Plains All American Pipeline, L.P. (NYSE:PAA) and Plains GP
Holdings (NYSE:PAGP) today reported second-quarter 2015
results.
Plains All American Pipeline, L.P.
Summary Financial
Information (1) (unaudited)
(in millions, except per unit data)
Three Months
Ended Six Months Ended June
30, June 30, % %
2015 2014 Change 2015 2014
Change Net income attributable to PAA $ 124 $ 287 (57
)% $ 407 $ 671 (39 )%
Diluted net income/(loss) per limited
partner unit $ (0.06 ) $ 0.45 (113 )% $ 0.29 $ 1.18 (75 )%
Diluted weighted average limited partner units outstanding
400 367 9 % 393 365 8 %
EBITDA $ 372 $ 492 (24 )% $
881 $ 1,099 (20 )%
Three Months Ended Six
Months Ended June 30, June 30, 2015
2014 %
Change
2015 2014 %
Change
Adjusted net income attributable to PAA $ 255 $ 307 (17 )% $
624 $ 660 (5 )%
Diluted adjusted net income per limited partner
unit $ 0.27 $ 0.50 (46 )% $ 0.83 $ 1.15 (28 )%
Adjusted
EBITDA $ 486 $ 512 (5 )% $ 1,108 $ 1,079 3 %
Distribution per limited partner unit declared for the
period $ 0.695 $ 0.645 7.8 % (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 solid second quarter results, with adjusted EBITDA
of $486 million, which was approximately $26 million above the
mid-point of our quarterly guidance range,” said Greg L. Armstrong,
Chairman and CEO of Plains All American. “PAA will pay a quarterly
distribution of $0.695 per limited partner unit next week, which is
the equivalent of $2.78 per unit on an annualized basis, while PAGP
will pay a quarterly distribution of $0.227 per Class A share, or
$0.908 per share on an annualized basis. These distributions
represent a 7.8% and 23.8% increase over comparative distributions
paid in the same quarter of 2014, respectively.
“Over the intermediate to long-term, we remain very constructive
on the outlook for the North American crude oil industry. Near
term, we are cautious as high crude oil and refined product
inventory levels will influence oilfield activity and crude oil
production levels over the next six to twelve months and
competition for the marginal barrel will intensify. Additionally,
our current forecast assumes that our All American pipeline in
California will not be returned to service during the balance of
2015.”
Armstrong added, “Based on this outlook, we have reduced the
midpoint of our full-year guidance for adjusted EBITDA by $50
million. The resulting midpoint guidance of $2.275 billion remains
in line with the full-year guidance range provided at the beginning
of the year, albeit near the lower end of the initial range.
Importantly, PAA remains well positioned to manage through industry
down cycles and capitalize on attractive opportunities as it ended
the second quarter of 2015 with approximately $3.1 billion of
committed liquidity, a strong balance sheet and credit metrics that
are consistent with our targeted levels.”
The following table summarizes selected PAA financial
information by segment for the second quarter and first half of
2015:
Summary of
Selected Financial Data by Segment (1)
(unaudited)
(in millions)
Three
Months Ended Three Months Ended June 30, 2015
June 30, 2014
Supply and
Supply and
Transportation
Facilities
Logistics
Transportation
Facilities
Logistics Reported segment profit $ 186 $ 144 $ 41 $ 221 $
134 $ 133 Selected items impacting the comparability of segment
profit (2) 70 2 43
8 4 11
Adjusted segment profit
$ 256 $ 146 $
84 $ 229 $ 138 $
144 Percentage change in adjusted segment profit
versus 2014 period 12 % 6
% (42 )% Six Months Ended
Six Months Ended June 30, 2015 June 30, 2014
Supply and
Supply and
Transportation
Facilities
Logistics
Transportation
Facilities
Logistics Reported segment profit $ 428 $ 285 $ 171 $ 427 $
288 $ 382 Selected items impacting the comparability of segment
profit (2) 74 5 144
16 9 (44 )
Adjusted segment profit
$ 502 $ 290 $
315 $ 443 $ 297 $
338 Percentage change in adjusted segment profit
versus 2014 period 13 % (2
)% (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.
