4 unchanged sentences
Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our DCP as of December 31, 2022, the end of the period covered by this report, and, based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our DCP is effective.
−Removed: Index to Financial Statements
Internal Control over Financial Reporting
7 unchanged sentences
There have been no changes in our internal control over financial reporting during the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: Index to Financial Statements
Certifications
4 unchanged sentences
There was no information that was required to be disclosed in a report on Form 8-K during the fourth quarter of 2022 that has not previously been reported.
+Added: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
+Added: Not applicable.
Index to Financial Statements
17 unchanged sentences
Victor Burk (2)
−Removed: Managing Director, Alvarez and Marsal
+Added: Senior Advisor, Alvarez and Marsal
+Added: DeSanctis (2)
+Added: Former Senior Vice President, ConocoPhillips
Kevin McCarthy (2)
74 unchanged sentences
3.20 — Certificate of Formation of PAA GP Holdings LLC (incorporated by reference to Exhibit 3.3 to PAGP’s Registration Statement on Form S-1 (333-190227) filed July 29, 2013).
−Removed: 3.21 † — Fourth Amended and Restated Limited Liability Company Agreement of PAA GP Holdings LLC dated effective as of August 19, 2021.
+Added: 3.21 — Fourth Amended and Restated Limited Liability Company Agreement of PAA GP Holdings LLC dated effective as of August 19, 2021 (incorporated by reference to Exhi bit 3.21 to our Annual Report on Form 10-K for the year ended December 31, 2021) .
4.1 — Indenture dated September 25, 2002 among Plains All American Pipeline, L.P., PAA Finance Corp.
3 unchanged sentences
Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed October 30, 2006).
−Removed: 4.4 — Twentieth Supplemental Indenture (3.65% Senior Notes due 2022) dated March 22, 2012 among Plains All American Pipeline, L.P., PAA Finance Corp.
−Removed: Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed March 26, 2012).
4.4 — Twenty-First Supplemental Indenture (5.15% Senior Notes due 2042) dated March 22, 2012 among Plains All American Pipeline, L.P., PAA Finance Corp.
Bank National Association, as trustee (incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K filed March 26, 2012).
−Removed: Index to Financial Statements
4.5 — Twenty-Second Supplemental Indenture (2.85% Senior Notes due 2023) dated December 10, 2012, by and among Plains All American Pipeline, L.P., PAA Finance Corp.
Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed December 12, 2012).
+Added: Index to Financial Statements
4.6 — Twenty-Third Supplemental Indenture (4.30% Senior Notes due 2043) dated December 10, 2012, by and among Plains All American Pipeline, L.P., PAA Finance Corp.
32 unchanged sentences
Index to Financial Statements
+Added: 10.2 — First Amendment to Credit Agreement dated as of August 22, 2022, among Plains All American Pipeline, L.P.
+Added: and Plains Midstream Canada ULC, as Borrowers;
+Added: certain subsidiaries of Plains All American Pipeline, L.P.
+Added: from time to time party thereto, as Designated Borrowers;
+Added: Bank of America, N.A., as Administrative Agent and Swing Line Lender;
+Added: Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, N.A.
+Added: and Wells Fargo Bank, National Association, as L/C Issuers;
+Added: and the other Lenders party thereto (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed August 25, 2022).
10.3 — Fourth Amended and Restated Credit Agreement dated as of August 20, 2021, among Plains Marketing, L.P.
5 unchanged sentences
and the other Lenders party thereto (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed August 26, 2021).
+Added: 10.4 — First Amendment to Fourth Amended and Restated Credit Agreement dated as of August 22, 2022, among Plains Marketing, L.P.
+Added: and Plains Midstream Canada ULC, as Borrowers;
+Added: Plains All American Pipeline, L.P., as guarantor;
+Added: Bank of America, N.A., as Administrative Agent and Swing Line Lender;
+Added: Bank of America, N.A., Citibank, N.A., JPMorgan Chase Bank, N.A.
+Added: and Wells Fargo Bank, National Association, as L/C Issuers;
+Added: and the other Lenders party thereto (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed August 25, 2022).
10.5 — Contribution and Assumption Agreement dated December 28, 2007, by and between Plains AAP, L.P.
16 unchanged sentences
1 to Third Amended and Restated Employment Agreement dated effective December 31, 2021 between Plains All American GP LLC and Greg L.
+Added: Armstrong (i ncorporated by reference to Exhibit 10.12 to o ur Annual Report on Form 1 0-K for the year ended December 31, 202 1) .
10.15** — Amended and Restated Employment Agreement between Plains All American GP LLC and Harry N.
Pefanis dated as of June 30, 2001 (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
+Added: Index to Financial Statements
10.16** — First Amendment to Amended and Restated Employment Agreement dated December 4, 2008 between Plains All American GP LLC and Harry N.
4 unchanged sentences
Pefanis (incorporated by reference to Exhibit 10.32 to our Annual Report on Form 10-K for the year ended December 31, 2010).
−Removed: Index to Financial Statements
10.19** — Waiver Agreement dated October 21, 2013 to the Amended and Restated Employment Agreement dated June 30, 2001 of Harry N.
22 unchanged sentences
Class B Restricted Units Agreement dated August 25, 2016 (Officers) (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018).
−Removed: 10.32** — Form of Director LTIP Grant Letter (August 2018) (incorporated by reference to Exhibit 10.66 to our Annual Report on Form 10-K for the year ended December 31, 2018).
−Removed: 10.33** — Director LTIP Grant Letter (December 2018) (incorporated by reference to Exhibit 10.67 to our Annual Report on Form 10-K for the year ended December 31, 2018).
10.34** — Form of LTIP Grant Letter dated August 15, 2019 (Officers) (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).
−Removed: 10.35** — Form of LTIP Grant Letter dated August 15, 2019 (Directors) (incorporated by reference to exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).
−Removed: 10.36** — Director LTIP Grant Letter (January 2020) (incorporated by reference to Exhibit 10.72 to our Annual Report on Form 10-K for the year ended December 31, 2019).
Index to Financial Statements
+Added: 10.35** — Form of LTIP Grant Letter dated August 15, 2019 (Directors) (incorporated by reference to E xhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019).
+Added: 10.36** — Director LTIP Grant Letter (January 2020) (incorporated by reference to Exhibit 10.72 to our Annual Report on Form 10-K for the year ended December 31, 2019).
10.37** — Form of LTIP Grant Letter dated August 13, 2020 (Officers) (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020).
10.38** — Form of LTIP Grant Letter dated August 13, 2020 (Directors) (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020).
−Removed: 10.39** — Form of Special Retention LTIP Grant Letter dated November 20, 2019 (incorporated by reference to Exhibit 10.
−Removed: 53 to our Annual Report on Form 10- K for the year ended December 31 , 202 0 ).
−Removed: 10.40** — Form of LTIP Grant Letter dated December 21, 2017 (Goebel) (incorporated by reference to Exhibit 10.54 to our Annual Report on Form 10-K for the year ended December 31, 2020).
−Removed: 10.41** — Form of LTIP Grant Letter dated May 1, 2018 (Chandler) (incorporated by reference to Exhibit 10.5 6 to our Annual Report on Form 10-K for the year ended December 31, 2020).
−Removed: 10.42** — Form of LTIP Grant Letter dated August 19, 2021 (Named Executive Officers) (incorporated by reference to Exhibit 10.
−Removed: 3 to our Quar terly Report on Form 10- Q for the quarter ended September 30 , 202 1 ).
−Removed: 10.43** — Form of LTIP Grant Letter dated August 19, 2021 (Directors) (incorporated by reference to Exhibit 10.
−Removed: 4 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021).
+Added: 10.39** — Form of Special Retention LTIP Grant Letter dated November 20, 2019 (incorporated by reference to Exhibit 10.53 to our Annual Report on Form 10-K for the year ended December 31, 2020).
+Added: 10.40** — Form of LTIP Grant Letter dated August 19, 2021 (Named Executive Officers) (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021).
+Added: 10.41** — Form of LTIP Grant Letter dated August 19, 2021 (Directors) (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021).
+Added: 10.42** — Form of Amended and Restated Special Retention LTIP Grant Letter Dated February 24, 2022 (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022).
+Added: 10.43** — Form of LTIP Grant Letter dated August 18, 2022 (Named Executive Officers) (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022).
+Added: 10.44** — Form of LTIP Grant Letter dated August 18, 2022 (Directors) (incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022).
21.1 † — List of Subsidiaries of Plains All American Pipeline, L.P.
15 unchanged sentences
A copy of any omitted schedule will be furnished supplementally to the SEC upon request.
+Added: Index to Financial Statements
** Management compensatory plan or arrangement.
33 unchanged sentences
/s/ Victor Burk Director of PAA GP Holdings LLC February 28, 2023
+Added: DeSanctis Director of PAA GP Holdings LLC February 28, 2023
/s/ Kevin McCarthy Director of PAA GP Holdings LLC February 28, 2023
28 unchanged sentences
Net Income/(Loss) Per Common Unit
−Removed: Inventory, Linefill and Base Gas and Long-term Inventory
+Added: Inventory, Linefill and Long-term Inventory
Property and Equipment
8 unchanged sentences
Commitments and Contingencies
−Removed: S egment Information
+Added: Segment Information
Index to Financial Statements
41 unchanged sentences
We believe that our audits provide a reasonable basis for our opinions.
−Removed: Index to Financial Statements
Definition and Limitations of Internal Control over Financial Reporting
3 unchanged sentences
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
+Added: Index to Financial Statements
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
3 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Accounting for the Oryx Midstream Holdings LLC Business Combination
−Removed: As described in Note 7 to the consolidated financial statements, in October 2021, the Partnership and Oryx Midstream Holdings LLC (“Oryx Midstream”), completed the merger, in a cashless, debt-free transaction, of their respective Permian Basin assets, operations and commercial activities into a newly formed strategic joint venture, Plains Oryx Permian Basin LLC (the “Permian JV”).
−Removed: The Permian JV includes all of Oryx Midstream’s Permian Basin assets and, with the exception of the Partnership’s long-haul pipeline systems and certain of the intra-basin terminal assets, the vast majority of the Partnership’s assets located within the Permian Basin.
−Removed: The Partnership owns 65% of Permian JV, operates the combined assets and reflects Permian JV as a consolidated subsidiary in the consolidated financial statements.
−Removed: The formation of the joint venture was accounted for as a business combination using the acquisition method of accounting.
−Removed: As the majority owner and the controlling entity, the Partnership is considered the acquirer and the transfer of the predecessor business to the joint venture was accounted for at historical cost, while the Oryx Midstream predecessor business was recorded based on the fair value of the assets acquired and liabilities assumed.
−Removed: In accordance with applicable accounting guidance, the fair value of Oryx Midstream’s ownership interest in the joint venture following the formation of $3.256 billion is utilized as the consideration transferred for the purchase price allocation.
−Removed: The fair value of the $3.256 billion consideration is a Level 3 measurement in the fair value hierarchy and was determined by valuing both the enterprise value of Oryx Midstream’s Permian Basin business and the enterprise value of the Partnership’s Permian Basin assets that were contributed to the joint venture.
−Removed: The enterprise value of Oryx Midstream’s Permian Basin business was calculated by weighting the results of (i) a discounted cash flow (“DCF”) approach and (ii) a guideline public company method (“GPCM”).
−Removed: The DCF approach utilized a discount rate based on the estimate of the risk that a theoretical market participant would assign to the business.
−Removed: The projection of future crude volumes gathered and transported was also a key assumption in the DCF approach and was based on projected rig activity on the associated acreage.
−Removed: The fair value of the intangible assets was determined by applying a discounted cash flow approach.
−Removed: Such approach utilized a discount rate based on the estimate of the risk that a theoretical market participant would assign to the respective intangible assets.
−Removed: The projection of future crude volumes gathered and transported was also a key assumption in the valuation of the intangible assets and was based on projected rig activity on the associated acreage.
−Removed: The fair value of intangible assets is comprised of customer relationships with an assigned value of $1.247 billion.
−Removed: The principal considerations for our determination that performing procedures relating to the accounting for the Oryx Midstream business combination is a critical audit matter are (i) the significant judgment by management when determining the fair value of the consideration transferred for the Oryx Midstream Permian Basin business and the customer relationships, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to future crude volumes gathered and transported and the discount rates used in the valuation of the consideration transferred for the Oryx Midstream Permian Basin business and the customer relationships;
−Removed: and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.
−Removed: Index to Financial Statements
+Added: Fair Value of the Preferred Distribution Rate Reset Option
+Added: As described in Note 13 to the consolidated financial statements, the Preferred Distribution Rate Reset Option of the Partnership’s Series A preferred units is an embedded derivative that is bifurcated from the related host contract and recorded at fair value.
+Added: The fair value, as of December 31, 2022, was $189 million, and is recorded in other long-term liabilities and deferred credits.
+Added: Management determines the fair value based on a Monte Carlo valuation model that estimates the fair value of the Series A preferred units with and without the Preferred Distribution Rate Reset Option.
+Added: This model relies on assumptions for forecasts for the ten-year U.S.
+Added: Treasury rate, the Partnership’s common unit price, and default probabilities which impact timing estimates as to when the option will be exercised.
+Added: The principal considerations for our determination that performing procedures relating to the fair value of the Preferred Distribution Rate Reset Option is a critical audit matter are the significant judgment by management when developing the fair value estimate of the Preferred Distribution Rate Reset Option using the Monte Carlo valuation model.
+Added: This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the Monte Carlo valuation model and management’s significant assumption related to forecasts for the ten-year U.S.
+Added: Treasury rate.
+Added: Also, the audit effort involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to acquisition accounting, including controls over management’s valuation of the consideration transferred and the customer relationships, and controls over the determination of the significant assumptions.
−Removed: These procedures also included, among others (i) reading the transaction agreement and (ii) testing management’s process for determining the fair value of the consideration transferred for the Oryx Midstream Permian Basin business and the customer relationships.
−Removed: Testing management’s process included evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of data provided by management, and evaluating the reasonableness of the significant assumptions related to future crude volumes gathered and transported and the discount rates used in the valuation of the consideration transferred for the Oryx Midstream Permian Basin business and the customer relationships.
−Removed: Evaluating the reasonableness of the future crude volumes gathered and transported involved considering (i) the consistency with external market and industry data and (ii) the past performance of the Oryx Midstream Permian Basin business.
−Removed: Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the valuation methods and the reasonableness of the discount rate significant assumption.
+Added: These procedures included testing the effectiveness of controls relating to the fair value of the Preferred Distribution Rate Reset Option, including the appropriateness of the Monte Carlo valuation model, the significant assumption, and data used in developing the fair value estimate.
+Added: These procedures also included, among others (i) testing the completeness and accuracy of the contractual information from the Series A preferred unit agreement that is used in the valuation model, (ii) evaluating the reasonableness of, and testing the accuracy of, inputs used to estimate the fair value of the Preferred Distribution Rate Reset Option, and (iii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s estimate by developing (a) an independent Monte Carlo valuation model and (b) an independent range of fair values using independently developed forecasts for the ten-year U.S.
+Added: Treasury rate and comparing the independent range of fair values to management’s estimate.
/s/ PricewaterhouseCoopers LLP
10 unchanged sentences
Cash and cash equivalents $ 401 $ 449
−Removed: Restricted cash 4 38
Trade accounts receivable and other receivables, net 3,907 4,705
7 unchanged sentences
Intangible assets, net 2,145 1,960
−Removed: Linefill and base gas 907 982
+Added: Linefill 961 907
Long-term operating lease right-of-use assets, net 349 393
40 unchanged sentences
(Gains)/losses on asset sales and asset impairments, net (Note 6, Note 7) 269 592 719
−Removed: Goodwill impairment losses (Note 8) — 2,515 —
+Added: Goodwill impairment loss (Note 8) — — 2,515
Total costs and expenses 56,050 41,227 25,665
2 unchanged sentences
Equity earnings in unconsolidated entities 403 274 355
−Removed: Gain on/(impairment of) investments in unconsolidated entities, net (Note 9) 2 ( 182 ) 271
+Added: Gains (losses) on/(impairment of) investments in unconsolidated entities, net (Note 7, Note 9) 346 2 ( 182 )
Interest expense (net of capitalized interest of $ 5 , $ 18 and $ 24 , respectively)
( 405 ) ( 425 ) ( 436 )
−Removed: Other income, net 19 39 24
+Added: Other income/(expense), net ( 219 ) 19 39
INCOME/(LOSS) BEFORE TAX 1,417 721 ( 2,599 )
5 unchanged sentences
NET INCOME/(LOSS) PER COMMON UNIT (NOTE 4):
−Removed: Net income/(loss) allocated to common unitholders — Basic $ 393 $ ( 2,790 ) $ 1,967
−Removed: Basic weighted average common units outstanding 716 728 727
−Removed: Basic net income/(loss) per common unit $ 0.55 $ ( 3.83 ) $ 2.70
−Removed: Net income/(loss) allocated to common unitholders — Diluted $ 393 $ ( 2,790 ) $ 2,119
−Removed: Diluted weighted average common units outstanding 716 728 800
−Removed: Diluted net income/(loss) per common unit $ 0.55 $ ( 3.83 ) $ 2.65
+Added: Net income/(loss) allocated to common unitholders — Basic and Diluted $ 831 $ 393 $ ( 2,790 )
+Added: Basic and diluted weighted average common units outstanding 701 716 728
+Added: Basic and diluted net income/(loss) per common unit $ 1.19 $ 0.55 $ ( 3.83 )
The accompanying notes are an integral part of these consolidated financial statements.
