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

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

Fourth-Quarter and Full-Year 2018 Highlights

  • Delivered 4Q and full-year 2018 financial and operating results ahead
    of expectations
  • Executed Permian-focused capital program, including early completion
    of Sunrise Expansion
  • Actively developed additional growth capital projects
  • Significantly advanced deleveraging plan and enhanced financial
    flexibility

"Our fourth-quarter and full-year 2018 results exceeded our guidance and
reflect solid execution of our business plan," stated Willie Chiang,
Chief Executive Officer of Plains All American Pipeline. "Looking
forward, we believe we are well positioned with a strategic asset base
and business model and improved financial flexibility."

               

Plains All American Pipeline, L.P.

 

Summary Financial Information
(unaudited)

(in millions, except per unit data)

 
Three Months Ended
December 31,
% Twelve Months Ended
December 31,
%
GAAP Results 2018     2017 Change 2018     2017 Change
Net income attributable to PAA $ 1,117 $ 191 485 % $ 2,216 $ 856 159 %
Diluted net income per common unit $ 1.38 $ 0.19 626 % $ 2.71 $ 0.95 185 %
Diluted weighted average common units outstanding 799   726   10 % 799   718   11 %
Distribution per common unit declared for the period $ 0.30   $ 0.30   % $ 1.20   $ 1.70   (29 )%
 
Three Months Ended
December 31,
% Twelve Months Ended
December 31,
%
Non-GAAP Results (1) 2018 2017 Change 2018 2017 Change
Adjusted net income attributable to PAA (2) $ 653 $ 335 95 % $ 1,570 $ 958 64 %
Diluted adjusted net income per common unit (2) $ 0.80 $ 0.39 105 % $ 1.88 $ 1.10 71 %
Adjusted EBITDA $ 949 $ 631 50 % $ 2,684 $ 2,082 29 %
Implied DCF per common unit $ 0.94 $ 0.58 62 % $ 2.46 $ 1.82 35 %
 

____________________

(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.

(2)

During the fourth quarter of 2018, we began classifying net
gains and losses on asset sales and asset impairments as a
selected item impacting comparability in the calculation of
adjusted net income attributable to PAA. Prior period amounts have
been recast to reflect this change. See the "Selected Items
Impacting Comparability" table attached hereto for additional
information.

 

Segment Adjusted EBITDA for the fourth quarter and full year 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 December 31, 2018 $ 425   $ 181   $ 342  
Three Months Ended December 31, 2017 $ 354   $ 184   $ 92  
Percentage change in Segment Adjusted EBITDA versus 2017 period 20 % (2 )% 272 %
Percentage change in Segment Adjusted EBITDA versus 2017
period further adjusted for impact of divested assets
32 % 2 % N/A
 
Segment Adjusted EBITDA
Transportation Facilities

Supply and
Logistics

Twelve Months Ended December 31, 2018 $ 1,508   $ 711   $ 462  
Twelve Months Ended December 31, 2017 $ 1,287   $ 734   $ 60  
Percentage change in Segment Adjusted EBITDA versus 2017 period 17 % (3 )% 670 %
Percentage change in Segment Adjusted EBITDA versus 2017
period further adjusted for impact of divested assets
23 % 3 % N/A
 

Fourth-quarter 2018 Transportation Segment Adjusted EBITDA increased by
20% over comparable 2017 results. This increase was primarily driven by
increased volume on our Permian Basin systems, including the start-up of
our Sunrise II pipeline in the fourth quarter of 2018. Fourth-quarter
2018 results also benefited from a full period of Diamond pipeline
volumes, which was placed into service in late 2017. These favorable
results were partially offset by the impact of the sale of an interest
in our BridgeTex pipeline and asset sales in the Rocky Mountain region.

Fourth-quarter 2018 Facilities Segment Adjusted EBITDA decreased by 2%
versus comparable 2017 results, primarily due to the impact of asset
sales and lower revenues from our NGL fractionation facilities. This was
partially offset by higher revenues from increased activity at certain
of our crude oil rail terminals, as well as at our Cushing terminal.

Fourth-quarter 2018 Supply and Logistics Segment Adjusted EBITDA
increased versus comparable 2017 results primarily due to capturing more
favorable crude oil differentials in the U.S. and Canada.

