PLAINS ALL AMERICAN PIPELINE LP [PAA] Filings

10-Q 1 paa-20220331.htm 10-Q paa-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________

FORM 10-Q

________________________________________________________________________________________________________________________________

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-14569

________________________________________________________________

PLAINS ALL AMERICAN PIPELINE, L.P.

(Exact name of registrant as specified in its charter)


Delaware						76-0582150
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

333 Clay Street, Suite 1600

Houston, Texas 77002

(Address of principal executive offices) (Zip code)

(713) 646-4100

(Registrant’s telephone number, including area code)

________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Units	PAA	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

As of April 29, 2022, there were 702,668,178 Common Units outstanding.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION
Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets: As of March 31, 2022 and December 31, 2021			3
Condensed Consolidated Statements of Operations: For the three months ended March 31, 2022 and 2021			4
Condensed Consolidated Statements of Comprehensive Income: For the three months ended March 31, 2022 and 2021			5
Condensed Consolidated Statements of Changes in Accumulated Other Comprehensive Income/(Loss): For the three months ended March 31, 2022 and 2021			5
Condensed Consolidated Statements of Cash Flows: For the three months ended March 31, 2022 and 2021			6
Condensed Consolidated Statements of Changes in Partners’ Capital: For the three months ended March 31, 2022 and 2021			7
Notes to the Condensed Consolidated Financial Statements:
1. Organization and Basis of Consolidation and Presentation			8
2. Summary of Significant Accounting Policies			10
3. Revenues and Accounts Receivable			11
4. Net Income Per Common Unit			14
5. Inventory, Linefill and Long-term Inventory			15
6. Debt			15
7. Partners’ Capital and Distributions			16
8. Derivatives and Risk Management Activities			18
9. Related Party Transactions			22
10. Commitments and Contingencies			23
11. Segment Information			28


Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			32
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			50
Item 4. CONTROLS AND PROCEDURES			51

PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS			52
Item 1A. RISK FACTORS			52
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			52
Item 3. DEFAULTS UPON SENIOR SECURITIES			52
Item 4. MINE SAFETY DISCLOSURES			52
Item 5. OTHER INFORMATION			52
Item 6. EXHIBITS			53
SIGNATURES			57

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PART I. FINANCIAL INFORMATION

Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except unit data)


	March 31, 2022		December 31, 2021
	(unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	114	$	449

Trade accounts receivable and other receivables, net	7,136		4,705
Inventory	527		783
Other current assets	320		200
Total current assets	8,097		6,137

PROPERTY AND EQUIPMENT	19,399		19,257
Accumulated depreciation	(4,535)		(4,354)
Property and equipment, net	14,864		14,903

OTHER ASSETS
Investments in unconsolidated entities	3,807		3,805
Intangible assets, net	1,901		1,960
Linefill	919		907
Long-term operating lease right-of-use assets, net	387		393
Long-term inventory	374		253
Other long-term assets, net	293		251
Total assets	$	30,642	$	28,609

LIABILITIES AND PARTNERS’ CAPITAL

CURRENT LIABILITIES
Trade accounts payable	$	6,867	$	4,810
Short-term debt	900		822
Other current liabilities	803		600
Total current liabilities	8,570		6,232

LONG-TERM LIABILITIES
Senior notes, net	7,931		8,329
Other long-term debt, net	55		69
Long-term operating lease liabilities	331		339
Other long-term liabilities and deferred credits	901		830
Total long-term liabilities	9,218		9,567

COMMITMENTS AND CONTINGENCIES (NOTE 10)

PARTNERS’ CAPITAL
Series A preferred unitholders (71,090,468 and 71,090,468 units outstanding, respectively)	1,505		1,505
Series B preferred unitholders (800,000 and 800,000 units outstanding, respectively)	787		787
Common unitholders (702,668,178 and 704,991,540 units outstanding, respectively)	7,751		7,680
Total partners’ capital excluding noncontrolling interests	10,043		9,972
Noncontrolling interests	2,811		2,838
Total partners’ capital	12,854		12,810
Total liabilities and partners’ capital	$	30,642	$	28,609

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per unit data)


	Three Months Ended March 31,
		2022		2021
	(unaudited)
REVENUES
Product sales revenues		$	13,381	$	8,083
Services revenues		313		300
Total revenues		13,694		8,383