7 unchanged sentences
Net income/(loss) $ 1,228 $ 648 $ ( 2,580 )
−Removed: Other comprehensive income 65 15 97
+Added: Other comprehensive income/(loss) ( 101 ) 65 15
Comprehensive income/(loss) 1,127 713 ( 2,565 )
13 unchanged sentences
Currency translation adjustments — 17 — 17
+Added: Other — — ( 3 ) ( 3 )
2020 Activity 1 17 ( 3 ) 15
1 unchanged sentence
Reclassification adjustments 31 — — 31
−Removed: Unrealized loss on hedges ( 10 ) — — ( 10 )
+Added: Unrealized gain on hedges 19 — — 19
Currency translation adjustments — 15 — 15
−Removed: Other — — ( 3 ) ( 3 )
2021 Activity 50 15 — 65
3 unchanged sentences
Currency translation adjustments — ( 204 ) — ( 204 )
+Added: Other — — 2 2
2022 Activity 101 ( 204 ) 2 ( 101 )
13 unchanged sentences
(Gains)/losses on asset sales and asset impairments, net (Note 6, Note 7) 269 592 719
−Removed: Goodwill impairment losses (Note 8) — 2,515 —
+Added: Goodwill impairment loss (Note 8) — — 2,515
Equity-indexed compensation expense 40 23 15
1 unchanged sentence
Deferred income tax expense/(benefit) 105 23 ( 70 )
+Added: (Gains)/losses on sales of linefill ( 35 ) — 1
+Added: (Gain)/loss on foreign currency revaluation 41 ( 7 ) ( 16 )
Settlement of terminated interest rate hedging instruments 42 — ( 100 )
+Added: Change in fair value of Preferred Distribution Rate Reset Option (Note 13) 189 ( 14 ) ( 20 )
Equity earnings in unconsolidated entities ( 403 ) ( 274 ) ( 355 )
Distributions on earnings from unconsolidated entities 488 431 472
−Removed: (Gain on)/impairment of investments in unconsolidated entities, net (Note 9) ( 2 ) 182 ( 271 )
+Added: (Gains) losses on/impairment of investments in unconsolidated entities, net (Note 7, Note 9) ( 346 ) ( 2 ) 182
Other 16 29 23
9 unchanged sentences
Proceeds from sales of assets (Note 7) 60 881 429
+Added: Cash received from sales of linefill 72 3 3
+Added: Cash paid for purchases of linefill ( 84 ) ( 37 ) ( 14 )
Other investing activities 44 1 ( 2 )
10 unchanged sentences
Distributions paid to common unitholders (Note 12) ( 584 ) ( 517 ) ( 655 )
−Removed: Sale of noncontrolling interest in a subsidiary (Note 12) — — 128
+Added: Distributions paid to noncontrolling interests (Note 12) ( 298 ) ( 14 ) ( 10 )
+Added: Contributions from noncontrolling interests (Note 12) 26 1 12
Other financing activities ( 53 ) ( 166 ) 39
18 unchanged sentences
Balance at December 31, 2019 $ 1,505 $ 787 $ 10,770 $ 13,062 $ 133 $ 13,195
−Removed: Net income 149 49 1,973 2,171 9 2,180
+Added: Net income/(loss) 149 49 ( 2,788 ) ( 2,590 ) 10 ( 2,580 )
Distributions (Note 12) ( 149 ) ( 49 ) ( 655 ) ( 853 ) ( 10 ) ( 863 )
1 unchanged sentence
Equity-indexed compensation expense — — 19 19 — 19
−Removed: Sale of noncontrolling interest in a subsidiary (Note 12) — — ( 2 ) ( 2 ) 130 128
+Added: Repurchase of common units (Note 12) — — ( 50 ) ( 50 ) — ( 50 )
+Added: Contributions from noncontrolling interests (Note 12) — — — — 12 12
Other — — ( 10 ) ( 10 ) — ( 10 )
Balance at December 31, 2020 $ 1,505 $ 787 $ 7,301 $ 9,593 $ 145 $ 9,738
−Removed: Net income/(loss) 149 49 ( 2,788 ) ( 2,590 ) 10 ( 2,580 )
+Added: Net income 149 49 395 593 55 648
Distributions (Note 12) ( 149 ) ( 49 ) ( 517 ) ( 715 ) ( 14 ) ( 729 )
3 unchanged sentences
Contributions from noncontrolling interests (Note 12) — — — — 1 1
+Added: Plains Oryx Permian Basin LLC joint venture formation (Note 7) — — 605 605 2,651 3,256
Other — — ( 10 ) ( 10 ) — ( 10 )
2 unchanged sentences
Distributions (Note 12) ( 149 ) ( 52 ) ( 584 ) ( 785 ) ( 298 ) ( 1,083 )
−Removed: Other comprehensive income — — 65 65 — 65
+Added: Other comprehensive loss — — ( 101 ) ( 101 ) — ( 101 )
Equity-indexed compensation expense — — 32 32 — 32
2 unchanged sentences
Plains Oryx Permian Basin LLC joint venture formation (Note 7) — — ( 10 ) ( 10 ) ( 16 ) ( 26 )
+Added: Cactus II Pipeline LLC transaction (Note 7) — — — — 526 526
Other — — ( 14 ) ( 14 ) 1 ( 13 )
62 unchanged sentences
The accompanying financial statements and related notes present and discuss our consolidated financial position as of December 31, 2022 and 2021, and the consolidated results of our operations, cash flows, changes in partners’ capital, comprehensive income and changes in accumulated other comprehensive income/(loss) for the years ended December 31, 2022, 2021 and 2020.
−Removed: All significant intercompany transactions have been eliminated in consolidation, and certain reclassifications have been made to information from previous years to conform to the current presentation, as discussed further below.
+Added: All significant intercompany balances and transactions have been eliminated in consolidation, and certain reclassifications have been made to information from previous years to conform to the current presentation.
The accompanying consolidated financial statements include the accounts of PAA and all of its wholly owned subsidiaries and those entities that it controls.
1 unchanged sentence
We apply proportionate consolidation for pipelines and other assets in which we own undivided joint interests.
+Added: Subsequent Events
+Added: Subsequent events have been evaluated through the financial statements issuance date and have been included in the following footnotes where applicable.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Reclassification of Prior Period Information
−Removed: During the fourth quarter of 2021, we effected changes in the primary financial information provided to our Chief Operating Decision Maker (“CODM”) (our Chief Executive Officer) for assessing performance and allocating resources to present two operating segments, Crude Oil and NGL.
−Removed: Prior to the fourth quarter of 2021, this information was organized into three operating segments:
−Removed: Transportation, Facilities and Supply and Logistics.
−Removed: See Note 20 for further discussion of our operating segments.
−Removed: In connection with this change, we changed the presentation of Revenues on our Consolidated Statements of Operations.
−Removed: “Product sales revenues” include amounts that were previously presented as “Supply and Logistics segment revenues,” while “Services revenues” includes amounts previously presented as “Transportation segment revenues” and “Facilities segment revenues.”
−Removed: In October 2021, we and Oryx Midstream Holdings LLC (“Oryx Midstream”) completed the merger, in a cashless, debt-free transaction, of our respective Permian Basin assets, operations and commercial activities into a newly formed joint venture, Plains Oryx Permian Basin LLC (the “Permian JV”).
−Removed: See Note 7 for more details regarding this transaction.
−Removed: Due to the increase in intangible assets associated with this transaction, we present “Intangible assets, net” as a separate line item on our Consolidated Balance Sheets.
−Removed: Such amounts were previously reported in “Other long-term assets, net” on our Consolidated Balance Sheets.
−Removed: Many uncertainties remain with respect to the novel coronavirus (“COVID-19”) pandemic, including uncertainty regarding the length of time the pandemic will continue, as well as the timing, pace and extent of an economic recovery in the United States, Canada and elsewhere, and how such uncertainties will impact the energy industry and our business.
−Removed: As a result, these matters may affect our estimates and assumptions on amounts reported in the financial statements and accompanying notes in the near term.
−Removed: Subsequent Events
−Removed: Subsequent events have been evaluated through the financial statements issuance date and have been included in the following footnotes where applicable.
Note 2— Summary of Significant Accounting Policies
8 unchanged sentences
Inventory exchanges under buy/sell transactions are presented net in “Purchases and related costs” in our Consolidated Statements of Operations.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Field Operating Costs and General and Administrative Expenses
20 unchanged sentences
However, gains and losses arising from intercompany foreign currency transactions that are of a long-term investment nature are reported in the same manner as translation adjustments.
−Removed: For the years ended December 31, 2021, 2020 and 2019, the revaluation of foreign currency transactions and monetary assets and liabilities resulted in the recognitions of net gains of $ 7 million, $ 16 million and $ 1 million, respectively, in our Consolidated Statements of Operations.
−Removed: Cash and Cash Equivalents and Restricted Cash
+Added: For the years ended December 31, 2022, 2021 and 2020, the revaluation of foreign currency transactions and monetary assets and liabilities resulted in the recognition of a net loss of $ 41 million, a net gain of $ 7 million and a net gain of $ 16 million, respectively, in our Consolidated Statements of Operations.
+Added: Cash and Cash Equivalents
Cash and cash equivalents consist of all unrestricted demand deposits and funds invested in highly liquid instruments with original maturities of three months or less and typically exceed federally insured limits.
2 unchanged sentences
As of December 31, 2022 and 2021, trade accounts payable included $ 25 million and $ 19 million, respectively, of outstanding checks that were reclassified from cash and cash equivalents.
−Removed: Restricted cash includes cash held by us that is unavailable for general use and is comprised of amounts advanced to us by certain equity method investees related to the construction of fixed assets where we serve as construction manager.
−Removed: The following table presents a reconciliation of cash and cash equivalents and restricted cash reported on our Consolidated Balance Sheets that sum to the total of the amounts shown on our Consolidated Statements of Cash Flows (in millions):
−Removed: Cash and cash equivalents $ 449 $ 22
−Removed: Restricted cash 4 38
−Removed: Total cash and cash equivalents and restricted cash $ 453 $ 60
−Removed: Noncontrolling Interests
−Removed: Noncontrolling interest represents the portion of assets and liabilities in a consolidated subsidiary that is owned by a third party.
−Removed: FASB guidance requires all entities to report noncontrolling interests in subsidiaries as a component of equity in the consolidated financial statements.
−Removed: See Note 12 for additional discussion regarding our noncontrolling interests.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: Noncontrolling Interests
+Added: Noncontrolling interest represents the portion of assets and liabilities in a consolidated subsidiary that is owned by a third party.
+Added: FASB guidance requires all entities to report noncontrolling interests in subsidiaries as a component of equity in the consolidated financial statements.
+Added: See Note 12 for additional discussion regarding our noncontrolling interests.
Asset Retirement Obligations
14 unchanged sentences
Liabilities settled (1)
+Added: ( 26 ) ( 1 ) ( 1 )
Accretion expense 4 4 5
1 unchanged sentence
Ending balance $ 122 $ 143 $ 135
+Added: (1) The 2022 amount primarily relates to the transfer of liabilities to the third party purchaser associated with the sale of Line 901 and the Sisquoc to Pentland portion of Line 903 pipeline.
+Added: See Notes 7 and 19 for additional information.
Fair Value Measurements
2 unchanged sentences
The determination of the fair values includes not only the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits and letters of credit) but also the impact of our nonperformance risk on our liabilities.
−Removed: The fair value of our commodity derivatives, interest rate derivatives and foreign currency derivatives includes adjustments for credit risk.
+Added: The fair value of our commodity derivatives and interest rate derivatives includes adjustments for credit risk.
Our credit adjustment methodology uses market observable inputs and requires judgment.
1 unchanged sentence
See Note 13 for further discussion.
−Removed: Other Significant Accounting Policies
−Removed: See the respective footnotes for our accounting policies regarding (i) revenues and accounts receivable, (ii) net income/(loss) per common unit, (iii) inventory, linefill and base gas and long-term inventory, (iv) property and equipment, (v) acquisitions, (vi) goodwill, (vii) investments in unconsolidated entities, (viii) intangible assets, (ix) income allocation for partners’ capital presentation purposes, (x) derivatives and risk management activities, (xi) leases, (xii) income taxes, (xiii) equity-indexed compensation and (xiv) legal and environmental matters.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: Other Significant Accounting Policies
+Added: See the respective footnotes for our accounting policies regarding (i) revenues and accounts receivable, (ii) net income/(loss) per common unit, (iii) inventory, linefill and long-term inventory, (iv) property and equipment, (v) acquisitions, (vi) goodwill, (vii) investments in unconsolidated entities, (viii) intangible assets, (ix) income allocation for partners’ capital presentation purposes, (x) derivatives and risk management activities, (xi) leases, (xii) income taxes, (xiii) equity-indexed compensation and (xiv) legal and environmental matters.
Recent Accounting Pronouncements
3 unchanged sentences
The guidance is effective prospectively for interim and annual periods beginning after December 15, 2022, with early adoption permitted.
−Removed: We have not adopted this guidance as of December 31, 2021, but do not anticipate that our adoption will have a material impact on our financial position, results of operations or cash flows.
+Added: We adopted this guidance as of January 1, 2023, and do not anticipate that our adoption will have a material impact on our financial position, results of operations or cash flows.
In July 2021, the FASB issued ASU 2021-05, Lessors - Certain Leases with Variable Lease Payments (Topic 842) w hich modifies the lease classification requirements for lessors in Topic 842, which we adopted on the effective date of January 1, 2019.
9 unchanged sentences
Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.
−Removed: This guidance is effective prospectively upon issuance through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of this ASU.
−Removed: We will apply applicable expedients and exceptions to contract modifications through December 31, 2022.
+Added: This guidance was effective prospectively upon issuance through December 31, 2022.
+Added: In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):
+Added: Deferral of the Sunset Date of Topic 848, which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.
+Added: We will continue to apply applicable expedients and exceptions to contract modifications through December 31, 2024, as applicable.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
30 unchanged sentences
Inventory exchanges under buy/sell transactions are excluded from sales revenues in our Consolidated Statements of Operations.
−Removed: In addition, we have certain crude oil sales agreements that are entered into in conjunction with storage arrangements and future inventory exchanges.
−Removed: The revenues under these agreements are deferred until all performance obligations associated with the related agreements are completed.
−Removed: The inventory that has been sold under these crude oil sales agreements is reflected in “Other current assets” on our Consolidated Balance Sheet until all of our performance obligations are complete.
−Removed: At that time, the inventory that has been sold is removed from our Consolidated Balance Sheet and recorded as “Purchases and related costs” in our Consolidated Statement of Operations.
−Removed: See “ Contract Balances ” below for further discussion of contract liabilities associated with these agreements.
−Removed: The following table presents amounts in Other current assets and deferred revenue associated with these agreements (in millions):
−Removed: Other current assets $ — $ 229
−Removed: Deferred revenue (1)
−Removed: (1) Included in “Other current liabilities” on our Consolidated Balance Sheet.
−Removed: We may also utilize derivatives in connection with the transactions described above.
−Removed: Derivative revenue is not included as a component of revenue from contracts with customers, but is included in other items in revenue.
−Removed: The change in the fair value of derivatives that are not designated or do not qualify for hedge accounting is recognized in revenues each period.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Transportation Revenues.
12 unchanged sentences
Fees from NGL fractionation and isomerization services and gas processing services are recognized in the period when the services are performed.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation to Total Revenues of Reportable Segments.
1 unchanged sentence
revenues from entities accounted for by the equity method are not included.
−Removed: The following tables present the reconciliation of our revenues from contracts with customers (as described above for each segment) to segment revenues and total revenues as disclosed in our Consolidated Statements of Operations (in millions):
+Added: The following tables present the reconciliation of our revenues from contracts with customers (as described above for each segment) to total revenues of reportable segments and total revenues as disclosed in our Consolidated Statements of Operations (in millions):
Year Ended December 31, 2022 Crude Oil NGL Total
16 unchanged sentences
Total revenues $ 23,290
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Minimum Volume Commitments.
3 unchanged sentences
If a counterparty has a make-up right associated with a deficiency, we defer the revenue attributable to the counterparty’s make-up right as a contract liability 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.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table presents counterparty deficiencies associated with contracts with customers and buy/sell arrangements that include minimum volume commitments for which we had remaining performance obligations and the customers still had the ability to meet their obligations (in millions):
Counterparty Deficiencies Financial Statement Classification 2022 2021
−Removed: Billed and collected Liability $ 63 $ 73
+Added: Billed and collected Other current liabilities $ 104 $ 63
Total $ 105 $ 79
6 unchanged sentences
Amounts recognized as revenue (1)
−Removed: Additions (2)
Balance at December 31, 2021 $ 141
Amounts recognized as revenue ( 26 )
+Added: Additions (2)
Balance at December 31, 2022 $ 229
(1) Includes approximately $ 361 million associated with crude oil sales agreements that were entered into in conjunction with storage arrangements and future inventory exchanges.
−Removed: Such agreements were entered into in 2019 and recognized as revenue in the first quarter of 2020.
−Removed: (2) Includes approximately $ 361 million associated with crude oil sales agreements that were entered into in conjunction with storage arrangements and future inventory exchanges.
Such amount was recognized as revenue in the first quarter of 2021.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: (2) Includes approximately $ 122 million associated with a gas processing agreement that was entered into in conjunction with the purchase of an additional ownership interest in certain straddle plants.
+Added: Such amount is expected to be recognized as revenue over a 50-year term.
+Added: See Note 7 for additional information.
Remaining Performance Obligations .
10 unchanged sentences
(1) Calculated as volumes committed under contracts multiplied by the current applicable tariff rate.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The presentation above does not include (i) expected revenues from legacy shippers not underpinned by minimum volume commitments, including pipelines where there are no or limited alternative pipeline transportation options, (ii) intersegment revenues and (iii) the amount of consideration associated with certain income generating contracts, which include a fixed minimum level of service, that are either not within the scope of ASC 606 or do not meet the requirements for presentation as remaining performance obligations.
8 unchanged sentences
Certain contracts do not meet the requirements for presentation of remaining performance obligations due to variability in amount of performance obligation remaining, variability in the timing of recognition or variability in consideration.
−Removed: Acreage dedications do require us to perform future services but do not contain a minimum level of services and are therefore excluded from this presentation.
+Added: Acreage dedications require us to perform future services but do not contain a minimum level of services and are therefore excluded from this presentation.
Long-term merchant arrangements contain variable timing, volumes and/or consideration and are excluded from this presentation.
5 unchanged sentences
The majority of our accounts receivable relate to our crude oil merchant activities that can generally be described as high volume and low margin activities, in many cases involving exchanges of crude oil volumes.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
To mitigate credit risk related to our accounts receivable, we utilize a rigorous credit review process.
10 unchanged sentences
Although we consider our credit procedures to be adequate to mitigate any significant credit losses, the actual amount of current and future credit losses could vary significantly from estimated amounts.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following is a reconciliation of trade accounts receivable from revenues from contracts with customers to total Trade accounts receivable and other receivables, net as presented on our Consolidated Balance Sheets (in millions):
6 unchanged sentences
Note 4— Net Income/(Loss) Per Common Unit
−Removed: After consideration of distributions to preferred unitholders (whether paid in cash or in-kind), basic and diluted net income/(loss) per common unit is determined pursuant to the two-class method as prescribed in FASB guidance.
+Added: After consideration of distributions to preferred unitholders, basic and diluted net income/(loss) per common unit is determined pursuant to the two-class method as prescribed in FASB guidance.
