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Plains All American Pipeline, L.P. and Plains GP Holdings Report Third-Quarter 2018 Results

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Plains All American Pipeline, L.P. (NYSE: PAA)
and Plains GP Holdings (NYSE: PAGP)
today reported third-quarter 2018 results.

Third-Quarter Highlights

  • Delivered 3Q18 financial and operating results ahead of expectations
  • Increased 2018 Adjusted EBITDA guidance
  • Announced and closed sale of 30% interest in BridgeTex for net
    proceeds of $862 million, resulting in a gain of $210 million
  • Continued progress on leverage reduction plan with visibility to
    complete during 1H19

"We are pleased to report solid third-quarter results and increased
guidance for the full year that reflects continued execution of our
business plan and constructive industry fundamentals," stated Willie
Chiang, Chief Executive Officer of Plains All American Pipeline. "We are
on track with our deleveraging objectives, our capital program and other
commercial and operating initiatives and believe that we are well
positioned for the future."

                 

Plains All American Pipeline, L.P.

 

Summary Financial Information
(unaudited)

(in millions, except per unit data)

 
 
Three Months Ended
September 30,
% Nine Months Ended
September 30,
%
GAAP Results 2018   2017 Change 2018     2017 Change
Net income attributable to PAA $ 710 $ 33 ** $ 1,099 $ 665 65 %
Diluted net income/(loss) per common unit $ 0.87 $ (0.01 ) ** $ 1.30 $ 0.76 71 %
Diluted weighted average common units outstanding 799   725   10 % 728 715 2 %
Distribution per common unit declared for the period $ 0.30   $ 0.30   %
 
Three Months Ended
September 30,
% Nine Months Ended
September 30,
%
Non-GAAP Results (1) 2018 2017 Change 2018 2017 Change
Adjusted net income attributable to PAA $ 361 $ 195 85 % $ 995 $ 609 63 %
Diluted adjusted net income per common unit $ 0.43 $ 0.21 105 % $ 1.16 $ 0.69 68 %
Adjusted EBITDA $ 636 $ 489 30 % $ 1,735 $ 1,452 19 %
Implied DCF per common unit $ 0.55 $ 0.41 34 % $ 1.52 $ 1.25 22 %
 

____________________

**    

Indicates that variance as a percentage is not meaningful.

(1)

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.

 

Segment Adjusted EBITDA for the third quarter and first nine months of
2018 and 2017 is presented below:

   

Summary of Selected Financial Data by
Segment
(unaudited)

(in millions)

 
 
Segment Adjusted EBITDA
Transportation     Facilities    

Supply and
Logistics

Three Months Ended September 30, 2018 $ 388   $ 173   $ 75  
Three Months Ended September 30, 2017 $ 363   $ 182   $ (56 )
Percentage change in Segment Adjusted EBITDA versus 2017 period 7 % (5 )% 234 %
Percentage change in Segment Adjusted EBITDA versus 2017
period further adjusted for impact of divested assets
12 % (1 )% N/A  
 
Segment Adjusted EBITDA
Transportation Facilities

Supply and
Logistics

Nine Months Ended September 30, 2018 $ 1,083   $ 530   $ 120  
Nine Months Ended September 30, 2017 $ 933   $ 550   $ (32 )
Percentage change in Segment Adjusted EBITDA versus 2017 period 16 % (4 )% 475 %
Percentage change in Segment Adjusted EBITDA versus 2017
period further adjusted for impact of divested assets
21 % 3 % N/A  
 

Third-quarter 2018 Transportation Segment Adjusted EBITDA increased by
7% over comparable 2017 results. This increase was primarily driven by
increased volume on our Permian Basin systems. Third-quarter 2018
results also benefited from the Diamond pipeline being placed into
service in late 2017. These favorable results were partially offset by
the impact of asset sales in the Rocky Mountain and Central regions.

Third-quarter 2018 Facilities Segment Adjusted EBITDA decreased by 5%
versus comparable 2017 results, primarily due to the impact of asset
sales. This was partially offset by increased revenue from capacity
expansions and increased throughput at our Cushing terminal, as well as
increased activity at our St. James terminal and certain crude oil rail
terminals.

Third-quarter 2018 Supply and Logistics Segment Adjusted EBITDA
increased versus comparable 2017 results due to favorable regional crude
oil differentials, higher lease gathering margins and volumes, and a
benefit from an audit recovery in our NGL business.

2018 Full-Year Guidance

The table below presents our full-year 2018 financial and operating
guidance:

   

Financial and Operating Guidance
(unaudited)

(in millions, except volumes, per unit and per barrel data)

 
 
Twelve Months Ended December 31,
2016     2017     2018 (G)
+ / -
Segment Adjusted EBITDA
Transportation $ 1,141 $ 1,287 $ 1,510
Facilities   667     734     690  
Fee-Based $ 1,808 $ 2,021 $ 2,200
Supply and Logistics 359 60 350

Adjusted other income/(expense), net

  2     1      
Adjusted EBITDA (1) $ 2,169   $ 2,082   $ 2,550  
Interest expense, net (2) (451 ) (483 ) (420 )
Maintenance capital (186 ) (247 ) (240 )
Current income tax expense (85 ) (28 ) (55 )
Other   (33 )   (12 )   5  
Implied DCF (1) $ 1,414 $ 1,312 $ 1,840
Preferred unit distributions paid (3) (5 ) (160 )
General partner cash distributions   (565 )        
Implied DCF Available to Common Unitholders $ 849   $ 1,307   $ 1,680  
 
Implied DCF per Common Unit (1) $ 1.83 $ 1.82 $ 2.31
Implied DCF per Common Unit and Common Equivalent Unit (1) $ 1.63 $ 1.67 $ 2.25
 
Distributions per Common Unit (4) $ 2.65 $ 1.95 $ 1.20
Common Unit Distribution Coverage Ratio

0.87

x

0.94

x

1.93

x

 
Operating Data
Transportation
Average daily volumes (MBbls/d) 4,637 5,186 5,925
Segment Adjusted EBITDA per barrel $ 0.67 $ 0.68 $ 0.70
 
Facilities
Average capacity (MMBbls/Mo) 127 130 125
Segment Adjusted EBITDA per barrel $ 0.44 $ 0.47 $ 0.46
 
Supply and Logistics
Average daily volumes (MBbls/d) 1,153 1,219 1,275
Segment Adjusted EBITDA per barrel $ 0.85 $ 0.13 $ 0.75
 