COSTS AND EXPENSES
Purchases and related costs		12,785		7,392
Field operating costs		346		219
General and administrative expenses		82		67
Depreciation and amortization		230		177
(Gains)/losses on asset sales and asset impairments, net		(42)		2
Total costs and expenses		13,401		7,857

OPERATING INCOME		293		526

OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities		97		88

Interest expense (net of capitalized interest of $1 and $5, respectively)		(107)		(107)
Other expense, net		(37)		(60)

INCOME BEFORE TAX		246		447
Current income tax expense		(19)		(1)
Deferred income tax expense		(2)		(23)

NET INCOME		225		423
Net income attributable to noncontrolling interests		(38)		(1)
NET INCOME ATTRIBUTABLE TO PAA		$	187	$	422

NET INCOME PER COMMON UNIT (NOTE 4):
Net income allocated to common unitholders — Basic and Diluted		$	137	$	371
Basic and diluted weighted average common units outstanding		705		722
Basic and diluted net income per common unit		$	0.19	$	0.51

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)


	Three Months Ended March 31,
		2022		2021
	(unaudited)
Net income		$	225	$	423
Other comprehensive income		74		108
Comprehensive income		299		531
Comprehensive income attributable to noncontrolling interests		(38)		(1)
Comprehensive income attributable to PAA		$	261	$	530

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

(in millions)


	Derivative Instruments		Translation Adjustments		Other		Total
	(unaudited)
Balance at December 31, 2021	$	(208)	$	(642)	$	(3)	$	(853)

Reclassification adjustments	3		—		—		3
Unrealized gain on hedges	32		—		—		32
Currency translation adjustments	—		40		—		40
Other	—		—		(1)		(1)
Total period activity	35		40		(1)		74
Balance at March 31, 2022	$	(173)	$	(602)	$	(4)	$	(779)


	Derivative Instruments		Translation Adjustments		Other		Total
	(unaudited)
Balance at December 31, 2020	$	(258)	$	(657)	$	(3)	$	(918)

Reclassification adjustments	3		—		—		3
Unrealized gain on hedges	68		—		—		68
Currency translation adjustments	—		37		—		37

Total period activity	71		37		—		108
Balance at March 31, 2021	$	(187)	$	(620)	$	(3)	$	(810)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Three Months Ended March 31,
	2022		2021
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	225	$	423
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	230		177
(Gains)/losses on asset sales and asset impairments, net	(42)		2


Deferred income tax expense	2		23


Change in fair value of Preferred Distribution Rate Reset Option (Note 8)	44		67
Equity earnings in unconsolidated entities	(97)		(88)
Distributions on earnings from unconsolidated entities	96		110

Other	4		6
Changes in assets and liabilities, net of acquisitions	(122)		71
Net cash provided by operating activities	340		791

CASH FLOWS FROM INVESTING ACTIVITIES

Investments in unconsolidated entities	(3)		(35)
Additions to property, equipment and other	(101)		(97)
Proceeds from sales of assets	53		21


Cash paid for purchases of linefill	(39)		—
Other investing activities	9		3
Net cash used in investing activities	(81)		(108)

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings/(repayments) under commercial paper program (Note 6)	382		(410)

Net repayments under senior secured hedged inventory facility (Note 6)	—		(166)


Repayments of senior notes	(750)		—

Repurchase of common units (Note 7)	(25)		(3)
Distributions paid to Series A preferred unitholders (Note 7)	(37)		(37)

Distributions paid to common unitholders (Note 7)	(127)		(130)
Distributions paid to noncontrolling interests (Note 7)	(59)		(6)



Other financing activities	19		65
Net cash used in financing activities	(597)		(687)

Effect of translation adjustment	3		—

Net decrease in cash and cash equivalents and restricted cash	(335)		(4)
Cash and cash equivalents and restricted cash, beginning of period	453		60
Cash and cash equivalents and restricted cash, end of period	$	118	$	56

Cash paid for:
Interest, net of amounts capitalized	$	74	$	65
Income taxes, net of amounts refunded	$	23	$	24

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(in millions)















	Limited Partners						Partners’ Capital Excluding Noncontrolling Interests		Noncontrolling Interests		Total Partners’ Capital
	Preferred Unitholders				Common Unitholders
	Series A		Series B
	(unaudited)
Balance at December 31, 2021	$	1,505	$	787	$	7,680	$	9,972	$	2,838	$	12,810
Net income	37		12		138		187		38		225
Distributions (Note 7)	(37)		(12)		(127)		(176)		(59)		(235)
Other comprehensive income	—		—		74		74		—		74
Repurchase of common units (Note 7)	—		—		(25)		(25)		—		(25)