This method is an earnings allocation formula that is used to determine allocations to our limited partners and participating securities according to distributions pertaining to the current period’s net income and participation rights in undistributed earnings or distributions in excess of earnings.
2 unchanged sentences
We calculate basic and diluted net income/(loss) per common unit by dividing net income/(loss) attributable to PAA (after deducting amounts allocated to the preferred unitholders and participating securities) by the basic and diluted weighted average number of common units outstanding during the period.
−Removed: Participating securities include equity-indexed compensation plan awards that have vested distribution equivalent rights, which entitle the grantee to a cash payment equal to the cash distribution paid on our outstanding common units.
The diluted weighted average number of common units is computed based on the weighted average number of common units plus the effect of potentially dilutive securities outstanding during the period, which include (i) our Series A preferred units and (ii) our equity-indexed compensation plan awards.
1 unchanged sentence
See Note 18 for a complete discussion of our equity-indexed compensation plan awards.
−Removed: When applying the if-converted method prescribed by FASB guidance, the possible conversion of approximately 71 million Series A
+Added: When applying the if-converted method prescribed by FASB guidance, the possible conversion of approximately 71 million Series A preferred units, on a weighted-average basis, were excluded from the calculation of diluted net income/(loss) per common unit for the years ended December 31, 2022, 2021 and 2020 as the effect was antidilutive for all periods.
+Added: Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered potentially dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied.
+Added: Equity-indexed compensation plan awards that were deemed to be dilutive during the year were 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.
+Added: For the years ended December 31, 2022, 2021 and 2020, approximately 2.0 million, 0.5 million and 0.3 million equity-indexed compensation plan awards, respectively, on a weighted-average basis, were excluded from the computation of diluted net income/(loss) per common unit as the effect did not change the presentation of diluted net income/(loss) per common unit or the effect was antidilutive.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: preferred units, on a weighted-average basis, were excluded from the calculation of diluted net income/(loss) per common unit for the year ended December 31, 2021 and 2020 as the effect was antidilutive for both periods.
−Removed: Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered potentially dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied.
−Removed: Equity-indexed compensation plan awards that were deemed to be dilutive during the year ended December 31, 2019 were 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.
−Removed: For the twelve months ended December 31, 2021 and 2020, approximately 0.5 million and 0.3 million equity-indexed compensation plan awards, respectively, on a weighted-average basis, were excluded from the computation of diluted net loss per common unit as the effect did not change the presentation of diluted net income/(loss) per common unit or the effect was antidilutive.
The following table sets forth the computation of basic and diluted net income/(loss) per common unit (in millions, except per unit data):
1 unchanged sentence
2022 2021 2020
−Removed: Basic Net Income/(Loss) per Common Unit
−Removed: Net income/(loss) attributable to PAA $ 593 $ ( 2,590 ) $ 2,171
−Removed: Distributions to Series A preferred unitholders ( 149 ) ( 149 ) ( 149 )
−Removed: Distributions to Series B preferred unitholders ( 49 ) ( 49 ) ( 49 )
−Removed: Distributions to participating securities ( 2 ) ( 2 ) ( 3 )
−Removed: Other — — ( 3 )
−Removed: Net income/(loss) allocated to common unitholders (1)
−Removed: $ 393 $ ( 2,790 ) $ 1,967
−Removed: Basic weighted average common units outstanding 716 728 727
−Removed: Basic net income/(loss) per common unit $ 0.55 $ ( 3.83 ) $ 2.70
−Removed: Diluted Net Income/(Loss) per Common Unit
+Added: Basic and Diluted Net Income/(Loss) per Common Unit
Net income/(loss) attributable to PAA $ 1,037 $ 593 $ ( 2,590 )
1 unchanged sentence
Distributions to Series B preferred unitholders ( 52 ) ( 49 ) ( 49 )
−Removed: Distributions to participating securities ( 2 ) ( 2 ) ( 3 )
+Added: Amounts allocated to participating securities ( 5 ) ( 2 ) ( 2 )
Net income/(loss) allocated to common unitholders (1)
$ 831 $ 393 $ ( 2,790 )
−Removed: Basic weighted average common units outstanding 716 728 727
−Removed: Effect of dilutive securities:
−Removed: Series A preferred units — — 71
−Removed: Equity-indexed compensation plan awards — — 2
−Removed: Diluted weighted average common units outstanding 716 728 800
−Removed: Diluted net income/(loss) per common unit $ 0.55 $ ( 3.83 ) $ 2.65
+Added: Basic and diluted weighted average common units outstanding 701 716 728
+Added: Basic and diluted net income/(loss) per common unit $ 1.19 $ 0.55 $ ( 3.83 )
(1) We calculate net income/(loss) allocated to common unitholders based on the distributions pertaining to the current period’s net income.
After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings (i.e., undistributed loss), 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.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Note 5— Inventory, Linefill and Base Gas and Long-term Inventory
+Added: Note 5— Inventory, Linefill and Long-term Inventory
Inventory, including long-term inventory, primarily consists of crude oil and NGL in pipelines, storage facilities and railcars that are valued at the lower of cost or net realizable value, with cost determined using an average cost method within specific inventory pools.
1 unchanged sentence
Any resulting adjustments are a component of “Purchases and related costs” on our accompanying Consolidated Statements of Operations.
−Removed: During the year ended December 31, 2021, no adjustments were recorded.
−Removed: During the years ended December 31, 2020 and 2019, we recorded charges of $ 233 million (of which $ 40 million was associated with our long-term inventory) and $ 11 million, respectively, related to the write down of our crude oil and NGL inventory due to declines in prices.
+Added: No adjustments were recorded during the years ended December 31, 2022 or 2021.
+Added: During the year ended December 31, 2020, we recorded charges of $ 233 million (of which $ 40 million was associated with our long-term inventory) related to the write down of our crude oil and NGL inventory due to declines in prices.
A portion of these inventory valuation adjustments was offset by the recognition of gains on derivative instruments being utilized to hedge future sales of our crude oil and NGL inventory.
1 unchanged sentence
See Note 13 for discussion of our derivative and risk management activities.
−Removed: Linefill and base gas in assets we own are recorded at historical cost and consist of crude oil, NGL and natural gas.
−Removed: We classify as linefill or base gas (i) our proportionate share of barrels used to fill a pipeline that we own such that when an incremental barrel is pumped into or enters a pipeline it forces product out at another location, (ii) barrels that represent the minimum working requirements in tanks and caverns that we own and (iii) natural gas required to maintain the minimum operating pressure of natural gas storage facilities we own.
−Removed: Following the sale of our Pine Prairie and Southern Pines natural gas storage facilities in August of 2021, we no longer own natural gas storage facilities.
−Removed: See Note 7 for additional information.
−Removed: Linefill and base gas carrying amounts are reviewed for impairment in accordance with FASB guidance with respect to accounting for the impairment or disposal of long-lived assets.
+Added: Linefill in assets we own is recorded at historical cost and consists of crude oil and NGL.
+Added: We classify as linefill (i) our proportionate share of barrels used to fill a pipeline that we own such that when an incremental barrel is pumped into or enters a pipeline it forces product out at another location and (ii) barrels that represent the minimum working requirements in tanks and caverns that we own.
+Added: Linefill carrying amounts are reviewed for impairment in accordance with FASB guidance with respect to accounting for the impairment or disposal of long-lived assets.
Carrying amounts that are not expected to be recoverable through future cash flows are written down to estimated fair value.
See Note 6 for further discussion regarding impairment of long-lived assets.
−Removed: During 2021, 2020 and 2019, we did not recognize any material impairments of linefill and base gas.
+Added: During 2022, 2021 and 2020, we did not recognize any material impairments of linefill.
Minimum working inventory requirements in third-party assets and other working inventory in our assets that are needed for our commercial operations are included within specific inventory pools in inventory (a current asset) in determining the average cost of operating inventory.
4 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Inventory, linefill and base gas and long-term inventory consisted of the following (barrels and natural gas volumes in thousands and carrying value in millions):
+Added: Inventory, linefill and long-term inventory consisted of the following (barrels in thousands and carrying value in millions):
December 31, 2022 December 31, 2021
7 unchanged sentences
Inventory subtotal 729 783
−Removed: Linefill and base gas
Crude oil 15,480 barrels 906 $ 58.53 15,199 barrels 862 $ 56.71
NGL 1,876 barrels 55 $ 29.32 1,633 barrels 45 $ 27.56
−Removed: Natural gas (2)
−Removed: — Mcf — $ — 25,576 Mcf 110 $ 4.30
−Removed: Linefill and base gas subtotal 907 982
+Added: Linefill subtotal 961 907
Long-term inventory
5 unchanged sentences
Accordingly, these prices may not coincide with any published benchmarks for such products.
−Removed: (2) Base gas with a carrying value of $ 110 million was included in the sale of our natural gas storage facilities, which closed in August 2021.
−Removed: See Note 7 for additional information.
Note 6— Property and Equipment
−Removed: In accordance with our capitalization policy, expenditures made to expand the existing operating and/or earnings capacity of our assets are capitalized.
−Removed: We also capitalize certain costs directly related to the construction of such assets, including related internal labor costs, engineering costs and interest costs.
−Removed: For the years ended December 31, 2021, 2020 and 2019, capitalized interest recorded to property and equipment was $ 6 million, $ 8 million and $ 14 million, respectively.
−Removed: In addition, we capitalize interest related to investments in certain unconsolidated entities.
−Removed: See Note 9 for additional information.
+Added: In accordance with our capitalization policy, expenditures made to expand the existing operating and/or earnings capacity of our assets are capitalized, as are certain costs directly related to the construction of such assets, including related internal labor costs, engineering costs and interest costs.
We also capitalize expenditures for the replacement and/or refurbishment of partially or fully depreciated assets in order to maintain the operating and/or earnings capacity of our existing assets.
Repair and maintenance expenditures incurred in order to maintain the day to day operation of our existing assets are expensed as incurred.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment, net is stated at cost and consisted of the following (in millions):
11 unchanged sentences
Property and equipment, net $ 15,250 $ 14,903
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) We include rights-of-way, which are intangible assets, in our Pipelines and related facilities amounts within property and equipment.
−Removed: (2) Useful lives changed to 10 to 50 years in 2021.
−Removed: See below for additional information.
We calculate our depreciation using the straight-line method, based on estimated useful lives and salvage values of our assets.
Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $ 707 million, $ 652 million and $ 563 million, respectively.
−Removed: During the first quarter of 2021, we modified the useful lives of our Pipelines and related facilities and Storage, terminal and rail facilities to useful lives of 10 to 50 years from useful lives of 10 to 70 years to reflect current expectations given our future operating and commercial outlook.
−Removed: These depreciable life adjustments will prospectively increase depreciation expense.
−Removed: For the year ended December 31, 2021, these reductions in useful lives increased depreciation expense by approximately $ 72 million, which resulted in a decrease to both basic and diluted net income per common unit of approximately $ 0.10 from what these amounts would have been absent the change in useful lives.
−Removed: As of December 31, 2021, 2020 and 2019, we incurred liabilities for construction in progress that had not been paid of $ 48 million, $ 51 million and $ 120 million, respectively.
+Added: As of December 31, 2022, 2021 and 2020, we incurred liabilities of $ 46 million, $ 48 million and $ 51 million, respectively, for construction in progress that had not been paid.
Impairment of Long-Lived Assets (Held and Used)
11 unchanged sentences
• if an impairment exists, the fair value of the asset or asset group.
+Added: In addition, when we evaluate property and equipment and other long-lived assets for recoverability, it may also be necessary to review related depreciation estimates and methods.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: In addition, when we evaluate property and equipment and other long-lived assets for recoverability, it may also be necessary to review related depreciation estimates and methods.
+Added: During the third quarter of 2022, we temporarily ceased service on a crude oil pipeline in California as a precautionary measure following a routine inspection and initiated a program of additional tests and inspections.
+Added: After assessing the results of such tests and the changing operating conditions of our California assets, we determined that we had a triggering event due to the effect on future cash flows for certain of our assets that required us to assess the recoverability of our carrying value of our California crude oil assets (which includes the temporarily idled pipeline) reported in our Crude Oil segment.
+Added: As a result of our impairment review, we wrote off the portion of the carrying amount of these long-lived assets that exceeded their fair value.
+Added: We recognized a non-cash loss of approximately $ 330 million, which amount is reflected in “ (Gains)/losses on asset sales and asset impairments, net ” on our Consolidated Statement of Operations.
+Added: Our estimated fair values (which we consider a Level 3 measurement in the fair value hierarchy) were based upon a discounted cash flow approach utilizing various assumptions and the application of a discount rate of approximately 15 %, which represents our estimate of the cost of capital of a theoretical market participant for the asset group.
+Added: Such assumptions included (but were not limited to) (i) future commodity volumes (consistent with historical information and estimates of future drilling and completion activity), (ii) tariff rates, (iii) estimated fixed and variable costs, (iv) the length of time the assets operate and (v) the amount for which assets in the asset group could be sold.
During the year ended December 31, 2021, we recognized approximately $ 220 million of non-cash impairment losses related to certain crude oil storage terminal assets included in our Crude Oil segment.
11 unchanged sentences
We wrote off substantially all of the carrying value of these assets.
−Removed: We did not recognize any material impairments during the year ended December 31, 2019.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 7— Acquisitions, Divestitures and Other Transactions
+Added: In November 2022, we and Enbridge Inc.
+Added: (“Enbridge”) purchased Western Midstream Partners, LP (“WES”)’s 15 % interest in Cactus II Pipeline, LLC (“Cactus II”) for an aggregate amount of $ 265 million.
+Added: Enbridge acquired 10 % and we acquired 5 % of Cactus II, with each paying a proportionate share ($ 177 million and $ 88 million, respectively) of the aggregate purchase price.
+Added: We and Enbridge are now the sole owners of Cactus II, with 70 % and 30 % respective ownership interests.
+Added: We will continue to serve as operator.
+Added: We previously accounted for our 65 % interest in Cactus II as an equity method investment.
+Added: In addition to the change in ownership, there were changes in governance which led to a change in control.
+Added: We now control Cactus II and reflect Cactus II as a consolidated subsidiary in our Consolidated Financial Statements, with Enbridge’s 30 % interest reflected as a noncontrolling interest.
+Added: The acquisition was accounted for as a business combination achieved in stages, or a “step acquisition”, using the acquisition method of accounting.
+Added: As the majority owner and the controlling entity, we are considered the acquirer and the Cactus II predecessor business was recorded based on the fair value of the assets acquired and liabilities assumed, with Enbridge’s 30 % interest in Cactus II of $ 526 million recognized as noncontrolling interest in partners’ capital.
+Added: As a result of us obtaining control over Cactus II, our previously held 65 % interest in Cactus II was remeasured to its fair value of $ 1.140 billion based upon a valuation of the acquired business, as of the date of acquisition.
+Added: We considered multiple factors in determining the fair value of the previously held equity method investment, including, (i) the price negotiated with WES for its 15 % interest in Cactus II and (ii) a discounted cash flow approach.
+Added: The discounted cash flow approach utilized a discount rate of 13.8 %, based on the estimate of the risk that a theoretical market participant would assign to the business.
+Added: Prior to the acquisition, we had a preexisting relationship with Cactus II, through one of our consolidated joint ventures, for certain capacity lease agreements.
+Added: The portion of the fair value of Cactus II associated with these agreements is eliminated in consolidation.
+Added: Accounting for such impact, the remeasurement of our investment in Cactus II to fair value resulted in a gain of $ 370 million.
+Added: This gain has been recognized in the line item “Gains (losses) on/(impairment of) investments in unconsolidated entities, net” on our Consolidated Statement of Operations
+Added: In accordance with applicable accounting guidance, the fair value of Cactus II following the acquisition is utilized as the consideration transferred for the purchase price allocation.
+Added: The consideration transferred of $ 1.556 billion excludes the value associated with the capacity lease agreements described above as such value is eliminated for our Consolidated Financial Statements.
+Added: The determination of the fair value of the assets acquired and liabilities assumed was estimated in accordance with the applicable accounting guidance.
+Added: The analysis was performed based on estimates that are reflective of market participant assumptions.
+Added: The following table reflects our determination of the fair value of those assets and liabilities (in millions):
+Added: Identifiable Assets Acquired and Liabilities Assumed:
+Added: Estimated Useful Lives
+Added: (in years) Recognized Amount
+Added: Property and equipment 3 - 50
+Added: Intangible assets 20 428
+Added: Working capital and other assets and liabilities N/A ( 46 )
+Added: The fair value of the tangible assets is a Level 3 measurement in the fair value hierarchy and was determined using a market approach for rights-of-way and a cost approach for other tangible assets, which were based on costs incurred on similar recent construction projects.
+Added: The fair value of the intangible assets is also a Level 3 measurement in the fair value hierarchy and was determined by applying a discounted cash flow approach.
+Added: Such approach utilized a discount rate of approximately 18 %, based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets.
+Added: The projection of future crude oil volumes transported and the estimated tariff rates for transportation were also key assumptions in the valuation of the intangible assets.
+Added: Projected future volumes and estimated tariff rates were based on current contracts in place with assumptions for forecasted rate increases and contract renewals.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: The fair value of intangible assets is comprised of customer relationships that will be amortized over their useful lives, which have a remaining weighted average life of approximately 20 years.
+Added: The value assigned to such intangible assets will be amortized to earnings under the declining balance method of amortization.
+Added: Amortization expense was approximately $ 13 million during the year ended December 31, 2022, and the future amortization expense through 2027 is estimated as follows (in millions):
+Added: Pro forma financial information assuming the step acquisition had occurred as of the beginning of the calendar year prior to the year of the step acquisition, as well as the revenues and earnings generated during the period since the step acquisition date, were not material for disclosure purposes.
+Added: Other Acquisitions
+Added: During the year ended December 31, 2022, we also completed the following acquisitions:
+Added: • the acquisition in July 2022 of the remaining 50 % interest in Advantage Pipeline Holdings LLC (“Advantage”) for $ 74 million, including cash paid for working capital.
+Added: As a result of this transaction, we now own 100 % of Advantage and its subsidiaries and such entities are reflected as consolidated subsidiaries in our Consolidated Financial Statements.
+Added: • the acquisition in October 2022 of an additional ownership interest in certain straddle plants included in our NGL segment in a non-cash transaction whereby we agreed to provide processing capacity over a 50-year term at specified terms and conditions.
+Added: This transaction was accounted for as an asset acquisition.
+Added: The fair value of the straddle plant assets acquired and liabilities assumed was approximately $ 122 million, and we recognized an equally offsetting contract liability that will be amortized on a straight-line basis into “Services revenue” over the 50-year term of the agreement.