2019 Full-Year Guidance

The table below presents our full-year 2019 financial and operating
guidance:

   

Financial and Operating Guidance
(unaudited)

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

 
Twelve Months Ended December 31,
2017     2018     2019 (G)
+ / -
Segment Adjusted EBITDA
Transportation $ 1,287 $ 1,508 $ 1,735
Facilities 734   711   665  
Fee-Based $ 2,021 $ 2,219 $ 2,400
Supply and Logistics 60 462 350
Adjusted other income/(expense), net 1   3    
Adjusted EBITDA (1) $ 2,082   $ 2,684   $ 2,750  
Interest expense, net (2) (483 ) (419 ) (400 )
Maintenance capital (247 ) (252 ) (230 )
Current income tax expense (28 ) (66 ) (40 )
Other (12 )   1   (5 )  
Implied DCF (1) $ 1,312 $ 1,948 $ 2,075
Preferred unit distributions paid (3) (5 )   (161 )   (200 )  
Implied DCF Available to Common Unitholders $ 1,307   $ 1,787   $ 1,875  
 
Implied DCF per Common Unit (1) $ 1.82 $ 2.46 $ 2.58
Implied DCF per Common Unit and Common Equivalent Unit (1) $ 1.67 $ 2.38 $ 2.54
 
Diluted Adjusted Net Income per Common Unit (1) $ 1.10 $ 1.88 $ 2.03
 
Operating Data
Transportation
Average daily volumes (MBbls/d) 5,186 5,889 7,000
Segment Adjusted EBITDA per barrel $ 0.68 $ 0.70 $ 0.68
 
Facilities
Average capacity (MMBbls/Mo) 130 124 125
Segment Adjusted EBITDA per barrel $ 0.47 $ 0.48 $ 0.44
 
Supply and Logistics
Average daily volumes (MBbls/d) 1,219 1,309 1,385
Segment Adjusted EBITDA per barrel $ 0.13 $ 0.97 $ 0.69
 
Expansion Capital $ 1,135 $ 1,888 $ 1,100
 
First-Quarter Adjusted EBITDA as Percentage of Full Year 25 % 22 % 27 %
 

____________________

(G)     2019 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 2017
and 2018 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 2017 quarterly
distributions and for the February 2018 quarterly distribution.
Distributions on our Series A preferred units were 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.
 

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:

           
Q4 2018 Q3 2018 Q4 2017
Distribution per Class A share declared for the period $ 0.30 $ 0.30   $ 0.30  
Q4 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, February 5, 2019 to discuss the following items:

  1. PAA's fourth-quarter and full-year 2018 performance;
  2. Financial and operating guidance for the full year of 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=1226801&tp_key=b7b2e5a458

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), gains and
losses on asset sales and asset impairments, 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 Annual Report on Form 10-K.

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
December 31,

Twelve Months Ended
December 31,

2018     2017 2018     2017
REVENUES $ 8,786 $ 7,605 $ 34,055 $ 26,223
 
COSTS AND EXPENSES
Purchases and related costs 6,955 6,746 29,793 22,985
Field operating costs 332 307 1,263 1,183
General and administrative expenses 84 66 316 276
Depreciation and amortization (1) 136 131 520 517
(Gains)/losses on asset sales and asset impairments, net (1) (36 ) 94   (114 ) 109  
Total costs and expenses 7,471 7,344 31,778 25,070
 
OPERATING INCOME 1,315 261 2,277 1,153
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 93 90 375 290
Gain/(loss) on sale of investment in unconsolidated entities (10 ) 200
Interest expense, net (104 ) (120 ) (431 ) (510 )
Other expense, net (14 ) (26 ) (7 ) (31 )
 
INCOME BEFORE TAX 1,280 205 2,414 902
Current income tax expense (32 ) (19 ) (66 ) (28 )
Deferred income tax (expense)/benefit (131 ) 5   (132 ) (16 )
 
NET INCOME 1,117 191 2,216 858
Net income attributable to noncontrolling interests       (2 )
NET INCOME ATTRIBUTABLE TO PAA $ 1,117   $ 191   $ 2,216   $ 856  
 
NET INCOME PER COMMON UNIT:
Net income allocated to common unitholders — Basic $ 1,063 $ 138 $ 2,009 $ 685
Basic weighted average common units outstanding 726 725 726 717
Basic net income per common unit $ 1.46   $ 0.19   $ 2.77   $ 0.96  
 
Net income allocated to common unitholders — Diluted $ 1,104 $ 138 $ 2,164 $ 685
Diluted weighted average common units outstanding 799 726 799 718
Diluted net income per common unit $ 1.38   $ 0.19   $ 2.71   $ 0.95  
 

____________________

(1)     Effective for the fourth quarter of 2018, we reclassified
amounts related to gains and losses on asset sales and asset
impairments from "Depreciation and amortization" to "(Gains)/losses
on asset sales and asset impairments, net" on our Condensed
Consolidated Statements of Operations.
 
