UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported) — February 8, 2016

 

Plains All American Pipeline, L.P.

(Exact name of registrant as specified in its charter)

 

DELAWARE

 

1-14569

 

76-0582150

(State or other jurisdiction of
incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

333 Clay Street, Suite 1600, Houston, Texas 77002

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: 713-646-4100

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 9.01.                                        Financial Statements and Exhibits

 

(d)    Exhibit 99.1 — Press Release dated February 8, 2016

 

Item 2.02 and Item 7.01. Results of Operations and Financial Condition; Regulation FD Disclosure

 

Plains All American Pipeline, L.P. (the “Partnership”) today issued a press release reporting its fourth-quarter and full-year 2015 results. We are furnishing the press release, attached as Exhibit 99.1, pursuant to Item 2.02 and Item 7.01 of Form 8-K.  Pursuant to Item 7.01, we are also providing detailed guidance of financial performance for the first quarter and full year of 2016.  In accordance with General Instruction B.2. of Form 8-K, the information presented herein under Item 2.02 and Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Exchange Act or Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

 

Disclosure of First-Quarter and Full-Year 2016 Guidance

 

We based our guidance for the three-month period ending March 31, 2016 and twelve-month period ending December 31, 2016 on assumptions and estimates that we believe are reasonable, given our assessment of historical trends (modified for changes in market conditions, including an assumption that U.S. onshore oil production continues to decline in 2016 as well as a continuation of a competitive crude oil market), business cycles and other reasonably available information. Projections covering multi-quarter periods contemplate inter-period changes in future performance resulting from new expansion projects, seasonal operational changes (such as NGL sales) and acquisition synergies. Our assumptions and future performance, however, are both subject to a wide range of business risks and uncertainties, so we can provide no assurance that actual performance will fall within the guidance ranges. In particular, in response to recent price fluctuations, many producers are still developing their 2016 capital plans and production forecasts and others are modifying previously disclosed plans, which adds a fairly significant element of uncertainty to our 2016 quarterly and annual guidance given the impact that producer capital activity and production levels can have on our performance. Please refer to information under the caption “Forward-Looking Statements and Associated Risks” on page 10. These risks and uncertainties, as well as other unforeseeable risks and uncertainties, could cause our actual results to differ materially from those in the following table. The operating and financial guidance provided in the following pages is given as of the date hereof, based on information known to us as of February 7, 2016. We undertake no obligation to publicly update or revise any forward-looking statements.

 

To supplement our financial information presented in accordance with GAAP, management uses additional measures known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future.  Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations.  EBITDA (as defined in Note 1 to the “Operating and Financial Guidance” table) is a non-GAAP financial measure. Net income represents one of the two most directly comparable GAAP measures to EBITDA. In Note 10, we reconcile net income to EBITDA and adjusted EBITDA for the 2016 guidance periods presented. Cash flows from operating activities is the other most comparable GAAP measure. We do not, however, reconcile cash flows from operating activities to EBITDA, because such reconciliations are impractical for forecasted periods. We encourage you to visit our website at www.plainsallamerican.com (in particular the section under and Financial Information entitled “Non-GAAP Reconciliations” within the “Investor Relations” tab), which presents a historical reconciliation of EBITDA as well as certain other commonly used non-GAAP and supplemental financial measures. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable, (iii) long—term inventory costing adjustments, (iv) items that are not indicative of our core operating results and business outlook and/or (v) other items that we believe should be excluded in understanding our core operating performance. We have defined all such items as “Selected Items Impacting Comparability.”  Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We consider an understanding of these selected items impacting comparability to be material to the evaluation of our operating results and prospects.

 

2



 

Plains All American Pipeline, L.P.

Operating and Financial Guidance

(in millions, except per unit data)

 

 

 

Guidance (a)

 

 

 

3 Months Ending

 

12 Months Ending

 

 

 

Mar 31, 2016

 

Dec 31, 2016

 

 

 

Low

 

High

 

Low

 

High

 

Segment Profit

 

 

 

 

 

 

 

 

 

Net revenues (including equity earnings in unconsolidated entities)

 

$

934

 

$

982

 

$

3,717

 

$

3,877

 

Field operating costs

 

(329

)

(320

)

(1,289

)

(1,259

)

General and administrative expenses

 

(74

)

(71

)

(283

)

(273

)

 

 

531

 

591

 

2,145

 

2,345

 

Depreciation and amortization expense

 

(114

)

(110

)

(446

)

(430

)

Interest expense, net

 

(112

)

(108

)

(448

)

(432

)

Income tax expense

 

(33

)

(29

)

(114

)

(98

)

Other income / (expense), net

 

 

 

 

 

Net Income

 

272

 

344

 

1,137

 

1,385

 

Net income attributable to noncontrolling interests

 

(1

)

(1

)

(5

)

(5

)

Net Income Attributable to PAA

 

$

271

 

$

343

 

$

1,132

 

$

1,380

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common unitholders (b)

 

$

96

 

$

167

 

$

401

 

$

644

 

Basic net income per common unit (b)

 

 

 

 

 

 

 

 

 

Weighted average common units outstanding

 

398

 

398

 

398

 

398

 

Net income per common unit

 

$

0.24

 

$

0.42

 

$

1.01

 

$

1.62

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common unit(b)(c)

 

 

 

 

 

 

 

 

 

Weighted average common units outstanding (c)

 

400

 

400

 

400

 

400

 

Net income per common unit

 

$

0.24

 

$

0.42

 

$

1.00

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

531

 

$

591

 

$

2,145

 

$

2,345

 

 

 

 

 

 

 

 

 

 

 

Selected items impacting comparability- income / (loss)

 

 

 

 

 

 

 

 

 

Equity-indexed compensation expense

 

$

(9

)

$

(9

)

$

(30

)

$

(30

)

Selected items impacting comparability of net income attributable to PAA

 

$

(9

)

$

(9

)

$

(30

)

$

(30

)

 

 

 

 

 

 

 

 

 

 

Excluding selected items impacting comparability

 

 

 

 

 

 

 

 

 

Adjusted segment profit

 

 

 

 

 

 

 

 

 

Transportation

 

$

242

 

$

260

 

$

1,140

 

$

1,200

 

Facilities

 

139

 

151

 

595

 

635

 

Supply and Logistics

 

159

 

189

 

440

 

540

 

Other income / (expense), net

 

 

 

 

 

Adjusted EBITDA

 

$

540

 

$

600

 

$

2,175

 

$

2,375

 

Adjusted net income attributable to PAA

 

$

280

 

$

352

 

$

1,162

 

$

1,410

 

Basic adjusted net income per common unit (b)

 

$

0.26

 

$

0.44

 

$

1.08

 

$

1.69

 

Diluted adjusted net income per common unit (b)(c)

 

$

0.26

 

$

0.44

 

$

1.07

 

$

1.68

 

 


(a)                                      The assumed average foreign exchange rate is $1.40 Canadian dollar (CAD) to $1.00 U.S. dollar (USD) for the three-month period ending March 31, 2016 and the twelve month period ending December 31, 2016.  The rate as of February 5, 2016 was $1.39 CAD to $1.00 USD. We do not anticipate that fluctuations in the foreign exchange rate will have a significant impact on aggregate reported financial results, but such fluctuations will result in variations between segments.

 

(b)                                     We allocate Net Income Attributable to PAA among our Series A Preferred Unitholders, Common Unitholders and General Partner interest using the two-class method in accordance with applicable authoritative accounting guidance.  Under the two-class method, we allocate Net Income Attributable to PAA based on the distributions pertaining to the current period’s net income.  After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, common unitholders and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

 

(c)                                      Diluted net income per common unit is computed based on the weighted average number of common units outstanding plus the effect of dilutive potential units outstanding during the period using the two-class method, unless the effects of such units are anti-dilutive.

 

3



 

Notes and Significant Assumptions:

 

1.              Definitions.

 

EBITDA

Earnings before interest, taxes and depreciation and amortization

Segment Profit

Net revenues (including equity earnings in unconsolidated entities, as applicable) less segment field operating costs and general and administrative expenses

DCF

Distributable cash flow

Bbls/d

Barrels per day

Mcf

Thousand cubic feet

Bcf

Billion cubic feet

LTIP

Long-term incentive plan

NGL

Natural gas liquids, including ethane and natural gasoline products as well as propane and butane, which are often referred to as liquefied petroleum gas (LPG). When used in this document NGL refers to all NGL products including LPG.

FX

Foreign currency exchange

G&A

General and administrative

General partner (GP)

As the context requires, “general partner” or “GP” refers to any or all of (i) PAA GP LLC, the owner of our 2% general partner interest, (ii) Plains AAP, L.P., the sole member of PAA GP LLC and owner of our incentive distribution rights and (iii) Plains All American GP LLC, the general partner of Plains AAP, L.P.