+Added: In February 2020, we acquired Felix Midstream LLC, now known as FM Gathering LLC (“FM Gathering”) from Felix Energy Holdings II, LLC for approximately $ 300 million, net of working capital and other adjustments.
+Added: FM Gathering owns and operates a newly constructed crude oil gathering system in the Delaware Basin, with associated crude oil storage and truck offloading capacity, and is supported by a long-term acreage dedication.
+Added: The assets acquired are included in our Crude Oil segment.
+Added: This acquisition was accounted for using the acquisition method of accounting and the determination of the fair value of the assets acquired and liabilities assumed was determined in accordance with the applicable accounting guidance.
+Added: The assets acquired primarily consisted of property and equipment with a fair value of $ 115 million and intangible assets with a fair value of $ 187 million.
+Added: The fair value of the tangible assets is a Level 3 measurement in the fair value hierarchy and was determined using a cost approach.
+Added: The cost approach was based on costs incurred on similar recent construction projects.
+Added: The fair value of the intangible assets is also a Level 3 measurement in the fair value hierarchy and was determined by applying a discounted cash flow approach.
+Added: Such approach utilized discount rates varying from 18 % to 19 %, based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets.
+Added: Asset Exchange
+Added: In June 2021, we closed on an asset exchange agreement (the “Asset Exchange”) with Inter Pipeline Ltd., through which we acquired additional interests in two straddle plants included in our NGL segment that we currently operate, in exchange for a pipeline and related storage and truck offload facilities previously included in our Crude Oil segment and cash consideration of $ 32 million, including working capital and other adjustments.
+Added: We recognized a gain of $ 106 million on the divestiture of the pipeline and related storage and truck offload facilities, which is included in “(Gains)/losses on asset sales and asset impairments, net” on our Consolidated Statement of Operations, based on the difference between the fair value of the divested assets and their carrying value.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Joint Venture Transaction
8 unchanged sentences
The difference between the noncontrolling interest recognized and the fair value of Oryx Midstream’s assets acquired and liabilities assumed was recorded as an increase to our partners’ capital excluding noncontrolling interests.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the amounts recognized in partners’ capital associated with this transaction (in millions):
3 unchanged sentences
The fair value of the $ 3.230 billion consideration is a Level 3 measurement in the fair value hierarchy and was determined by valuing both the enterprise value of Oryx Midstream’s Permian Basin business and the enterprise value of our Permian Basin assets that were contributed to the joint venture.
−Removed: The enterprise value of Oryx Midstream’s Permian Basin business was calculated by weighting the results of (i) a discounted cash flow (“DCF”) approach and (ii) a guideline public company method (“GPCM”).
+Added: The enterprise value of Oryx Midstream’s Permian Basin business was calculated by weighting the results of (i) a discounted cash flow approach and (ii) a guideline public company method (“GPCM”).
The value of our Permian Basin assets that were contributed to the joint venture was based on a GPCM.
−Removed: The DCF approach utilized a discount rate of 11.75 %, based on our estimate of the risk that a theoretical market participant would assign to the business.
−Removed: The projection of future crude volumes gathered and transported was also a key assumption in the DCF approach and was based on projected rig activity on the associated acreage.
+Added: The discounted cash flow approach utilized a discount rate of 11.75 %, based on our estimate of the risk that a theoretical market participant would assign to the business.
+Added: The projection of future crude volumes gathered and transported was also a key assumption in the discounted cash flow approach and was based on projected rig activity on the associated acreage.
The GPCM applies market multiples to estimated earnings to derive the fair value.
2 unchanged sentences
The analysis was performed based on estimates that are reflective of market participant assumptions.
−Removed: The determination of these values is preliminary, pending finalization of working capital balances, and we expect to finalize our fair value determination in 2022.
−Removed: The following table reflects our preliminary determination of the fair value of those assets and liabilities (in millions):
+Added: The following table reflects our determination of the fair value of those assets and liabilities (in millions):
Identifiable Assets Acquired and Liabilities Assumed Estimated Useful Lives
3 unchanged sentences
Investment in unconsolidated entities N/A 103
−Removed: Linefill N/A 5
Working capital and other assets and liabilities N/A ( 6 )
−Removed: The fair value of the tangible assets is a Level 3 measurement in the fair value hierarchy and was determined using a cost approach based on costs incurred on similar recent construction projects.
−Removed: The fair value of the intangible assets is also a Level 3 measurement in the fair value hierarchy and was determined by applying a discounted cash flow approach.
−Removed: Such approach utilized a discount rate of approximately 16 %, based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets.
−Removed: The projection of future crude oil volumes gathered and transported was also a key assumption in the valuation of the intangible assets and was based on projected rig activity on the associated acreage.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: The fair value of the tangible assets is a Level 3 measurement in the fair value hierarchy and was determined using a cost approach based on costs incurred on similar recent construction projects.
+Added: The fair value of the intangible assets is also a Level 3 measurement in the fair value hierarchy and was determined by applying a discounted cash flow approach.
+Added: Such approach utilized a discount rate of approximately 16 %, based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets.
+Added: The projection of future crude oil volumes gathered and transported was also a key assumption in the valuation of the intangible assets and was based on projected rig activity on the associated acreage.
The fair value of intangible assets is comprised of customer relationships that will be amortized over their useful lives, which have a remaining weighted average life of approximately 20 years.
The value assigned to such intangible assets will be amortized to earnings under the declining balance method of amortization.
−Removed: Amortization expense was approximately $ 28 million during the year ended December 31, 2021, and the future amortization expense through 2026 is estimated as follows (in millions):
+Added: Amortization expense was approximately $ 142 million and $ 28 million during the years ended December 31, 2022 and 2021, respectively, and the future amortization expense through 2026 is estimated as follows (in millions):
During the year ended December 31, 2021, we incurred approximately $ 17 million of transaction-related costs associated with the joint venture formation transaction.
Such costs are reflected as a component of “General and administrative expenses” on our Consolidated Statements of Operations.
−Removed: Quarterly distributions of available cash from the Permian JV to us and Oryx Midstream are subject to a tiered modified sharing arrangement (“MSA”) for up to ten years .
+Added: Distributions of available cash from the Permian JV to us and Oryx Midstream are subject to a tiered modified sharing arrangement (“MSA”) for up to ten years .
Pursuant to the terms of the governing documents for the Permian JV, the MSA will terminate in October 2031, or sooner if Oryx Midstream exercises its right to terminate the MSA at any time by delivery of written notice to us.
−Removed: Upon termination of the MSA, quarterly distributions of available cash will be paid 65 % to PAA and 35 % to Oryx.
+Added: Upon termination of the MSA, monthly distributions of available cash will be paid 65 % to PAA and 35 % to Oryx.
+Added: Through the third quarter of 2022, the Permian JV made quarterly distributions, but starting in December 2022, the Permian JV began making monthly distributions to the members after renegotiation of the MSA.
Under the MSA, distributions will be allocated as follows (in millions):
23 unchanged sentences
Basic and diluted net income/(loss) per common unit $ 0.45 $ ( 4.26 )
−Removed: Asset Exchange
−Removed: In June 2021, we closed on an asset exchange agreement (the “Asset Exchange”) with Inter Pipeline Ltd., through which we acquired additional interests in two straddle plants included in our NGL segment that we currently operate, in exchange for a pipeline and related storage and truck offload facilities previously included in our Crude Oil segment and cash consideration of $ 32 million, including working capital and other adjustments.
−Removed: We recognized a gain of $ 106 million on the divestiture of the pipeline and related storage and truck offload facilities, which is included in “(Gains)/losses on asset sales and asset impairments, net” on our Consolidated Statement of Operations, based on the difference between the fair value of the divested assets and their carrying value.
−Removed: In February 2020, we acquired Felix Midstream LLC, now known as FM Gathering LLC (“FM Gathering”) from Felix Energy Holdings II, LLC for approximately $ 300 million, net of working capital and other adjustments.
−Removed: FM Gathering owns and operates a newly constructed crude oil gathering system in the Delaware Basin, with associated crude oil storage and truck offloading capacity, and is supported by a long-term acreage dedication.
−Removed: The assets acquired are included in our Crude Oil segment.
−Removed: This acquisition was accounted for using the acquisition method of accounting and the determination of the fair value of the assets acquired and liabilities assumed was determined in accordance with the applicable accounting guidance.
−Removed: The assets acquired primarily consisted of property and equipment of $ 115 million and intangible assets of $ 187 million.
−Removed: The fair value of the tangible assets is a Level 3 measurement in the fair value hierarchy and was determined using a cost approach.
−Removed: The cost approach was based on costs incurred on similar recent construction projects.
−Removed: The fair value of the intangible assets is also a Level 3 measurement in the fair value hierarchy and was determined by applying a discounted cash flow approach.
−Removed: Such approach utilized discount rates varying from 18 % to 19 %, based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets.
−Removed: During the second quarter of 2019, we acquired a crude oil terminal, including tank bottoms and linefill, in Cushing, Oklahoma for cash consideration of $ 44 million, which was accounted for as an asset acquisition.
+Added: During the year ended December 31, 2022, we sold certain non-core assets for total proceeds of $ 60 million.
+Added: The assets sold primarily consisted of land and related assets in Long Beach, California, as well as Line 901 and the Sisquoc to Pentland portion of Line 903.
+Added: These assets were previously reported in our Crude Oil segment.
+Added: We recognized gains of $ 61 million related to these asset sales, a portion of which relates to the transfer of an asset retirement obligation to the purchaser.
+Added: Such amounts are included in “(Gains)/losses on asset sales and asset impairments, net” on our Consolidated Statement of Operations.
In August 2021, we sold our Pine Prairie and Southern Pines natural gas storage facilities, which were included in our Crude Oil segment for periods prior to the sale, for net proceeds of approximately $ 850 million, including working capital adjustments.
2 unchanged sentences
During the year ended December 31, 2020, we received cash proceeds of $ 451 million, primarily from the sale of:
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
• certain Los Angeles Basin crude oil terminals previously included in our Crude Oil segment for proceeds of approximately $ 200 million, subject to certain adjustments;
1 unchanged sentence
• a 10 % ownership interest in Saddlehorn Pipeline Company, LLC (“Saddlehorn”) for proceeds of approximately $ 78 million, including working capital adjustments (see Note 9 for additional information).
−Removed: We recognized a loss related to these assets sales of $ 178 million, including non-cash impairments recognized upon classification to assets held for sale, for the year ended December 31, 2020.
+Added: We recognized a loss related to these asset sales of $ 178 million, including non-cash impairments recognized upon classification to assets held for sale, for the year ended December 31, 2020.
Such amount is included in “(Gains)/losses on asset sales and asset impairments, net” on our Consolidated Statement of Operations.
−Removed: During the year ended December 31, 2019, we sold certain non-core assets for total proceeds of $ 77 million that primarily consisted of a storage terminal in North Dakota, which is reflected in our Crude Oil segment for the period prior to the sale.
−Removed: For the year ended December 31, 2019, we recognized a net loss related to these asset sales of $ 16 million, which is comprised of gains of $ 31 million and losses of $ 47 million.
−Removed: Such amounts are included in “(Gains)/losses on asset sales and asset impairments, net” on our Consolidated Statement of Operations.
−Removed: Note 8— Goodwill
−Removed: Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized.
−Removed: In accordance with FASB guidance, we test goodwill to determine whether an impairment has occurred at least annually (as of June 30) and on an interim basis if it is more likely than not that a reporting unit’s fair value is less than its carrying value.
−Removed: Goodwill is tested for impairment at a level of reporting referred to as a reporting unit.
−Removed: A reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and regularly reviewed by segment management.
−Removed: Our reporting units are our operating segments.
−Removed: FASB guidance provides for a quantitative approach to testing goodwill for impairment;
−Removed: however, we may first assess certain qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.
−Removed: In the quantitative test, we compare the fair value of the reporting unit with the respective book values, including goodwill, by using an income approach based on a discounted cash flow model.
−Removed: This approach requires us to make long-term forecasts of future revenues, expenses and other expenditures.
−Removed: Those forecasts require the use of various assumptions and estimates, the most significant of which are net revenues (total revenues less purchases and related costs), operating expenses, general and administrative expenses and the weighted average cost of capital.
−Removed: Fair value of the reporting units is determined using significant unobservable inputs, or Level 3 inputs in the fair value hierarchy.
−Removed: When the fair value is greater than book value, then the reporting unit’s goodwill is not considered impaired.
−Removed: If the book value is greater than fair value, then goodwill is impaired by the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.
+Added: Assets Held for Sale
+Added: In December 2022, we entered into a definitive agreement to sell our 21 % non-operated/undivided joint interest in the Keyera Fort Saskatchewan facility to Keyera Corporation for approximately CAD$ 365 million.
+Added: As of December 31, 2022, we classified the assets related to this transaction (primarily “Property and equipment” in our NGL segment), valued at the lower of the carrying amount or fair value less costs to sell, of approximately $ 130 million as assets held for sale on our Consolidated Balance Sheet (in “Other current assets”).
+Added: This transaction closed in February 2023.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: Note 8— Goodwill
During the first quarter of 2020, we recorded impairment losses of $ 2.515 billion related to goodwill.
Our market capitalization declined significantly during the first quarter driven by macroeconomic and geopolitical conditions that occurred in 2020, including the collapse of oil prices driven by both the decrease in demand caused by the COVID-19 pandemic and excess supply, as well as changing market conditions and expected lower crude oil production in certain regions, that resulted in expected decreases in future cash flows for certain of our assets, which we concluded was a triggering event that required us to perform a quantitative impairment test as of March 31, 2020, utilizing a discounted cash flow approach.
−Removed: We applied a discount rate of approximately 14 % in the determination of the fair value of each of our reporting units, which represents our estimate of the cost of capital of a theoretical market participant as of March 31, 2020.
−Removed: The fair values of the reporting units are Level 3 measurements in the fair value hierarchy and were based on various inputs, as discussed below.
−Removed: The discounted cash flows for each reporting unit were based on six years of projected cash flows and terminal values that we believe would be applied by a theoretical market participant in similar market transactions.
−Removed: The discounted cash flows for the respective reporting units utilized various other assumptions, including, but not limited to (i) volumes (based on historical information and estimates of future drilling and completion activity, as well as expectations of future demand recovery), (ii) tariff and storage rates, (iii) future commodity prices (based on relevant indices and applicable quality and location differentials), and (iv) estimated fixed and variable costs.
−Removed: We used a range of cash flows for the discounted cash flow calculations based on differing potential market scenarios, but for each of the reporting units, the ultimate outcome of the impairment test was unchanged by the various points within the range of cash flows.
−Removed: As a result of the impairment test, we concluded that the carrying value of each of our reporting units exceeded their respective fair values, resulting in a goodwill impairment charge for the entire goodwill balance for each reporting unit.
−Removed: Prior to the year ended December 31, 2020, we did not recognize any impairments of goodwill.
−Removed: Goodwill by segment and changes in goodwill is reflected in the following table (in millions):
−Removed: Crude Oil NGL Total
−Removed: Balance at December 31, 2019 $ 2,300 $ 240 $ 2,540
−Removed: Acquisitions 2 — 2
−Removed: Goodwill, gross $ 2,302 $ 240 $ 2,542
−Removed: Impairments ( 2,287 ) ( 228 ) ( 2,515 )
−Removed: Foreign currency translation adjustments ( 15 ) ( 12 ) ( 27 )
−Removed: Accumulated impairment losses ( 2,302 ) ( 240 ) ( 2,542 )
−Removed: Balance at December 31, 2020 $ — $ — $ —
+Added: We applied a discount rate of approximately 14 % in the determination of the fair value of each of our reporting units, which represented our estimate of the cost of capital of a theoretical market participant as of March 31, 2020.
+Added: As a result of the impairment test, we concluded that the carrying value of each of our reporting units exceeded their respective fair values, resulting in an impairment charge for the entire goodwill balance for each reporting unit.
Note 9— Investments in Unconsolidated Entities
4 unchanged sentences
An impairment of an equity investment results when factors indicate that the investment’s fair value is less than its carrying value and the reduction in value is other than temporary in nature.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Our investments in unconsolidated entities consisted of the following (in millions, except percentage data):
3 unchanged sentences
BridgeTex Pipeline Company, LLC (“BridgeTex”) Crude Oil Pipeline 20 % $ 403 $ 406
−Removed: Cactus II Pipeline LLC (“Cactus II”) Crude Oil Pipeline 65 % 737 752
+Added: Cactus II (2)
+Added: Crude Oil Pipeline — % — 737
Capline Pipeline Company LLC Crude Oil Pipeline 54 % 539 531
3 unchanged sentences
Crude Oil Terminal and Dock 50 % 118 120
−Removed: OMOG JV LLC (3)
+Added: OMOG JV LLC (“OMOG”) (3)
Crude Oil Pipeline 57 % 211 102
6 unchanged sentences
(1) The financial results from these entities are reported in our Crude Oil segment.
−Removed: (2) The Capline pipeline was out of service during 2020 and a majority of 2021 pending the reversal of the pipeline system.
−Removed: The pipeline reversal project was completed with interim service beginning in mid-December 2021 and full service beginning in January 2022.
−Removed: (3) Our ownership in this entity was acquired as part of the assets contributed by Oryx Midstream in the formation of the Permian JV in October 2021.
+Added: (2) In November 2022, we acquired an additional 5 % interest in Cactus II which, combined with changes in governance, resulted in our obtaining control of the entity.
+Added: We now reflect Cactus II as a consolidated subsidiary in our Consolidated Financial Statements.
See Note 7 for additional information.
+Added: (3) In November 2022, we acquired an additional interest in OMOG.
+Added: Although we own greater than 50% of OMOG, we use the equity method to account for the investment because the joint venture partner still retains substantive participating rights.
(4) Although we own less than 20% of W2W Pipeline, we use the equity method to account for the investment because we believe we have significant influence over the financial and operating decisions of the company.
−Removed: (5) The pipeline system was in partial service during 2021 and another phase of the pipeline construction project was completed in the first quarter of 2022.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: (5) In July 2022, we acquired the remaining 50 % interest in Advantage.
+Added: Prior to the acquisition, our 50 % interest in Advantage was accounted for as an equity method investment.
+Added: See Note 7 for additional information.
+Added: During the fourth quarter of 2022, through a non-monetary transaction, we acquired an additional interest in OMOG in exchange for the contribution of portions of two pipeline systems.
+Added: Subsequent to the transaction, our ownership interest in OMOG increased to 57 % from 40 %.
