	Tax Rate (Federal)
DVN	Qualified	0%, 15\%, or 20%
CTRA	Qualified	0%, 15\%, or 20%
WMB	Mixed	Qualified + Return of Capital (ROC)
KMI	Qualified	0%, 15\%, or 20%
SOBO	Qualified	0%, 15\%, or 20% (Minus 15% Canadian Withholding)

Note: KMI in earlier years had ROC. I also have WMB in the ROTH that is not included in the above CAGR results.

To: robert b furman who wrote (79102)	2/10/2026 3:53:43 AM
From: Johnny Canuck	Respond to of 79146

Hi Bob, I am not sure what other mid-tier E&P companies you looked at when you chose NOG. I have been sticking to a Canadian equivalent royalty trust that is an non-operation company FRU.TO . I am conscious of the potential for further USD currency devaluation in the coming years due to the perceived risk in the US economy and administration. Unfortunately FRU.TO has become too popular moving from a yield of 8 to low 6's now. I am now at least looking at US oil and gas companies. Any comments on these other mid-tier choices that came up in some research I did : Message 35422820 Message 35422821

To: robert b furman who wrote (79102)

2/10/2026 8:43:36 AM

From: E_K_S

Read Replies (2) | Respond to of 79146

RE: Williams Companies (WMB) - earnings Trading at an All Time High

At the high end of Valuation at 26x Forward PE and only 3.3% FCF yield

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Williams Companies (WMB) Q4 2024 Earnings Summary Quarterly & Full Year 2024 Results:

Record Adjusted EBITDA of $7.08 billion, up 4.4% year-over-year Ryortho
GAAP net income of $2.222 billion ($1.82 per share) Ryortho
Adjusted net income of $2.347 billion ($1.92 per share) Ryortho
Cash flow from operations: $4.974 billion Ryortho
Available funds from operations (AFFO): $5.378 billion, up 3.2% Ryortho
Record contracted transmission capacity: 33.4 Bcf/d, up 3.4% from 2023 Ryortho

Dividend & Returns:

Dividend increased 5.3% to $2.00 annualized (quarterly $0.525/share) Ryortho
Dividend coverage ratio: 2.32x Ryortho
5-year annualized total shareholder return of nearly 30% Ryortho

Key Strategic Achievements:

Completed Regional Energy Access, Southside Reliability Enhancement, and Carolina Market Link expansions
Integrated 115 Bcf of Gulf Coast Storage capacity with first 10 Bcf expansion announced Ryortho
Six new transmission projects announced in 2024 adding 885 MMcf/d of capacity Ryortho
Replaced 92 compressor units, reducing emissions and operating expenses

WMB 2025-2026 Valuation Proposition 2025 Guidance (Raised):

Adjusted EBITDA: $7.45-$7.85 billion (midpoint $7.65 billion, up 3% from prior guidance) Ryortho
Represents 5-year CAGR of 8% through 2025 Ryortho
Growth capex: $1.65-$1.95 billion Ryortho
Maintenance capex: $650-$750 million Ryortho
Target leverage ratio: 3.55x for 2025 Ryortho

Current Valuation Metrics: Stock Price: $68.26 (as of Feb 9, 2026) FinancialContent
Market Cap: $82.1 billion FinancialContent

P/E Ratios:

Trailing P/E: 31.53 TradingView
Forward P/E: 26.18 TradingView

2025-2026 Projections:

2025E Adjusted EPS: ~$2.00 (based on $2.347B net income / 1.22B shares)
2026E Forward P/E: 26.2x (based on analyst estimates)
Dividend Yield: 2.9% Simply Wall St at current price

Free Cash Flow Analysis: 2024 Performance:

Operating cash flow: $4.974 billion Ryortho
Capital expenditures: $2.573 billion Ryortho
Free Cash Flow: ~$2.4 billion
FCF Yield: $2.4B / $82.1B = 2.9%

Projected 2025 FCF:

Estimated OCF: ~$5.2 billion (based on EBITDA growth)
Capex guidance: ~$2.5 billion (midpoint of $2.3-$2.7B)
Projected FCF: ~$2.7 billion
Projected FCF Yield: ~3.3%

Growth Profile: Expected CAGR:

EBITDA CAGR (2020-2025): 8% (company disclosed)
Dividend CAGR (5-year): 5% (company disclosed)
2025-2026E Revenue CAGR: ~3-4% (based on guidance and expansion projects)
2025-2026E EPS CAGR: ~4-5% (driven by EBITDA growth and leverage optimization)

Valuation Summary:
MetricValueAssessment<tbody]

2026 Forward P/E	26.2x	Premium to midstream average (~18-20x)
FCF Yield (2024)	2.9%	Solid for infrastructure
Projected FCF Yield (2025)	3.3%	Improving with capital discipline
Dividend Yield	2.9%	Attractive, well-covered (2.32x)
Expected EBITDA CAGR	8%	Industry-leading growth
Expected Dividend CAGR	5%	Consistent growth trajectory
Analyst Price Target	$69.90 average (range $53-$83) FinancialContent	2.4% upside to avg; 21.6% to high
Enterprise Value/EBITDA TradingView	14.73x	Fair for quality infrastructure

Investment Considerations: Positives:

Irreplaceable Transco pipeline - connects major supply to demand centers (Gulf Coast to Northeast)
Industry-leading 8% EBITDA CAGR driven by record natural gas demand
14 high-return transmission projects in execution Ryortho, including Southeast Supply Enhancement (1.6 Bcf/d)
Strong dividend coverage (2.32x) with 50-year payment history
Data center and LNG export demand tailwinds
Leverage improving to 3.55x target Ryortho
97% fee-based revenue model (low commodity exposure)

Considerations:

Premium valuation (26x forward P/E vs. ~18-20x midstream peers)
Natural gas price volatility could impact volumes
Regulatory/permitting risks for expansion projects
High debt load ($26.7B) despite improving metrics

Verdict: WMB offers a compelling growth story in the midstream space with its 8% EBITDA CAGR significantly outpacing peers. The stock trades at a premium valuation (26x forward P/E) which is justified by its irreplaceable Transco asset, robust project pipeline, and exposure to secular growth drivers (LNG, data centers, power generation). The 2.9% dividend yield with 2.32x coverage plus 5% annual dividend growth provides attractive income with growth. At current levels near $68, the stock appears fairly valued with modest upside to the $70 average analyst target, but offers a high-quality way to play the natural gas infrastructure buildout over the next 5+ years.

Key Investment Thesis: Premium quality infrastructure asset with visible 8% EBITDA growth, strong FCF generation improving to 3.3% yield, and well-covered 2.9% dividend growing at 5% annually - ideal for income-focused investors seeking exposure to natural gas demand growth.