Other	—		—		11		11		(6)		5
Balance at March 31, 2022	$	1,505	$	787	$	7,751	$	10,043	$	2,811	$	12,854














	Limited Partners						Partners’ Capital Excluding Noncontrolling Interests		Noncontrolling Interests		Total Partners’ Capital
	Preferred Unitholders				Common Unitholders
	Series A		Series B
	(unaudited)
Balance at December 31, 2020	$	1,505	$	787	$	7,301	$	9,593	$	145	$	9,738
Net income	37		12		373		422		1		423
Distributions	(37)		(12)		(130)		(179)		(6)		(185)
Other comprehensive income	—		—		108		108		—		108
Repurchase of common units (Note 7)	—		—		(3)		(3)		—		(3)
Contributions from noncontrolling interests	—		—		—		—		1		1
Other	—		—		2		2		—		2
Balance at March 31, 2021	$	1,505	$	787	$	7,651	$	9,943	$	141	$	10,084

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Organization and Basis of Consolidation and Presentation

Organization

Plains All American Pipeline, L.P. (“PAA”) is a Delaware limited partnership formed in 1998. Our operations are conducted directly and indirectly through our primary operating subsidiaries. As used in this Form 10-Q and unless the context indicates otherwise, the terms “Partnership,” “we,” “us,” “our,” “ours” and similar terms refer to PAA and its subsidiaries.

Our business model integrates large-scale supply aggregation capabilities with the ownership and operation of critical midstream infrastructure systems that connect major producing regions to key demand centers and export terminals. As one of the largest midstream service providers in North America, we own an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and natural gas liquids (“NGL”) producing basins (including the Permian Basin) and transportation corridors and at major market hubs in the United States and Canada. Our assets and the services we provide are primarily focused on and conducted through two operating segments: Crude Oil and NGL. See Note 11 for further discussion of our operating segments.

Our non-economic general partner interest is held by PAA GP LLC (“PAA GP”), a Delaware limited liability company, whose sole member is Plains AAP, L.P. (“AAP”), a Delaware limited partnership. In addition to its ownership of PAA GP, as of March 31, 2022, AAP also owned a limited partner interest in us through its ownership of approximately 241.5 million of our common units (approximately 31% of our total outstanding common units and Series A preferred units combined). Plains All American GP LLC (“GP LLC”), a Delaware limited liability company, is AAP’s general partner. Plains GP Holdings, L.P. (“PAGP”) is the sole and managing member of GP LLC, and, at March 31, 2022, owned an approximate 81% limited partner interest in AAP. PAA GP Holdings LLC (“PAGP GP”) is the general partner of PAGP.

As the sole member of GP LLC, PAGP has responsibility for conducting our business and managing our operations; however, the board of directors of PAGP GP has ultimate responsibility for managing the business and affairs of PAGP, AAP and us. GP LLC employs our domestic officers and personnel; our Canadian officers and personnel are employed by our subsidiary, Plains Midstream Canada ULC.

References to our “general partner,” as the context requires, include any or all of PAGP GP, PAGP, GP LLC, AAP and PAA GP.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Definitions

Additional defined terms are used in this Form 10-Q and shall have the meanings indicated below:


AOCI	=	Accumulated other comprehensive income/(loss)
ASC	=	Accounting Standards Codification
ASU	=	Accounting Standards Update
Bcf	=	Billion cubic feet
Btu	=	British thermal unit
CAD	=	Canadian dollar
CODM	=	Chief Operating Decision Maker
EBITDA	=	Earnings before interest, taxes, depreciation and amortization
EPA	=	United States Environmental Protection Agency
FASB	=	Financial Accounting Standards Board
GAAP	=	Generally accepted accounting principles in the United States
ICE	=	Intercontinental Exchange
ISDA	=	International Swaps and Derivatives Association
LIBOR	=	London Interbank Offered Rate
LTIP	=	Long-term incentive plan
Mcf	=	Thousand cubic feet
MMbls	=	Million barrels
NGL	=	Natural gas liquids, including ethane, propane and butane
NYMEX	=	New York Mercantile Exchange
SEC	=	United States Securities and Exchange Commission
TWh	=	Terawatt hour
USD	=	United States dollar
WTI	=	West Texas Intermediate