+Added: We continue to account for OMOG as an equity method investment.
+Added: The transaction resulted in a loss of approximately $ 25 million, which represents the difference between the fair value and historical book value of the assets contributed.
+Added: This loss is reflected in “Gains (losses) on/(impairment of) investments in unconsolidated entities, net” on our Consolidated Statement of Operations.
During the year ended December 31, 2020, we recognized losses as a result of the write-down of certain of our investments in unconsolidated entities, as discussed further below.
−Removed: Such amounts are reflected in “Gain on/(impairment of) investments in unconsolidated entities, net” on our Consolidated Statement of Operations.
+Added: Such amounts are reflected in “Gains (losses) on/(impairment of) investments in unconsolidated entities, net” on our Consolidated Statement of Operations.
During the third quarter of 2020, we determined that there was an other-than-temporary impairment of our investment in STACK Pipeline LLC as a result of a continued decline of drilling activity and related volumes of crude oil in its area of operation.
We recognized a loss of $ 91 million related to the write-down of the portion of the carrying amount of our investment that exceeded its fair value.
−Removed: The estimated fair value (which we consider a Level 3 measurement in the fair value hierarchy) was based on a discounted cash flow approach utilizing various assumptions and the application of a discount rate of approximately 14 %, which represents our estimate of the cost of capital of a theoretical market participant.
+Added: The estimated fair value (which we consider a Level 3 measurement in the fair value hierarchy) was based on a discounted cash flow approach utilizing various assumptions and the application of a discount rate of approximately 14 %, which represented our estimate of the cost of capital of a theoretical market participant.
Such assumptions included (but were not limited to) (i) volumes (consistent with historical information and estimates of future drilling and completion activity), (ii) tariff rates, (iii) future commodity prices (based on relevant indices and applicable quality and location differentials), and (iv) estimated fixed and variable costs.
2 unchanged sentences
We determined that there was an other-than-temporary impairment of our investment in Red Oak, and we recognized a loss of $ 69 million related to the write-down of our investment in Red Oak to the estimated residual value of our share of the net assets during the second quarter of 2020.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other investments.
During the first quarter of 2020, we also recognized a loss of $ 43 million related to the write-down of certain of our investments included in “Other investments” in the table above due to an other-than-temporary impairment related to a decline in market conditions.
−Removed: Capline LLC .
−Removed: During the first quarter of 2019, the owners of the Capline pipeline system contributed their undivided joint interests in the system to a newly formed entity, Capline Pipeline Company LLC (“Capline LLC”), in exchange for equity interests in such entity.
−Removed: After the contribution, Capline LLC owns 100 % of the pipeline system.
−Removed: Each owner’s undivided joint interest in the Capline pipeline system prior to the transaction is equal to each owner’s equity interest in Capline LLC.
−Removed: Although we own a majority of Capline LLC’s equity, we do not have a controlling financial interest in Capline LLC because the other members have substantive participating rights.
−Removed: Therefore, we account for our ownership interest in Capline LLC as an equity method investment.
−Removed: Under applicable accounting rules, the transaction resulted in a “loss of control” of our undivided joint interest, which was derecognized and contributed to Capline LLC.
−Removed: The “loss of control” required us to measure our equity interest in Capline LLC at fair value.
−Removed: At the time of the transaction, our 54 % undivided joint interest in the Capline pipeline system had a carrying value of $ 175 million, which primarily related to property and equipment included in our Crude Oil segment.
−Removed: We determined the fair value of our investment in Capline LLC to be approximately $ 444 million, resulting in the recognition of a gain of $ 269 million during the year ended December 31, 2019.
−Removed: Such gain is included in “Gain on/(impairment of) investment in unconsolidated entities, net” on our Consolidated Statement of Operations.
−Removed: The fair value of our investment in Capline LLC was based on an income approach utilizing a discounted cash flow analysis.
−Removed: The cash flow forecasts require the use of various assumptions and estimates which include those related to the timing and amount of capital expenditures, the expected tariff rates and volumes of crude oil, and the terminal value.
−Removed: We probability-weighted various forecasted cash flow scenarios utilized in the analysis when we considered the possible outcomes.
−Removed: We used a discount rate representing our estimate of the risk adjusted discount rate that would be used by market participants.
−Removed: If shipper interest varies from the levels assumed in our model, the related cash flows, and thus the fair value of our investment, could be materially impacted.
−Removed: The fair value of our investment was determined using significant unobservable inputs, or Level 3 inputs in the fair value hierarchy.
−Removed: In February 2020, we sold a 10 % ownership interest in Saddlehorn for proceeds of approximately $ 78 million and have retained a 30 % ownership interest.
−Removed: We recorded a gain of approximately $ 21 million related to this sale, which is included in “Gain on/(impairment of) investments in unconsolidated entities, net” on our Consolidated Statement of Operations.
−Removed: We continue to account for our remaining interest under the equity method of accounting.
+Added: In February 2020, we sold a 10 % ownership interest in Saddlehorn for proceeds of approximately $ 78 million.
+Added: We recorded a gain of approximately $ 21 million related to this sale, which is included in “Gains (losses) on/(impairment of) investments in unconsolidated entities, net” on our Consolidated Statement of Operations.
+Added: We continue to account for our remaining 30 % interest in Saddlehorn under the equity method of accounting.
Distributions
2 unchanged sentences
Other distributions received from unconsolidated entities are considered a return of investment and classified as cash flows from investing activities on the Consolidated Statement of Cash Flows.
−Removed: Contributions
−Removed: We generally fund our portion of development, construction or capital investment projects of our equity method investees through capital contributions.
−Removed: Our contributions to these entities increase the carrying value of our investments and are reflected in our Consolidated Statements of Cash Flows as cash used in investing activities.
−Removed: During the years ended December 31, 2021, 2020 and 2019, we made cash contributions of $ 82 million, $ 445 million and $ 504 million, respectively, to certain of our equity method investees.
−Removed: In addition, we capitalized interest of $ 12 million, $ 16 million and $ 20 million during the years ended December 31, 2021, 2020 and 2019, respectively, related to contributions to unconsolidated entities for projects under development and construction.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: Contributions
+Added: We generally fund our portion of development, construction or capital investment projects of our equity method investees through capital contributions.
+Added: During the years ended December 31, 2022, 2021 and 2020, we made cash contributions of $ 13 million, $ 82 million and $ 445 million, respectively, to certain of our equity method investees.
+Added: We capitalize interest costs associated with contributions to unconsolidated entities for projects under development and construction.
+Added: Our contributions to these entities (including capitalized interest costs) increase the carrying value of our investments and are reflected in our Consolidated Statements of Cash Flows as cash used in investing activities.
Basis Differences
33 unchanged sentences
$ 2,852 $ ( 707 ) $ 2,145 $ 2,481 $ ( 521 ) $ 1,960
−Removed: (1) The increase in intangible assets related to Customer contracts and relationships in 2021 is associated with the assets acquired in the formation of the Permian JV.
+Added: (1) The increase in intangible assets related to Customer contracts and relationships in 2022 is primarily associated with the assets recognized upon consolidation of Cactus II.
See Note 7 for additional information.
3 unchanged sentences
We did not recognize any impairments of finite-lived intangible assets during the three years ended December 31, 2022.
+Added: The majority of our finite-lived intangible assets are amortized under the declining balance method.
Amortization expense for finite-lived intangible assets for the years ended December 31, 2022, 2021 and 2020 was $ 254 million, $ 122 million and $ 90 million, respectively.
8 unchanged sentences
SHORT-TERM DEBT
−Removed: Commercial paper notes, bearing a weighted-average interest rate of 0.7 % (1)
−Removed: Senior secured hedged inventory facility, bearing a weighted-average interest rate of 1.2 % (1)
Senior notes:
3.65 % senior notes due June 2022
+Added: 2.85 % senior notes due January 2023
+Added: 3.85 % senior notes due October 2023
Total short-term debt 1,159 822
1 unchanged sentence
Senior notes:
−Removed: 3.65 % senior notes due June 2022
2.85 % senior notes due January 2023
14 unchanged sentences
Other long-term debt:
−Removed: GO Zone term loans, net of debt issuance costs of $ 1 , bearing a weighted-average interest rate of 1.3 % (4)
Total long-term debt 7,287 8,398
1 unchanged sentence
$ 8,446 $ 9,220
−Removed: (1) We classified these commercial paper notes and credit facility borrowings as short-term as of December 31, 2020, as these notes and borrowings were primarily designated as working capital borrowings, were required to be repaid within one year and were primarily for hedged NGL and crude oil inventory and NYMEX and ICE margin deposits.
−Removed: (2) In January 2022, we provided notice of our intention to redeem these senior notes on March 1, 2022.
−Removed: (3) During the year ended December 31, 2020, we repurchased $ 17 million of our outstanding senior notes on the open market and recognized a gain of $ 3 million on these transactions, which is included in “Other income/(expense), net” on our Consolidated Statement of Operations.
+Added: (1) Our fixed-rate senior notes had a face value of approximately $ 8.4 billion and $ 9.1 billion at December 31, 2022 and 2021, respectively.
+Added: We estimated the aggregate fair value of these notes to be approximately $ 7.6 billion and $ 9.9 billion at December 31, 2022 and 2021, respectively.
+Added: Our fixed-rate senior notes are traded among institutions, and these trades are routinely published by a reporting service.
+Added: Our determination of fair value is based on reported trading activity near the end of the reporting period.
+Added: We estimate that the carrying value of outstanding borrowings under our credit facilities and commercial paper program approximates fair value as interest rates reflect current market rates.
+Added: The fair value estimates for our senior notes, credit facilities and commercial paper program are based upon observable market data and are classified in Level 2 of the fair value hierarchy.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: (4) The GO Zone term loans were initially assumed by one of our subsidiaries in connection with the acquisition of the Southern Pines natural gas storage facility.
−Removed: The loans were repaid in August 2021 in connection with the sale of that facility.
−Removed: See Note 7 for additional information.
−Removed: (5) Our fixed-rate senior notes had a face value of approximately $ 9.1 billion at both December 31, 2021 and 2020.
−Removed: We estimated the aggregate fair value of these notes to be approximately $ 9.9 billion at both December 31, 2021 and 2020.
−Removed: Our fixed-rate senior notes are traded among institutions, and these trades are routinely published by a reporting service.
−Removed: Our determination of fair value is based on reported trading activity near the end of the reporting period.
−Removed: We estimate that the carrying value of outstanding borrowings under our credit facilities, commercial paper program and GO Zone term loans approximates fair value as interest rates reflect current market rates.
−Removed: The fair value estimates for our senior notes, credit facilities, commercial paper program and GO Zone term loans are based upon observable market data and are classified in Level 2 of the fair value hierarchy.
Commercial Paper Program
4 unchanged sentences
Senior secured hedged inventory facility .
−Removed: In August 2021, we entered into an amended credit agreement which replaced our $ 1.4 billion senior secured hedged inventory facility scheduled to mature in August 2022 with a $ 1.35 billion senior secured hedged inventory facility with an initial maturity date of August 2024.
+Added: We have a credit agreement that provides for a senior secured hedged inventory facility with a committed borrowing capacity of $ 1.35 billion.
Subject to obtaining additional or increased lender commitments and other terms and conditions, the committed capacity of the facility may be increased to $ 1.9 billion.
−Removed: The amended credit agreement provides for the issuance of letters of credit of up to $ 400 million.
+Added: The credit agreement provides for the issuance of letters of credit of up to $ 400 million.
Proceeds from the facility are primarily used to finance purchased or stored hedged inventory, including NYMEX and ICE margin deposits.
2 unchanged sentences
The amended credit agreement also provides for one or more one-year extensions, subject to applicable approval and other terms and conditions.
+Added: In August 2022, we amended this agreement to, among other things, extend the maturity date of the facility to August 2025 for each existing lender.
Senior unsecured revolving credit facility.
−Removed: In August 2021, we entered into a new unsecured credit agreement that provides for a senior unsecured revolving credit facility with a committed borrowing capacity of $ 1.35 billion, of which $ 400 million is available for the issuance of letters of credit.
−Removed: The new credit agreement replaced our previous credit agreement that provided for a $ 1.6 billion senior unsecured revolving credit facility and was scheduled to mature in August 2024.
+Added: We have a credit agreement that provides for a senior unsecured revolving credit facility with a committed borrowing capacity of $ 1.35 billion, of which $ 400 million is available for the issuance of letters of credit.
Subject to obtaining additional or increased lender commitments and other terms and conditions, the committed capacity may be increased to $ 2.1 billion.
Borrowings accrue interest based, at our election, on certain floating rate indices as defined in the credit agreement, in each case plus a margin based on our credit rating at the applicable time.
−Removed: The new credit agreement has an initial maturity date of August 2026 and provides for one or more one-year extensions, subject to applicable approval and other terms and conditions.
+Added: The credit agreement provides for one or more one-year extensions, subject to applicable approval and other terms and conditions.
+Added: In August 2022, we amended this agreement to, among other things, extend the maturity date of the facility to August 2027 for each existing lender.
GO Zone term loans .
−Removed: In August 2018, we entered into an agreement for two $ 100 million term loans (the “GO Zone term loans”) from the remarketing of our $ 100 million Mississippi Business Finance Corporation Gulf Opportunity Zone Industrial Development Revenue Bonds (PAA Natural Gas Storage, L.P.
−Removed: Project), Series 2009 and our $ 100 million Mississippi Business Finance Corporation Gulf Opportunity Zone Industrial Development Revenue Bonds (PAA Natural Gas Storage, L.P.
−Removed: Project), Series 2010 (collectively, the “GO Bonds”).
−Removed: The GO Zone term loans accrued interest, based on certain floating rate indices, in accordance with the interest payable on the related GO Bonds as provided in the GO Bonds Indenture pursuant to which such GO Bonds are issued and governed.
−Removed: The GO Zone term loans were repaid in August 2021 in connection with the sale of the Southern Pines natural gas storage facility.
+Added: In August 2021, in connection with the sale of the Southern Pines natural gas storage facility, we repaid $ 200 million of term loans (the “Go Zone term loans”) that were initially assumed in connection with our acquisition of that facility.
See Note 7 for additional information.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Our senior notes are co-issued, jointly and severally, by Plains All American Pipeline, L.P.
7 unchanged sentences
September 2030 $ 750 March 15 and September 15
−Removed: 2019 3.55 % Senior Notes issued at 99.801 % of face value
−Removed: December 2029 $ 1,000 June 15 and December 15
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Senior Notes Repayments.
1 unchanged sentence
Year Description Repayment Date
+Added: 2022 $ 750 million 3.65 % Senior Notes due June 2022
+Added: March 2022 (1)
2020 $ 600 million 5.00 % Senior Notes due February 2021
November 2020 (2)
−Removed: 2019 $ 500 million 2.60 % Senior Notes due December 2019
−Removed: November 2019 (2)
−Removed: 2019 $ 500 million 5.75 % Senior Notes due January 2020
−Removed: December 2019 (2)
+Added: (1) We repaid these senior notes with cash on hand and borrowings under our commercial paper program.
(2) We repaid these senior notes with proceeds from our 3.80 % senior notes issued in June 2020 and cash on hand.
−Removed: (2) We repaid these senior notes with proceeds from our 3.55 % senior notes issued in September 2019 and cash on hand.
+Added: On January 31, 2023, we redeemed our 2.85 %, $ 400 million senior notes.
+Added: We utilized a combination of cash on hand and borrowings under our commercial paper program to repay these senior notes.
The weighted average maturity of our senior notes outstanding at December 31, 2022 was approximately 9 years.
4 unchanged sentences
Thereafter $ 4,783
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Covenants and Compliance
10 unchanged sentences
Additionally, letters of credit and borrowings to fund hedged inventory and margin requirements are excluded when calculating the debt coverage ratio.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A default under our credit agreements or indentures would permit the lenders to accelerate the maturity of the outstanding debt.
14 unchanged sentences
Use of the straight-line method does not differ materially from the “effective interest” method of amortization.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 12— Partners’ Capital and Distributions
Units Outstanding
−Removed: At December 31, 2021, partners’ capital consisted of outstanding common units and Series A and Series B preferred units, which represent limited partner interests in us, which give the holders thereof the right to participate in distributions and to exercise the other rights or privileges as outlined in our partnership agreement.
+Added: At December 31, 2022, partners’ capital consisted of outstanding common units and Series A and Series B preferred units, which represent limited partner interests in us and which give the holders thereof the right to participate in distributions and to exercise the other rights or privileges as outlined in our partnership agreement.
Our general partner has a non-economic interest in us.
2 unchanged sentences
The Series A preferred units represent limited partner interests in us, rank pari passu with our Series B preferred units, and senior to our common units and to each other class or series of our equity securities with respect to distribution rights and rights upon liquidation.
−Removed: The holders of the Series A preferred units receive cumulative quarterly distributions, subject to customary antidilution adjustments, equal to $ 0.525 per unit ($ 2.10 per unit annualized).
−Removed: The holders may convert their Series A preferred units into common units, generally on a one -for-one basis and subject to customary anti-dilution adjustments, at any time, in whole or in part, subject to certain minimum conversion amounts (and not more often than once per quarter).
−Removed: We may convert the Series A preferred units into common units at any time (but not more often than once per quarter), in whole or in part, subject to certain minimum conversion amounts, if the closing price of our common units is greater than 150 % of the Issue Price for the preceding 20 trading days.
−Removed: The Series A preferred units vote on an as-converted basis with our common units and have certain other class voting rights with respect to any amendment to our partnership agreement that would adversely affect any rights, preferences or privileges of the Series A preferred units.
−Removed: In addition, upon certain events involving a change of control, the holders of the Series A preferred units may elect, among other potential elections, to convert the Series A preferred units into common units at the then applicable conversion rate.
+Added: The holders of the Series A preferred units receive cumulative quarterly distributions, subject to customary antidilution adjustments, to unitholders of record within 45 days following the end of each quarter.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: The initial Series A preferred unit distribution is equal to $ 0.525 per unit ($ 2.10 per unit annualized).
For a period of 30 days following (a) the fifth anniversary of the January 28, 2016 issuance date (the “Issuance Date”) of the Series A preferred units and (b) each subsequent anniversary of the Issuance Date, the holders of the Series A preferred units, acting by majority vote, may make a one -time election to reset the Series A preferred unit distribution rate to equal the then applicable rate of ten-year U.S.