 

2.              Operating Segments. We manage our operations through three operating segments:  Transportation, Facilities and Supply and Logistics. The following is a brief explanation of the operating activities for each segment as well as key metrics.

 

a.              Transportation. Our Transportation segment operations generally consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. The Transportation segment generates revenue through a combination of tariffs, third-party pipeline capacity agreements and other transportation fees. Our transportation segment also includes equity earnings from our investments in the entities that own BridgeTex, Caddo, Eagle Ford, Frontier, Saddlehorn, White Cliffs, and Butte pipeline systems as well as Settoon Towing, in which we own interests ranging from 22% to 50%.  We account for these investments under the equity method of accounting.

 

Pipeline volume estimates are based on historical trends, anticipated future operating performance and assumed completion of capital projects. Actual volumes will be influenced by maintenance schedules at refineries, drilling and completion activity levels, production trends, weather and other natural occurrences including hurricanes, changes in the quantity of inventory held in tanks, variations due to market structure and other external factors beyond our control. We forecast adjusted segment profit using the volume assumptions following in the table, priced at forecasted tariff rates, less estimated field operating costs and G&A expenses. Field operating costs do not include depreciation. Actual segment profit could vary materially depending on the level and mix of volumes transported or expenses incurred during the period, as well as the extent of any cash we receive with respect to minimum ship or pay commitments for which revenue recognition is required to be deferred until the associated transportation credits are used or expire. The following table summarizes our total transportation volumes and broken down by crude oil geographic area as well as total NGL and trucking volumes.

 

4



 

 

 

Guidance

 

 

 

Three Months

 

Twelve Months

 

 

 

Ending

 

Ending

 

 

 

Mar 31, 2016

 

Dec 31, 2016

 

Average daily volumes (MBbls/d)

 

 

 

 

 

Volumes from tariff activities

 

 

 

 

 

Crude oil pipelines (by region):

 

 

 

 

 

Permian Basin (1)

 

2,125

 

2,380

 

South Texas / Eagle Ford (1)

 

320

 

340

 

Western

 

180

 

230

 

Rocky Mountain (1)

 

435

 

470

 

Gulf Coast

 

580

 

470

 

Central

 

360

 

405

 

Canada

 

395

 

410

 

Crude oil pipelines

 

4,395

 

4,705

 

NGL pipelines

 

165

 

155

 

Total volumes from tariff activities

 

4,560

 

4,860

 

Trucking

 

115

 

120

 

Total Transportation segment volumes

 

4,675

 

4,980

 

 

 

 

 

 

 

Adjusted segment profit per barrel ($/Bbl)

 

$

0.59

(2)

$

0.64

(2)

 


 

(1)             Area systems include volumes (attributable to our interest) from pipelines owned by unconsolidated entities.

(2)             Represents the midpoint of guidance.

 

b.              Facilities. Our Facilities segment operations generally consist of fee-based activities associated with providing storage, terminalling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. The Facilities segment generates revenue through a combination of month-to-month and multi-year agreements and processing arrangements.

 

Revenues generated in this segment primarily include (i) fees that are generated from storage capacity agreements, (ii) terminal throughput fees that are generated when we receive crude oil, refined products or NGL from one connecting source and deliver the applicable product to another connecting carrier, (iii) loading and unloading fees at our rail terminals, (iv) fees from NGL fractionation and isomerization services, (v) fees from natural gas and condensate processing services and (vi) fees associated with natural gas park and loan activities, interruptible storage services and wheeling and balancing services.  Adjusted segment profit is forecasted using the volume assumptions in the following table, priced at forecasted rates, less estimated field operating costs and G&A expenses. Field operating costs do not include depreciation.

 

5



 

 

 

Guidance

 

 

 

Three Months

 

Twelve Months

 

 

 

Ending

 

Ending

 

 

 

Mar 31, 2016

 

Dec 31, 2016

 

Operating Data

 

 

 

 

 

Crude oil, refined products and NGL terminalling and storage capacity (MMBbls/Mo.)

 

105

 

105

 

Rail load / unload volumes (MBbls/d)

 

115

 

150

 

Natural gas storage capacity (Bcf/Mo.)

 

97

 

97

 

NGL fractionation volumes (MBbls/d)

 

110

 

110

 

Total Facilities segment volumes

 

 

 

 

 

Avg. Capacity (MMBbls/Mo.) (1)

 

128

 

129

 

 

 

 

 

 

 

Adjusted segment profit per barrel ($/Bbl)

 

$

0.38

(2)

$

0.40

(2)

 


(1)             Calculated as the sum of: (i) crude oil, refined products and NGL terminalling and storage capacity; (ii) rail load and unload volumes multiplied by the number of days in the period and divided by the number of months in the period; (iii) natural gas storage working capacity divided by 6 to account for the 6:1 mcf of natural gas to crude Btu equivalent ratio and further divided by 1,000 to convert to monthly volumes in millions; and (iv) NGL fractionation volumes multiplied by the number of days in the period and divided by the number of months in the period.

(2)             Represents the mid-point of guidance.

 

c.                           Supply and Logistics. Our Supply and Logistics segment operations generally consist of the following merchant-related activities:

 

·                  the purchase of U.S. and Canadian crude oil at the wellhead, the bulk purchase of crude oil at pipeline, terminal and rail facilities and the purchase of cargos at their load port and various other locations in transit;

 

·                  the storage of inventory during contango market conditions and the seasonal storage of NGL and natural gas;

 

·                  the purchase of NGL from producers, refiners, processors and other marketers;

 

·                  the resale or exchange of crude oil and NGL at various points along the distribution chain to refiners or other resellers;

 

·                  the transportation of crude oil and NGL on trucks, barges, railcars, pipelines and ocean-going vessels from various delivery points, market hub locations or directly to end users such as refineries, processors and fractionation facilities; and

 

·                  the purchase and sale of natural gas.

 

We characterize a substantial portion of our baseline profit generated by our Supply and Logistics segment as fee equivalent. This portion of the segment profit is generated by the purchase and resale of crude oil on an index-related basis, which results in us generating a gross margin for such activities.  This gross margin is reduced by the transportation, facilities and other logistical costs associated with delivering the crude oil to market and carrying costs for hedged inventory as well as any operating and G&A expenses.  The level of profit associated with a portion of the other activities we conduct in the Supply and Logistics segment is influenced by overall market structure and the degree of market volatility as well as variable operating expenses. Forecasted operating results for the three-month period ending March 31, 2016 and for the twelve-month period ending December 31, 2016 reflect current market structure as well as seasonal, and weather-related and other anticipated variations in crude oil, NGL and natural gas sales. Variations in weather, market structure or volatility could cause actual results to differ materially from forecasted results.

 

6


 


 

We forecast adjusted segment profit using the volume assumptions stated below, as well as estimates of unit margins, field operating costs, G&A expenses and carrying costs for hedged inventory, based on current and anticipated market conditions. Actual volumes are influenced by temporary market-driven storage and withdrawal of crude oil, maintenance schedules at refineries, actual production levels, weather, and other external factors beyond our control. Field operating costs do not include depreciation. Realized unit margins for any given lease-gathered barrel could vary significantly based on a variety of factors including location and quality differentials as well as contract structure. Accordingly, the projected adjusted segment profit per barrel can vary significantly even if aggregate volumes are in line with the forecasted levels.

 

 

 

Guidance

 

 

 

Three Months

 

Twelve Months

 

 

 

Ending

 

Ending

 

 

 

Mar 31, 2016

 

Dec 31, 2016

 

Average daily volumes (MBbls/d)

 

 

 

 

 

Crude oil lease gathering purchases

 

915

 

935

 

NGL sales

 

300

 

250

 

Total Supply and Logistics segment volumes

 

1,215

 

1,185

 

 

 

 

 

 

 

Adjusted segment profit per barrel ($/Bbl)

 

$

1.57

(1)

$

1.13

(1)

 


(1)             Represents the mid-point of guidance.

 

3.              Depreciation and Amortization. We forecast depreciation and amortization based on our existing depreciable assets, forecasted capital expenditures and projected in-service dates. Depreciation may also vary due to gains and losses on intermittent sales of assets, asset retirement obligations, asset impairments, acceleration of depreciation or foreign exchange rates.