Basis of Consolidation and Presentation

The accompanying unaudited condensed consolidated interim financial statements and related notes thereto should be read in conjunction with our 2021 Annual Report on Form 10-K. The accompanying condensed consolidated financial statements include the accounts of PAA and all of its wholly owned subsidiaries and those entities that it controls. Investments in entities over which we have significant influence but not control are accounted for by the equity method. We apply proportionate consolidation for pipelines and other assets in which we own undivided joint interests. The financial statements have been prepared in accordance with the instructions for interim reporting as set forth by the SEC. The condensed consolidated balance sheet data as of December 31, 2021 was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the three months ended March 31, 2022 should not be taken as indicative of results to be expected for the entire year. All adjustments (consisting only of normal recurring adjustments) that in the opinion of management were necessary for a fair statement of the results for the interim periods have been reflected. 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, including the reclassifications discussed below.

Subsequent events have been evaluated through the financial statements issuance date and have been included in the following footnotes where applicable.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reclassification of Prior Period Information

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. Prior to the fourth quarter of 2021, this information was organized into three operating segments: Transportation, Facilities and Supply and Logistics. See Note 11 for further discussion of our operating segments. In connection with this change, we changed the presentation of Revenues on our Condensed Consolidated Statements of Operations. “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.”

Note 2—Summary of Significant Accounting Policies

Restricted Cash

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. The following table presents a reconciliation of cash and cash equivalents and restricted cash reported on our Condensed Consolidated Balance Sheets that sum to the total of the amounts shown on our Condensed Consolidated Statements of Cash Flows (in millions):


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	114	$	449
Restricted cash (1)	4		4
Total cash and cash equivalents and restricted cash	$	118	$	453

(1)Included in “Other current assets” on our Condensed Consolidated Balance Sheets.

Recent Accounting Pronouncements

Except as discussed below and in our 2021 Annual Report on Form 10-K, there have been no new accounting pronouncements that have become effective or have been issued during the three months ended March 31, 2022 that are of significance or potential significance to us.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity, by eliminating two of the three models that require separate accounting for embedded conversion features and the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification. This guidance is effective for interim and annual periods beginning after December 15, 2021, with early adoption permitted. We adopted this guidance effective January 1, 2022, and our adoption did not have a material impact on our financial position, results of operations or cash flows.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3—Revenues and Accounts Receivable

Revenue Recognition

We disaggregate our revenues by segment and type of activity. These categories depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. See Note 3 to our Consolidated Financial Statements included in Part IV of our 2021 Annual Report on Form 10-K for additional information regarding our types of revenues and policies for revenue recognition.

Revenues from Contracts with Customers. The following tables present our revenues from contracts with customers disaggregated by segment and type of activity (in millions):


	Three Months Ended March 31,
		2022		2021
Crude Oil segment revenues from contracts with customers
Sales		$	12,857	$	7,726
Transportation		155		90
Terminalling, Storage and Other		90		130
Total Crude Oil segment revenues from contracts with customers		$	13,102	$	7,946


	Three Months Ended March 31,
		2022		2021
NGL segment revenues from contracts with customers
Sales		$	845	$	772
Transportation		9		7
Terminalling, Storage and Other		25		22
Total NGL segment revenues from contracts with customers		$	879	$	801

Reconciliation to Total Revenues of Reportable Segments. The following disclosures only include information regarding revenues associated with consolidated entities; revenues from entities accounted for by the equity method are not included. The following tables present the reconciliation of our revenues from contracts with customers to total revenues of reportable segments and total revenues as disclosed in our Condensed Consolidated Statements of Operations (in millions):


Three Months Ended March 31, 2022	Crude Oil		NGL		Total
Revenues from contracts with customers	$	13,102	$	879	$	13,981
Other items in revenues	(23)		(144)		(167)
Total revenues of reportable segments	$	13,079	$	735	$	13,814
Intersegment revenue elimination					(120)
Total revenues					$	13,694

Three Months Ended March 31, 2021	Crude Oil		NGL		Total
Revenues from contracts with customers	$	7,946	$	801	$	8,747
Other items in revenues	(93)		(162)		(255)
Total revenues of reportable segments	$	7,853	$	639	$	8,492
Intersegment revenue elimination					(109)
Total revenues					$	8,383

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Minimum Volume Commitments. We have certain agreements that require counterparties to transport or throughput a minimum volume over an agreed upon period. 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	March 31, 2022		December 31, 2021
Billed and collected	Liability	$	56	$	63
Unbilled (1)	N/A	16		16
Total		$	72	$	79

(1)Amounts were related to deficiencies for which the counterparties had not met their contractual minimum commitments and are not reflected in our Condensed Consolidated Financial Statements as we had not yet billed or collected such amounts.