(2)
Certain of our non-GAAP financial measures
may not be impacted by each of the selected items impacting
comparability.
Second-quarter 2015 Transportation adjusted segment profit
increased 12% versus comparable 2014 results. This increase was
driven by earnings from our 50% interest in the BridgeTex pipeline
acquired in November 2014 and higher crude oil pipeline volumes
associated with recently completed organic growth projects
primarily within the Permian Basin and Eagle Ford producing
regions.
Second-quarter 2015 Facilities adjusted segment profit increased
by 6% over comparable 2014 results. This increase was primarily due
to lower field operating costs associated with our NGL
fractionation and Canadian natural gas processing activities.
Second-quarter 2015 Supply and Logistics adjusted segment profit
exceeded the high end of our quarterly guidance range but decreased
by 42% compared to 2014 results. This decrease was primarily driven
by lower margins associated with less favorable crude oil market
conditions.
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 tables included at the end of this release.
Information regarding PAGP’s distributions is reflected below:
Q2 2015 Q1 2015 Q2 2014
Distribution per Class A share declared
for the period
$ 0.227 $ 0.222 $ 0.1834
Q2 2015 distribution percentage growth
from prior periods
2.3% 23.8%
Conference Call
PAA and PAGP will hold a conference call on August 5, 2015 (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 third and fourth quarter and full year of 2015. 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. EDT
on Wednesday, August 5, 2015 to discuss the following items:
1. PAA's second-quarter 2015 performance;
2. The status of major expansion
projects;
3. Capitalization and liquidity;
4. Financial and operating guidance for the
third and fourth quarter and full year of 2015; and
5. PAA 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, navigate to “Investor Relations,”
select “PAA” or “PAGP,” then “News & Events,” and then
“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) 230-1059. International callers should
dial (612) 234-9959. No password is required. The slide
presentation accompanying the conference call will be available a
few minutes prior to the call at 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 363940. The replay will be available
beginning Wednesday, August 5, 2015, at approximately
1:00 p.m. EDT and will continue until 11:59 a.m. EDT on
September 5, 2015.
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 Quarterly
Report on Form 10-Q.
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.
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, failure to
implement or capitalize, or delays in implementing or capitalizing,
on planned growth projects; 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
facilities, 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; 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 effects of competition;
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; 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;
non-utilization of our assets and facilities; 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 facilities, including our ability
to satisfy our contractual obligations to our customers at our
facilities; 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 approximately 4.3
million barrels per day of crude oil and NGL on its pipelines. 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.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per unit data)