       

NON-GAAP ADJUSTED RESULTS

(in millions, except per unit data)

 

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2018     2017 2018     2017
Adjusted net income attributable to PAA $ 653   $ 335   $ 1,570   $ 958
 
Diluted adjusted net income per common unit $ 0.80   $ 0.39   $ 1.88   $ 1.10
 
Adjusted EBITDA $ 949   $ 631   $ 2,684   $ 2,082
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

CONDENSED CONSOLIDATED BALANCE SHEET DATA

(in millions)

 

December 31,
2018

December 31,
2017

ASSETS
Current assets $ 3,533 $ 4,000
Property and equipment, net 14,787 14,089
Goodwill 2,521 2,566
Investments in unconsolidated entities 2,702 2,756
Linefill and base gas 916 872
Long-term inventory 136 164
Other long-term assets, net 916   904
Total assets $ 25,511   $ 25,351
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 3,456 $ 4,531
Senior notes, net 8,941 8,933
Other long-term debt, net 202 250
Other long-term liabilities and deferred credits 910   679
Total liabilities 13,509 14,393
 
Partners' capital 12,002   10,958
Total liabilities and partners' capital $ 25,511   $ 25,351
 
       

DEBT CAPITALIZATION RATIOS

(in millions)

 
December 31, 2018 December 31, 2017
Short-term debt (1) $ 66 $ 737
Long-term debt 9,143   9,183  
Total debt $ 9,209   $ 9,920  
 
Long-term debt $ 9,143 $ 9,183
Partners' capital 12,002   10,958  
Total book capitalization $ 21,145   $ 20,141  
Total book capitalization, including short-term debt $ 21,211   $ 20,878  
 
Long-term debt-to-total book capitalization 43 % 46 %
Total debt-to-total book capitalization, including short-term debt 43 % 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 PER COMMON UNIT
(1)

(in millions, except per unit data)

 
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Basic Net Income per Common Unit
Net income attributable to PAA $ 1,117 $ 191 $ 2,216 $ 856
Distributions to Series A preferred unitholders (37 ) (37 ) (149 ) (142 )
Distributions to Series B preferred unitholders (12 ) (11 ) (49 ) (11 )
Other (5 ) (5 ) (9 ) (18 )
Net income allocated to common unitholders $ 1,063   $ 138   $ 2,009   $ 685  
 
Basic weighted average common units outstanding 726 725 726 717
 
Basic net income per common unit $ 1.46   $ 0.19   $ 2.77   $ 0.96  
 
Diluted Net Income per Common Unit
Net income attributable to PAA $ 1,117 $ 191 $ 2,216 $ 856
Distributions to Series A preferred unitholders (37 ) (142 )
Distributions to Series B preferred unitholders (12 ) (11 ) (49 ) (11 )
Other (1 ) (5 ) (3 ) (18 )
Net income allocated to common unitholders $ 1,104   $ 138   $ 2,164   $ 685  
 
Basic weighted average common units outstanding 726 725 726 717
Effect of dilutive securities:
Series A preferred units (2) 71 71
Equity-indexed compensation plan awards (3) 2   1   2   1  
Diluted weighted average common units outstanding 799   726   799   718  
 
Diluted net income per common unit $ 1.38   $ 0.19   $ 2.71   $ 0.95  
 

____________________

(1)     We calculate 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 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 per common unit
for the three and twelve months ended December 31, 2017 as the
effect was antidilutive.
(3) Our equity-indexed compensation plan awards that contemplate
the issuance of common units 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. Equity-indexed compensation plan awards 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.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

SELECTED ITEMS IMPACTING COMPARABILITY

(in millions)