Contract Balances. Our contract balances consist of amounts received associated with services or sales for which we have not yet completed the related performance obligation. The following table presents the change in the liability balance associated with contracts with customers (in millions):


	Contract Liabilities
Balance at December 31, 2021	$	141
Amounts recognized as revenue	(20)

Additions	16

Balance at March 31, 2022	$	137

Remaining Performance Obligations. The information below includes the amount of consideration allocated to partially and wholly unsatisfied remaining performance obligations under contracts that exist as of the end of the periods and the timing of revenue recognition of those remaining performance obligations. Certain contracts meet the requirements for the presentation as remaining performance obligations. These arrangements include a fixed minimum level of service, typically a set volume of service, and do not contain any variability other than expected timing within a limited range. The following table presents the amount of consideration associated with remaining performance obligations for the population of contracts with external customers meeting the presentation requirements as of March 31, 2022 (in millions):


	Remainder of 2022		2023		2024		2025		2026		2027 and Thereafter
Pipeline revenues supported by minimum volume commitments and capacity agreements (1)	$	132	$	174	$	158	$	134	$	87	$	379
Terminalling, storage and other agreement revenues	201		223		173		81		61		517
Total	$	333	$	397	$	331	$	215	$	148	$	896

(1)Calculated as volumes committed under contracts multiplied by the current applicable tariff rate.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED 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. The following are examples of contracts that are not included in the table above because they are not within the scope of ASC 606 or do not meet the requirements for presentation:

•Minimum volume commitments on certain of our joint venture pipeline systems;

•Acreage dedications;

•Buy/sell arrangements with future committed volumes;

•Short-term contracts and those with variable consideration, due to the election of practical expedients;

•Contracts within the scope of ASC 842, Leases; and

•Contracts within the scope of ASC 815, Derivatives and Hedging.

Trade Accounts Receivable and Other Receivables, Net

Our accounts receivable are primarily from purchasers and shippers of crude oil and, to a lesser extent, purchasers of NGL. These purchasers include, but are not limited to, refiners, producers, marketing and trading companies and financial institutions. 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.

To mitigate credit risk related to our accounts receivable, we utilize a rigorous credit review process. We closely monitor market conditions and perform credit reviews of each customer to make a determination with respect to the amount, if any, of open credit to be extended to any given customer and the form and amount of financial performance assurances we require. Such financial assurances are commonly provided to us in the form of advance cash payments, standby letters of credit, credit insurance or parental guarantees. Additionally, in an effort to mitigate credit risk, a significant portion of our transactions with counterparties are settled on a net-cash basis. For a majority of these net-cash arrangements, we also enter into netting agreements (contractual agreements that allow us to offset receivables and payables with those counterparties against each other on our balance sheet).

Accounts receivable from the sale of crude oil are generally settled with counterparties on the industry settlement date, which is typically in the month following the month in which the title transfers. Otherwise, we generally invoice customers within 30 days of when the products or services were provided and generally require payment within 30 days of the invoice date. We review all outstanding accounts receivable balances on a monthly basis and record our receivables net of expected credit losses. We do not write-off accounts receivable balances until we have exhausted substantially all collection efforts. At March 31, 2022 and December 31, 2021, substantially all of our trade accounts receivable were less than 30 days past their invoice date. Our expected credit losses are immaterial. 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.

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 Condensed Consolidated Balance Sheets (in millions):


	March 31, 2022		December 31, 2021
Trade accounts receivable arising from revenues from contracts with customers	$	5,496	$	4,031
Other trade accounts receivables and other receivables (1)	9,620		5,126
Impact due to contractual rights of offset with counterparties	(7,980)		(4,452)
Trade accounts receivable and other receivables, net	$	7,136	$	4,705

(1)The balance is comprised primarily of accounts receivable associated with buy/sell arrangements that are not within the scope of ASC 606.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4—Net Income Per Common Unit

We calculate basic and diluted net income per common unit by dividing net income 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. 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. See Note 12 and Note 18 to our Consolidated Financial Statements included in Part IV of our 2021 Annual Report on Form 10-K for a discussion of our Series A preferred units and equity-indexed compensation plan awards. 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 per common unit for the three months ended March 31, 2022 and 2021 as the effect was antidilutive for both periods. 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. Equity-indexed compensation plan awards that were deemed to be dilutive during the period 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. For the three months ended March 31, 2022, approximately 0.7 million equity-indexed compensation plan awards, on a weighted-average basis, were dilutive, but did not change the presentation of diluted net income per common unit or diluted weighted average common units outstanding. For the three months ended March 31, 2021, there were no potentially dilutive equity-indexed compensation awards as a result of the hypothetical common unit repurchase.