Three Months
Ended Six Months Ended June 30, June 30,
2015 2014 2015 2014
REVENUES $ 6,663 $ 11,195 $ 12,605 $ 22,878
COSTS
AND EXPENSES Purchases and related costs 5,848 10,280 10,890
20,950 Field operating costs 417 360 763 696 General and
administrative expenses 79 90 157 179 Depreciation and amortization
110 100 217 196
Total costs and expenses 6,454 10,830 12,027 22,021
OPERATING INCOME 209 365 578 857
OTHER
INCOME/(EXPENSE) Equity earnings in unconsolidated entities 52
23 89 44 Interest expense, net (105 ) (82 ) (207 ) (161 ) Other
income/(expense), net 1 4 (3 )
2
INCOME BEFORE TAX 157 310 457 742
Current income tax expense (19 ) (16 ) (61 ) (52 ) Deferred income
tax benefit/(expense) (14 ) (6 ) 12
(18 )
NET INCOME 124 288 408 672 Net income
attributable to noncontrolling interests - (1
) (1 ) (1 )
NET INCOME ATTRIBUTABLE TO PAA $
124 $ 287 $ 407 $ 671
NET
INCOME ATTRIBUTABLE TO PAA: LIMITED PARTNERS $ (22 ) $
166 $ 116 $ 435
GENERAL PARTNER $ 146
$ 121 $ 291 $ 236
BASIC NET
INCOME/(LOSS) PER LIMITED PARTNER UNIT $ (0.06 ) $ 0.45
$ 0.29 $ 1.19
DILUTED NET INCOME/(LOSS) PER
LIMITED PARTNER UNIT $ (0.06 ) $ 0.45 $ 0.29 $
1.18
BASIC WEIGHTED AVERAGE LIMITED PARTNER UNITS
OUTSTANDING 397 365 390
363
DILUTED WEIGHTED AVERAGE LIMITED
PARTNER UNITS OUTSTANDING 400 367
393 365
ADJUSTED
RESULTS
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2015
2014 2015 2014 ADJUSTED NET INCOME
ATTRIBUTABLE TO PAA $ 255 $ 307 $ 624 $
660
DILUTED ADJUSTED NET INCOME PER LIMITED
PARTNER UNIT $ 0.27 $ 0.50 $ 0.83 $ 1.15
ADJUSTED EBITDA $ 486 $ 512 $
1,108 $ 1,079
PLAINS ALL
AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATED BALANCE SHEET DATA
(in millions)
June 30,
December 31,
2015 2014 ASSETS Current assets $ 3,944 $
4,179 Property and equipment, net 13,028 12,272 Goodwill 2,442
2,465 Investments in unconsolidated entities 1,841 1,735 Linefill
and base gas 976 930 Long-term inventory 159 186 Other long-term
assets, net 494 489 Total assets $
22,884 $ 22,256
LIABILITIES AND PARTNERS'
CAPITAL Current liabilities $ 4,474 $ 4,755 Senior notes, net
of unamortized discount 8,759 8,757 Other long-term debt 378 5
Other long-term liabilities and deferred credits 568
548 Total liabilities 14,179 14,065 Partners'
capital excluding noncontrolling interests 8,647 8,133
Noncontrolling interests 58 58 Total
partners' capital 8,705 8,191 Total
liabilities and partners' capital $ 22,884 $ 22,256
DEBT
CAPITALIZATION RATIOS
(in millions)
June 30, December 31, 2015
2014 Short-term debt $ 915 $ 1,287 Long-term debt
9,137 8,762 Total debt $ 10,052 $
10,049 Long-term debt $ 9,137 $ 8,762 Partners'
capital 8,705 8,191 Total book
capitalization $ 17,842 $ 16,953 Total book
capitalization, including short-term debt $ 18,757 $ 18,240
Long-term debt-to-total book capitalization 51 % 52 %
Total debt-to-total book capitalization, including short-term debt
54 % 55 %
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
SELECTED
FINANCIAL DATA BY SEGMENT
(in millions)
Three Months Ended Three Months Ended
June 30, 2015 June 30, 2014 Supply and
Supply and Transportation Facilities
Logistics Transportation Facilities
Logistics Revenues (1) $ 402 $ 269 $ 6,351 $ 412 $ 277 $
10,860 Purchases and related costs (1) (29 ) (7 ) (6,168 ) (41 )
(12 ) (10,578 ) Field operating costs (1) (2) (209 ) (97 ) (110 )
(137 ) (106 ) (112 ) Equity-indexed compensation expense -
operations (3 ) (1 ) - (5 ) (2 ) (1 ) Segment general and