 

4.              Capital Expenditures and Acquisitions.  Although acquisitions constitute a key element of our growth strategy, the forecasted results and associated estimates do not include any forecasts for acquisitions that we may commit to after the date hereof. We forecast capital expenditures during calendar year 2016 to be approximately $1.5 billion for expansion projects with an additional $190 million to $210 million for maintenance capital projects.   The following are some of the more notable projects and forecasted expenditures for the year ending December 31, 2016:

 

 

 

Calendar 2016

 

 

 

(in millions)

 

Expansion Capital

 

 

 

· Red River Pipeline (Cushing to Longview)

 

$290

 

· Diamond Pipeline

 

260

 

· Permian Basin Area Pipeline Projects

 

185

 

· Fort Saskatchewan Facility Projects

 

190

 

· Saddlehorn Pipeline

 

155

 

· Cushing Terminal Expansions

 

35

 

· St. James Terminal Expansions

 

35

 

· Caddo Pipeline

 

30

 

· Cactus Pipeline

 

20

 

· Eagle Ford JV Project

 

20

 

· Other Projects

 

280

 

 

 

$1,500

 

Potential Adjustments for Timing / Scope Refinement (1)

 

- $100     + $100

 

Total Projected Expansion Capital Expenditures

 

$1,400   -   $1,600

 

 

 

 

 

Maintenance Capital Expenditures

 

$190   -   $210

 

 


(1)             Potential variation to current capital costs estimates may result from (i) changes to project design, (ii) final cost of materials and labor and (iii) timing of incurrence of costs due to uncontrollable factors such as receipt of permits, or regulatory approvals and weather.

 

7



 

5.              Asset Sales. This guidance takes into account the sale of non-core assets for total proceeds of $200 million to $400 million which are assumed to close mid-year 2016.  We do not expect that in the aggregate any gain or loss from these asset sales will be material and thus, we have not included any such estimate in our guidance.

 

6.              Capital Structure. This guidance is based on our capital structure as of December 31, 2015, adjusted for the issuance of approximately 61 million Series A Convertible Preferred Units for net proceeds of approximately $1.6 billion which closed late January 2016.

 

7.              Interest Expense. Debt balances are projected based on estimated cash flows, estimated distribution rates, estimated capital expenditures for maintenance and expansion projects, anticipated equity proceeds from the continuous offering program, expected timing of collections and payments and forecasted levels of inventory and other working capital sources and uses. Interest rate assumptions for variable-rate debt are based on the LIBOR curve as of late January 2016.

 

Interest expense is net of amounts capitalized for expansion capital projects and does not include interest on borrowings for hedged inventory. We treat interest on hedged inventory borrowings as carrying costs of crude oil, NGL, and natural gas and include it in purchases and related costs.

 

8.             Income Taxes. We expect our Canadian income tax expense to be approximately $31 million and $106 million for the three-month period ending March 31, 2016 and twelve-month period ending December 31, 2016, respectively, of which approximately $23 million and $80 million, respectively, is classified as a current income tax expense.  For the twelve-month period ending December 31, 2016 we expect to have a deferred tax expense of $26 million.  All or part of the annual income tax expense of $106 million may result in a tax credit to our equity holders.

 

9.              Equity-Indexed Compensation Plans. The majority of grants outstanding under our various equity-indexed compensation plans contain vesting criteria that are based on a combination of performance benchmarks and service periods. The grants will vest in various percentages, typically on the later to occur of specified vesting dates and the dates on which minimum distribution levels are reached. Among the various grants outstanding as of February 7, 2016, estimated vesting dates range from May 2016 to August 2024 and annualized benchmark distribution levels range from $2.075 to $3.50.

 

On January 12, 2016, we declared an annualized distribution of $2.80 per unit payable on February 12, 2016 to our unitholders of record as of January 29, 2016. We have made the assessment that an annualized $2.90 distribution level is probable in the reasonably foreseeable future, and accordingly, guidance includes an accrual over the applicable service period at an assumed market price of $23 per unit as well as an accrual associated with awards that will vest on a certain date. The actual amount of equity-indexed compensation expense in any given period will be directly influenced by (i) our unit price at the end of each reporting period, (ii) our unit price on the vesting date, (iii) our then current probability assessment regarding distributions, and (iv) new equity-indexed compensation award grants, including the timing of such grant issuances. For example, a $2 change in the unit price would change the first-quarter equity-indexed compensation expense by approximately $4 million and the full year equity-indexed compensation expense by approximately $5 million. Therefore, actual net income could differ from our projections.

 

10.       Reconciliation of Net Income to EBITDA and Adjusted EBITDA. The following table reconciles net income to EBITDA and Adjusted EBITDA for the indicated periods.

 

 

 

Guidance

 

 

 

3 Months Ending

 

12 Months Ending

 

 

 

Mar 31, 2016

 

Dec 31, 2016

 

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Net income

 

$

272

 

$

344

 

$

1,137

 

$

1,385

 

Interest expense, net

 

112

 

108

 

448

 

432

 

Income tax expense

 

33

 

29

 

114

 

98

 

Depreciation and amortization

 

114

 

110

 

446

 

430

 

EBITDA

 

$

531

 

$

591

 

$

2,145

 

$

2,345

 

 

 

 

 

 

 

 

 

 

 

Selected items impacting comparability of EBITDA

 

9

 

9

 

30

 

30

 

Adjusted EBITDA

 

$

540

 

$

600

 

$

2,175

 

$

2,375

 

 

8



 

11.       Implied DCF. The following table reconciles adjusted EBITDA to implied DCF for the indicated periods.

 

 

 

Mid-Point Guidance

 

 

 

Three Months

 

Twelve Months

 

 

 

Ending

 

Ending

 

 

 

Mar 31, 2016

 

Dec 31, 2016

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

570

 

$

2,275

 

Interest expense (1)

 

(106

)

(423

)

Maintenance capital expenditures

 

(50

)

(200

)

Current income tax expense

 

(23

)

(80

)

Other, net

 

3

 

14

 

Implied DCF

 

$

394

 

$

1,586

 

 


(1)             Excludes non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps.

 

9



 

Forward-Looking Statements and Associated Risks

 

All statements included in this report, other than statements of historical fact, are forward-looking statements, including, but not limited to, statements incorporating the words “anticipate,” “believe,” “estimate,” “expect,” “plan,” “intend” and “forecast,” as well as similar expressions and statements regarding our business strategy, plans and objectives for future operations. The absence of such words, expressions or statements, however, does not mean that the statements are not forward-looking. Any such forward-looking statements reflect our current views with respect to future events, based on what we believe to be reasonable assumptions. Certain factors could cause actual results or outcomes to differ materially from the results or outcomes anticipated in the forward-looking statements. The most important of these factors include, but are not limited to:

 

·                  declines in the volume of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our assets, whether due to declines in production from existing oil and gas reserves, failure to develop or slowdown in the development of additional oil and gas reserves, whether from reduced cash flow to fund drilling or the inability to access capital, or other factors;

 

·                  the effects of competition;

 

·                  failure to implement or capitalize, or delays in implementing or capitalizing, on expansion projects;

 

·                  unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof);

 

·                  environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves;

 

·                  fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements;

 

·                  the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on our electronic and computer systems;

 

·                  tightened capital markets or other factors that increase our cost of capital or limit our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness;

 

·                  the currency exchange rate of the Canadian dollar;

 

·                  continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business;

 

·                  maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties;

 

·                  non-utilization of our assets and facilities;

 

·                  weather interference with business operations or project construction, including the impact of extreme weather events or conditions;

 

·                  the availability of, and our ability to consummate, acquisition or combination opportunities;

 

·                  the successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations;

 

·                  increased costs, or lack of availability, of insurance;

 

·                  the effectiveness of our risk management activities;

 

·                  shortages or cost increases of supplies, materials or labor;

 

·                  the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations;

 

10



 

·                  fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans;

 

·                  risks related to the development and operation of our assets, including our ability to satisfy our contractual obligations to our customers;

 

·                  inability to recognize current revenue attributable to deficiency payments received from customers who fail to ship or move more than minimum contracted volumes until the related credits expire or are used;

 

·                  factors affecting demand for natural gas and natural gas storage services and rates;

 

·                  general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and

 

·                  other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids.

 

We undertake no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in our filings with the Securities and Exchange Commission, which information is incorporated by reference herein.

 

11



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

PLAINS ALL AMERICAN PIPELINE, L.P.

 

 

 

By:

PAA GP LLC, its general partner

 

 

 

 

By:

PLAINS AAP, L. P., its sole member

 

 

 

 

By:

PLAINS ALL AMERICAN GP LLC, its general partner

 

 

 

Date: February 8, 2016

By:

/s/ Sharon Spurlin

 

 

Name:   Sharon Spurlin

 

 

Title:     Vice President and Treasurer

 

12


 



Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

Plains All American Pipeline, L.P. and Plains GP Holdings Report Fourth-Quarter and Full-Year 2015 Results

 

(Houston — February 8, 2016) Plains All American Pipeline, L.P. (NYSE: PAA) and Plains GP Holdings (NYSE: PAGP) today reported fourth-quarter and full-year 2015 results.