3 unchanged sentences
If the holders of the Series A preferred units have exercised the Preferred Distribution Rate Reset Option, then, at any time following 30 days after the sixth anniversary of the Issuance Date, we may redeem all or any portion of the outstanding Series A preferred units in exchange for cash, common units (valued at 95 % of the volume-weighted average price of our common units for a trading day period specified in our partnership agreement) or a combination of cash and common units at a redemption price equal to 110 % of the Issue Price, plus any accrued and unpaid distributions.
+Added: In January 2023, we received notice that the Series A preferred unitholders elected the Preferred Distribution Rate Reset Option.
+Added: Effective January 31, 2023, the new Series A preferred unit distribution rate is equal to 9.375 % per annum on the original Issue Price (approximately $ 2.46 per unit annualized).
+Added: The quarterly distribution to be paid in May 2023 will reflect a pro-rated amount of $ 0.58516 per unit.
+Added: The holders may convert their Series A preferred units into common units, generally on a one -for-one basis and subject to customary anti-dilution adjustments, at any time, in whole or in part, subject to certain minimum conversion amounts (and not more often than once per quarter).
+Added: We may convert the Series A preferred units into common units at any time (but not more often than once per quarter), in whole or in part, subject to certain minimum conversion amounts, if the closing price of our common units is greater than 150 % of the Issue Price for the preceding 20 trading days.
+Added: The Series A preferred units vote on an as-converted basis with our common units on the election of directors and have certain other class voting rights with respect to any amendment to our partnership agreement that would adversely affect any rights, preferences or privileges of the Series A preferred units.
+Added: In addition, upon certain events involving a change of control, the holders of the Series A preferred units may elect, among other potential elections, to convert the Series A preferred units into common units at the then applicable conversion rate.
Series B Preferred Units
Our Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests in us (the “Series B preferred units”) were issued in 2017 at a price to the public of $ 1,000 per unit.
−Removed: Our Series B preferred units represent perpetual equity interests in us, and they have no stated maturity or mandatory redemption date and are not redeemable at the option of the holders under any circumstances.
+Added: Our Series B preferred units represent perpetual equity interests in us, have no stated maturity or mandatory redemption date and are not redeemable at the option of the holders under any circumstances.
Holders of the Series B preferred units generally have no voting rights, except for limited voting rights with respect to (i) potential amendments to our partnership agreement that would have a material adverse effect on the existing preferences, rights, powers or duties of the Series B preferred units, (ii) the creation or issuance of any parity securities if the cumulative distributions payable on then outstanding Series B preferred units are in arrears, (iii) the creation or issuance of any senior securities and (iv) the payment of distributions to our common unitholders out of capital surplus.
The Series B preferred units rank, as to the payment of distributions and amounts payable on a liquidation event, pari passu with our outstanding Series A preferred units and senior to our common units.
+Added: The Series B preferred units have a liquidation preference of $ 1,000 per unit.
+Added: Holders of our Series B preferred units are entitled to receive, when, as and if declared by our general partner out of legally available funds for such purpose, cumulative semiannual or quarterly cash distributions, as applicable.
+Added: Through November 15, 2022, distributions on the Series B preferred units were paid semiannually in arrears on the 15th day of May and November.
+Added: After November 15, 2022, distributions are payable quarterly in arrears on the 15th day of February, May, August and November of each year.
+Added: The initial distribution rate for the Series B preferred units from and including October 10, 2017 to, but not including, November 15, 2022 was 6.125 % per year of the liquidation preference per unit (equal to $ 61.25 per unit per year).
+Added: On and after November 15, 2022, distributions on the Series B preferred units accumulate for each distribution period at a percentage of the liquidation preference equal to the applicable three-month LIBOR (or, if discontinued, a substitute or successor rate determined by the calculation agent) plus a spread of 4.11 %.
+Added: The distribution rate for the quarterly distribution paid on February 15, 2023 was 8.71614 % ($ 22.27 per Series B preferred unit).
+Added: At any time, we may redeem the Series B preferred units, at our option, in whole or in part, at a redemption price of $ 1,000 per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The Series B preferred units have a liquidation preference of $ 1,000 per unit.
−Removed: Holders of our Series B preferred units are entitled to receive, when, as and if declared by our general partner out of legally available funds for such purpose, cumulative semiannual or quarterly cash distributions, as applicable.
−Removed: Distributions on the Series B preferred units accrue and are cumulative from October 10, 2017, the date of original issue, and are payable semiannually in arrears on the 15th day of May and November through and including November 15, 2022, and after November 15, 2022, quarterly in arrears on the 15th day of February, May, August and November of each year.
−Removed: The initial distribution rate for the Series B preferred units from and including October 10, 2017 to, but not including, November 15, 2022 is 6.125 % per year of the liquidation preference per unit (equal to $ 61.25 per unit per year).
−Removed: On and after November 15, 2022, distributions on the Series B preferred units will accumulate for each distribution period at a percentage of the liquidation preference equal to the Series B Three-Month LIBOR (as defined in and calculated pursuant to our Seventh Amended and Restated Agreement of Limited Partnership) plus a spread of 4.11 %.
−Removed: Upon the occurrence of certain rating agency events, we may redeem the Series B preferred units, in whole but not in part, at a price of $ 1,020 ( 102 % of the liquidation preference) per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared.
−Removed: In addition, at any time on or after November 15, 2022, we may redeem the Series B preferred units, at our option, in whole or in part, at a redemption price of $ 1,000 per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared.
The following table presents the activity for our preferred and common units:
4 unchanged sentences
71,090,468 800,000 728,028,576
−Removed: Issuances of common units under equity-indexed compensation plans
+Added: Repurchase and cancellation of common units under the Common Equity Repurchase Program
— — ( 6,222,748 )
+Added: Issuances of common units under equity-indexed compensation plans
Outstanding at December 31, 2020
16 unchanged sentences
See Note 17 for additional information regarding our ownership of PAGP Class C shares.
−Removed: We repurchased 18,061,583 and 6,222,748 common units under the Program through open market purchases that settled during the years ended December 31, 2021 and 2020, respectively.
−Removed: The total purchase price of these units was $ 178 million and $ 50 million, respectively, including commissions and fees.
+Added: During the years ended December 31, 2022, 2021 and 2020, we repurchased common units under the Program through open market purchases for a total purchase price of $ 74 million, $ 178 million and $ 50 million, respectively, including commissions and fees.
The repurchased common units were canceled immediately upon acquisition, as were the PAGP Class C shares held by us associated with the repurchased common units.
At December 31, 2022, the remaining available capacity under the Program was $ 198 million.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Income Allocation
1 unchanged sentence
Net income is allocated 100 % to our common unitholders, after giving effect to income allocations for cash distributions to our Series A preferred unitholders and guaranteed payments attributable to our Series B preferred unitholders.
−Removed: In accordance with our partnership agreement, our Series A preferred unitholders are not allocated income for paid-in-kind distributions for partners’ capital presentation purposes.
−Removed: For purposes of determining basic and diluted net income per common unit, income is allocated as prescribed in FASB guidance for calculating earnings per unit, including a deduction to income available to common unitholders for distributions attributable to the period (whether paid in cash or in-kind) on our Series A and Series B preferred units.
+Added: For purposes of determining basic and diluted net income per common unit, income is allocated as prescribed in FASB guidance for calculating earnings per unit, including a deduction to income available to common unitholders for distributions attributable to the period on our Series A and Series B preferred units.
See Note 4 for additional information.
3 unchanged sentences
Our available cash also includes cash on hand resulting from borrowings made after the end of the quarter.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Preferred Unit Distributions
7 unchanged sentences
At December 31, 2022, such amount was accrued as distributions payable in “Other current liabilities” on our Consolidated Balance Sheet.
+Added: On February 15, 2023, we paid a cash distribution of $ 18 million to our Series B preferred unitholders.
At December 31, 2022, approximately $ 9 million of accrued distributions payable to our Series B preferred unitholders was included in “Other current liabilities” on our Consolidated Balance Sheet.
9 unchanged sentences
Of this amount, approximately $ 65 million was paid to AAP.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Noncontrolling Interests in Subsidiaries
−Removed: As of December 31, 2021, noncontrolling interests in our subsidiaries consisted of (i) a 35 % interest in the Permian JV and (ii) a 33 % interest in Red River Pipeline Company LLC (“Red River LLC”).
−Removed: The transactions resulting in the recognition of such noncontrolling interests are described below.
+Added: As of December 31, 2022, noncontrolling interests in our subsidiaries consisted of (i) a 35 % interest in the Permian JV, (ii) a 30 % interest in Cactus II and (iii) a 33 % interest in Red River Pipeline Company LLC (“Red River”).
+Added: The transactions resulting in the recognition of noncontrolling interests in the Permian JV and Cactus II are described below.
+Added: In November 2022, we acquired an additional 5 % interest in Cactus II which, combined with changes in governance, resulted in our obtaining control of the entity.
+Added: We own 70 % of Cactus II and reflect the entity as a consolidated subsidiary in our Consolidated Financial Statements, with Enbridge’s 30 % interest accounted for as a noncontrolling interest.
+Added: This transaction resulted in the recognition of partners’ capital attributable to noncontrolling interests of approximately $ 526 million.
+Added: See Note 7 for more details regarding this transaction.
In October 2021, we formed a joint venture, the Permian JV, with Oryx Midstream.
2 unchanged sentences
See Note 7 for more details regarding this transaction.
−Removed: In May 2019, we formed a joint venture, Red River LLC, with Delek Logistics Partners, LP (“Delek”) on our Red River pipeline system.
−Removed: We received approximately $ 128 million for Delek’s 33 % interest in Red River LLC.
−Removed: We consolidate Red River LLC based on control, with Delek’s 33 % interest accounted for as a noncontrolling interest.
−Removed: Noncontrolling Interest Contributions and Distributions
−Removed: During the years ended December 31, 2021 and 2020, we received contributions from noncontrolling interests in Red River LLC of $ 1 million and $ 12 million, respectively, related to the Red River pipeline capacity expansion.
−Removed: During the years ended December 31, 2021, 2020 and 2019, we paid distributions of $ 14 million, $ 10 million and $ 6 million, respectively, to noncontrolling interests in Red River LLC.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: Distributions to Noncontrolling Interests
+Added: Pursuant to the terms of the governing documents for the Permian JV, with the exception of the initial distribution paid in the first quarter of 2022, distributions of available cash from the Permian JV are subject to a tiered modified sharing arrangement.
+Added: See Note 7 for additional information.
+Added: Cash available for distribution is cash on hand less the amount of cash required to fund normal operations and capital projects.
+Added: Distributions from Cactus II and Red River are paid in proportion to each owners interest in the entity.
+Added: The following table details distributions paid to noncontrolling interests during the years presented (in millions):
+Added: 2022 2021 2020
+Added: Permian JV (1)
+Added: $ 273 $ — $ —
+Added: Cactus II 4 — —
+Added: Red River 21 14 10
+Added: $ 298 $ 14 $ 10
(1) The initial distribution from the Permian JV was paid during the first quarter of 2022, with approximately $ 54 million paid to noncontrolling interests.
−Removed: Subsequent distributions will be allocated based on the MSA.
+Added: Contributions from Noncontrolling Interests
+Added: During the year ended December 31, 2022, we received a contribution of $ 26 million from noncontrolling interests in the Permian JV associated with the acquisition of the remaining 50 % interest in Advantage.
See Note 7 for additional information.
+Added: During the year ended December 31, 2020, we received contributions from noncontrolling interests in Red River of $ 12 million related to a pipeline capacity expansion.
Note 13— Derivatives and Risk Management Activities
We identify the risks that underlie our core business activities and use risk management strategies to mitigate those risks when we determine that there is value in doing so.
−Removed: We use various derivative instruments to optimize our profits while managing our exposure to (i) commodity price risk, (ii) interest rate risk and (iii) currency exchange rate risk.
+Added: We use various derivative instruments to optimize our profits while managing our exposure to commodity price risk and interest rate risk.
Our commodity price risk management policies and procedures are designed to help ensure that our hedging activities address our risks by monitoring our derivative positions, as well as physical volumes, grades, locations, delivery schedules and storage capacity.
−Removed: Our interest rate and currency exchange rate risk management policies and procedures are designed to monitor our derivative positions and ensure that those positions are consistent with our objectives and approved strategies.
−Removed: Our policy is to use derivative instruments for risk management purposes and not for the purpose of speculating on changes in commodity prices, interest rates or currency exchange rates.
+Added: Our interest rate risk management policies and procedures are designed to monitor our derivative positions and ensure that those positions are consistent with our objectives and approved strategies.
+Added: Our policy is to use derivative instruments for risk management purposes and not for the purpose of speculating on changes in commodity prices or interest rates.
When we apply hedge accounting, our policy is to formally document all relationships between hedging instruments and hedged items, as well as our risk management objectives for undertaking the hedge.
7 unchanged sentences
Cash settlements associated with our derivative activities are classified within the same category as the related hedged item in our Consolidated Statements of Cash Flows.
+Added: Our financial derivatives, used for hedging risk, are governed through ISDA master agreements and clearing brokerage agreements.
+Added: These agreements include stipulations regarding the right of set off in the event that we or our counterparty default on performance obligations.
+Added: If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Our financial derivatives, used for hedging risk, are governed through ISDA master agreements and clearing brokerage agreements.
−Removed: These agreements include stipulations regarding the right of set off in the event that we or our counterparty default on performance obligations.
−Removed: If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties.
At December 31, 2022 and 2021, none of our outstanding derivatives contained credit-risk related contingent features that would result in a material adverse impact to us upon any change in our credit ratings.
3 unchanged sentences
Our policy is to (i) only purchase inventory for which we have a sales market, (ii) structure our sales contracts so that price fluctuations do not materially affect our operating income and (iii) not acquire and hold material physical inventory or derivatives for the purpose of speculating on commodity price changes.
−Removed: The material commodity-related risks inherent in our business activities can be divided into the following general categories:
−Removed: Commodity Purchases and Sales — In the normal course of our operations, we purchase and sell commodities.
+Added: The material commodity-related risks inherent in our business activities are described below.
+Added: In the normal course of our operations, we purchase and sell commodities.
We use derivatives to manage the associated risks and to optimize profits.
4 unchanged sentences
These derivatives allow us to lock in grade and location basis differentials.
−Removed: • A net short position of 19.2 million barrels through December 2023 related to anticipated net sales of crude oil and NGL inventory.
−Removed: Natural Gas Processing/NGL Fractionation — We purchase natural gas for processing and operational needs.
+Added: • A net short position of 18.4 million barrels through June 2024 related to anticipated net sales of crude oil and NGL inventory.
+Added: We purchase natural gas for processing and operational needs.
Additionally, we purchase NGL mix for fractionation and sell the resulting individual specification products (including ethane, propane, butane and condensate).
54 unchanged sentences
Total $ 311 $ ( 89 ) $ ( 168 ) $ 54 $ 100 $ ( 243 ) $ 259 $ 116
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Interest Rate Risk Hedging
3 unchanged sentences
As such, changes in fair value are deferred in AOCI and are reclassified to interest expense as we incur the interest expense associated with the underlying debt.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the terms of our outstanding interest rate derivatives as of December 31, 2022 (notional amounts in millions):
9 unchanged sentences
The deferred net loss recorded in AOCI is expected to be reclassified to future earnings contemporaneously with interest expense accruals associated with underlying debt instruments.
+Added: During the year ended December 31, 2022, we terminated $ 100 million of notional interest hedging instruments previously expected to terminate in June 2024 for proceeds of $ 42 million.
+Added: The early termination did not result in an impact to the relationship between the hedging instrument and hedged item.
We estimate that substantially all of the remaining deferred loss will be reclassified to earnings through 2054 as the underlying hedged transactions impact earnings.
5 unchanged sentences
Interest rate derivatives, net $ 94 $ 19 $ ( 10 )
−Removed: At December 31, 2021, the net fair value of our interest rate hedges, which were included in “Other long-term assets, net” on our Consolidated Balance Sheet, totaled $ 65 million.
+Added: At December 31, 2022, the net fair value of our interest rate hedges, which were included in “Other current assets” and “Other long-term assets, net” on our Consolidated Balance Sheet, totaled $ 75 million and $ 45 million, respectively.
At December 31, 2021, the net fair value of these hedges totaled $ 65 million and was included in “Other long-term assets, net.”
1 unchanged sentence
A derivative feature embedded in a contract that does not meet the definition of a derivative in its entirety must be bifurcated and accounted for separately if the economic characteristics and risks of the embedded derivative are not clearly and closely related to those of the host contract.
−Removed: The Preferred Distribution Rate Reset Option of our Series A preferred units is an embedded derivative that must be bifurcated from the related host contract, our partnership agreement, and recorded at fair value on our Consolidated Balance Sheets.
+Added: The Preferred Distribution Rate Reset Option of our Series A preferred units is an embedded derivative that must be bifurcated from the related host contract, our partnership agreement, and recorded at fair value on our Consolidated Balance Sheet.
This embedded derivative is not designated in a hedging relationship for accounting purposes and corresponding changes in fair value are recognized in “Other income/(expense), net” in our Consolidated Statement of Operations.
−Removed: For the years ended December 31, 2021, 2020 and 2019 we recognized net gains of $ 14 million, $ 20 million and $ 2 million, respectively.
−Removed: The fair value of the Preferred Distribution Rate Reset Option, which was included in “Other long-term liabilities and deferred credits” on our Consolidated Balance Sheets, totaled less than $ 1 million and $ 14 million at December 31, 2021 and 2020, respectively.
+Added: For the years ended December 31, 2022, 2021 and 2020 we recognized a net loss of $ 189 million, a net gain of $ 14 million and a net gain of $ 20 million, respectively.
+Added: The fair value of the Preferred Distribution Rate Reset Option, which was included in “ Other long-term liabilities and deferred credits ” on our Consolidated Balance Sheets, totaled $ 189 million and less than $ 1 million at December 31, 2022 and 2021, respectively.
+Added: In January 2023, we received notice that the Series A preferred unitholders elected the Preferred Distribution Rate Reset Option, which will be effective for the distribution paid in May 2023.
See Note 12 for additional information regarding our Series A preferred units and the Preferred Distribution Rate Reset Option.
11 unchanged sentences
Interest rate derivatives — 120 — 120 — 65 — 65
−Removed: Preferred Distribution Rate Reset Option and Other — — — — — 2 ( 14 ) ( 12 )
+Added: Preferred Distribution Rate Reset Option — — ( 189 ) ( 189 ) — — — —
Total net derivative asset/(liability) $ ( 7 ) $ 349 $ ( 189 ) $ 153 $ ( 17 ) $ ( 59 ) $ ( 2 ) $ ( 78 )
2 unchanged sentences
The fair value of exchange-traded commodity derivatives and over-the-counter commodity contracts is based on unadjusted quoted prices in active markets.