The following table sets forth the computation of basic and diluted net income per common unit (in millions, except per unit data):


	Three Months Ended March 31,
		2022		2021
Basic and Diluted Net Income per Common Unit
Net income attributable to PAA		$	187	$	422
Distributions to Series A preferred unitholders		(37)		(37)
Distributions to Series B preferred unitholders		(12)		(12)
Distributions to participating securities		(1)		(1)
Other		—		(1)
Net income allocated to common unitholders (1)		$	137	$	371

Basic and diluted weighted average common units outstanding		705		722

Basic and diluted net income per common unit		$	0.19	$	0.51

(1)We calculate net income 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.

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5—Inventory, Linefill and Long-term Inventory

Inventory, linefill and long-term inventory consisted of the following (barrels in thousands and carrying value in millions):


	March 31, 2022						December 31, 2021
	Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)		Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)
Inventory
Crude oil	4,711	barrels	$	420	$	89.15	8,041	barrels	$	544	$	67.65
NGL	2,329	barrels	102		$	43.80	6,982	barrels	234		$	33.51

Other	N/A		5		N/A		N/A		5		N/A
Inventory subtotal			527						783

Linefill
Crude oil	15,160	barrels	872		$	57.52	15,199	barrels	862		$	56.71
NGL	1,667	barrels	47		$	28.19	1,633	barrels	45		$	27.56

Linefill subtotal			919						907

Long-term inventory
Crude oil	3,289	barrels	325		$	98.81	2,973	barrels	209		$	70.30
NGL	1,071	barrels	49		$	45.75	1,135	barrels	44		$	38.77
Long-term inventory subtotal			374						253

Total			$	1,820					$	1,943

(1)Price per unit of measure is comprised of a weighted average associated with various grades, qualities and locations. Accordingly, these prices may not coincide with any published benchmarks for such products.

Note 6—Debt

Debt consisted of the following (in millions):


	March 31, 2022		December 31, 2021
SHORT-TERM DEBT
Commercial paper notes, bearing a weighted-average interest rate of 0.8% (1)	$	382	$	—


Senior notes:
3.65% senior notes due June 2022 (2)	—		750
2.85% senior notes due January 2023	400		—
Other	118		72
Total short-term debt	900		822

LONG-TERM DEBT
Senior notes, net of unamortized discounts and debt issuance costs of $52 and $54, respectively	7,931		8,329


Other	55		69
Total long-term debt	7,986		8,398
Total debt (3)	$	8,886	$	9,220

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PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)We classified these commercial paper notes as short-term as of March 31, 2022, as these notes 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.

(2)These senior notes were redeemed on March 1, 2022.

(3)Our fixed-rate senior notes had a face value of approximately $8.4 billion and $9.1 billion as of March 31, 2022 and December 31, 2021, respectively. We estimated the aggregate fair value of these notes as of March 31, 2022 and December 31, 2021 to be approximately $8.4 billion and $9.9 billion, respectively. Our fixed-rate senior notes are traded among institutions, and these trades are routinely published by a reporting service. Our determination of fair value is based on reported trading activity near the end of the reporting period. We estimate that the carrying value of outstanding borrowings under our commercial paper program approximates fair value as interest rates reflect current market rates. The fair value estimates for our senior notes and commercial paper notes are based upon observable market data and are classified in Level 2 of the fair value hierarchy.

Borrowings and Repayments

Total borrowings under our credit facilities and commercial paper program for the three months ended March 31, 2022 and 2021 were approximately $5.6 billion and $14.2 billion, respectively. Total repayments under our credit facilities and commercial paper program were approximately $5.2 billion and $14.8 billion for the three months ended March 31, 2022 and 2021, respectively. The variance in total gross borrowings and repayments is impacted by various business and financial factors including, but not limited to, the timing, average term and method of general partnership borrowing activities.

During the three months ended March 31, 2022, we redeemed our 3.65%, $750 million senior notes due June 2022.