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See Note 12 to our Consolidated Financial Statements for further discussion regarding our hedging strategies and objectives.
−Removed: Index to Financial Statements
The fair value of our commodity derivatives and the change in fair value as of December 31, 2023 that would be expected from a 10% price increase or decrease is shown in the table below (in millions):
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Total fair value
+Added: Index to Financial Statements
The fair values presented in the table above reflect the sensitivity of the derivative instruments only and do not include the effect of the underlying hedged commodity.
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All of PAA’s senior notes are fixed rate notes and thus are not subject to interest rate risk.
−Removed: We did not have any variable rate debt outstanding at December 31, 2022.
+Added: Our variable rate debt outstanding at December 31, 2023, approximately $433 million, was subject to interest rate resets that generally range from less than one week to approximately one month.
The average interest rate on variable rate debt that was outstanding during the year ended December 31, 2023 was 5.8%, based upon rates in effect during the year.
The fair value of our interest rate derivatives was an asset of $55 million as of December 31, 2023.
−Removed: A 10% increase in the forward LIBOR curve as of December 31, 2022 would have resulted in an increase of $18 million to the fair value of our interest rate derivatives.
−Removed: A 10% decrease in the forward LIBOR curve as of December 31, 2022 would have resulted in a decrease of $18 million to the fair value of our interest rate derivatives.
+Added: A 10% increase in the forward SOFR curve as of December 31, 2023 would have resulted in an increase of $18 million to the fair value of our interest rate derivatives.
+Added: A 10% decrease in the forward SOFR curve as of December 31, 2023 would have resulted in a decrease of $18 million to the fair value of our interest rate derivatives.
See Note 12 to our Consolidated Financial Statements for a discussion of our interest rate risk hedging activities.
−Removed: Preferred Distribution Rate Reset Option
−Removed: The Preferred Distribution Rate Reset Option of PAA’s Series A preferred units is an embedded derivative that must be bifurcated from the related host contract, PAA’s partnership agreement, and recorded at fair value in our Consolidated Balance Sheets.
−Removed: The valuation model utilized for this embedded derivative contains multiple inputs, including PAA’s common unit price, ten-year United States treasury rates, default probabilities and timing estimates to ultimately calculate the fair value of PAA’s Series A preferred units with and without the Preferred Distribution Rate Reset Option.
−Removed: The fair value of this embedded derivative was a liability of $189 million as of December 31, 2022.
−Removed: The ten-year U.S.
−Removed: Treasury rate as of December 31, 2022 was 3.88%.
−Removed: An increase in the ten-year U.S.
−Removed: Treasury rate curve of 10%, holding other inputs constant, would result in an increase in both expense and our liability of $33 million.
−Removed: A decrease in the ten-year U.S.
−Removed: Treasury rate curve of 10%, holding other inputs constant, would result in a decrease in both expense and our liability of $39 million.
−Removed: See Note 13 to our Consolidated Financial Statements for a discussion of embedded derivatives.
−Removed: 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.
−Removed: See Note 12 to our Consolidated Financial Statements for additional information.
+Added: Series B Preferred Units .
+Added: Distributions on PAA’s Series B preferred units accumulate and are payable quarterly in arrears on the 15th day of February, May, August and November.
+Added: Beginning August 15, 2023, distributions on PAA’s Series B preferred units accumulate based on the applicable three-month SOFR, plus certain adjustments.
+Added: Based upon the Series B preferred units outstanding at December 31, 2023 and the liquidation preference of $1,000 per unit, a change of 100 basis points in interest rates would increase or decrease the annual distributions on PAA’s Series B preferred units by approximately $8 million.
+Added: See Note 11 to our Consolidated Financial Statements for additional information on PAA’s Series B preferred units.
Financial Statements and Supplementary Data
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Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
−Removed: Index to Financial Statements
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.