administrative expenses (2) (3) (22 ) (17 ) (27 ) (21 ) (16 ) (27 )
Equity-indexed compensation expense - general and administrative (5
) (3 ) (5 ) (10 ) (7 ) (9 ) Equity earnings in unconsolidated
entities 52 - - 23
- - Reported segment profit $
186 $ 144 $ 41 $ 221 $ 134 $ 133
Selected items impacting comparability of
segment profit (4)
70 2 43 8
4 11 Adjusted segment profit $ 256
$ 146 $ 84 $ 229 $ 138 $ 144
Maintenance capital $ 33 $ 17 $ 2
$ 42 $ 5 $ 1
Six Months
Ended Six Months Ended June 30, 2015 June 30,
2014 Supply and Supply and Transportation
Facilities Logistics Transportation
Facilities Logistics Revenues (1) $ 803 $ 525 $
11,984 $ 798 $ 576 $ 22,228 Purchases and related costs (1) (59 )
(11 ) (11,521 ) (78 ) (38 ) (21,553 ) Field operating costs (1) (2)
(346 ) (187 ) (227 ) (265 ) (204 ) (218 ) Equity-indexed
compensation expense - operations (6 ) (2 ) (1 ) (10 ) (2 ) (2 )
Segment general and administrative expenses (2) (3) (43 ) (33 ) (54
) (43 ) (29 ) (53 ) Equity-indexed compensation expense - general
and administrative (10 ) (7 ) (10 ) (19 ) (15 ) (20 ) Equity
earnings in unconsolidated entities 89 -
- 44 - -
Reported segment profit $ 428 $ 285 $ 171 $ 427 $ 288 $ 382
Selected items impacting comparability of segment profit (4)
74 5 144 16
9 (44 ) Adjusted segment profit $ 502 $ 290
$ 315 $ 443 $ 297 $ 338
Maintenance capital $ 66 $ 32 $ 4 $ 76
$ 15 $ 4
(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.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
OPERATING
DATA (1)
Three Months Ended Six Months Ended June 30,
June 30, 2015 2014 2015 2014
Transportation segment (average daily volumes in
thousands of barrels per day): Tariff activities Crude Oil
Pipelines All American 18 38 27 36 Bakken Area Systems (2) 147 145
149 138 Basin / Mesa / Sunrise 858 714 839 729 BridgeTex 130 - 107
- Cactus 62 - 31 - Capline 169 121 161 123 Eagle Ford Area Systems
(2) 308 209 286 199 Line 63 / Line 2000 108 106 122 116 Manito 48
44 51 44 Mid-Continent Area Systems 355 371 363 349 Permian Basin
Area Systems 836 759 795 759 Rainbow 116 108 117 114 Rangeland 56
65 59 67 Salt Lake City Area Systems (2) 122 130 126 131 South
Saskatchewan 61 58 63 61 White Cliffs 41 24 44 24 Other 791 734 740
692 NGL Pipelines Co-Ed 57 55 59 56 Other 137 123 133 119 Tariff
activities total 4,420 3,804 4,272 3,757 Trucking 109 127 115 129
Transportation segment total 4,529 3,931 4,387 3,886
Facilities segment (average monthly volumes):
Crude oil, refined products and NGL
terminalling and storage
(average monthly capacity in millions of barrels) 99 94 99 95 Rail
load / unload volumes (average volumes in thousands of barrels per
day) 233 224 220 227
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) 103 86 103 89
Facilities segment total
(average monthly volumes in millions of
barrels)(3)
126 120 125 121
Supply and Logistics segment (average
daily volumes in thousands of barrels per day): Crude oil lease
gathering purchases 967 931 974 912 NGL sales 158 139 222 205
Supply and Logistics segment total 1,125 1,070 1,196 1,117
(1)
Volumes associated with assets employed
through acquisitions and capital expansion projects represent total
volumes (attributable to our interest) for the number of days or
months we
employed the assets divided by the number
of days or months in the period.
(2)
Area systems include volumes (attributable
to our interest) from our investments in 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.