 

Plains All American Pipeline, L.P.

 

Summary Financial Information (1) (unaudited)

(in millions, except per unit data)

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2015

 

2014

 

Change

 

2015

 

2014

 

Change

 

Net income attributable to PAA

 

$

247

 

$

389

 

(37)%

 

$

903

 

$

1,384

 

(35)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common unit

 

$

0.24

 

$

0.67

 

(64)%

 

$

0.77

 

$

2.38

 

(68)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common units outstanding

 

399

 

375

 

6%

 

396

 

369

 

7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

$

506

 

$

664

 

(24)%

 

$

1,870

 

$

2,289

 

(18)%

 

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2015

 

2014

 

Change

 

2015

 

2014

 

Change

 

Adjusted net income attributable to PAA

 

$

304

 

$

362

 

(16)%

 

$

1,191

 

$

1,347

 

(12)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted net income per common unit

 

$

0.38

 

$

0.60

 

(37)%

 

$

1.48

 

$

2.28

 

(35)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

563

 

$

594

 

(5)%

 

$

2,168

 

$

2,200

 

(1)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution per common unit declared for the period

 

$

0.700

 

$

0.675

 

3.7%

 

 

 

 

 

 

 

 


(1)             PAA’s reported results include the impact of items that affect comparability between reporting periods. The impact of certain of these items is excluded from adjusted results. See the section of this release entitled “Non-GAAP Financial Measures and Selected Items Impacting Comparability” and the tables attached hereto for information regarding certain selected items that PAA believes impact comparability of financial results between reporting periods, as well as for information regarding non-GAAP financial measures (such as adjusted EBITDA) and their reconciliation to the most directly comparable measures as reported in accordance with GAAP.

 

“PAA reported fourth-quarter and full-year 2015 results with adjusted EBITDA of $563 million and $2.17 billion, respectively, which were slightly below the low end of our guidance ranges issued last November,” said Greg Armstrong, Chairman and CEO of Plains All American.  “Our fourth-quarter results were negatively impacted by approximately $15 million associated with deficiencies on minimum volume commitments and an approximate $15 million shift in earnings recognition on certain NGL sales activities from the fourth quarter of 2015 to the first quarter of 2016.  This earnings shift is primarily the result of delayed inventory draws due to unseasonably warm temperatures in certain parts of the U.S. and Canada as well as impacts of inventory pricing during the fourth quarter. Additionally, severe weather in West Texas and the Mid-continent resulted in volume shortfalls impacting results by approximately $5 million.”

 

– more –

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Page 2

 

Armstrong stated that the partnership is well positioned to manage through near-term challenges and to grow meaningfully in the intermediate and long-term as industry conditions improve.

 

“The $1.6 billion of proceeds from our recent preferred equity placement satisfies PAA’s equity financing needs for 2016 and substantially all of 2017 and enables PAA to complete its multi-year, multi-billion dollar capital expansion program, while maintaining substantial liquidity and a solid balance sheet.”

 

Armstrong continued, “PAA has visibility for incremental cash flow contributions over the next 24 months from the completion of these projects, the majority of which are backed by minimum volume commitments and other contractual support.  These projects enhance PAA’s existing footprint and provide further significant leverage to a sustained increase in U.S. production levels with little to no incremental investment.”

 

The following table summarizes selected PAA financial information by segment for the fourth quarter and full year of 2015:

 

Summary of Selected Financial Data by Segment (1) (unaudited)

(in millions)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

Transportation

 

Facilities

 

Supply and
Logistics

 

 

Transportation

 

Facilities

 

Supply and
Logistics

 

Reported segment profit

 

$

236

 

$

147

 

$

123

 

 

$

267

 

$

149

 

$

249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected items impacting comparability of segment profit (2)

 

20

 

3

 

34

 

 

3

 

2

 

(76

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted segment profit

 

$

256

 

$

150

 

$

157

 

 

$

270

 

$

151

 

$

173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in adjusted segment profit versus 2014 period

 

(5

)%

(1

)%

(9

)%

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

Transportation

 

Facilities

 

Supply and
Logistics

 

 

Transportation

 

Facilities

 

Supply and
Logistics

 

Reported segment profit

 

$

917

 

$

579

 

$

381

 

 

$

925

 

$

584

 

$

782

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected items impacting comparability of segment profit (2)

 

94

 

9

 

187

 

 

25

 

13

 

(131

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted segment profit

 

$

1,011

 

$

588

 

$

568

 

 

$

950

 

$

597

 

$

651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage change in adjusted segment profit versus 2014 period

 

6

%

(2

)%

(13

)%

 

 

 

 

 

 

 

 


(1)             PAA’s reported results include the impact of items that affect comparability between reporting periods. The impact of certain of these items is excluded from adjusted results. See the section of this release entitled “Non-GAAP Financial Measures and Selected Items Impacting Comparability” and the tables attached hereto for information regarding certain selected items that PAA believes impact comparability of financial results between reporting periods.

(2)             Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 

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Page 3

 

Fourth-quarter 2015 Transportation adjusted segment profit decreased 5% versus comparable 2014 results. This decrease was primarily driven by lower pipeline loss allowance revenue due to a lower realized average price per barrel during fourth-quarter 2015, partially offset by higher equity earnings from our 50% interest in the BridgeTex pipeline.

 

Fourth-quarter 2015 Facilities adjusted segment profit decreased 1% versus comparable 2014 results. This decrease was primarily due to lower revenues associated with our rail and natural gas storage activities, partially offset by increased storage revenue at our west coast terminals.

 

Fourth-quarter 2015 Supply and Logistics adjusted segment profit decreased by 9% relative to comparable 2014 results. This decrease was primarily driven by lower volumes and margins associated with our crude oil lease gathering due to less favorable market conditions as a result of increased competition. This decrease was partially offset by increased margins on NGL sales.

 

Plains GP Holdings

 

PAGP’s sole assets are its ownership interest in PAA’s general partner and incentive distribution rights.  As the control entity of PAA, PAGP consolidates PAA’s results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement included at the end of this release.  Information regarding PAGP’s distributions is reflected below:

 

 

 

Q4 2015

 

Q3 2015

 

Q4 2014

 

Distribution per Class A share declared for the period

 

$

0.231

 

$

0.231

 

$

0.203

 

Q4 2015 distribution percentage growth from prior periods

 

 

 

%

13.8

%

 

– more –

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Page 4

 

Conference Call

 

PAA and PAGP will hold a conference call on February 9, 2016 (see details below).  Prior to this conference call, PAA will furnish a current report on Form 8-K, which will include material in this news release as well as PAA’s financial and operational guidance for the first quarter and full year of 2016.  A copy of the Form 8-K will be available at www.plainsallamerican.com, where PAA and PAGP routinely post important information.

 

The PAA and PAGP conference call will be held at 11:00 a.m. ET on Tuesday, February 9, 2016 to discuss the following items:

 

1.              PAA’s fourth-quarter and full-year 2015 performance;

 

2.              The status of major expansion projects;

 

3.              Capitalization and liquidity;

 

4.              Financial and operating guidance for the first quarter and full year of 2016; and

 

5.              PAA’s and PAGP’s outlook for the future.

 

Conference Call Access Instructions

 

To access the Internet webcast of the conference call, please go to www.plainsallamerican.com, under the “Investor Relations” section of the website (Navigate to: Investor Relations / either “PAA” or “PAGP” / News & Events / Quarterly Earnings).  Following the live webcast, the call will be archived for a period of sixty (60) days on the website.

 

Alternatively, access to the live conference call is available by dialing toll free (800) 230-1092. International callers should dial (612) 288-0329.  No password is required.  The slide presentation accompanying the conference call will be available a few minutes prior to the call under the “Events and Presentations” tab of the PAA and PAGP Investor Relations sections of the above referenced website.

 

Telephonic Replay Instructions

 

To listen to a telephonic replay of the conference call, please dial (800) 475-6701, or (320) 365-3844 for international callers, and enter replay access code 383078.  The replay will be available beginning Tuesday, February 9, 2016, at approximately 1:00 p.m. ET and will continue until 11:59 p.m. ET on March 9, 2016.