Expansion Capital $ 1,405 $ 1,135 $ 1,950
 
Fourth-Quarter Adjusted EBITDA as Percentage of Full Year 28 % 30 % 32 %
 

____________________

(G)

   

2018 Guidance forecasts are intended to be + / - amounts.

(1)

See the section of this release entitled "Non-GAAP Financial
Measures and Selected Items Impacting Comparability" and the
Non-GAAP Reconciliation tables attached hereto for information
regarding non-GAAP financial measures and, for the historical 2016
and 2017 periods, their reconciliation to the most directly
comparable measures as reported in accordance with GAAP. We do not
provide a reconciliation of non-GAAP financial measures to the
equivalent GAAP financial measures on a forward-looking basis as
it is impractical to forecast certain items that we have defined
as "Selected Items Impacting Comparability" without unreasonable
effort, due to the uncertainty and inherent difficulty of
predicting the occurrence and financial impact of and the periods
in which such items may be recognized. Thus, a reconciliation of
non-GAAP financial measures to the equivalent GAAP financial
measures could result in disclosure that could be imprecise or
potentially misleading.

(2)

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

(3)

Cash distributions paid to our preferred unitholders during
the year presented. The distribution requirement of our Series A
preferred units was paid-in-kind for all 2016 and 2017 quarterly
distributions and for the February 2018 quarterly distribution.
Distributions on our Series A preferred units must be paid in cash
beginning with the May 2018 quarterly distribution. The
distribution requirement of our Series B preferred units, which
were issued in October 2017, is payable semi-annually in arrears
on May 15 and November 15. A pro-rated initial distribution on the
Series B preferred units was paid on November 15, 2017.

(4)

Cash distributions per common unit paid or to be paid during
the periods presented.

 

Plains GP Holdings

PAGP owns an indirect non-economic controlling interest in PAA's general
partner and an indirect limited partner interest in PAA. 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:

           
Q3 2018 Q2 2018 Q3 2017
Distribution per Class A share declared for the period $ 0.30 $ 0.30   $ 0.30  
Q3 2018 distribution percentage change from prior periods % %
 

Conference Call

PAA and PAGP will hold a joint conference call at 4:00 p.m. CT on
Tuesday, November 6, 2018 to discuss the following items:

  1. PAA's third-quarter 2018 performance;
  2. Financial and operating guidance for the full year of 2018 and
    preliminary 2019;
  3. Capitalization and liquidity; and
  4. PAA and PAGP's outlook for the future.

Conference Call Webcast Instructions

To access the internet webcast please go to https://event.webcasts.com/starthere.jsp?ei=1213672&tp_key=802fe3c91a

Alternatively, the webcast can be accessed at 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, an audio replay in MP3 format
will be available on the website within two hours after the end of the
call and will be accessible for a period of 365 days. A transcript will
also be available after the call at the above referenced website.

Non-GAAP Financial Measures and Selected Items Impacting
Comparability

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. The primary additional measures used by management are earnings
before interest, taxes, depreciation and amortization (including our
proportionate share of depreciation and amortization and gains and
losses on significant asset sales of unconsolidated entities), and gains
on sales of investments in unconsolidated entities, adjusted for certain
selected items impacting comparability ("Adjusted EBITDA") and implied
distributable cash flow ("DCF").

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
to supplement related GAAP financial measures, (i) provide additional
information about our core operating performance and ability to fund
distributions to our unitholders through cash generated by our
operations and (ii) provide investors with the same financial analytical
framework upon which management bases financial, operational,
compensation and planning/budgeting decisions. We also present these and
additional non-GAAP financial measures, including adjusted net income
attributable to PAA and basic and diluted adjusted net income per common
unit, as they are measures that investors, rating agencies and debt
holders have indicated are useful in assessing us and our results of
operations. These non-GAAP measures may exclude, for example, (i)
charges for obligations that are expected to be settled with the
issuance of equity instruments, (ii) gains or losses on derivative
instruments that are related to underlying activities in another period
(or the reversal of such adjustments from a prior period), the
mark-to-market related to our Preferred Distribution Rate Reset Option,
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. These measures may further
be adjusted to include amounts related to deficiencies associated with
minimum volume commitments whereby we have billed the counterparties for
their deficiency obligation and such amounts are recognized as deferred
revenue in "Other current liabilities" on our Condensed Consolidated
Financial Statements. Such amounts are presented net of applicable
amounts subsequently recognized into revenue. Furthermore, the
calculation of these measures contemplates tax effects as a separate
reconciling item, where applicable. 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 do not
necessarily consider all of our selected items impacting comparability
to be non-recurring, infrequent or unusual, but we believe that an
understanding of these selected items impacting comparability is
material to the evaluation of our operating results and prospects.

Although we present selected items impacting comparability that
management considers 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, divestitures, expansion projects
and numerous other factors. These types of variations may not be
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.

Our definition and calculation of certain non-GAAP financial measures
may not be comparable to similarly-titled measures of other companies.
Adjusted EBITDA, Implied DCF and other non-GAAP financial performance
measures are reconciled to Net Income (the most directly comparable
measure as reported in accordance with GAAP) for the historical periods
presented in the tables attached to this release, and should be viewed
in addition to, and not in lieu of, our Condensed Consolidated Financial
Statements and notes thereto. In addition, we encourage you to visit our
website at www.plainsallamerican.com
(in particular the section under "Financial Information" entitled
"Non-GAAP Reconciliations" within the Investor Relations tab), which
presents a reconciliation of our commonly used non-GAAP and supplemental
financial measures.

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 actual or expected volume of crude
oil 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, reduced demand, 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; market distortions caused by over-commitments to
infrastructure projects, which impacts volumes, margins, returns and
overall earnings; unanticipated changes in crude oil and NGL 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, NGL and natural gas and
resulting changes in pricing conditions or transportation throughput
requirements; maintenance of our credit rating and ability to receive
open credit from our suppliers and trade counterparties; the occurrence
of a natural disaster, catastrophe, terrorist attack (including
eco-terrorist attacks) or other event, including attacks on our
electronic and computer systems; failure to implement or capitalize, or
delays in implementing or capitalizing, on expansion projects, whether
due to permitting delays, permitting withdrawals or other factors;
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; the
failure to consummate, or significant delay in consummating, sales of
assets or interests as a part of our strategic divestiture program;
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 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; 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; 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; non-utilization of our assets and
facilities; increased costs, or lack of availability, of insurance;
weather interference with business operations or project construction,
including the impact of extreme weather events or conditions; the
effectiveness of our risk management activities; 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; 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, 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, NGLs and natural gas. 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 more than 5 million barrels
per day of crude oil and NGL in its Transportation segment. PAA is
headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.