PLAINS ALL AMERICAN PIPELINE,
L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER
UNIT
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2015
2014 2015 2014 Basic Net Income per Limited
Partner Unit Net income attributable to PAA $ 124 $ 287 $ 407 $
671 Less: General partner's incentive distribution (1) (146 ) (117
) (289 ) (227 ) Less: General partner 2% ownership (1) -
(4 ) (2 ) (9 )
Net income/(loss) attributable to limited
partners
(22 ) 166 116 435 Less: Undistributed earnings allocated and
distributions to participating securities (1) (1 ) (1
) (3 ) (3 ) Net income/(loss) attributable to limited
partners in accordance with application of the two-class method for
MLPs $ (23 ) $ 165 $ 113 $ 432 Basic
weighted average limited partner units outstanding 397 365 390 363
Basic net income/(loss) per limited partner unit $ (0.06 ) $
0.45 $ 0.29 $ 1.19
Diluted Net
Income per Limited Partner Unit Net income attributable to PAA
$ 124 $ 287 $ 407 $ 671 Less: General partner's incentive
distribution (1) (146 ) (117 ) (289 ) (227 ) Less: General partner
2% ownership (1) - (4 ) (2 ) (9
) Net income/(loss) attributable to limited partners (22 ) 166 116
435 Less: Undistributed earnings allocated and distributions to
participating securities (1) (1 ) (1 ) (3 )
(3 ) Net income/(loss) attributable to limited partners in
accordance with application of the two-class method for MLPs $ (23
) $ 165 $ 113 $ 432 Basic weighted
average limited partner units outstanding 397 365 390 363 Effect of
dilutive securities: Weighted average LTIP units (2) 3
2 3 2 Diluted
weighted average limited partner units outstanding 400
367 393 365
Diluted net income/(loss) per limited partner unit $ (0.06 ) $ 0.45
$ 0.29 $ 1.18
(1)
We calculate net income/(loss)
attributable to limited partners 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, limited partners 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.
PLAINS ALL AMERICAN PIPELINE,
L.P. AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
SELECTED ITEMS
IMPACTING COMPARABILITY
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2015
2014 2015 2014
Selected Items Impacting Comparability
- Income/(Loss) (1):
Gains/(losses) from derivative activities net of inventory
valuation adjustments (2) $ (60 ) $ (14 ) $ (151 ) $ 50 Long-term
inventory costing adjustments (3) 23 - (15 ) - Equity-indexed
compensation expense (4) (11 ) (17 ) (22 ) (36 ) Net gain/(loss) on
foreign currency revaluation (1 ) 11 26 6 Line 901 incident (65 ) -
(65 ) - Deferred income tax expense (5) (22 ) - (22 ) - Tax effect
on selected items impacting comparability 5 -
32 (9 ) Selected items impacting
comparability of net income attributable to PAA $ (131 ) $ (20 ) $
(217 ) $ 11 Impact to basic net income per limited
partner unit $ (0.33 ) $ (0.06 ) $ (0.55 ) $ 0.03 Impact to
diluted net income per limited partner unit $ (0.33 ) $ (0.05 ) $
(0.54 ) $ 0.03
(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). See Note 5 to our Consolidated
Financial Statements included in Part IV of our 2014 Annual Report
on Form 10-K for a complete discussion of our long-term
inventory.
(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.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
ADJUSTED BASIC AND DILUTED EARNINGS PER LIMITED PARTNER
UNIT
(in millions, except per unit data)
Three Months Ended
Six Months Ended June 30, June 30, 2015
2014 2015 2014 Basic Adjusted Net Income
per Limited Partner Unit Net income attributable to PAA $ 124 $
287 $ 407 $ 671 Selected items impacting comparability of net
income attributable to PAA (1) 131 20
217 (11 ) Adjusted net income attributable to
PAA 255 307 624 660 Less: General partner's incentive distribution
(2) (146 ) (117 ) (289 ) (227 ) Less: General partner 2% ownership
(2) (2 ) (4 ) (6 ) (9 ) Adjusted net
income attributable to limited partners 107 186 329 424 Less:
Undistributed earnings allocated and distributions to participating
securities (2) (1 ) (1 ) (3 ) (3 )
Adjusted limited partners' net income $ 106 $ 185 $
326 $ 421 Basic weighted average limited
partner units outstanding 397 365 390 363 Basic adjusted net
income per limited partner unit $ 0.27 $ 0.51 $ 0.84
$ 1.16
Diluted Adjusted Net Income per
Limited Partner Unit Net income attributable to PAA $ 124 $ 287
$ 407 $ 671 Selected items impacting comparability of net income
attributable to PAA (1) 131 20
217 (11 ) Adjusted net income attributable to PAA 255
307 624 660 Less: General partner's incentive distribution (2) (146
) (117 ) (289 ) (227 ) Less: General partner 2% ownership (2)
(2 ) (4 ) (6 ) (9 ) Adjusted net income
attributable to limited partners 107 186 329 424 Less:
Undistributed earnings allocated and distributions to participating
securities (2) (1 ) (1 ) (3 ) (3 )
Adjusted limited partners' net income $ 106 $ 185 $
326 $ 421 Diluted weighted average limited
partner units outstanding 400 367 393 365 Diluted adjusted
net income per limited partner unit $ 0.27 $ 0.50 $
0.83 $ 1.15
(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 limited partners 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, limited partners and
participating securities in accordance with the contractual terms
of the partnership agreement and as further prescribed under the
two-class method.