 
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Selected Items Impacting Comparability: (1)
Gains/(losses) from derivative activities net of inventory valuation
adjustments (2)
$ 610 $ (28 ) $ 505 $ 59
Long-term inventory costing adjustments (3) (38 ) 22 (21 ) 24
Deficiencies under minimum volume commitments, net (4) 2 3 (7 ) (2 )
Equity-indexed compensation expense (5) (19 ) (5 ) (55 ) (23 )
Net gain on foreign currency revaluation (6) 3 1 21
Line 901 incident (7) (20 ) (32 )
Significant acquisition-related expenses (8) (6 )
Net loss on early repayment of senior notes (9)   (40 )   (40 )
Selected items impacting comparability - Adjusted EBITDA $ 558 $ (68 ) $ 423 $ 1
Gains/(losses) from derivative activities (2) 4 (10 )
Gain/(loss) on sale of investment in unconsolidated entities (10 ) 200
Gains/(losses) on asset sales and asset impairments, net (10) 36 (94 ) 114 (109 )
Tax effect on selected items impacting comparability (120 ) 18   (95 ) 16  
Selected items impacting comparability - Adjusted net income
attributable to PAA
$ 464   $ (144 ) $ 646   $ (102 )
 

____________________

(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.
(9) Includes net losses incurred in connection with the early
redemption of our (i) $600 million, 6.50% senior notes due May 2018
and (ii) $350 million, 8.75% senior notes due May 2019.
(10) During the fourth quarter of 2018, we began classifying net
gains and losses on asset sales and asset impairments as a selected
item impacting comparability in the calculation of adjusted net
income. Prior period amounts have been recast to reflect this change.
 
       

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
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Basic Adjusted Net Income per Common Unit
Net income attributable to PAA $ 1,117 $ 191 $ 2,216 $ 856
Selected items impacting comparability - Adjusted net income
attributable to PAA (2)
(464 )

 

144  

 

 

(646 )

 

102  
Adjusted net income attributable to PAA $ 653 $ 335 $ 1,570 $ 958
Distributions to Series A preferred unitholders (37 ) (37 ) (149 ) (142 )
Distributions to Series B preferred unitholders (12 ) (11 ) (49 ) (11 )
Other (3 ) (5 ) (6 ) (17 )
Adjusted net income allocated to common unitholders $ 601   $ 282   $ 1,366   $ 788  
 
Basic weighted average common units outstanding 726 725 726 717
 
Basic adjusted net income per common unit $ 0.83   $ 0.39   $ 1.88   $ 1.10  
 
Diluted Adjusted Net Income per Common Unit
Net income attributable to PAA $ 1,117 $ 191 $ 2,216 $ 856
Selected items impacting comparability - Adjusted net income
attributable to PAA (2)
(464 )

 

144  

 

(646 )

 

102  
Adjusted net income attributable to PAA $ 653 $ 335 $ 1,570 $ 958
Distributions to Series A preferred unitholders (37 ) (149 ) (142 )
Distributions to Series B preferred unitholders (12 ) (11 ) (49 ) (11 )
Other (1 ) (5 ) (4 ) (17 )
Adjusted net income allocated to common unitholders $ 640   $ 282   $ 1,368   $ 788  
 
Basic weighted average common units outstanding 726 725 726 717
Effect of dilutive securities:
Series A preferred units (3) 71

Equity-indexed compensation plan awards (4) 2   1   2   1  
Diluted weighted average common units outstanding 799   726   728   718  
 
Diluted adjusted net income per common unit $ 0.80   $ 0.39   $ 1.88   $ 1.10  
 

____________________

(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) The possible conversion of our Series A preferred units was
excluded from the calculation of diluted adjusted net income per
common unit for the twelve months ended December 31, 2018 and the
three and twelve months ended December 31, 2017 as the effect was
antidilutive.
(4) Our equity-indexed compensation plan awards that contemplate
the issuance of common units 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. Equity-indexed compensation plan awards 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.
 