−Removed: Level 2 of the fair value hierarchy includes exchange-cleared commodity derivatives and over-the-counter commodity, interest rate and foreign currency derivatives that are traded in observable markets with less volume and transaction frequency than active markets.
+Added: Level 2 of the fair value hierarchy includes exchange-cleared commodity derivatives and over-the-counter commodity and interest rate derivatives that are traded in observable markets with less volume and transaction frequency than active markets.
In addition, it includes certain physical commodity contracts.
4 unchanged sentences
We report unrealized gains and losses associated with these contracts in our Consolidated Statements of Operations as Product sales revenues .
−Removed: The fair value of the embedded derivative feature contained in our partnership agreement is based on a valuation model that estimates the fair value of the Series A preferred units with and without the Preferred Distribution Rate Reset Option.
−Removed: This model contains inputs, including our common unit price, ten-year U.S.
−Removed: Treasury rates, default probabilities and timing estimates, some of which involve management judgment.
−Removed: A significant change in these inputs could result in a material change in fair value to this embedded derivative feature.
+Added: The fair value of the Preferred Distribution Rate Reset Option of our Series A preferred units contained in our partnership agreement is based on a Monte Carlo valuation model that estimates the fair value of the Series A preferred units with and without the Preferred Distribution Rate Reset Option.
+Added: This model relies on assumptions for forecasts for the ten-year U.S.
+Added: Treasury rate, our common unit price, and default probabilities which impact timing estimates as to when the option will be exercised.
+Added: In general, an increase in ten-year U.S.
+Added: Treasury rates would increase the fair value of the feature and our liability and expense.
+Added: The future impact on “ Other income/(expense), net ” depends on how inputs change in relation to one another.
Index to Financial Statements
10 unchanged sentences
Change in unrealized gains/(losses) included in earnings relating to Level 3 derivatives still held at the end of the period
+Added: $ ( 189 ) $ 15
Note 14— Leases
16 unchanged sentences
For those leases for which the discount rate is not readily determinable, we utilize incremental borrowing rates that reflect collateralized borrowing with payments and terms that mirror our lease portfolio to discount the lease payments based on information available at the lease commencement date.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table presents components of lease cost, including both amounts recognized in income and amounts capitalized (in millions):
5 unchanged sentences
Total lease cost $ 124 $ 129 $ 150
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) Includes finance lease costs, variable lease costs and sublease income.
−Removed: (2) Includes approximately $ 8 million and $ 6 million for the years ended December 31, 2021 and 2020, respectively, associated with leased storage tanks owned by an equity method investee, in which we own a 50 % interest.
+Added: (2) Includes approximately $ 8 million, $ 8 million, and $ 6 million for the years ended December 31, 2022, 2021 and 2020, respectively, associated with leased storage tanks owned by an equity method investee, in which we own a 50 % interest.
The following table presents information related to cash flows arising from lease transactions (in millions):
8 unchanged sentences
Finance leases (1)
−Removed: $ 1 $ 32 $ 27
−Removed: (1) Includes $ 25 million and $ 12 million for the years ended December 31, 2020 and 2019, respectively, associated with leased storage tanks owned by an equity method investee, in which we own a 50 % interest.
+Added: (1) Includes $ 25 million for the year ended December 31, 2020 associated with leased storage tanks owned by an equity method investee, in which we own a 50 % interest.
Information related to the weighted-average remaining lease term and discount rate is presented in the table below:
113 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: During the second quarter of 2019, the Alberta government enacted legislation that reduces the Alberta provincial corporate income tax rate from 12 % to 8 % over the period from July 1, 2019 through January 1, 2022.
−Removed: As a result, during the second quarter of 2019, we recognized a reduction of our deferred income tax liability of approximately $ 60 million and a corresponding deferred tax benefit.
−Removed: In the fourth quarter of 2020, the Alberta government changed the timing of the rate reduction to decrease the corporate income tax rate to 8 % starting July 1, 2020.
Deferred tax assets and liabilities are aggregated by the applicable tax paying entity and jurisdiction and result from the following (in millions):
6 unchanged sentences
Property and equipment in excess of tax values ( 515 ) ( 531 )
+Added: Derivative instruments ( 46 ) —
Lease assets ( 42 ) ( 47 )
6 unchanged sentences
$ ( 545 ) $ ( 475 )
−Removed: As of December 31, 2021, we had foreign net operating loss carryforwards of $ 9 million, which will expire beginning in 2034.
Generally, tax returns for our Canadian entities are open to audit from 2016 through 2022.
7 unchanged sentences
As of December 31, 2022, we believe that our tax position associated with these matters is “more likely than not” to be sustained and have not recognized any amounts for uncertainty in income taxes related to these notices.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 16— Major Customers and Concentration of Credit Risk
2 unchanged sentences
and its subsidiaries accounted for 10 % of our revenues for the year ended December 31, 2021.
−Removed: Phillips 66 Company and its subsidiaries accounted for 11 % of our revenues for the year ended December 31, 2019.
No other customers accounted for 10% or more of our revenues during any of the three years ended December 31, 2022.
1 unchanged sentence
If we were to lose one or more of these customers, there is risk that we would not be able to identify and access a replacement market at a comparable margin.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments that potentially subject us to concentrations of credit risk consist principally of trade receivables.
12 unchanged sentences
Our general partner provides services necessary to manage and operate our business, properties and assets, including employing or retaining personnel.
−Removed: We do not pay our general partner a management fee, but we do reimburse our general partner for all direct and indirect costs it incurs or payments it makes on our behalf, including the costs of employee, officer and director compensation and benefits allocable to us as well as all other expenses necessary or appropriate to the conduct of our business.
+Added: We do not pay our general partner a management fee, but we do reimburse our general partner for all direct and indirect costs it incurs or payments it makes on our behalf, including the costs of employee, officer and director compensation and benefits allocable to us as well as all other expenses necessary or appropriate to conduct our business.
We record these costs on the accrual basis in the period in which our general partner incurs them.
−Removed: Our partnership agreement provides that our general partner will determine the expenses that are allocable to us in any reasonable manner determined by our general partner in its sole discretion.
+Added: Our partnership agreement provides that our general partner will, in a manner it deems in its sole discretion to be reasonable, determine the expenses that are allocable to us.
Total costs reimbursed by us to our general partner for the years ended December 31, 2022, 2021 and 2020 were $ 476 million, $ 467 million and $ 553 million, respectively.
2 unchanged sentences
• that we will pay all direct or indirect expenses of any of the PAGP Entities, other than income taxes, including, but not limited to, (i) compensation for the directors of PAGP GP, (ii) director and officer liability insurance, (iii) listing exchange fees, (iv) investor relations expenses and (v) fees related to legal, tax, financial advisory and accounting services.
−Removed: We paid $ 5 million, $ 5 million and $ 4 million during the years ended December 31, 2021, 2020 and 2019, respectively;
+Added: Amounts paid on behalf of the PAGP Entities during the years ended December 31, 2022, 2021 and 2020 were not material;
• the ability of PAGP to issue additional Class A shares and use the net proceeds therefrom to purchase a like number of AAP units from AAP, and the corresponding ability of AAP to use the net proceeds therefrom to purchase a like number of our common units from us;
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
• the ability of PAGP to lend proceeds of any future indebtedness incurred by it to AAP, and AAP’s corresponding ability to lend such proceeds to us, in each case on substantially the same terms as incurred by PAGP.
Transactions with Other Related Parties
−Removed: Our other related parties include (i) principal owners and their affiliated entities and (ii) entities in which we hold investments and account for under the equity method of accounting (see Note 9 for information regarding such entities).
+Added: Our other related parties include (i) entities in which we hold investments and account for under the equity method of accounting (see Note 9 for information regarding such entities) and (ii) principal owners and their affiliated entities.
We recognize as our principal owners entities that have a designated representative on the board of directors of PAGP GP and/or own greater than 10 % of the limited partner interests in AAP.
2 unchanged sentences
As of December 31, 2022, no entities met the criteria to be recognized as a principal owner.
−Removed: Through various transactions by an affiliate of The Energy & Minerals Group (“EMG”) in May 2019, EMG’s limited partner interest in AAP was significantly reduced, which caused EMG to lose its right to designate a representative on the board of directors of PAGP GP.
−Removed: Additionally, as a result of various transactions by Occidental Petroleum Corporation or its subsidiaries (“Oxy”) in September 2019, Oxy no longer holds a limited partner interest in AAP and lost its right to designate a representative on the board of directors of PAGP GP.
−Removed: Following these transactions, we no longer recognize EMG or Oxy as a principal owner.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In August 2021, the board of directors of PAGP GP approved and adopted an amendment to PAGP GP’s limited liability company agreement (the “Amendment”) which eliminated all previously negotiated “director designation” rights and requires that all directors be subject to public election, including Kayne Anderson Capital Advisors, L.P.’s (“Kayne Anderson”) legacy contractual right to designate an individual to serve on the PAGP GP board without being subject to public election.
15 unchanged sentences
(1) Includes amounts related to crude oil purchases and sales, transportation and storage services and amounts owed to us or advanced to us related to investment capital projects of equity method investees where we serve as construction manager.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) We have agreements to store crude oil at facilities and transport crude oil or utilize capacity on pipelines that are owned by equity method investees.
7 unchanged sentences
In May 2021, PAA unitholders approved the Plains All American 2021 Long-Term Incentive Plan, which amends, restates, and renames the Plains All American 2013 Long-Term Incentive Plan and authorizes an incremental 20 million PAA common units deliverable upon vesting of awards granted under the plan.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Our LTIP awards include both liability-classified and equity-classified awards.
13 unchanged sentences
Plains All American GP LLC 2006 Long-Term Incentive Tracking Unit Plan 13.4
−Removed: (1) Of the 43.5 million total awards authorized, 22.7 million awards are currently available.
+Added: (1) Of the 43.5 million total awards authorized, 19.7 million awards are currently available for future grant.
The remaining balance has already vested or is currently outstanding.
3 unchanged sentences
As of December 31, 2022, the outstanding awards that are considered probable of vesting have a remaining unrecognized fair value of approximately $ 65 million.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 19— Commitments and Contingencies
10 unchanged sentences
See Note 14 for additional information.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) Primarily includes storage, transportation and pipeline throughput agreements, as well as certain rights-of-way easements.
Expense associated with our storage, transportation and pipeline throughput agreements was approximately $ 336 million, $ 270 million and $ 265 million for 2022, 2021 and 2020, respectively.
−Removed: A majority of the storage, transportation and pipeline throughput commitments are associated with agreements to store crude oil at facilities and transport crude oil on pipelines owned by equity method investees, in which we own a 50 % interest, at posted tariff rates or prices that we believe approximate market.
+Added: A majority of the storage, transportation and pipeline throughput commitments are associated with agreements to store crude oil at facilities and transport crude oil on pipelines owned by equity method investees at posted tariff rates or prices that we believe approximate market.
A portion of our commitment to transport is supported by crude oil buy/sell or other agreements with third parties with commensurate quantities.
11 unchanged sentences
Accordingly, we can provide no assurance that the outcome of the various legal proceedings that we are currently involved in, or will become involved with in the future, will not, individually or in the aggregate, have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Environmental — General
4 unchanged sentences
Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated wastes (including wastes disposed of or released by prior owners or operators) and to clean up contaminated property (including contaminated groundwater).
−Removed: Assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified.
+Added: Assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified or insured.
Although we have made significant investments in our maintenance and integrity programs, we have experienced (and likely will experience future) releases of hydrocarbon products into the environment from our pipeline, rail, storage and other facility operations.
2 unchanged sentences
Damages and liabilities associated with any such releases from our existing or future assets could be significant and could have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
We record environmental liabilities when environmental assessments and/or remedial efforts are probable and the amounts can be reasonably estimated.
13 unchanged sentences
Therefore, although we believe that the reserve is adequate, actual costs incurred (which may ultimately include costs for contingencies that are currently not reasonably estimable or costs for contingencies where the likelihood of loss is currently believed to be only reasonably possible or remote) may be in excess of the reserve and may potentially have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Specific Legal, Environmental or Regulatory Matters
9 unchanged sentences
Set forth below is a brief summary of actions and matters that are currently pending or recently resolved.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As the “responsible party” for the Line 901 incident we are liable for various costs and for certain natural resource damages under the Oil Pollution Act.
6 unchanged sentences
Pursuant to the terms of the Consent Decree, Plains paid $ 24 million in civil penalties and $ 22.325 million as compensation for injuries to, destruction of, loss of, or loss of use of natural resources resulting from the Line 901 incident.
−Removed: The Consent Decree also contains requirements for implementing certain agreed-upon injunctive relief, as well as requirements for potentially restarting Line 901 and the Sisquoc to Pentland portion of Line 903.
−Removed: The Consent Decree resolved all regulatory claims related to the incident.
+Added: The Consent Decree, which resolved all regulatory claims related to the incident, also contains requirements for implementing certain agreed-upon injunctive relief, as well as requirements for potentially restarting Line 901 and the Sisquoc to Pentland portion of Line 903.
+Added: On October 13, 2022, Plains sold Line 901 and the Sisquoc to Pentland portion of Line 903 to Pacific Pipeline Company, an indirect wholly owned subsidiary of Exxon Mobil Corporation.
+Added: As required by the terms of the Consent Decree, such purchaser assumed responsibility for compliance with the Consent Decree as it relates to the future ownership and operation of Line 901 and the Sisquoc to Pentland portion of Line 903.
Following an investigation and grand jury proceedings, in May of 2016, PAA was charged by a California state grand jury, pursuant to an indictment filed in California Superior Court, Santa Barbara County (the “May 2016 Indictment”), with alleged violations of California law in connection with the Line 901 incident.
6 unchanged sentences
The Court did award an aggregate amount of less than $ 150,000 to a handful of claimants and we settled with approximately 40 claimants before the hearings for aggregate consideration that is not material.
−Removed: The prosecution has appealed the Court’s rulings.
+Added: The prosecution and certain separately represented claimants have appealed the Court’s rulings.
+Added: In addition, after various other unitholder derivative lawsuits were either dismissed or consolidated, one derivative suit proceeded in Delaware Chancery Court.
+Added: Generally, the plaintiffs in the derivative lawsuit claimed that PAGP’s Board of Directors failed to exercise proper oversight over PAA’s pipeline integrity efforts.
+Added: In April 2022, Plains entered into a settlement agreement to settle this lawsuit, subject to court approval and notice to all PAA unitholders (the “Derivative Settlement”).
+Added: Following preliminary court approval, on May 23, 2022 we filed a Current Report on Form 8-K with the SEC.
+Added: We also posted notice on our website and mailed copies of the notice to all record holders of PAA common units as of August 10, 2022.
+Added: The key terms of the Derivative Settlement include a payment of Plaintiff’s attorneys’ fees by our insurers in the amount of approximately $ 1.0 million and the agreement of Plains to comply with various covenants regarding the implementation or continuation of certain Board oversight practices with respect to pipeline integrity.
+Added: At a settlement hearing held on November 1, 2022, the Delaware Chancery Court approved the terms of the Derivative Settlement.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Shortly following the Line 901 incident, we established a claims line and encouraged any parties that were damaged by the release to contact us to discuss their damage claims.
+Added: We also received several individual lawsuits and claims from companies, governmental agencies and individuals alleging damages arising out of the Line 901 incident.
+Added: These lawsuits and claims generally seek restitution, compensatory and punitive damages, and/or injunctive relief.
+Added: The majority of these lawsuits have been settled or dismissed by the court.
+Added: In addition to the other lawsuits disclosed herein, the following lawsuits remain:
+Added: (i) a lawsuit filed in the United States District Court for the Central District of California that was remanded to the California Superior Court in Santa Barbara County for lost revenue or profit asserted by a former oil producer that declared bankruptcy and shut in its offshore production platform following the Line 901 incident;
+Added: (ii) a lawsuit filed by the California State Land Commission in California Superior Court in Santa Barbara County seeking lost royalties following the shut-down of Line 901, as well as costs related to the decommissioning of such platform, and (iii) lawsuits filed in California Superior Court in Santa Barbara County by various companies and individuals who provided labor, goods, or services associated with oil production activities they claim were disrupted following the Line 901 incident.
+Added: We are vigorously defending these remaining lawsuits and believe we have strong defenses, including a lack of duty owed to the claimants to keep Line 901 in service.
+Added: Furthermore, shortly following the Line 901 incident, we established a claims line and encouraged any parties that were damaged by the release to contact us to discuss their damage claims.
We received a number of claims through the claims line and we have processed those claims and made payments as appropriate.
Nine class action lawsuits were filed against us;
−Removed: however, after various claims were either dismissed or consolidated, two proceedings remain pending in the United States District Court for the Central District of California.
−Removed: In the first proceeding, the plaintiffs claim two different classes of claimants were damaged by the release:
+Added: however, after various claims were either dismissed or consolidated, two proceedings remained pending in the United States District Court for the Central District of California.
+Added: In the first proceeding, the plaintiffs seek a declaratory judgment that Plains’ right-of-way agreements would not allow Plains to lay a new pipeline to replace Line 901 and/or the non-operating segment of Line 903 without paying additional compensation.
+Added: No trial date has been set in that action and the purchaser of Line 901 and the Sisquoc to Pentland portion of Line 903 will be joining this proceeding as a co-defendant with respect to its interest in such acquired pipelines.
+Added: In the second proceeding, the plaintiffs claimed two different classes of claimants were damaged by the release:
(i) commercial fishermen who landed fish in certain specified fishing blocks in the waters off the coast of Southern California or persons or businesses who resold commercial seafood caught in those areas;
and (ii) owners and lessees of residential beachfront properties, or properties with a private easement to a beach, where plaintiffs claim oil from the spill washed up.
−Removed: We are vigorously defending against those claims.
−Removed: This case is set for trial to begin in June of 2022.
−Removed: In the second proceeding, the plaintiffs seek a declaratory judgment that Plains’ right-of-way agreements would not allow Plains to lay a new pipeline to replace Line 901 and/or the non-operating segment of Line 903 without paying additional compensation.
−Removed: No trial date has been set in that action.
−Removed: In addition, four unitholder derivative lawsuits were filed by certain purported investors in the Partnership against PAGP and certain of the Partnership’s affiliates, officers and directors.
−Removed: After various claims were either dismissed or consolidated, one proceeding against PAGP remains pending in Delaware Chancery Court.
−Removed: Generally, the plaintiffs claim that PAGP failed to exercise proper oversight over the Partnership’s pipeline integrity efforts.