PLAINS ALL AMERICAN PIPELINE, L.P. AND
SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
FINANCIAL DATA
RECONCILIATIONS
(in millions)
Three Months Ended Six Months Ended
June 30, June 30, 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 $ 124 $ 288 $ 408 $ 672 Add: Interest expense, net 105
82 207 161 Add: Income tax expense 33 22 49 70 Add: Depreciation
and amortization 110 100 217
196 EBITDA $ 372 $ 492 $ 881 $ 1,099 Selected
items impacting comparability of EBITDA (1) 114
20 227 (20 ) Adjusted EBITDA $
486 $ 512 $ 1,108 $ 1,079 (1)
Certain of our non-GAAP financial measures may not be impacted by
each of the selected items impacting comparability.
Three
Months Ended Six Months Ended June 30, June
30, 2015 2014 2015 2014 Adjusted
EBITDA to Implied Distributable Cash Flow ("DCF")
Reconciliation Adjusted EBITDA $ 486 $ 512 $ 1,108 $ 1,079
Interest expense, net (105 ) (82 ) (207 ) (161 ) Maintenance
capital (52 ) (48 ) (102 ) (95 ) Current income tax expense (19 )
(16 ) (61 ) (52 ) Equity earnings in unconsolidated entities, net
of distributions (3 ) 2 13 7 Distributions to noncontrolling
interests (1) (1 ) (1 ) (2 ) (2 )
Implied DCF (2) $ 306 $ 367 $ 749 $ 776
(1) Includes distributions that pertain to the current
period's net income, which are paid in the subsequent period.
(2) Including costs of $65 million related
to our Line 901 incident that occurred during May 2015, Implied DCF
would have been $241 million and $684 million for the three and six
months ended June 30, 2015, respectively.
Three Months Ended Six Months Ended June
30, June 30, 2015 2014 2015
2014 Net Cash Provided by Operating Activities
Reconciliation EBITDA $ 372 $ 492 $ 881 $ 1,099 Current income
tax expense (19 ) (16 ) (61 ) (52 ) Interest expense, net (105 )
(82 ) (207 ) (161 ) Net change in assets and liabilities, net of
acquisitions (336 ) (287 ) 11 9 Other items to reconcile to net
cash provided by operating activities: Equity-indexed compensation
expense 17 34 36
68 Net cash provided by/(used in) operating activities $ (71
) $ 141 $ 660 $ 963
PLAINS GP HOLDINGS AND SUBSIDIARIES
FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions, except per share data)
Three Months
Ended Three Months Ended June 30, 2015 June
30, 2014
Consolidating
Consolidating
PAA
Adjustments (1)
PAGP
PAA
Adjustments (1)
PAGP
REVENUES $ 6,663 $ - $ 6,663 $ 11,195 $ - $ 11,195
COSTS AND EXPENSES Purchases and related costs 5,848
- 5,848 10,280 - 10,280 Field operating costs 417 - 417 360 - 360
General and administrative expenses 79 1 80 90 1 91 Depreciation