       

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
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Net Income to Adjusted EBITDA and Implied DCF Reconciliation
Net Income $ 1,117 $ 191 $ 2,216 $ 858
Interest expense, net 104 120 431 510
Income tax expense 163 14 198 44
Depreciation and amortization 136 131 520 517
(Gains)/losses on asset sales and asset impairments, net (36 ) 94 (114 ) 109
Depreciation and amortization of unconsolidated entities (1) 13 13 56 45
(Gain)/loss on sale of investment in unconsolidated entities 10 (200 )

 

 

Selected items impacting comparability - Adjusted EBITDA (2) (558 ) 68   (423 ) (1 )
Adjusted EBITDA $ 949 $ 631 $ 2,684 $ 2,082
Interest expense, net (3) (101 ) (116 ) (419 ) (483 )
Maintenance capital (66 ) (53 ) (252 ) (247 )
Current income tax expense (32 ) (19 ) (66 ) (28 )
Adjusted equity earnings in unconsolidated entities, net of
distributions (4)
(9 ) (19 ) 1 (10 )
Distributions to noncontrolling interests (5)       (2 )
Implied DCF $ 741 $ 424 $ 1,948 $ 1,312
Preferred unit distributions paid (6) (62 ) (5 ) (161 ) (5 )
Implied DCF Available to Common Unitholders $ 679   $ 419   $ 1,787   $ 1,307  
 
Weighted Average Common Units Outstanding 726 725 726 717
Weighted Average Common Units and Common Equivalent Units 797 794 797 784
 
Implied DCF per Common Unit (7) $ 0.94 $ 0.58 $ 2.46 $ 1.82
Implied DCF per Common Unit and Common Equivalent Unit (8) $ 0.90 $ 0.53 $ 2.38 $ 1.67
 
Cash Distribution Paid per Common Unit $ 0.30 $ 0.30 $ 1.20 $ 1.95
Common Unit Cash Distributions (5) $ 218 $ 218 $ 871 $ 1,386
Common Unit Distribution Coverage Ratio 3.11x 1.92x 2.05x 0.94x
 
Implied DCF Excess / (Shortage) $ 461 $ 201 $ 916 $ (79 )
 

____________________

(1)     Adjustment to add back our proportionate share of depreciation
and amortization expense and gains and losses on significant asset
sales by 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)

Net Income Per Common Unit to Adjusted Net Income Per Common
Unit Reconciliation:

 
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Basic net income per common unit $ 1.46 $ 0.19 $ 2.77 $ 0.96
Selected items impacting comparability per common unit (1) (0.63 ) 0.20   (0.89 ) 0.14
Basic adjusted net income per common unit $ 0.83   $ 0.39   $ 1.88   $ 1.10
 
Diluted net income per common unit $ 1.38 $ 0.19 $ 2.71 $ 0.95
Selected items impacting comparability per common unit (1) (0.58 ) 0.20   (0.83 ) 0.15
Diluted adjusted net income per common unit $ 0.80   $ 0.39   $ 1.88   $ 1.10
 

____________________

(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 Per Common Unit to Implied DCF Per Common Unit and
Common Equivalent Unit Reconciliation:

 
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Basic net income per common unit $ 1.46 $ 0.19 $ 2.77 $ 0.96
Reconciling items per common unit (1) (2) (0.52 ) 0.39   (0.31 ) 0.86
Implied DCF per common unit $ 0.94   $ 0.58   $ 2.46   $ 1.82
 
Basic net income per common unit $ 1.46 $ 0.19 $ 2.77 $ 0.96
Reconciling items per common unit and common equivalent unit (1)
(3)
(0.56 ) 0.34   (0.39 ) 0.71
Implied DCF per common unit and common equivalent unit $ 0.90   $ 0.53   $ 2.38   $ 1.67
 

____________________

(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 717 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, 69 million,
71 million and 67 million, respectively.
 
       

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

SELECTED FINANCIAL DATA BY SEGMENT

(in millions)

 
Three Months Ended
December 31, 2018
Three Months Ended
December 31, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation     Facilities    

Supply and
Logistics

Revenues (1) $ 563 $ 295 $ 8,446 $ 458 $ 299 $ 7,308
Purchases and related costs (1) (54 ) (5 ) (7,411 ) (48 ) (4 ) (7,151 )
Field operating costs (1) (2) (171 ) (88 ) (76 ) (158 ) (91 ) (61 )
Segment general and administrative expenses (2) (3) (31 ) (23 ) (30 ) (24 ) (18 ) (24 )
Equity earnings in unconsolidated entities 93 90
 
Adjustments: (4)
Depreciation and amortization of unconsolidated entities 13 13
(Gains)/losses from derivative activities net of inventory valuation
adjustments
2 (628 ) 40
Long-term inventory costing adjustments 38 (22 )
Deficiencies under minimum volume commitments, net 2 (4 ) (3 )
Equity-indexed compensation expense 10 4 5 3 1 1
Net (gain)/loss on foreign currency revaluation (2 ) 1
Line 901 incident       20      
Segment Adjusted EBITDA $ 425   $ 181   $ 342   $ 354   $ 184   $ 92  
 