Plains GP Holdings is a publicly traded entity that owns an indirect,
non-economic controlling general partner interest in PAA and an indirect
limited partner interest in PAA, one of the largest energy
infrastructure and logistics companies in North America. PAGP is
headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.

       

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
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
REVENUES $ 8,792 $ 5,873 $ 25,269 $ 18,618
 
COSTS AND EXPENSES
Purchases and related costs 7,768 5,327 22,838 16,239
Field operating costs 326 283 931 876
General and administrative expenses 74 68 232 210
Depreciation and amortization 131   151   306   401  
Total costs and expenses 8,299 5,829 24,307 17,726
 
OPERATING INCOME 493 44 962 892
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 110 80 281 201
Gain on sale of investment in unconsolidated entities 210 210
Interest expense, net (110 ) (134 ) (327 ) (390 )
Other income/(expense), net (3 ) (1 ) 8   (6 )
 
INCOME/(LOSS) BEFORE TAX 700 (11 ) 1,134 697
Current income tax (expense)/benefit (14 ) 1 (34 ) (9 )
Deferred income tax (expense)/benefit 24   44   (1 ) (21 )
 
NET INCOME 710 34 1,099 667
Net income attributable to noncontrolling interests   (1 )   (2 )
NET INCOME ATTRIBUTABLE TO PAA $ 710   $ 33   $ 1,099   $ 665  
 
NET INCOME/(LOSS) PER COMMON UNIT:
Net income/(loss) allocated to common unitholders — Basic $ 658 $ (8 ) $ 946 $ 547
Basic weighted average common units outstanding 726 725 726 714
Basic net income/(loss) per common unit $ 0.91   $ (0.01 ) $ 1.30   $ 0.77  
 
Net income/(loss) allocated to common unitholders — Diluted $ 697 $ (8 ) $ 947 $ 547
Diluted weighted average common units outstanding 799 725 728 715
Diluted net income/(loss) per common unit $ 0.87   $ (0.01 ) $ 1.30   $ 0.76  
 

NON-GAAP ADJUSTED RESULTS

(in millions, except per unit data)

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018 2017 2018 2017
Adjusted net income attributable to PAA $ 361   $ 195   $ 995   $ 609  
 
Diluted adjusted net income per common unit $ 0.43   $ 0.21   $ 1.16   $ 0.69  
 
Adjusted EBITDA $ 636   $ 489   $ 1,735   $ 1,452  
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in millions)

 
September 30,
2018
December 31,
2017
ASSETS
Current assets $ 4,127 $ 4,000
Property and equipment, net 14,677 14,089
Goodwill 2,540 2,566
Investments in unconsolidated entities 2,539 2,756
Linefill and base gas 914 872
Long-term inventory 179 164
Other long-term assets, net 951   904  
Total assets $ 25,927   $ 25,351  
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 4,656 $ 4,531
Senior notes, net 8,939 8,933
Other long-term debt, net 201 250
Other long-term liabilities and deferred credits 781   679  
Total liabilities 14,577 14,393
 
Partners' capital 11,350   10,958  
Total liabilities and partners' capital $ 25,927   $ 25,351  
 

DEBT CAPITALIZATION RATIOS

(in millions)

 
September 30,
2018
December 31,
2017
Short-term debt (1) $ 429 $ 737
Long-term debt 9,140   9,183  
Total debt $ 9,569   $ 9,920  
 
Long-term debt $ 9,140 $ 9,183
Partners' capital 11,350   10,958  
Total book capitalization $ 20,490   $ 20,141  
Total book capitalization, including short-term debt $ 20,919   $ 20,878  
 
Long-term debt-to-total book capitalization 45 % 46 %
Total debt-to-total book capitalization, including short-term debt 46 % 48 %
 

____________________

(1)     Includes borrowings for cash margin deposits with our clearing
brokers, which are associated with financial derivatives used for
hedging purposes, and for short-term hedged inventory purchases.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

COMPUTATION OF BASIC AND DILUTED NET
INCOME/(LOSS) PER COMMON UNIT
(1)

(in millions, except per unit data)

 
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Basic Net Income/(Loss) per Common Unit
Net income attributable to PAA $ 710 $ 33 $ 1,099 $ 665
Distributions to Series A preferred unitholders (37 ) (36 ) (112 ) (105 )
Distributions to Series B preferred unitholders (12 ) (37 )
Other (3 ) (5 ) (4 ) (13 )
Net income/(loss) allocated to common unitholders $ 658   $ (8 ) $ 946   $ 547  
 
Basic weighted average common units outstanding 726 725 726 714
 
Basic net income/(loss) per common unit $ 0.91   $ (0.01 ) $ 1.30   $ 0.77  
 
Diluted Net Income/(Loss) per Common Unit
Net income attributable to PAA $ 710 $ 33 $ 1,099 $ 665
Distributions to Series A preferred unitholders (36 ) (112 ) (105 )
Distributions to Series B preferred unitholders (12 ) (37 )
Other (1 ) (5 ) (3 ) (13 )
Net income/(loss) allocated to common unitholders $ 697   $ (8 ) $ 947   $ 547  
 
Basic weighted average common units outstanding 726 725 726 714
Effect of dilutive securities:
Series A preferred units (2) 71
Equity-indexed compensation plan awards (3) 2     2   1  
Diluted weighted average common units outstanding 799   725   728   715  
 
Diluted net income/(loss) per common unit $ 0.87   $ (0.01 ) $ 1.30   $ 0.76  
 

____________________

(1)     We calculate net income/(loss) allocated to common unitholders based
on the distributions pertaining to the current period's net income
(whether paid in cash or in-kind). After adjusting for the
appropriate period's distributions, the remaining undistributed
earnings or excess distributions over earnings, if any, are
allocated to common unitholders and participating securities in
accordance with the contractual terms of our partnership agreement
in effect for the period and as further prescribed under the
two-class method.
(2) The possible conversion of our Series A preferred units was excluded
from the calculation of diluted net income/(loss) per common unit
for the nine months ended September 30, 2018 and the three and nine
months ended September 30, 2017 as the effect was antidilutive.
(3) Our Long-term Incentive Plan ("LTIP") awards that contemplate the
issuance of common units and certain AAP Management Units that
contemplate the issuance of common units to AAP when such AAP
Management Units become earned are considered dilutive unless (i)
they become vested or earned only upon the satisfaction of a
performance condition and (ii) that performance condition has yet to
be satisfied. LTIP awards and AAP Management Units that are deemed
to be dilutive are reduced by a hypothetical common unit repurchase
based on the remaining unamortized fair value, as prescribed by the
treasury stock method in guidance issued by the FASB. Such LTIP
awards were excluded from the calculation of diluted net loss per
common unit for the three months ended September 30, 2017 as the
effect was antidilutive.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