and amortization 110 - 110
100 - 100 Total
costs and expenses 6,454 1 6,455 10,830 1 10,831
OPERATING INCOME 209 (1 ) 208 365 (1 ) 364
OTHER
INCOME/(EXPENSE) Equity earnings in unconsolidated entities 52
- 52 23 - 23 Interest expense, net (105 ) (2 ) (107 ) (82 ) (3 )
(85 ) Other income, net 1 - 1
4 - 4
INCOME BEFORE TAX 157 (3 ) 154 310 (4 ) 306 Current income
tax expense (19 ) - (19 ) (16 ) - (16 ) Deferred income tax expense
(14 ) (18 ) (32 ) (6 ) (9 )
(15 )
NET INCOME 124 (21 ) 103 288 (13 ) 275
Net income attributable to noncontrolling interests -
(73 ) (73 ) (1 ) (259 ) (260 )
NET INCOME ATTRIBUTABLE TO PAGP $ 124 $ (94 ) $ 30
$ 287 $ (272 ) $ 15
BASIC NET
INCOME PER CLASS A SHARE $ 0.14 $ 0.11
DILUTED NET INCOME PER CLASS A SHARE $ 0.14 $ 0.11
BASIC WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING 224 136
DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING
224 136
(1)
Represents the aggregate consolidating
adjustments necessary to produce consolidated financial statements
for PAGP.
PLAINS GP
HOLDINGS AND SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
(in millions, except per share data)
Six Months Ended
Six Months Ended June 30, 2015 June 30, 2014
Consolidating
Consolidating
PAA
Adjustments (1)
PAGP
PAA
Adjustments (1)
PAGP
REVENUES $ 12,605 $ - $ 12,605 $ 22,878 $ - $ 22,878
COSTS AND EXPENSES Purchases and related costs 10,890
- 10,890 20,950 - 20,950 Field operating costs 763 - 763 696 - 696
General and administrative expenses 157 2 159 179 2 181
Depreciation and amortization 217 1
218 196 1 197
Total costs and expenses 12,027 3 12,030 22,021 3 22,024
OPERATING INCOME 578 (3 ) 575 857 (3 ) 854
OTHER INCOME/(EXPENSE) Equity earnings in unconsolidated
entities 89 - 89 44 - 44 Interest expense, net (207 ) (4 ) (211 )
(161 ) (5 ) (166 ) Other income/(expense), net (3 ) -
(3 ) 2 - 2
INCOME BEFORE TAX 457 (7 ) 450 742 (8 ) 734 Current
income tax expense (61 ) - (61 ) (52 ) - (52 ) Deferred income tax
benefit/(expense) 12 (36 ) (24 )
(18 ) (17 ) (35 )
NET INCOME 408 (43 )
365 672 (25 ) 647 Net income attributable to noncontrolling
interests (1 ) (303 ) (304 ) (1 )
(617 ) (618 )
NET INCOME ATTRIBUTABLE TO PAGP
$ 407 $ (346 ) $ 61 $ 671 $ (642 ) $ 29
BASIC NET INCOME PER CLASS A SHARE $ 0.28
$ 0.21
DILUTED NET INCOME PER CLASS A
SHARE $ 0.27 $ 0.21
BASIC WEIGHTED
AVERAGE CLASS A SHARES OUTSTANDING 218 135
DILUTED WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING 606 135
(1)
Represents the aggregate consolidating adjustments necessary
to produce consolidated financial statements for PAGP.