 

– more –

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Page 5

 

Non-GAAP Financial Measures and Selected Items Impacting Comparability

 

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as “non-GAAP financial measures” (such as adjusted EBITDA and implied distributable cash flow (“DCF”)) in its evaluation of past performance and prospects for the future. Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our core operating results and business outlook and/or (v) other items that we believe should be excluded in understanding our core operating performance. We have defined all such items as “Selected Items Impacting Comparability.”  We consider an understanding of these selected items impacting comparability to be material to the evaluation of our operating results and prospects.

 

Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Annual Report on Form 10-K.

 

Adjusted EBITDA and other non-GAAP financial measures are reconciled to the most comparable measures as reported in accordance with GAAP for the periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our Consolidated Financial Statements and notes thereto. In addition, PAA maintains on its website (www.plainsallamerican.com) a reconciliation of adjusted EBITDA and certain commonly used non-GAAP financial information to the most comparable GAAP measures. To access the information, investors should click on “PAA” under the “Investor Relations” tab on the home page, select the “Financial Information” tab and navigate to the “Non-GAAP Reconciliations” link.

 

– more –

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Page 6

 

Forward Looking Statements

 

Except for the historical information contained herein, the matters discussed in this release consist of forward-looking statements that involve certain risks and uncertainties that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. These risks and uncertainties include, among other things, declines in the volume of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our assets, whether due to declines in production from existing oil and gas reserves, failure to develop or slowdown in the development of additional oil and gas reserves, whether from reduced cash flow to fund drilling or the inability to access capital, or other factors; the effects of competition; failure to implement or capitalize, or delays in implementing or capitalizing, on expansion projects; unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof); environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on our electronic and computer systems; tightened capital markets or other factors that increase our cost of capital or limit our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the currency exchange rate of the Canadian dollar; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; non-utilization of our assets and facilities; weather interference with business operations or project construction, including the impact of extreme weather events or conditions; the availability of, and our ability to consummate, acquisition or combination

 

– more –

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Page 7

 

opportunities; the successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; increased costs, or lack of availability, of insurance; the effectiveness of our risk management activities; shortages or cost increases of supplies, materials or labor; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; risks related to the development and operation of our assets, including our ability to satisfy our contractual obligations to our customers; inability to recognize current revenue attributable to deficiency payments received from customers who fail to ship or move more than minimum contracted volumes until the related credits expire or are used; factors affecting demand for natural gas and natural gas storage services and rates; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids as discussed in the Partnerships’ filings with the Securities and Exchange Commission.

 

Plains All American Pipeline, L.P. is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (“NGL”), natural gas and refined products. PAA owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, PAA handles over 4.4 million barrels per day of crude oil and NGL in its Transportation segment. PAA is headquartered in Houston, Texas.

 

Plains GP Holdings is a publicly traded entity that owns an interest in the general partner and incentive distribution rights of Plains All American Pipeline, L.P., one of the largest energy infrastructure and logistics companies in North America. PAGP is headquartered in Houston, Texas.

 

– more –

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Page 8

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)

(in millions, except per unit data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

4,996

 

$

9,459

 

$

23,152

 

$

43,464

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

Purchases and related costs

 

4,135

 

8,384

 

19,726

 

39,500

 

Field operating costs

 

343

 

378

 

1,454

 

1,456

 

General and administrative expenses

 

61

 

67

 

278

 

325

 

Depreciation and amortization

 

113

 

98

 

432

 

384

 

Total costs and expenses

 

4,652

 

8,927

 

21,890

 

41,665

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

344

 

532

 

1,262

 

1,799

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

 

 

Equity earnings in unconsolidated entities

 

49

 

35

 

183

 

108

 

Interest expense, net

 

(111

)

(95

)

(432

)

(348

)

Other expense, net

 

 

(1

)

(7

)

(2

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE TAX

 

282

 

471

 

1,006

 

1,557

 

Current income tax expense

 

(12

)

(9

)

(84

)

(71

)

Deferred income tax expense

 

(22

)

(72

)

(16

)

(100

)

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

248

 

390

 

906

 

1,386

 

Net income attributable to noncontrolling interests

 

(1

)

(1

)

(3

)

(2

)

NET INCOME ATTRIBUTABLE TO PAA

 

$

247

 

$

389

 

$

903

 

$

1,384

 

 

 

 

 

 

 

 

 

 

 

NET INCOME PER COMMON UNIT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS

 

$

95

 

$

251

 

$

305

 

$

878

 

 

 

 

 

 

 

 

 

 

 

BASIC NET INCOME PER COMMON UNIT

 

$

0.24

 

$

0.67

 

$

0.78

 

$

2.39

 

 

 

 

 

 

 

 

 

 

 

DILUTED NET INCOME PER COMMON UNIT

 

$

0.24

 

$

0.67

 

$

0.77

 

$

2.38

 

 

 

 

 

 

 

 

 

 

 

BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

398

 

373

 

394

 

367

 

 

 

 

 

 

 

 

 

 

 

DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING

 

399

 

375

 

396

 

369

 

 


(1)             The 2014 periods have been retroactively adjusted to reflect the reclassification of the amortization of debt issuance costs from “Depreciation and amortization” to “Interest expense, net” as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

 

ADJUSTED RESULTS

(in millions, except per unit data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED NET INCOME ATTRIBUTABLE TO PAA

 

$

304

 

$

362

 

$

1,191

 

$

1,347

 

 

 

 

 

 

 

 

 

 

 

DILUTED ADJUSTED NET INCOME PER COMMON UNIT

 

$

0.38

 

$

0.60

 

$

1.48

 

$

2.28

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED EBITDA

 

$

563

 

$

594

 

$

2,168

 

$

2,200

 

 

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Page 9

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

CONDENSED CONSOLIDATED BALANCE SHEET DATA (1)

(in millions)

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

ASSETS

 

 

 

 

 

Current assets

 

$

2,969

 

$

4,179

 

Property and equipment, net

 

13,474

 

12,272

 

Goodwill

 

2,405

 

2,465

 

Investments in unconsolidated entities

 

2,027

 

1,735

 

Linefill and base gas

 

898

 

930

 

Long-term inventory

 

129

 

186

 

Other long-term assets, net

 

386

 

431

 

Total assets

 

$

22,288

 

$

22,198

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

Current liabilities

 

$

3,407

 

$

4,755

 

Senior notes, net of unamortized discounts and debt issuance costs

 

9,698

 

8,699

 

Other long-term debt

 

677

 

5

 

Other long-term liabilities and deferred credits

 

567

 

548

 

Total liabilities

 

14,349

 

14,007

 

 

 

 

 

 

 

Partners’ capital excluding noncontrolling interests

 

7,881

 

8,133

 

Noncontrolling interests

 

58

 

58

 

Total partners’ capital

 

7,939

 

8,191

 

Total liabilities and partners’ capital

 

$

22,288

 

$

22,198

 

 

DEBT CAPITALIZATION RATIOS (1)

(in millions)

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

Short-term debt

 

$

999

 

$

1,287

 

Long-term debt

 

10,375

 

8,704

 

Total debt

 

$

11,374

 

$

9,991

 

 

 

 

 

 

 

Long-term debt

 

$

10,375

 

$

8,704

 

Partners’ capital

 

7,939

 

8,191

 

Total book capitalization

 

$

18,314

 

$

16,895

 

Total book capitalization, including short-term debt

 

$

19,313

 

$

18,182

 

 

 

 

 

 

 

Long-term debt-to-total book capitalization

 

57

%

52

%

Total debt-to-total book capitalization, including short-term debt

 

59

%

55

%

 


(1)             The 2014 period has been retroactively adjusted to reflect the reclassification of certain debt issuance costs from “Other long-term assets, net” to “Senior notes, net of unamortized discounts and debt issuance costs” as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

 

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Page 10

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

SELECTED FINANCIAL DATA BY SEGMENT

(in millions)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

 

 

 

 

Supply and

 

 

 

 

 

 

Supply and

 

 

 

Transportation

 

Facilities

 

Logistics

 

 

Transportation

 

Facilities

 

Logistics

 

Revenues (1)

 

$

391

 

$

261

 

$

4,706

 

 

$

433

 

$

270

 

$

9,129

 

Purchases and related costs (1)

 

(23

)

(7

)

(4,464

)

 

(35

)

(8

)

(8,711

)

Field operating costs (1) (2)

 

(159

)

(94

)

(94

)

 

(142

)

(97

)

(141

)

Equity-indexed compensation (expense)/benefit - operations

 

 

1

 

 

 

(1

)

 

 

Segment general and administrative expenses (2) (3)

 

(22

)

(14

)

(24

)

 

(20

)

(14

)

(26

)

Equity-indexed compensation expense - general and administrative

 

 

 

(1

)

 

(3

)

(2

)