SELECTED ITEMS IMPACTING COMPARABILITY

(in millions)

 
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Selected Items Impacting Comparability: (1)
Gains/(losses) from derivative activities net of inventory valuation
adjustments (2)
$ 108 $ (214 ) $ (104 ) $ 86
Long-term inventory costing adjustments (3) 10 16 18 2
Deficiencies under minimum volume commitments, net (4) 4 (8 ) (9 ) (5 )
Equity-indexed compensation expense (5) (14 ) (7 ) (37 ) (18 )
Net gain/(loss) on foreign currency revaluation (6) 2 11 (2 ) 20
Line 901 incident (7) (12 )
Significant acquisition-related expenses (8)       (6 )
Selected items impacting comparability - Adjusted EBITDA $ 110 $ (202 ) $ (134 ) $ 67
Gains/(losses) from derivative activities (2) (8 ) 3 (10 )
Gain on sale of investment in unconsolidated entities 210 210
Tax effect on selected items impacting comparability 29   48   25   (1 )
Selected items impacting comparability - Adjusted net income
attributable to PAA
$ 349   $ (162 ) $ 104   $ 56  
 

____________________

(1)  

 

Certain of our non-GAAP financial measures may not be impacted by
each of the selected items impacting comparability.
(2) We use derivative instruments for risk management purposes and our
related processes include specific identification of hedging
instruments to an underlying hedged transaction. Although we
identify an underlying transaction for each derivative instrument we
enter into, there may not be an accounting hedge relationship
between the instrument and the underlying transaction. In the course
of evaluating our results of operations, we identify the earnings
that were recognized during the period related to derivative
instruments for which the identified underlying transaction does not
occur in the current period and exclude the related gains and losses
in determining adjusted results. In addition, we exclude gains and
losses on derivatives that are related to investing activities, such
as the purchase of linefill. We also exclude the impact of
corresponding inventory valuation adjustments, as applicable, as
well as the mark-to-market adjustment related to our Preferred
Distribution Rate Reset Option.
(3) We carry crude oil and NGL inventory comprised of minimum working
inventory requirements in third-party assets and other working
inventory that is 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). We treat the impact of changes in the average
cost of the long-term inventory (that result from fluctuations in
market prices) and writedowns of such inventory that result from
price declines as a selected item impacting comparability.
(4) We have certain agreements that require counterparties to deliver,
transport or throughput a minimum volume over an agreed upon period.
Substantially all of such agreements were entered into with
counterparties to economically support the return on our capital
expenditure necessary to construct the related asset. Some of these
agreements include make-up rights if the minimum volume is not met.
We record a receivable from the counterparty in the period that
services are provided or when the transaction occurs, including
amounts for deficiency obligations from counterparties associated
with minimum volume commitments. If a counterparty has a make-up
right associated with a deficiency, we defer the revenue
attributable to the counterparty's make-up right and subsequently
recognize the revenue at the earlier of when the deficiency volume
is delivered or shipped, when the make-up right expires or when it
is determined that the counterparty's ability to utilize the make-up
right is remote. We include the impact of amounts billed to
counterparties for their deficiency obligation, net of applicable
amounts subsequently recognized into revenue, as a selected item
impacting comparability. We believe the inclusion of the
contractually committed revenues associated with that period is
meaningful to investors as the related asset has been constructed,
is standing ready to provide the committed service and the fixed
operating costs are included in the current period results.
(5) Our total equity-indexed compensation expense includes expense
associated with awards that will or may be settled in units and
awards that will or may be settled in cash. The awards that will or
may be settled in units are included in our diluted net income per
unit calculation when the applicable performance criteria have been
met. We consider the compensation expense associated with these
awards as a selected item impacting comparability as the dilutive
impact of the outstanding awards is included in our diluted net
income per unit calculation and the majority of the awards are
expected to be settled in units. The portion of compensation expense
associated with awards that are certain to be settled in cash is not
considered a selected item impacting comparability.
(6) During the periods presented, there were fluctuations in the value
of the Canadian dollar to the U.S. dollar, resulting in gains and
losses that were not related to our core operating results for the
period and were thus classified as a selected item impacting
comparability.
(7) Includes costs recognized during the period related to the Line 901
incident that occurred in May 2015, net of amounts we believe are
probable of recovery from insurance.
(8) Includes acquisition-related expenses associated with the Alpha
Crude Connector acquisition.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

COMPUTATION OF BASIC AND DILUTED ADJUSTED
NET INCOME PER COMMON UNIT
(1)

(in millions, except per unit data)

 
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Basic Adjusted Net Income per Common Unit
Net income attributable to PAA $ 710 $ 33 $ 1,099 $ 665
Selected items impacting comparability - Adjusted net income
attributable to PAA (2)
(349 ) 162   (104 ) (56 )
Adjusted net income attributable to PAA $ 361 $ 195 $ 995 $ 609
Distributions to Series A preferred unitholders (37 ) (36 ) (112 ) (105 )
Distributions to Series B preferred unitholders (12 ) (37 )
Other (1 ) (5 ) (4 ) (13 )
Adjusted net income allocated to common unitholders $ 311   $ 154   $ 842   $ 491  
 
Basic weighted average common units outstanding 726 725 726 714
 
Basic adjusted net income per common unit $ 0.43   $ 0.21   $ 1.16   $ 0.69  
 
Diluted Adjusted Net Income per Common Unit
Net income attributable to PAA $ 710 $ 33 $ 1,099 $ 665
Selected items impacting comparability - Adjusted net income
attributable to PAA (2)
(349 ) 162   (104 ) (56 )
Adjusted net income attributable to PAA $ 361 $ 195 $ 995 $ 609
Distributions to Series A preferred unitholders (37 ) (36 ) (112 ) (105 )
Distributions to Series B preferred unitholders (12 ) (37 )
Other (1 ) (5 ) (3 ) (13 )
Adjusted net income allocated to common unitholders $ 311   $ 154   $ 843   $ 491  
 