Maintenance capital $ 38   $ 26   $ 2   $ 31   $ 20   $ 2  
 

____________________

(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)

 
Twelve Months Ended
December 31, 2018
Twelve Months Ended
December 31, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation     Facilities    

Supply and
Logistics

Revenues (1) $ 1,990 $ 1,161 $ 32,822 $ 1,718 $ 1,173 $ 25,065
Purchases and related costs (1) (194 ) (17 ) (31,487 ) (123 ) (24 ) (24,557 )
Field operating costs (1) (2) (640 ) (360 ) (276 ) (593 ) (350 ) (254 )
Segment general and administrative expenses (2) (3) (117 ) (82 ) (117 ) (101 ) (73 ) (102 )
Equity earnings in unconsolidated entities 375 290
 
Adjustments: (4)
Depreciation and amortization of unconsolidated entities 56 45
(Gains)/losses from derivative activities net of inventory valuation
adjustments
(1 ) (518 ) 4 (50 )
Long-term inventory costing adjustments 21 (24 )
Deficiencies under minimum volume commitments, net 9 (2 ) 2
Equity-indexed compensation expense 30 11 14 11 4 8
Net (gain)/loss on foreign currency revaluation 3 (26 )
Line 901 incident 32
Significant acquisition-related expenses       6      
Segment Adjusted EBITDA $ 1,508   $ 711   $ 462   $ 1,287   $ 734   $ 60  
 
Maintenance capital $ 139   $ 100   $ 13   $ 120   $ 114   $ 13  
 

____________________

(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
December 31,
Twelve Months Ended
December 31,
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) 4,063 3,219 3,732 2,855
South Texas / Eagle Ford (2) 459 418 442 360
Central (2) 523 424 473 420
Gulf Coast 168 312 178 349
Rocky Mountain (2) 349 317 284 393
Western 194 179 183 184
Canada 326   330   316   352
Crude oil pipelines 6,082 5,199 5,608 4,913
NGL pipelines 212   172   183   170
Tariff activities total volumes 6,294 5,371 5,791 5,083
Trucking volumes 110   106   98   103
Transportation segment total volumes 6,404   5,477   5,889   5,186
 
Facilities segment (average monthly volumes):
Liquids storage (average monthly capacity in millions of barrels) 109   114   109   112
Natural gas storage (average monthly working capacity in billions of
cubic feet)
65   67   66   82
NGL fractionation (average volumes in thousands of barrels per day) 140   127   131   126
Facilities segment total volumes (average monthly volumes in
millions of barrels) (3)
124   129   124   130
 
Supply and Logistics segment (average daily volumes in thousands
of barrels per day):
Crude oil lease gathering purchases 1,111 994 1,054 945
NGL sales 292   335   255   274
Supply and Logistics segment total volumes 1,403   1,329   1,309   1,219
 

____________________

(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
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Transportation Segment Adjusted EBITDA $ 425 $ 354 $ 1,508 $ 1,287
Facilities Segment Adjusted EBITDA 181   184   711   734
Fee-based Segment Adjusted EBITDA $ 606 $ 538 $ 2,219 $ 2,021
Supply and Logistics Segment Adjusted EBITDA 342 92 462 60
Adjusted other income/(expense), net (1) 1   1   3   1
Adjusted EBITDA (2) $ 949   $ 631   $ 2,684   $ 2,082
 

____________________

(1)     Represents "Other expense, net" as reported on our Condensed
Consolidated Statements of Operations, adjusted for selected items
impacting comparability of $15 million, $27 million, $10 million and
$32 million for the three and twelve months ended December 31, 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
December 31, 2018
Three Months Ended
December 31, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation     Facilities    

Supply and
Logistics

Segment Adjusted EBITDA $ 425 $ 181 $ 342 $ 354 $ 184 $ 92
Impact of divested assets (1)       (31 ) (6 )
Segment Adjusted EBITDA further adjusted for impact of divested
assets
$ 425   $ 181   $ 342   $ 323   $ 178   $ 92
 
       
Twelve Months Ended
December 31, 2018
Twelve Months Ended
December 31, 2017
Transportation     Facilities    