(2

)

Equity earnings in unconsolidated entities

 

49

 

 

 

 

35

 

 

 

Reported segment profit

 

$

236

 

$

147

 

$

123

 

 

267

 

149

 

249

 

Selected items impacting comparability of segment profit (4)

 

20

 

3

 

34

 

 

3

 

2

 

(76

)

Adjusted segment profit

 

$

256

 

$

150

 

$

157

 

 

$

270

 

$

151

 

$

173

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance capital

 

$

43

 

$

20

 

$

3

 

 

$

54

 

$

17

 

$

2

 

 

 

 

 

Twelve Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

 

 

 

 

Supply and

 

 

 

 

 

 

Supply and

 

 

 

Transportation

 

Facilities

 

Logistics

 

 

Transportation

 

Facilities

 

Logistics

 

Revenues (1)

 

$

1,594

 

$

1,050

 

$

21,945

 

 

$

1,655

 

$

1,127

 

$

42,150

 

Purchases and related costs (1)

 

(108

)

(24

)

(21,018

)

 

(151

)

(55

)

(40,752

)

Field operating costs (1) (2)

 

(652

)

(377

)

(433

)

 

(560

)

(404

)

(481

)

Equity-indexed compensation expense - operations

 

(5

)

 

 

 

(15

)

(4

)

(2

)

Segment general and administrative expenses (2) (3)

 

(89

)

(65

)

(102

)

 

(83

)

(60

)

(105

)

Equity-indexed compensation expense - general and administrative

 

(6

)

(5

)

(11

)

 

(29

)

(20

)

(28

)

Equity earnings in unconsolidated entities

 

183

 

 

 

 

108

 

 

 

Reported segment profit

 

$

917

 

$

579

 

$

381

 

 

$

925

 

$

584

 

$

782

 

Selected items impacting comparability of segment profit (4)

 

94

 

9

 

187

 

 

25

 

13

 

(131

)

Adjusted segment profit

 

$

1,011

 

$

588

 

$

568

 

 

$

950

 

$

597

 

$

651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance capital

 

$

144

 

$

68

 

$

8

 

 

$

165

 

$

52

 

$

7

 

 


(1)             Includes intersegment amounts.

(2)             Field operating costs and Segment general and administrative expenses exclude equity-indexed compensation expense, which is presented separately in the table above.

(3)             Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.

(4)             Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 

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Page 11

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

OPERATING DATA (1)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Transportation segment (average daily volumes in thousands of barrels per day):

 

 

 

 

 

 

 

 

 

Volumes from tariff activities

 

 

 

 

 

 

 

 

 

Crude oil pipelines (by region):

 

 

 

 

 

 

 

 

 

Permian Basin (2)

 

1,963

 

1,552

 

1,849

 

1,512

 

South Texas / Eagle Ford (2)

 

331

 

262

 

306

 

227

 

Western

 

190

 

265

 

215

 

260

 

Rocky Mountain (2)

 

433

 

460

 

440

 

426

 

Gulf Coast

 

537

 

587

 

532

 

492

 

Central

 

362

 

457

 

413

 

450

 

Canada

 

377

 

419

 

392

 

399

 

Crude oil pipelines

 

4,193

 

4,002

 

4,147

 

3,766

 

NGL pipelines

 

189

 

190

 

193

 

186

 

Total volumes from tariff activities

 

4,382

 

4,192

 

4,340

 

3,952

 

Trucking

 

109

 

122

 

113

 

127

 

Total Transportation segment volumes

 

4,491

 

4,314

 

4,453

 

4,079

 

 

 

 

 

 

 

 

 

 

 

Facilities segment (average monthly volumes):

 

 

 

 

 

 

 

 

 

Crude oil, refined products and NGL terminalling and storage (average monthly capacity in millions of barrels)

 

103

 

95

 

100

 

95

 

Rail load / unload volumes (average volumes in thousands of barrels per day)

 

172

 

229

 

210

 

231

 

Natural gas storage (average monthly working capacity in billions of cubic feet)

 

97

 

97

 

97

 

97

 

NGL fractionation (average volumes in thousands of barrels per day)

 

111

 

103

 

103

 

96

 

Total Facilities segment volumes (average monthly volumes in millions of barrels) (3)

 

128

 

122

 

126

 

121

 

 

 

 

 

 

 

 

 

 

 

Supply and Logistics segment (average daily volumes in thousands of barrels per day):

 

 

 

 

 

 

 

 

 

Crude oil lease gathering purchases

 

899

 

999

 

943

 

949

 

NGL sales

 

266

 

268

 

223

 

208

 

Waterborne cargos

 

2

 

 

2

 

 

Total Supply and Logistics segment volumes

 

1,167

 

1,267

 

1,168

 

1,157

 

 


(1)             Average volumes are calculated as total volumes for the period (attributable to our interest) divided by the number of days or months in the period.

(2)             Area systems include volumes (attributable to our interest) from pipelines owned by unconsolidated entities.

(3)             Facilities segment total is calculated as the sum of: (i) crude oil, refined products and NGL terminalling and storage capacity; (ii) rail load and unload volumes multiplied by the number of days in the period and divided by the number of months in the period; (iii) natural gas storage working capacity divided by 6 to account for the 6:1 mcf of natural gas to crude Btu equivalent ratio and further divided by 1,000 to convert to monthly volumes in millions; and (iv) NGL fractionation volumes multiplied by the number of days in the period and divided by the number of months in the period.

 

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Page 12

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

COMPUTATION OF BASIC AND DILUTED NET INCOME PER COMMON UNIT

(in millions, except per unit data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Basic Net Income per Common Unit

 

 

 

 

 

 

 

 

 

Net income attributable to PAA

 

$

247

 

$

389

 

$

903

 

$

1,384

 

Less: Distributions to general partner (1)

 

(155

)

(136

)

(608

)

(502

)

Less: Distributions to participating securities (1)

 

(1

)

(2

)

(6

)

(6

)

Less: Undistributed (earnings)/loss allocated to general partner and participating securities (1)

 

4

 

 

16

 

2

 

Net income attributable to common unitholders in accordance with application of the two-class method for MLPs

 

$

95

 

$

251

 

$

305

 

$

878

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common units outstanding

 

398

 

373

 

394

 

367

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common unit

 

$

0.24

 

$

0.67

 

$

0.78

 

$

2.39

 

 

 

 

 

 

 

 

 

 

 

Diluted Net Income per Common Unit

 

 

 

 

 

 

 

 

 

Net income attributable to PAA

 

$

247

 

$

389

 

$

903

 

$

1,384

 

Less: Distributions to general partner (1)

 

(155

)

(136

)

(608

)

(502

)

Less: Distributions to participating securities (1)

 

(1

)

(2

)

(6

)

(6

)

Less: Undistributed (earnings)/loss allocated to general partner and participating securities (1)

 

4

 

 

16

 

2

 

Net income attributable to common unitholders in accordance with application of the two-class method for MLPs

 

$

95

 

$

251

 

$

305

 

$

878

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common units outstanding

 

398

 

373

 

394

 

367

 

Effect of dilutive securities: Weighted average LTIP units (2)

 

1

 

2

 

2

 

2

 

Diluted weighted average common units outstanding

 

399

 

375

 

396

 

369

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common unit

 

$

0.24

 

$

0.67

 

$

0.77

 

$

2.38

 

 


(1)             We calculate net income attributable to common unitholders based on the distributions pertaining to the current period’s net income.  After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, common unitholders and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

(2)             Our Long-term Incentive Plan (“LTIP”) awards that contemplate the issuance of common units are considered dilutive unless (i) vesting occurs only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. LTIP awards that are deemed to be dilutive are reduced by a hypothetical unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB.

 

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Page 13

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

SELECTED ITEMS IMPACTING COMPARABILITY

(in millions, except per unit data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Selected Items Impacting Comparability - Income/(Loss) (1):

 

 

 

 

 

 

 

 

 

Gains/(losses) from derivative activities net of inventory valuation adjustments (2)

 

$

2

 

$

166

 

$

(110

)

$

243

 

Long-term inventory costing adjustments (3)

 

(37

)

(85

)

(99

)

(85

)

Line 901 incident

 

(18

)

 

(83

)

 

Equity-indexed compensation expense (4)

 

(5

)

(8

)

(27

)

(56

)

Deferred income tax expense (5)

 

 

 

(22

)

 

Net gain/(loss) on foreign currency revaluation

 

1

 

(3

)

21

 

(13

)

Tax effect on selected items impacting comparability

 

 

(43

)

32

 

(52

)

Selected items impacting comparability of net income attributable to PAA

 

$

(57

)

$

27

 

$

(288

)

$

37

 

 

 

 

 

 

 

 

 

 

 

Impact to basic net income per common unit

 

$

(0.14

)

$

0.07

 

$

(0.71

)

$

0.10

 

Impact to diluted net income per common unit

 

$

(0.14

)

$

0.07

 

$

(0.71

)

$

0.10

 

 


(1)             Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2)             Includes mark-to-market and other gains and losses resulting from derivative instruments that are related to underlying activities in another period (or the reversal of mark-to-market gains and losses from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable.