PLAINS GP HOLDINGS AND
SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
CONDENSED
CONSOLIDATING BALANCE SHEET DATA
(in millions)
June 30, 2015 December 31, 2014
Consolidating
Consolidating
PAA
Adjustments (1)
PAGP
PAA
Adjustments (1)
PAGP
ASSETS Current assets $ 3,944 $ 2 $ 3,946 $ 4,179 $ 2 $
4,181 Property and equipment, net 13,028 20 13,048 12,272 20 12,292
Goodwill 2,442 - 2,442 2,465 - 2,465 Investments in unconsolidated
entities 1,841 - 1,841 1,735 - 1,735 Deferred tax asset - 1,848
1,848 - 1,705 1,705 Linefill and base gas 976 - 976 930 - 930
Long-term inventory 159 - 159 186 - 186 Other long-term assets, net
494 - 494 489 -
489 Total assets $ 22,884 $ 1,870 $ 24,754 $ 22,256 $
1,727 $ 23,983
LIABILITIES AND PARTNERS'
CAPITAL Current liabilities $ 4,474 $ 1 $ 4,475 $ 4,755 $ 1 $
4,756 Senior notes, net of unamortized discount 8,759 - 8,759 8,757
- 8,757 Other long-term debt 378 560 938 5 536 541 Other long-term
liabilities and deferred credits 568 -
568 548 - 548 Total liabilities 14,179
561 14,740 14,065 537 14,602 Partners' capital excluding
noncontrolling interests 8,647 (6,846 ) 1,801 8,133 (6,476 ) 1,657
Noncontrolling interests 58 8,155 8,213
58 7,666 7,724 Total partners' capital
8,705 1,309 10,014 8,191
1,190 9,381 Total liabilities and partners' capital $
22,884 $ 1,870 $ 24,754 $ 22,256 $ 1,727 $ 23,983 (1)
Represents the aggregate consolidating adjustments necessary
to produce consolidated financial statements for PAGP.
PLAINS GP HOLDINGS AND SUBSIDIARIES DISTRIBUTION
SUMMARY (unaudited)
Q2 2015 PAGP
DISTRIBUTION SUMMARY
(in millions, except per unit and per share data)
Q2 2015 (1)
PAA Distribution/LP Unit $ 0.6950 GP Distribution/LP Unit $ 0.3822
Total Distribution/LP Unit $ 1.0772 PAA LP
Units Outstanding at 7/31/15 398 Gross GP Distribution $ 158
Less: IDR Reduction (6 ) Net Distribution from PAA to AAP
(2) $ 152 Less: Debt Service (3 ) Less: G&A Expense (2 )
Cash Available for Distribution by AAP $ 147
Distributions to AAP Partners Direct AAP Owners & AAP
Management (65.6% economic interest) $ 96 PAGP (34.4% economic
interest) 51 Total distributions to AAP Partners $
147 Distribution to PAGP Investors $ 51 PAGP
Class A Shares Outstanding at 7/31/15 224 PAGP
Distribution/Class A Share $ 0.227
(1)
Amounts may not recalculate due to
rounding.
(2)
Plains AAP, L.P. ("AAP") is the general
partner of PAA.
PLAINS GP HOLDINGS AND
SUBSIDIARIES FINANCIAL SUMMARY (unaudited)
COMPUTATION OF
BASIC AND DILUTED NET INCOME PER CLASS A SHARE
Three Months Ended Six Months Ended (in millions,
except per share data)
June 30, June 30, 2015
2014 2015 2014 Basic Net Income per Class A
Share Net income attributable to PAGP $ 30 $ 15 $ 61 $ 29 Basic
weighted average Class A shares outstanding 224 136 218 135
Basic net income per Class A share $ 0.14 $ 0.11 $ 0.28 $ 0.21
Diluted Net Income per Class A Share Net income
attributable to PAGP $ 30 $ 15 $ 61 $ 29 Incremental net income
attributable to PAGP resulting from assumed exchange of AAP units
- - 105 - Net income attributable to
PAGP including incremental net income from assumed exchange of AAP
units $ 30 $ 15 $ 166 $ 29 Basic weighted average Class A
shares outstanding 224 136 218 135 Dilutive shares resulting from
assumed exchange of AAP units - - 388 -
Diluted weighted average Class A shares outstanding 224
136 606 135 Diluted net income per
Class A share $ 0.14 $ 0.11 $ 0.27 $ 0.21
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version on businesswire.com: http://www.businesswire.com/news/home/20150804006894/en/
Plains All American Pipeline, L.P. and Plains GP HoldingsRyan
Smith, 866-809-1291Director, Investor RelationsorAl Swanson,
800-564-3036Executive Vice President, CFO
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