Supply and
Logistics

Transportation     Facilities    

Supply and
Logistics

Segment Adjusted EBITDA $ 1,508 $ 711 $ 462 $ 1,287 $ 734 $ 60
Impact of divested assets (1) (66 ) (2 )   (116 ) (44 )
Segment Adjusted EBITDA further adjusted for impact of divested
assets
$ 1,442   $ 709   $ 462   $ 1,171   $ 690   $ 60
 

____________________

(1)     Estimated impact of divestitures completed during 2017 and
2018, assuming an effective date of 1/1/17. Divested assets include
a 30% interest in BridgeTex Pipeline Company, LLC and 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
December 31, 2018
Three Months Ended
December 31, 2017
    Consolidating         Consolidating    
PAA Adjustments (1) PAGP PAA Adjustments (1) PAGP
REVENUES $ 8,786 $ $ 8,786 $ 7,605 $ $ 7,605
 
COSTS AND EXPENSES
Purchases and related costs 6,955 6,955 6,746 6,746
Field operating costs 332 332 307 307
General and administrative expenses 84 1 85 66 1 67
Depreciation and amortization (2) 136 136 131 131
(Gains)/losses on asset sales and asset impairments, net (2) (36 )   (36 ) 94     94  
Total costs and expenses 7,471 1 7,472 7,344 1 7,345
 
OPERATING INCOME 1,315 (1 ) 1,314 261 (1 ) 260
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 93 93 90 90
Gain/(loss) on sale of investment in unconsolidated entities (10 ) (10 )
Interest expense, net (104 ) (104 ) (120 ) (120 )
Other expense, net (14 )   (14 ) (26 )   (26 )
 
INCOME BEFORE TAX 1,280 (1 ) 1,279 205 (1 ) 204
Current income tax expense (32 ) (32 ) (19 ) (19 )
Deferred income tax (expense)/benefit (131 ) (54 ) (185 ) 5   (837 ) (832 )
 
NET INCOME/(LOSS) 1,117 (55 ) 1,062 191 (838 ) (647 )
Net income attributable to noncontrolling interests   (882 ) (882 )   (153 ) (153 )
NET INCOME/(LOSS) ATTRIBUTABLE TO PAGP $ 1,117   $ (937 ) $ 180   $ 191   $ (991 ) $ (800 )
 
BASIC NET INCOME/(LOSS) PER CLASS A SHARE $ 1.13   $ (5.16 )
 
DILUTED NET INCOME/(LOSS) PER CLASS A SHARE $ 1.12   $ (5.16 )
 
BASIC WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 159   155  
 
DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 160   155  

____________________

(1)     Represents the aggregate consolidating adjustments necessary to
produce consolidated financial statements for PAGP.
(2) Effective for the fourth quarter of 2018, we reclassified
amounts related to gains and losses on asset sales and asset
impairments from "Depreciation and amortization" to "(Gains)/losses
on asset sales and asset impairments, net" on our Condensed
Consolidated Statements of Operations.
 
       

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

CONDENSED CONSOLIDATING STATEMENTS OF
OPERATIONS

(in millions, except per share data)

 
Twelve Months Ended
December 31, 2018
Twelve Months Ended
December 31, 2017
    Consolidating         Consolidating    
PAA Adjustments (1) PAGP PAA Adjustments (1) PAGP
REVENUES $ 34,055 $ $ 34,055 $ 26,223 $ $ 26,223
 
COSTS AND EXPENSES
Purchases and related costs 29,793 29,793 22,985 22,985
Field operating costs 1,263 1,263 1,183 1,183
General and administrative expenses 316 4 320 276 4 280
Depreciation and amortization (2) 520 1 521 517 2 519
(Gains)/losses on asset sales and asset impairments, net (2) (114 )   (114 ) 109     109  
Total costs and expenses 31,778 5 31,783 25,070 6 25,076
 
OPERATING INCOME 2,277 (5 ) 2,272 1,153 (6 ) 1,147
 
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities 375 375 290 290
Gain on sale of investment in unconsolidated entities 200 200
Interest expense, net (431 ) (431 ) (510 ) (510 )
Other expense, net (7 )   (7 ) (31 )   (31 )
 
INCOME BEFORE TAX 2,414 (5 ) 2,409 902 (6 ) 896
Current income tax expense (66 ) (66 ) (28 ) (28 )
Deferred income tax expense (132 ) (104 ) (236 ) (16 ) (893 ) (909 )
 