Basic weighted average common units outstanding 726 725 726 714
Effect of dilutive securities:
Equity-indexed compensation plan awards (3) 2   1   2   1  
Diluted weighted average common units outstanding 728   726   728   715  
 
Diluted adjusted net income per common unit (4) $ 0.43   $ 0.21   $ 1.16   $ 0.69  
 

____________________

(1)     We calculate adjusted net income allocated to common unitholders
based on the distributions pertaining to the current period's net
income (whether paid in cash or in-kind). After adjusting for the
appropriate period's distributions, the remaining undistributed
earnings or excess distributions over earnings, if any, are
allocated to the common unitholders and participating securities in
accordance with the contractual terms of our partnership agreement
in effect for the period and as further prescribed under the
two-class method.
(2) Certain of our non-GAAP financial measures may not be impacted by
each of the selected items impacting comparability.
(3) Our LTIP awards that contemplate the issuance of common units and
certain AAP Management Units that contemplate the issuance of common
units to AAP when such AAP Management Units become earned are
considered dilutive unless (i) they become vested or earned only
upon the satisfaction of a performance condition and (ii) that
performance condition has yet to be satisfied. LTIP awards and AAP
Management Units that are deemed to be dilutive are reduced by a
hypothetical common unit repurchase based on the remaining
unamortized fair value, as prescribed by the treasury stock method
in guidance issued by the FASB.
(4) The possible conversion of our Series A preferred units was excluded
from the calculation of diluted adjusted net income per common unit
for the three and nine months ended September 30, 2018 and 2017 as
the effect was antidilutive.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

NON-GAAP RECONCILIATIONS

(in millions, except per unit and ratio data)

 
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Net Income to Adjusted EBITDA and Implied DCF Reconciliation
Net Income $ 710 $ 34 $ 1,099 $ 667
Interest expense, net 110 134 327 390
Income tax (benefit)/expense (10 ) (45 ) 35 30
Depreciation and amortization 131 151 306 401
Depreciation and amortization of unconsolidated entities (1) 15 13 44 31
Gain on sale of investment in unconsolidated entities (210 ) (210 )
Selected items impacting comparability - Adjusted EBITDA (2) (110 ) 202   134   (67 )
Adjusted EBITDA $ 636 $ 489 $ 1,735 $ 1,452
Interest expense, net (3) (106 ) (121 ) (318 ) (367 )
Maintenance capital (78 ) (63 ) (186 ) (194 )
Current income tax benefit/(expense) (14 ) 1 (34 ) (9 )
Adjusted equity earnings in unconsolidated entities, net of
distributions (4)
(5 ) (7 ) 9 11
Distributions to noncontrolling interests (5)   (1 )   (2 )
Implied DCF $ 433 $ 298 $ 1,206 $ 891
Preferred unit distributions (6) (37 )   (99 )  
Implied DCF Available to Common Unitholders $ 396   $ 298   $ 1,107   $ 891  
 
Weighted average common units outstanding 726 725 726 714
Weighted average common units and common equivalent units 797 793 797 780
 
Implied DCF per Common Unit (7) $ 0.55 $ 0.41 $ 1.52 $ 1.25
Implied DCF per Common Unit and Common Equivalent Unit (8) $ 0.54 $ 0.38 $ 1.48 $ 1.14
 
Cash Distribution Paid per Common Unit $ 0.30 $ 0.55 $ 0.90 $ 1.65
Common Unit Cash Distributions (5) $ 218 $ 399 $ 653 $ 1,168
Common Unit Distribution Coverage Ratio 1.82x 0.75x 1.70x 0.76x
 
Implied DCF Excess / (Shortage) $ 178 $ (101 ) $ 454 $ (277 )
 

____________________

(1)     Adjustment to add back our proportionate share of depreciation and
amortization expense and gains and losses on significant asset sales
of unconsolidated entities.
(2) Certain of our non-GAAP financial measures may not be impacted by
each of the selected items impacting comparability.
(3) Excludes certain non-cash items impacting interest expense such as
amortization of debt issuance costs and terminated interest rate
swaps.
(4) Represents the difference between non-cash equity earnings in
unconsolidated entities (adjusted for our proportionate share of
depreciation and amortization and gains and losses on significant
asset sales) and cash distributions received from such entities.
(5) Cash distributions paid during the period presented.
(6) Cash distributions paid to our preferred unitholders during the
period presented. The current $0.5250 quarterly ($2.10 annualized)
per unit distribution requirement of our Series A preferred units
was paid-in-kind for each quarterly distribution from their issuance
through February 2018. Distributions on our Series A preferred units
were paid in cash beginning with the May 2018 quarterly
distribution. The current $61.25 per unit annual distribution
requirement of our Series B preferred units, which were issued in
October 2017, is payable semi-annually in arrears on May 15 and
November 15.
(7) Implied DCF Available to Common Unitholders for the period divided
by the weighted average common units outstanding for the period.
(8) Implied DCF Available to Common Unitholders for the period, adjusted
for Series A preferred unit cash distributions paid (if any),
divided by the weighted average common units and common equivalent
units outstanding for the periods. Our Series A preferred units are
convertible into common units, generally on a one-for-one basis and
subject to customary anti-dilution adjustments, at any time after
January 28, 2018, in whole or in part, subject to certain minimum
conversion amounts.
 
   

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

       
 

NON-GAAP RECONCILIATIONS (continued)

(in millions, except per unit and ratio data)

 
 
Twelve Months Ended
December 31,
2017     2016
Net Income to Adjusted EBITDA and Implied DCF Reconciliation
Net Income $ 858 $ 730
Interest expense, net 510 467
Income tax expense 44 25
Depreciation and amortization 626 494
Depreciation and amortization of unconsolidated entities (1) 45 50
Selected items impacting comparability - Adjusted EBITDA (1 ) 403  
Adjusted EBITDA $ 2,082   $ 2,169  
Interest expense, net (2) (483 ) (451 )
Maintenance capital (247 ) (186 )
Current income tax expense (28 ) (85 )
Adjusted equity earnings in unconsolidated entities, net of
distributions (3)
(10 ) (29 )
Distributions to noncontrolling interests (2 ) (4 )
Implied DCF $ 1,312 $ 1,414
Preferred unit distributions (4) (5 )
General partner cash distributions (5)   (565 )
Implied DCF Available to Common Unitholders $ 1,307   $ 849  
 
Implied DCF per Common Unit (6) $ 1.82 $ 1.83
Implied DCF per Common Unit and Common Equivalent Unit (7) $ 1.67 $ 1.63
 
Cash Distribution Paid per Common Unit $ 1.95 $ 2.65
Common Unit Cash Distributions (8) $ 1,386 $ 1,627
Common Unit Distribution Coverage Ratio 0.94x 0.87x
 
Implied DCF Excess / (Shortage) $ (79 ) $ (213 )
 

____________________

(1)    

Adjustment to add back our proportionate share of depreciation and
amortization expense and gains and losses on significant asset
sales of unconsolidated entities.