(3)             Includes the impact of changes in the average cost of long-term inventory that result from fluctuations in market prices and writedowns of such inventory that result from price declines. Long-term inventory consists of minimum working inventory requirements in third-party assets and other working inventory needed for our commercial operations. We consider this inventory necessary to conduct our operations and we intend to carry this inventory for the foreseeable future. Therefore, we classify this inventory as long-term on our balance sheet and do not hedge the inventory with derivative instruments (similar to linefill in our own assets).

(4)             Includes equity-indexed compensation expense associated with LTIP awards that will or may be settled in units, as the dilutive impact of these outstanding awards is included in our diluted net income per unit calculation and the majority of these awards are expected to be settled in units.

(5)             Includes the initial cumulative effect of the recent change in Canadian tax legislation.

 

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Page 14

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

COMPUTATION OF ADJUSTED BASIC AND DILUTED NET INCOME PER COMMON UNIT

(in millions, except per unit data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Basic Adjusted Net Income per Common Unit

 

 

 

 

 

 

 

 

 

Net income attributable to PAA

 

$

247

 

$

389

 

$

903

 

$

1,384

 

Selected items impacting comparability of net income attributable to PAA (1)

 

57

 

(27

)

288

 

(37

)

Adjusted net income attributable to PAA

 

304

 

362

 

1,191

 

1,347

 

Less: Distributions to general partner (2)

 

(155

)

(136

)

(608

)

(502

)

Less: Distributions to participating securities (2)

 

(1

)

(2

)

(6

)

(6

)

Less: Undistributed (earnings)/loss allocated to general partner and participating securities (2)

 

3

 

1

 

11

 

3

 

Adjusted net income attributable to common unitholders in accordance with application of the two-class method for MLPs

 

$

151

 

$

225

 

$

588

 

$

842

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common units outstanding

 

398

 

373

 

394

 

367

 

 

 

 

 

 

 

 

 

 

 

Basic adjusted net income per common unit

 

$

0.38

 

$

0.60

 

$

1.49

 

$

2.29

 

 

 

 

 

 

 

 

 

 

 

Diluted Adjusted Net Income per Common Unit

 

 

 

 

 

 

 

 

 

Net income attributable to PAA

 

$

247

 

$

389

 

$

903

 

$

1,384

 

Selected items impacting comparability of net income attributable to PAA (1)

 

57

 

(27

)

288

 

(37

)

Adjusted net income attributable to PAA

 

304

 

362

 

1,191

 

1,347

 

Less: Distributions to general partner (2)

 

(155

)

(136

)

(608

)

(502

)

Less: Distributions to participating securities (2)

 

(1

)

(2

)

(6

)

(6

)

Less: Undistributed (earnings)/loss allocated to general partner and participating securities (2)

 

3

 

1

 

11

 

3

 

Adjusted net income attributable to common unitholders in accordance with application of the two-class method for MLPs

 

$

151

 

$

225

 

$

588

 

$

842

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common units outstanding

 

399

 

375

 

396

 

369

 

 

 

 

 

 

 

 

 

 

 

Diluted adjusted net income per common unit

 

$

0.38

 

$

0.60

 

$

1.48

 

$

2.28

 

 


(1)             Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

(2)             We calculate adjusted net income attributable to common unitholders based on the distributions pertaining to the current period’s net income.  After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to the general partner, common unitholders and participating securities in accordance with the contractual terms of the partnership agreement and as further prescribed under the two-class method.

 

– more –

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Page 15

 

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

FINANCIAL DATA RECONCILIATIONS

(in millions)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Net Income to Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Excluding Selected Items Impacting Comparability (“Adjusted EBITDA”) Reconciliations

 

 

 

 

 

 

 

 

 

Net Income

 

$

248

 

$

390

 

$

906

 

$

1,386

 

Add: Interest expense, net

 

111

 

95

 

432

 

348

 

Add: Income tax expense

 

34

 

81

 

100

 

171

 

Add: Depreciation and amortization

 

113

 

98

 

432

 

384

 

EBITDA

 

$

506

 

$

664

 

$

1,870

 

$

2,289

 

Selected items impacting comparability of EBITDA (1)

 

57

 

(70

)

298

 

(89

)

Adjusted EBITDA

 

$

563

 

$

594

 

$

2,168

 

$

2,200

 

 


(1)             Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Adjusted EBITDA to Implied Distributable Cash Flow (“DCF”) Reconciliation

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

563

 

$

594

 

$

2,168

 

$

2,200

 

Interest expense (1)

 

(107

)

(92

)

(417

)

(334

)

Maintenance capital

 

(66

)

(73

)

(220

)

(224

)

Current income tax expense

 

(12

)

(9

)

(84

)

(71

)

Equity earnings in unconsolidated entities, net of distributions

 

6

 

(4

)

31

 

(3

)

Distributions to noncontrolling interests (2)

 

(1

)

(1

)

(4

)

(3

)

Implied DCF (3)

 

$

383

 

$

415

 

$

1,474

 

$

1,565

 

 


(1)             Excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps.

(2)             Includes distributions that pertain to the current period’s net income, which are paid in the subsequent period.

(3)             Including costs related to our Line 901 incident that occurred during May 2015, Implied DCF would have been $365 million and $1,391 million for the three and twelve months ended December 31, 2015, respectively.

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Net Cash Provided by Operating Activities Reconciliation

 

 

 

 

 

 

 

 

 

EBITDA

 

$

506

 

$

664

 

$

1,870

 

$

2,289

 

Current income tax expense

 

(12

)

(9

)

(84

)

(71

)

Interest expense, net

 

(111

)

(95

)

(432

)

(348

)

Net change in assets and liabilities, net of acquisitions

 

(261

)

158

 

(37

)

36

 

Other items to reconcile to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Equity-indexed compensation expense

 

 

8

 

27

 

98

 

Net cash provided by operating activities

 

$

122

 

$

726

 

$

1,344

 

$

2,004

 

 

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Page 16

 

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (1)

(in millions, except per share data)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

PAA

 

Consolidating
Adjustments 
(2)

 

PAGP

 

 

PAA

 

Consolidating
Adjustments 
(2)

 

PAGP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

4,996

 

$

 

$

4,996

 

 

$

9,459

 

$

 

$

9,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and related costs

 

4,135

 

 

4,135

 

 

8,384

 

 

8,384

 

Field operating costs

 

343

 

 

343

 

 

378

 

 

378

 

General and administrative expenses

 

61

 

1

 

62

 

 

67

 

3

 

70

 

Depreciation and amortization

 

113

 

 

113

 

 

98

 

 

98

 

Total costs and expenses

 

4,652

 

1

 

4,653

 

 

8,927

 

3

 

8,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

344

 

(1

)

343

 

 

532

 

(3

)

529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity earnings in unconsolidated entities

 

49

 

 

49

 

 

35

 

 

35

 

Interest expense, net

 

(111

)

(3

)

(114

)

 

(95

)

(3

)

(98

)

Other expense, net

 

 

 

 

 

(1

)

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE TAX

 

282

 

(4

)

278

 

 

471

 

(6

)

465

 

Current income tax expense

 

(12

)

 

(12

)

 

(9

)

 

(9

)

Deferred income tax expense

 

(22

)

(28

)

(50

)

 

(72

)

(14

)

(86

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

248

 

(32

)

216

 

 

390

 

(20

)

370

 

Net income attributable to noncontrolling interests

 

(1

)

(190

)

(191

)

 

(1

)

(345

)

(346

)

NET INCOME ATTRIBUTABLE TO PAGP

 

$

247

 

$

(222

)

$

25

 

 

$

389

 

$

(365

)

$

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC NET INCOME PER CLASS A SHARE

 

$

0.11

 

 

 

 

 

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED NET INCOME PER CLASS A SHARE

 

$

0.11

 

 

 

 

 

 

$

0.13

 

 

 

 

 

 

 

 

 

 

 

 

BASIC WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

228

 

 

 

 

 

 

172

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

228

 

 

 

 

 

 

650

 

 


(1)             The  2014 periods have been retroactively adjusted to reflect the reclassification of the amortization of debt issuance costs from “Depreciation and amortization” to “Interest expense, net” as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

(2)             Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.