NET INCOME/(LOSS) 2,216 (109 ) 2,107 858 (899 ) (41 )
Net income attributable to noncontrolling interests   (1,773 ) (1,773 ) (2 ) (688 ) (690 )
NET INCOME/(LOSS) ATTRIBUTABLE TO PAGP $ 2,216   $ (1,882 ) $ 334   $ 856   $ (1,587 ) $ (731 )
 
BASIC NET INCOME/(LOSS) PER CLASS A SHARE $ 2.12   $ (5.03 )
 
DILUTED NET INCOME/(LOSS) PER CLASS A SHARE $ 2.11   $ (5.03 )
 
BASIC WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 158   145  
 
DILUTED WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING 282   145  
 

____________________

(1)     Represents the aggregate consolidating adjustments necessary to
produce consolidated financial statements for PAGP.
(2) Effective for the fourth quarter of 2018, we reclassified
amounts related to gains and losses on asset sales and asset
impairments from "Depreciation and amortization" to "(Gains)/losses
on asset sales and asset impairments, net" on our Condensed
Consolidated Statements of Operations.
 
       

PLAINS GP HOLDINGS AND SUBSIDIARIES

FINANCIAL SUMMARY (unaudited)

             
 

CONDENSED CONSOLIDATING BALANCE SHEET DATA

(in millions)

 
December 31, 2018 December 31, 2017
    Consolidating         Consolidating    
PAA Adjustments (1) PAGP PAA Adjustments (1) PAGP
ASSETS
Current assets $ 3,533 $ 3 $ 3,536 $ 4,000 $ 3 $ 4,003
Property and equipment, net 14,787 15 14,802 14,089 16 14,105
Goodwill 2,521 2,521 2,566 2,566
Investments in unconsolidated entities 2,702 2,702 2,756 2,756
Deferred tax asset 1,304 1,304 1,386 1,386
Linefill and base gas 916 916 872 872
Long-term inventory 136 136 164 164
Other long-term assets, net 916   (3 ) 913   904   (3 ) 901
Total assets $ 25,511   $ 1,319   $ 26,830   $ 25,351   $ 1,402   $ 26,753
 
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities $ 3,456 $ 2 $ 3,458 $ 4,531 $ 2 $ 4,533
Senior notes, net 8,941 8,941 8,933 8,933
Other long-term debt, net 202 202 250 250
Other long-term liabilities and deferred credits 910     910   679     679
Total liabilities $ 13,509 $ 2 $ 13,511 $ 14,393 $ 2 $ 14,395
 
Partners' capital excluding noncontrolling interests 12,002 (10,156 ) 1,846 10,958 (9,263 ) 1,695
Noncontrolling interests   11,473   11,473     10,663   10,663
Total partners' capital 12,002   1,317   13,319   10,958   1,400   12,358
Total liabilities and partners' capital $ 25,511   $ 1,319   $ 26,830   $ 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/(LOSS) PER CLASS A SHARE

(in millions, except per share data)

 
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2018     2017 2018     2017
Basic Net Income/(Loss) per Class A Share
Net income/(loss) attributable to PAGP $ 180 $ (800 ) $ 334 $ (731 )
Basic weighted average Class A shares outstanding 159 155 158 145
 
Basic net income/(loss) per Class A share $ 1.13   $ (5.16 ) $ 2.12   $ (5.03 )
 
Diluted Net Income/(Loss) per Class A Share
Net income/(loss) attributable to PAGP $ 180 $ (800 ) $ 334 $ (731 )
Incremental net income attributable to PAGP resulting from assumed
exchange of AAP units and AAP Management Units
    262    
Net income/(loss) attributable to PAGP including incremental net
income from assumed exchange of AAP units and AAP Management Units
$ 180   $ (800 ) $ 596   $ (731 )
 
Basic weighted average Class A shares outstanding 159 155 158 145
Dilutive shares resulting from assumed exchange of AAP units and AAP
Management Units
1     124    
Diluted weighted average Class A shares outstanding 160   155   282   145  
 
Diluted net income/(loss) per Class A share (1) $ 1.12   $ (5.16 ) $ 2.11   $ (5.03 )
 

____________________

(1)     For the three and twelve months ended December 31, 2017, the
possible exchange of any AAP units and certain AAP Management Units
would have had an antidilutive effect on basic net income/(loss) per
Class A share.
 

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