(2) Excludes certain non-cash items impacting interest expense such as
amortization of debt issuance costs and terminated interest rate
swaps.
(3) Represents the difference between non-cash equity earnings in
unconsolidated entities (adjusted for our proportionate share of
depreciation and amortization and gains and losses on significant
asset sales) and cash distributions received from such entities.
(4) Cash distributions paid to our preferred unitholders during the
period presented. The $0.5250 quarterly ($2.10 annualized) per unit
distribution requirement of our Series A preferred units was
paid-in-kind for all 2016 and 2017 quarterly distributions as such,
no Series A preferred unit distributions were included for any
periods presented. Distributions on our Series A preferred units
must be paid in cash beginning with the May 2018 quarterly
distribution. The $61.25 per unit annual distribution requirement of
our Series B preferred units, which were issued in October 2017, is
payable semi-annually in arrears on May 15 and November 15. A
pro-rated initial distribution on the Series B preferred units was
paid on November 15, 2017.
(5) The Simplification Transactions, which closed on November 15, 2016,
simplified our governance structure and permanently eliminated our
incentive distribution rights (IDRs) and the economic rights
associated with our 2% general partner interest.
(6) Implied DCF Available to Common Unitholders for the period divided
by the weighted average common units outstanding for the periods of
717 million and 464 million, respectively.
(7) Implied DCF Available to Common Unitholders for the period, adjusted
for Series A preferred unit cash distributions paid (if any),
divided by the weighted average common units and common equivalent
units outstanding for the periods of 784 million and 522 million,
respectively. Our Series A preferred units are convertible into
common units, generally on a one-for-one basis and subject to
customary anti-dilution adjustments, at any time after January 28,
2018, in whole or in part, subject to certain minimum conversion
amounts.
(8) Cash distributions paid during the period presented. For the twelve
months ended December 31, 2016, includes $565 million of cash
distributions paid to the general partner during the period.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

NON-GAAP RECONCILIATIONS (continued)

 

Net Income/(Loss) Per Common Unit to Adjusted Net Income Per
Common Unit Reconciliation:

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Basic net income/(loss) per common unit $ 0.91 $ (0.01 ) $ 1.30 $ 0.77
Selected items impacting comparability per common unit (1) (0.48 ) 0.22   (0.14 ) (0.08 )
Basic adjusted net income per common unit $ 0.43   $ 0.21   $ 1.16   $ 0.69  
 
Diluted net income/(loss) per common unit $ 0.87 $ (0.01 ) $ 1.30 $ 0.76
Selected items impacting comparability per common unit (1) (0.44 ) 0.22   (0.14 ) (0.07 )
Diluted adjusted net income per common unit $ 0.43   $ 0.21   $ 1.16   $ 0.69  
 

____________________

(1)     See the "Selected Items Impacting Comparability" and the
"Computation of Basic and Diluted Adjusted Net Income Per Common
Unit" tables for additional information.
 
     

Net Income/(Loss) Per Common Unit to Implied DCF Per Common
Unit and Common Equivalent Unit Reconciliations:

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018   2017 2018   2017
Basic net income/(loss) per common unit $ 0.91 $ (0.01 ) $ 1.30 $ 0.77
Reconciling items per common unit (1) (2) (0.36 ) 0.42   0.22   0.48
Implied DCF per common unit $ 0.55   $ 0.41   $ 1.52   $ 1.25
 
Basic net income/(loss) per common unit $ 0.91 $ (0.01 ) $ 1.30 $ 0.77
Reconciling items per common unit and common equivalent unit (1)
(3)
(0.37 ) 0.39   0.18   0.37
Implied DCF per common unit and common equivalent unit $ 0.54   $ 0.38   $ 1.48   $ 1.14
 
Twelve Months Ended
December 31,
2017 2016
Basic net income per common unit $ 0.96 $ 0.43
Reconciling items per common unit (1) (4) 0.86   1.40
Implied DCF per common unit $ 1.82   $ 1.83
 
Basic net income per common unit $ 0.96 $ 0.43
Reconciling items per common unit and common equivalent unit (1)
(5)
0.71   1.20
Implied DCF per common unit and common equivalent unit $ 1.67   $ 1.63
 

____________________

(1)     Represents adjustments to Net Income to calculate Implied DCF
Available to Common Unitholders. See the "Net Income to Adjusted
EBITDA and Implied DCF Reconciliation" table for additional
information.
(2) Based on weighted average common units outstanding for the period of
726 million, 725 million, 726 million and 714 million, respectively.
(3) Based on weighted average common units outstanding for the period,
as well as weighted average Series A preferred units outstanding for
the period of approximately 71 million, 68 million, 71 million and
66 million, respectively.
(4) Based on weighted average common units outstanding for the period of
717 million and 464 million, respectively.
(5) Based on weighted average common units outstanding for the period,
as well as weighted average Series A preferred units outstanding for
the period of 67 million and 58 million, respectively.
 
           

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

                 
 

SELECTED FINANCIAL DATA BY SEGMENT

(in millions)

 
 
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation     Facilities    

Supply and
Logistics

Revenues (1) $ 498 $ 289 $ 8,483 $ 446 $ 291 $ 5,574
Purchases and related costs (1) (49 ) (3 ) (8,191 ) (29 ) (3 ) (5,729 )
Field operating costs (1) (2) (164 ) (95 ) (70 ) (136 ) (89 ) (62 )
Segment general and administrative expenses (2) (3) (28 ) (18 ) (28 ) (25 ) (18 ) (25 )
Equity earnings in unconsolidated entities 110 80
 
Adjustments: (4)
Depreciation and amortization of unconsolidated entities 15 13
(Gains)/losses from derivative activities net of inventory valuation
adjustments
(110 ) 2 214
Long-term inventory costing adjustments (10 ) (16 )
Deficiencies under minimum volume commitments, net (1 ) (3 ) 11 (3 )
Equity-indexed compensation expense 7 3 4 3 2 2
Net gain on foreign currency revaluation     (3 )     (14 )
Segment Adjusted EBITDA $ 388   $ 173   $ 75   $ 363   $ 182   $ (56 )
 
Maintenance capital $ 41   $ 33   $ 4   $ 32   $ 28   $ 3  
 

____________________

(1)   Includes intersegment amounts.
(2) Field operating costs and Segment general and administrative
expenses include equity-indexed compensation expense.
(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) Represents adjustments utilized by our Chief Operating Decision
Maker ("CODM") in the evaluation of segment results. Many of these
adjustments are also considered selected items impacting
comparability when calculating consolidated non-GAAP financial
measures such as Adjusted EBITDA. See the "Selected Items Impacting
Comparability" table for additional discussion.
 