 

– more –

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Page 17

 

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (1)

(in millions, except per share data)

 

 

 

Twelve Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

PAA

 

Consolidating
Adjustments 
(2)

 

PAGP

 

 

PAA

 

Consolidating
Adjustments 
(2)

 

PAGP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

 

$

23,152

 

$

 

$

23,152

 

 

$

43,464

 

$

 

$

43,464

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases and related costs

 

19,726

 

 

19,726

 

 

39,500

 

 

39,500

 

Field operating costs

 

1,454

 

 

1,454

 

 

1,456

 

 

1,456

 

General and administrative expenses

 

278

 

3

 

281

 

 

325

 

6

 

331

 

Depreciation and amortization

 

432

 

1

 

433

 

 

384

 

2

 

386

 

Total costs and expenses

 

21,890

 

4

 

21,894

 

 

41,665

 

8

 

41,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

1,262

 

(4

)

1,258

 

 

1,799

 

(8

)

1,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity earnings in unconsolidated entities

 

183

 

 

183

 

 

108

 

 

108

 

Interest expense, net

 

(432

)

(11

)

(443

)

 

(348

)

(9

)

(357

)

Other expense, net

 

(7

)

 

(7

)

 

(2

)

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE TAX

 

1,006

 

(15

)

991

 

 

1,557

 

(17

)

1,540

 

Current income tax expense

 

(84

)

 

(84

)

 

(71

)

 

(71

)

Deferred income tax expense

 

(16

)

(82

)

(98

)

 

(100

)

(41

)

(141

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

906

 

(97

)

809

 

 

1,386

 

(58

)

1,328

 

Net income attributable to noncontrolling interests

 

(3

)

(688

)

(691

)

 

(2

)

(1,256

)

(1,258

)

NET INCOME ATTRIBUTABLE TO PAGP

 

$

903

 

$

(785

)

$

118

 

 

$

1,384

 

$

(1,314

)

$

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC NET INCOME PER CLASS A SHARE

 

$

0.53

 

 

 

 

 

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED NET INCOME PER CLASS A SHARE

 

$

0.53

 

 

 

 

 

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

BASIC WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

222

 

 

 

 

 

 

145

 

 

 

 

 

 

 

 

 

 

 

 

DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

222

 

 

 

 

 

 

650

 

 


(1)             The  2014 periods have been retroactively adjusted to reflect the reclassification of the amortization of debt issuance costs from “Depreciation and amortization” to “Interest expense, net” as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

(2)             Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.

 

– more –

333 Clay Street, Suite 1600          Houston, Texas 77002          (713) 646-4100 / (866) 809-1291

 



 

Page 18

 

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

CONDENSED CONSOLIDATING BALANCE SHEET DATA (1)

(in millions)

 

 

 

December 31, 2015

 

 

December 31, 2014

 

 

 

PAA

 

Consolidating
Adjustments 
(2)

 

PAGP

 

 

PAA

 

Consolidating
Adjustments 
(2)

 

PAGP

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

$

2,969

 

$

3

 

$

2,972

 

 

$

4,179

 

$

2

 

$

4,181

 

Property and equipment, net

 

13,474

 

19

 

13,493

 

 

12,272

 

20

 

12,292

 

Goodwill

 

2,405

 

 

2,405

 

 

2,465

 

 

2,465

 

Investments in unconsolidated entities

 

2,027

 

 

2,027

 

 

1,735

 

 

1,735

 

Deferred tax asset

 

 

1,835

 

1,835

 

 

 

1,705

 

1,705

 

Linefill and base gas

 

898

 

 

898

 

 

930

 

 

930

 

Long-term inventory

 

129

 

 

129

 

 

186

 

 

186

 

Other long-term assets, net

 

386

 

(3

)

383

 

 

431

 

(2

)

429

 

Total assets

 

$

22,288

 

$

1,854

 

$

24,142

 

 

$

22,198

 

$

1,725

 

$

23,923

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS’ CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

$

3,407

 

$

2

 

$

3,409

 

 

$

4,755

 

$

1

 

$

4,756

 

Senior notes, net of unamortized discounts and debt issuance costs

 

9,698

 

 

9,698

 

 

8,699

 

 

8,699

 

Other long-term debt, net of unamortized debt issuance costs

 

677

 

557

 

1,234

 

 

5

 

534

 

539

 

Other long-term liabilities and deferred credits

 

567

 

 

567

 

 

548

 

 

548

 

Total liabilities

 

14,349

 

559

 

14,908

 

 

14,007

 

535

 

14,542

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partners’ capital excluding noncontrolling interests

 

7,881

 

(6,119

)

1,762

 

 

8,133

 

(6,476

)

1,657

 

Noncontrolling interests

 

58

 

7,414

 

7,472

 

 

58

 

7,666

 

7,724

 

Total partners’ capital

 

7,939

 

1,295

 

9,234

 

 

8,191

 

1,190

 

9,381

 

Total liabilities and partners’ capital

 

$

22,288

 

$

1,854

 

$

24,142

 

 

$

22,198

 

$

1,725

 

$

23,923

 

 


(1)             The  2014 period has been retroactively adjusted to reflect the reclassification of certain debt issuance costs from “Other long-term assets, net” to “Senior notes, net of unamortized discounts and debt issuance costs” and “Other long-term debt, net of unamortized debt issuance costs” as a result of our adoption of revised debt issuance costs guidance issued by the FASB.

(2)             Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for PAGP.

 

– more –

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Page 19

 

PLAINS GP HOLDINGS AND SUBSIDIARIES

DISTRIBUTION SUMMARY (unaudited)

 

Q4 2015 PAGP DISTRIBUTION SUMMARY

(in millions, except per unit and per share data)

 

 

 

Q4 2015 (1)

 

PAA Distribution/Common Unit

 

$

0.7000

 

GP Distribution/Common Unit

 

$

0.3885

 

Total Distribution/Common Unit

 

$

1.0885

 

 

 

 

 

PAA Common Units Outstanding at 1/29/16

 

398

 

 

 

 

 

Gross GP Distribution

 

$

160

 

Less: IDR Reduction

 

(5

)

Net Distribution from PAA to AAP (2)

 

$

155

 

Less: Debt Service

 

(3

)

Less: G&A Expense

 

(1

)

Cash Available for Distribution by AAP

 

$

151

 

 

 

 

 

Distributions to AAP Partners

 

 

 

Direct AAP Owners & AAP Management (63% economic interest)

 

$

96

 

PAGP (37% economic interest)

 

55

 

Total distributions to AAP Partners

 

$

151

 

 

 

 

 

Distribution to PAGP Investors

 

$

55

 

PAGP Class A Shares Outstanding at 1/29/16

 

239

 

PAGP Distribution/Class A Share

 

$

0.231

 

 


(1)  Amounts may not recalculate due to rounding.

(2)  Plains AAP, L.P. (“AAP”) is the general partner of PAA.

 

– more –

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Page 20

 

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

 

COMPUTATION OF BASIC AND DILUTED NET INCOME PER CLASS A SHARE

(in millions, except per share data)

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Basic Net Income per Class A Share

 

 

 

 

 

 

 

 

 

Net income attributable to PAGP

 

$

25

 

$

24

 

$

118

 

$

70

 

Basic weighted average Class A shares outstanding

 

228

 

172

 

222

 

145

 

 

 

 

 

 

 

 

 

 

 

Basic net income per Class A share

 

$

0.11

 

$

0.14

 

$

0.53

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

Diluted Net Income per Class A Share

 

 

 

 

 

 

 

 

 

Net income attributable to PAGP

 

$

25

 

$

24

 

$

118

 

$

70

 

Incremental net income attributable to PAGP resulting from assumed exchange of AAP units and AAP Management Units

 

 

58

 

 

235

 

Net income attributable to PAGP including incremental net income from assumed exchange of AAP units and AAP Management Units

 

$

25

 

$

82

 

$

118

 

$

305

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average Class A shares outstanding

 

228

 

172

 

222

 

145

 

Dilutive shares resulting from assumed exchange of AAP units and AAP Management Units

 

 

478

 

 

505

 

Diluted weighted average Class A shares outstanding

 

228

 

650

 

222

 

650

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per Class A share

 

$

0.11

 

$

0.13

 

$

0.53

 

$

0.47

 

 

Contacts:

 

Ryan Smith

 

Al Swanson

Director, Investor Relations

 

Executive Vice President, CFO

(866) 809-1291

 

(800) 564-3036

 

###

333 Clay Street, Suite 1600          Houston, Texas 77002          (713) 646-4100 / (866) 809-1291

 


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