−Removed: We will continue to vigorously defend against the claim.
−Removed: No trial date has been set in this action.
−Removed: We have also received several other individual lawsuits and claims from companies, governmental agencies and individuals alleging damages arising out of the Line 901 incident.
−Removed: These lawsuits and claims generally seek restitution, compensatory and punitive damages, and/or injunctive relief.
−Removed: The majority of these lawsuits have been settled or dismissed by the court.
−Removed: Remaining claims include claims for lost revenue or profit asserted by a former oil producer that declared bankruptcy and shut in its offshore production platform following the Line 901 incident, a state agency that received royalties on oil produced from that platform until it was abandoned by its owner, and various companies and individuals who provided labor, goods, or services associated with oil production activities they claim were disrupted following the Line 901 incident.
−Removed: We are vigorously defending these suits.
−Removed: We may be subject to additional claims and lawsuits, which could materially impact the liabilities and costs we currently expect to incur as a result of the Line 901 incident.
−Removed: Taking the foregoing into account, as of December 31, 2021, we estimate that the aggregate total costs we have incurred or will incur with respect to the Line 901 incident will be approximately $ 495 million, which includes actual and projected emergency response and clean-up costs, natural resource damage assessments, fines and penalties payable pursuant to the Consent Decree and certain third-party claims settlements, as well as estimates for certain legal fees.
+Added: In 2022, in order to fully and finally resolve all claims and litigation for both classes, we reached an agreement to settle this case in exchange for a payment of $ 230 million (the “Class Action Settlement”).
+Added: The Class Action Settlement was formally approved by the trial court on September 20, 2022, and we made the $ 230 million settlement payment on October 27, 2022.
+Added: Plains formally submitted claims for reimbursement of the Class Action Settlement to our insurance carriers on November 7, 2022.
+Added: To date, we have received payment of approximately $ 3.6 million from one insurer, which represents the final payment obligation of such insurer and brings the total amount collected from all insurers under such program to $ 275 million of the $ 500 million policy limits as of December 31, 2022.
+Added: Insurers responsible for $ 185 million of the remaining $ 225 million of coverage formally communicated a denial of coverage for the Class Action Settlement generally alleging that some or all damages encompassed by the Class Action Settlement are not covered by their policies and that all or some portion of the $ 275 million for which Plains has already received insurance reimbursement does not properly exhaust the underlying policies that paid those sums.
+Added: The insurer responsible for the final $ 40 million of coverage under such insurance program has not yet responded to our reimbursement demand.
+Added: We intend to vigorously pursue recovery from our insurers of all amounts for which we have claimed reimbursement.
+Added: We believe that our claim for reimbursement from our insurers of the Class Action Settlement payment is strong and that our ultimate recovery of such amounts is probable.
+Added: Our belief is based on:
+Added: (i) our analysis of the terms of the underlying insurance policies as applied to the facts and circumstances that comprise our claim for reimbursement, (ii) our experience with the cost submissions and timely collection of claims for the $ 275 million collected to date for this incident under the same insurance program as the denied claims, including from some of the same insurers who are now denying claims, (iii) our extensive legal review and assessment of the insurer’s claimed basis for denial of coverage, which review and assessment includes the advice of external legal counsel experienced in these type of matters and solidly supports our belief that our insurers are required to provide coverage based on the terms of the policies and the nature of our claims, and (iv) the financial strength of the insurance carriers as determined by an independent credit ratings agency.
+Added: Various factors could impact the timing and amount of recovery of our insurance receivable, including future developments that adversely impact our assessment of the strength of our coverage claims, the outcome of any dispute resolution proceedings with respect to our coverage claims and the extent to which insurers may become insolvent in the future.
+Added: An unfavorable resolution could have a material impact on our results of operations.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: In connection with the foregoing, including the Class Action Settlement and the Derivative Settlement, we have made adjustments to our total estimated Line 901 costs and the portion of such costs that we believe are probable of recovery from insurance carriers, net of deductibles.
+Added: Effective as of December 31, 2022, we estimate that the aggregate total costs we have incurred or will incur with respect to the Line 901 incident will be approximately $ 740 million, which includes actual and projected emergency response and clean-up costs, natural resource damage assessments, fines and penalties payable pursuant to the Consent Decree, certain third-party claims settlements (including the Class Action Settlement and the Derivative Settlement), and estimated costs associated with our remaining Line 901 lawsuits and claims as described above, as well as estimates for certain legal fees and statutory interest where applicable.
We accrue such estimates of aggregate total costs to “Field operating costs” in our Consolidated Statements of Operations.
10 unchanged sentences
therefore, we can provide no assurance that we will not have to accrue significant additional costs in the future with respect to the Line 901 incident.
+Added: During the years ended December 31, 2022 and 2021, we recognized costs, net of amounts probable of recovery from insurance carriers, of $ 95 million and $ 15 million, respectively.
+Added: We did not recognize any such costs during the year ended December 31, 2020.
+Added: As of December 31, 2022, we had a remaining undiscounted gross liability of approximately $ 105 million related to the Line 901 incident, which aggregate amount is reflected in “Current liabilities” on our Consolidated Balance Sheet.
+Added: As discussed above, we maintain insurance coverage, which is subject to certain exclusions and deductibles, in the event of such liabilities.
+Added: As of December 31, 2022, our incurred costs for the Line 901 incident have exceeded our insurance coverage limit of $ 500 million related to our 2015 insurance program applicable to the Line 901 incident by $ 240 million.
+Added: Through December 31, 2022, we had collected, subject to customary reservations, approximately $ 280 million out of the $ 505 million of release costs that we believe are probable of recovery from insurance carriers (including the 2015 insurance program and our directors and officers (D&O) insurance policies), net of deductibles.
+Added: Therefore, as of December 31, 2022, we have recognized a long-term receivable of approximately $ 225 million for the portion of the release costs that we believe is probable of recovery from insurance, net of deductibles and amounts already collected.
+Added: We anticipate that the process to enforce our coverage claims with respect to the Class Action Settlement will take time and, accordingly, have recognized such amount as a long-term asset in “Other assets” on our Consolidated Balance Sheet.
+Added: We have completed the required clean-up and remediation work as determined by the Unified Command and the Unified Command has been dissolved;
+Added: however, we expect to make payments for additional legal, professional and regulatory costs during future periods.
+Added: Taking into account the costs that we have included in our total estimate of costs for the Line 901 incident and considering what we regard as very strong defenses to the claims made in our remaining Line 901 lawsuits, we do not believe the ultimate resolution of such remaining lawsuits will have a material adverse effect on our consolidated financial condition, results of operations or cash flows.
Index to Financial Statements
2 unchanged sentences
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
−Removed: As of December 31, 2021, we had a remaining undiscounted gross liability of $ 103 million related to this event, which is reflected in “Trade accounts payable” and “Other current liabilities” on our Consolidated Balance Sheet.
−Removed: We maintain insurance coverage, which is subject to certain exclusions and deductibles, in the event of such environmental liabilities.
−Removed: Subject to such exclusions and deductibles, we believe that our coverage is adequate to cover the current estimated total emergency response and clean-up costs, claims settlement costs and remediation costs and we believe that this coverage is also adequate to cover any potential increase in the estimates for these costs that exceed the amounts currently identified.
−Removed: Through December 31, 2021, we had collected, subject to customary reservations, $ 250 million out of the approximate $ 355 million of release costs that we believe are probable of recovery from insurance carriers, net of deductibles.
−Removed: Therefore, as of December 31, 2021, we have recognized a receivable of approximately $ 105 million for the portion of the release costs that we believe is probable of recovery from insurance, net of deductibles and amounts already collected.
−Removed: Such amount is recognized as a current asset in “Trade accounts receivable and other receivables, net” on our Consolidated Balance Sheet.
−Removed: We have completed the required clean-up and remediation work as determined by the Unified Command and the Unified Command has been dissolved;
−Removed: however, we expect to make payments for additional costs associated with restoration of the impacted areas, as well as legal, professional and regulatory costs during future periods.
+Added: Other Litigation Matters.
+Added: On July 19, 2022 Hartree Natural Gas Storage, LLC (“Hartree”) filed a lawsuit under seal in the Superior Court for the State of Delaware asserting claims against PAA Natural Gas Storage, L.P.
+Added: and PAA arising out of a Membership Interest Purchase Agreement relating to the 2021 sale of the Pine Prairie Energy Center natural gas storage facility to Hartree.
+Added: We believe the claims are without merit and that the outcome of the lawsuit will not have a material adverse effect on our financial condition, results of operations or cash flows.
+Added: We intend to vigorously defend against the claims asserted in this lawsuit.
Pipelines, terminals, trucks or other facilities or equipment may experience damage as a result of an accident, natural disaster, terrorist attack, cyber event or other event.
2 unchanged sentences
We maintain various types and varying levels of insurance coverage to cover our operations and properties, and we self-insure certain risks, including gradual pollution, cybersecurity and named windstorms.
−Removed: However, such insurance does not cover every potential risk that might occur, associated with operating pipelines, terminals and other facilities and equipment, including the potential loss of significant revenues and cash flows.
−Removed: The occurrence of a significant event not fully insured, indemnified or reserved against, or the failure of a party to meet its indemnification obligations, could materially and adversely affect our operations and financial condition.
−Removed: We believe that we maintain adequate insurance coverage, although insurance will not cover many types of interruptions that might occur, will not cover amounts up to applicable deductibles and will not cover all risks associated with certain of our assets and operations.
+Added: To the extent we do maintain insurance coverage, such insurance does not cover every potential risk that might occur, associated with operating pipelines, terminals and other facilities and equipment, including the potential loss of significant revenues and cash flows.
+Added: The occurrence of a significant event not fully insured, indemnified or reserved against, or the failure of a party to meet its insurance or indemnification obligations, could materially and adversely affect our operations and financial condition.
+Added: While we strive to maintain adequate insurance coverage, our actual costs may exceed our coverage levels and insurance will not cover many types of interruptions that might occur, will not cover amounts up to applicable deductibles and will not cover all risks associated with certain of our assets and operations.
With respect to our insurance coverage, our policies are subject to deductibles and retention levels that we consider reasonable and not excessive.
7 unchanged sentences
Note 20— Segment Information
−Removed: During the fourth quarter of 2021, we effected changes in the primary financial information provided to our CODM (our Chief Executive Officer) for assessing performance and allocating resources to present two operating segments, Crude Oil and NGL.
−Removed: Prior to the fourth quarter of 2021, this information was organized into three operating segments:
−Removed: Transportation, Facilities and Supply and Logistics.
−Removed: The change in our segments is reflective of a change in how our CODM views our business and stems primarily from (i) a multi-year transition in the midstream energy industry driven by increased competition that has reduced the stand alone earnings opportunities of our supply and logistics activities such that those activities now primarily support our effort to increase the utilization of our Crude Oil and NGL assets and (ii) internal changes regarding the oversight and reporting of our assets and related results of operations.
−Removed: All segment data and related disclosures for earlier periods presented herein have been recast to reflect the new segment reporting structure.
−Removed: Our operating segments, which are also our reportable segments, are organized by product as our Crude Oil and NGL businesses are generally impacted by different market fundamentals and require the use of different assets and business strategies.
+Added: Our operating segments, Crude Oil and NGL, which are also our reportable segments, are organized by product as our Crude Oil and NGL businesses are generally impacted by different market fundamentals and require the use of different assets and business strategies.
The Crude Oil segment includes our crude oil pipelines, crude oil storage and marine terminals and related crude oil marketing activities.
The NGL segment includes our NGL pipelines, NGL storage, natural gas processing and NGL fractionation facilities and related NGL marketing activities.
−Removed: In our historical segment reporting, our marketing activities were presented separately from our other operating activities.
−Removed: Our crude oil and NGL marketing activities are now included in the respective reporting segments as their primary purpose is to support the utilization of our assets by entering into transactions that facilitate increased volumes handled by our assets, resulting in additional earnings for each of our segments.
−Removed: Our CODM evaluates segment performance based on measures including Segment Adjusted EBITDA (as defined below) and maintenance capital.
+Added: Our crude oil and NGL marketing activities are included in the respective reporting segments as their primary purpose is to support the utilization of our assets by entering into transactions that facilitate increased volumes handled by our assets, resulting in additional earnings for each of our segments.
+Added: Our CODM (our Chief Executive Officer) evaluates segment performance based on measures including Segment Adjusted EBITDA (as defined below) and maintenance capital.
The measure of Segment Adjusted EBITDA forms the basis of our internal financial reporting and is the primary performance measure used by our CODM in assessing performance and allocating resources among our operating segments.
−Removed: We define Segment Adjusted EBITDA as revenues and equity earnings in unconsolidated entities less (a) purchases and related costs, (b) field operating costs and (c) segment general and administrative expenses, plus (d) our proportionate share of the depreciation and amortization expense of unconsolidated entities, further adjusted (e) for certain selected items including (i) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable, (ii) long-term inventory costing adjustments, (iii) charges for obligations that are expected to be settled with the issuance of equity instruments, (iv) amounts related to deficiencies associated with minimum volume commitments, net of the applicable amounts subsequently recognized into revenue and (v) other items that our CODM believes are integral to understanding our core segment operating performance and (f) to exclude the portion of all preceding items that is attributable to noncontrolling interests (“Adjusted EBITDA attributable to noncontrolling interests”).
−Removed: During the fourth quarter of 2021, we modified our definition of Segment Adjusted EBITDA to exclude amounts attributable to noncontrolling interests.
−Removed: In connection with the Permian JV formation in October 2021, our CODM determined this modification resulted in amounts that were more meaningful to evaluate segment performance.
−Removed: Amounts attributable to noncontrolling interests for periods prior have been recast to reflect this modification.
+Added: We define Segment Adjusted EBITDA as revenues and equity earnings in unconsolidated entities less (a) purchases and related costs, (b) field operating costs and (c) segment general and administrative expenses, plus (d) our proportionate share of the depreciation and amortization expense (including write-downs related to cancelled projects and impairments) of unconsolidated entities, further adjusted (e) for certain selected items including (i) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (ii) long-term inventory costing adjustments, (iii) charges for obligations that are expected to be settled with the issuance of equity instruments, (iv) amounts related to deficiencies associated with minimum volume commitments, net of the applicable amounts subsequently recognized into revenue and (v) other items that our CODM believes are integral to understanding our core segment operating performance and (f) to exclude the portion of all preceding items that is attributable to noncontrolling interests (“Adjusted EBITDA attributable to noncontrolling interests”).
Segment Adjusted EBITDA excludes depreciation and amortization.
74 unchanged sentences
( 85 ) ( 123 ) ( 73 )
−Removed: Gains/(losses) from derivative activities and inventory valuation adjustments (3)
+Added: Derivative activities and inventory valuation adjustments (3)
280 271 ( 480 )
1 unchanged sentence
Deficiencies under minimum volume commitments, net (5)
+Added: ( 7 ) 7 ( 74 )
Equity-indexed compensation expense (6)
( 32 ) ( 19 ) ( 19 )
−Removed: Net gain/(loss) on foreign currency revaluation (7)
+Added: Foreign currency revaluation (7)
Line 901 incident (8)
5 unchanged sentences
Gains/(losses) on asset sales and asset impairments, net ( 269 ) ( 592 ) ( 719 )
−Removed: Goodwill impairment losses — ( 2,515 ) —
−Removed: Gain on/(impairment of) investments in unconsolidated entities, net 2 ( 182 ) 271
+Added: Goodwill impairment loss — — ( 2,515 )
+Added: Gains (losses) on/(impairment of) investments in unconsolidated entities, net 346 2 ( 182 )
Interest expense, net ( 405 ) ( 425 ) ( 436 )
−Removed: Other income, net 19 39 24
+Added: Other income/(expense), net ( 219 ) 19 39
Income/(loss) before tax 1,417 721 ( 2,599 )
4 unchanged sentences
(1) Represents adjustments utilized by our CODM in the evaluation of segment results.
−Removed: (2) Includes our proportionate share of the depreciation and amortization expense (including write-downs related to cancelled projects) of unconsolidated entities.
−Removed: Index to Financial Statements
−Removed: PLAINS ALL AMERICAN PIPELINE, L.P.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+Added: (2) Includes our proportionate share of the depreciation and amortization expense (including write-downs related to cancelled projects and impairments) of unconsolidated entities.
(3) We use derivative instruments for risk management purposes and our related processes include specific identification of hedging instruments to an underlying hedged transaction.
1 unchanged sentence
In the course of evaluating our results, we identify differences in the timing of earnings from the derivative instruments and the underlying transactions and exclude the related gains and losses in determining Segment Adjusted EBITDA such that the earnings from the derivative instruments and the underlying transactions impact Segment Adjusted EBITDA in the same period.
−Removed: In addition, we exclude gains and losses on derivatives that are related to investing activities, such as the purchase of linefill.
+Added: In addition, we exclude gains and losses on derivatives that are related to (i) investing activities, such as the purchase of linefill, and (ii) purchases of long-term inventory.
We also exclude the impact of corresponding inventory valuation adjustments, as applicable.
+Added: Index to Financial Statements
+Added: PLAINS ALL AMERICAN PIPELINE, L.P.
+Added: AND SUBSIDIARIES
+Added: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(4) We carry crude oil and NGL inventory that is comprised of minimum working inventory requirements in third-party assets and other working inventory that is needed for our commercial operations.
2 unchanged sentences
We exclude the impact of changes in the average cost of the long-term inventory (that result from fluctuations in market prices) and write-downs of such inventory that result from price declines from Segment Adjusted EBITDA.
−Removed: (5) We, and certain of our equity method investments, have certain agreements that require counterparties to deliver, transport or throughput a minimum volume over an agreed upon period.
+Added: (5) We, and certain of our equity method investees, 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.
16 unchanged sentences
An adjustment for these non-recurring expenses is included in the calculation of Segment Adjusted EBITDA for the years ended December 31, 2021 and 2020 as our CODM does not view such expenses as integral to understanding our core segment operating performance.
−Removed: (10) Reflects amounts attributable to noncontrolling interests in the Permian JV (beginning October 2021) and Red River LLC.
+Added: (10) Reflects amounts attributable to noncontrolling interests in the Permian JV (beginning October 2021), Cactus II (beginning November 2022) and Red River.
Index to Financial Statements
15 unchanged sentences
$ 22,457 $ 22,367
−Removed: (1) Excludes long-term derivative assets, long-term deferred tax assets and goodwill.
+Added: (1) Excludes long-term derivative assets and long-term deferred tax assets.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.