           

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

                 
 

 

SELECTED FINANCIAL DATA BY SEGMENT

(in millions)

 
 
Nine Months Ended
September 30, 2018
Nine Months Ended
September 30, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation

    Facilities    

Supply and
Logistics

Revenues (1) $ 1,427 $ 866 $ 24,376 $ 1,260 $ 873 $ 17,757
Purchases and related costs (1) (141 ) (12 ) (24,076 ) (74 ) (19 ) (17,407 )
Field operating costs (1) (2) (469 ) (271 ) (200 ) (436 ) (258 ) (193 )
Segment general and administrative expenses (2) (3) (86 ) (59 ) (87 ) (78 ) (55 ) (77 )
Equity earnings in unconsolidated entities 281 201
 
Adjustments: (4)
Depreciation and amortization of unconsolidated entities 44 31
(Gains)/losses from derivative activities net of inventory valuation
adjustments
(1 ) (2 ) 110 3 (89 )
Long-term inventory costing adjustments (18 ) (2 )
Deficiencies under minimum volume commitments, net 8 1 2 3
Equity-indexed compensation expense 20 7 10 9 3 6
Net (gain)/loss on foreign currency revaluation 5 (27 )
Line 901 incident 12
Significant acquisition-related expenses       6      
Segment Adjusted EBITDA $ 1,083   $ 530   $ 120   $ 933   $ 550   $ (32 )
 
Maintenance capital $ 102   $ 74   $ 10   $ 89   $ 94   $ 11  
 

____________________

(1)     Includes intersegment amounts.
(2) Field operating costs and Segment general and administrative
expenses include equity-indexed compensation expense.
(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) Represents adjustments utilized by our CODM in the evaluation of
segment results. Many of these adjustments are also considered
selected items impacting comparability when calculating consolidated
non-GAAP financial measures such as Adjusted EBITDA. See the
"Selected Items Impacting Comparability" table for additional
discussion.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

OPERATING DATA BY SEGMENT (1)

 
 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Transportation segment (average daily volumes in thousands of
barrels per day):
Tariff activities volumes
Crude oil pipelines (by region):
Permian Basin (2) 3,880 2,963 3,621 2,732
South Texas / Eagle Ford (2) 451 362 436 341
Central (2) 480 424 456 419
Gulf Coast 171 359 182 362
Rocky Mountain (2) 258 426 261 418
Western 184 190 180 186
Canada 322   351   312   359
Crude oil pipelines 5,746 5,075 5,448 4,817
NGL pipelines 174   172   173   169
Tariff activities total volumes 5,920 5,247 5,621 4,986
Trucking volumes 95   94   95   102
Transportation segment total volumes 6,015   5,341   5,716   5,088
 
Facilities segment (average monthly volumes):
Liquids storage (average monthly capacity in millions of barrels) 109   112   109   112
Natural gas storage (average monthly working capacity in billions of
cubic feet)
65   67   66   87
NGL fractionation (average volumes in thousands of barrels per day) 115   131   128   125
Facilities segment total volumes (average monthly volumes in
millions of barrels) (3)
123   127   124   130
 
Supply and Logistics segment (average daily volumes in thousands
of barrels per day):
Crude oil lease gathering purchases 1,042 929 1,034 929
NGL sales 195   202   243   254
Supply and Logistics segment total volumes 1,237   1,131   1,277   1,183
 

____________________

(1)     Average volumes are calculated as the total volumes (attributable to
our interest) for the period divided by the number of days or months
in the period.
(2) Region includes volumes (attributable to our interest) from
pipelines owned by unconsolidated entities.
(3) Facilities segment total volumes is calculated as the sum of: (i)
liquids storage capacity; (ii) 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 (iii) 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)

             
 

NON-GAAP SEGMENT RECONCILIATIONS

(in millions)

 

Fee-based Segment Adjusted EBITDA to Adjusted EBITDA
Reconciliation:

 
Three Months Ended
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Transportation Segment Adjusted EBITDA $ 388 $ 363 $ 1,083 $ 933
Facilities Segment Adjusted EBITDA 173   182   530   550  
Fee-based Segment Adjusted EBITDA $ 561 $ 545 $ 1,613 $ 1,483
Supply and Logistics Segment Adjusted EBITDA 75 (56 ) 120 (32 )
Adjusted other income/(expense), net (1)     2   1  
Adjusted EBITDA (2) $ 636   $ 489   $ 1,735   $ 1,452  
 

____________________

(1)     Represents "Other income/(expense), net" as reported on our
Condensed Consolidated Statements of Operations, adjusted for
selected items impacting comparability of $3 million, $1 million,
$(6) million and $7 million for the three and nine months ended
September 30, 2018 and 2017, respectively. See the "Selected Items
Impacting Comparability" table for additional information.
(2) See the "Net Income to Adjusted EBITDA and Implied DCF
Reconciliation" table for reconciliation to Net Income.
 
           

Reconciliation of Segment Adjusted EBITDA to Segment Adjusted
EBITDA further adjusted for impact of divested assets:

 
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation     Facilities    

Supply and
Logistics

Segment Adjusted EBITDA $ 388 $ 173 $ 75 $ 363 $ 182 $ (56 )
Impact of divested assets (1)       (17 ) (8 )  
Segment Adjusted EBITDA further adjusted for impact of divested
assets
$ 388   $ 173   $ 75   $ 346   $ 174   $ (56 )
 
Nine Months Ended
September 30, 2018
Nine Months Ended
September 30, 2017
Transportation Facilities

Supply and
Logistics

Transportation Facilities

Supply and
Logistics

Segment Adjusted EBITDA $ 1,083 $ 530 $ 120 $ 933 $ 550 $ (32 )
Impact of divested assets (1) (6 ) (2 )   (43 ) (37 )  
Segment Adjusted EBITDA further adjusted for impact of divested
assets
$ 1,077   $ 528   $ 120   $ 890   $ 513   $ (32 )
 

____________________

(1)     Estimated impact of divestitures completed during 2017 and the first
nine months of 2018, assuming an effective date of 1/1/17. Divested
assets include certain pipelines in the Rocky Mountain and Central
regions that were previously reported in our Transportation segment,
and certain Bay Area, California terminal assets, a natural gas
storage facility and a natural gas processing facility that were
previously reported in our Facilities segment.
 
           

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

                 
 

CONDENSED CONSOLIDATING STATEMENTS OF
OPERATIONS

(in millions, except per share data)

 
 
Three Months Ended
September 30, 2018
Three Months Ended
September 30, 2017
    Consolidating         Consolidating    
PAA Adjustments (1) PAGP PAA Adjustments (1) PAGP
REVENUES $ 8,792 $ $ 8,792 $ 5,873 $ $ 5,873
 
COSTS AND EXPENSES
Purchases and related costs 7,768 7,768 5,327 5,327
Field operating costs 326 326 283 283
General and administrative expenses 74 1 75 68 68
Depreciation and amortization 131     131   151   1   152  
Total costs and expenses 8,299 1 8,300 5,829 1 5,830
 
OPERATING INCOME 493 (1 ) 492 44 (1 ) 43
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 110 110 80 80
Gain on sale of investment in unconsolidated entities 210 210
Interest expense, net (110 ) (110 ) (134 ) (134 )
Other expense, net (3 )   (3 ) (1 )   (1 )
 
INCOME/(LOSS) BEFORE TAX 700 (1 ) 699 (11 ) (1 ) (12 )
Current income tax (expense)/benefit (14 ) (14 ) 1 1
Deferred income tax (expense)/benefit 24   (33 ) (9 ) 44   (2 ) 42  
 
NET INCOME 710 (34 ) 676 34 (3 ) 31
Net income attributable to noncontrolling interests   (565 ) (565 ) (1 ) (26 ) (27 )
NET INCOME ATTRIBUTABLE TO PAGP $ 710   $ (599 ) $ 111   $ 33   $ (29 ) $ 4  
 
BASIC AND DILUTED NET INCOME PER CLASS A SHARE $ 0.70   $ 0.03  
 
BASIC AND DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 158   154  
 

____________________

(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)

 
 
Nine Months Ended
September 30, 2018
Nine Months Ended
September 30, 2017
    Consolidating         Consolidating    
PAA Adjustments (1) PAGP PAA Adjustments (1) PAGP
REVENUES $ 25,269 $ $ 25,269 $ 18,618 $ $ 18,618
 
COSTS AND EXPENSES
Purchases and related costs 22,838 22,838 16,239 16,239
Field operating costs 931 931 876 876
General and administrative expenses 232 3 235 210 3 213
Depreciation and amortization 306   1   307   401   2   403  
Total costs and expenses 24,307 4 24,311 17,726 5 17,731
 
OPERATING INCOME 962 (4 ) 958 892 (5 ) 887
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 281 281 201 201
Gain on sale of investment in unconsolidated entities 210 210
Interest expense, net (327 ) (327 ) (390 ) (390 )
Other income/(expense), net 8     8   (6 )   (6 )
 
INCOME BEFORE TAX 1,134 (4 ) 1,130 697 (5 ) 692
Current income tax expense (34 ) (34 ) (9 ) (9 )
Deferred income tax expense (1 ) (49 ) (50 ) (21 ) (55 ) (76 )
 
NET INCOME 1,099 (53 ) 1,046 667 (60 ) 607
Net income attributable to noncontrolling interests   (892 ) (892 ) (2 ) (536 ) (538 )
NET INCOME ATTRIBUTABLE TO PAGP $ 1,099   $ (945 ) $ 154   $ 665   $ (596 ) $ 69  
 
BASIC AND DILUTED NET INCOME PER CLASS A SHARE $ 0.98   $ 0.49  
 
BASIC AND DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 157   142  
 

____________________

(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)

 
 
September 30, 2018 December 31, 2017
  Consolidating     Consolidating  
PAA Adjustments (1) PAGP PAA Adjustments (1) PAGP
ASSETS
Current assets $ 4,127 $ 4 $ 4,131 $ 4,000 $ 3 $ 4,003
Property and equipment, net 14,677 15 14,692 14,089 16 14,105
Goodwill 2,540 2,540 2,566 2,566
Investments in unconsolidated entities 2,539 2,539 2,756 2,756
Deferred tax asset 1,347 1,347 1,386 1,386
Linefill and base gas 914 914 872 872
Long-term inventory 179 179 164 164
Other long-term assets, net 951   (3 ) 948   904   (3 ) 901
Total assets $ 25,927   $ 1,363   $ 27,290   $ 25,351   $ 1,402   $ 26,753
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 4,656 $ 2 $ 4,658 $ 4,531 $ 2 $ 4,533
Senior notes, net 8,939 8,939 8,933 8,933
Other long-term debt, net 201 201 250 250
Other long-term liabilities and deferred credits 781     781   679     679
Total liabilities $ 14,577 $ 2 $ 14,579 $ 14,393 $ 2 $ 14,395
 
Partners' capital excluding noncontrolling interests 11,350 (9,603 ) 1,747 10,958 (9,263 ) 1,695
Noncontrolling interests   10,964   10,964     10,663   10,663
Total partners' capital 11,350   1,361   12,711   10,958   1,400   12,358
Total liabilities and partners' capital $ 25,927   $ 1,363   $ 27,290   $ 25,351   $ 1,402   $ 26,753
 

____________________

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

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
September 30,
Nine Months Ended
September 30,
2018     2017 2018     2017
Basic and Diluted Net Income per Class A Share (1)
Net income attributable to PAGP $ 111 $ 4 $ 154 $ 69
Basic and diluted weighted average Class A shares outstanding 158 154 157 142
 
Basic and diluted net income per Class A share $ 0.70   $ 0.03   $ 0.98   $ 0.49
 

____________________

(1)     For the three and nine months ended September 30, 2018 and 2017, the
possible exchange of any AAP units and certain AAP Management Units
would not have had a dilutive effect on basic net income per Class A
share.
 

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