Plains All American Pipeline Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

paa-20200630

Table of Contents

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 June 30, 2020

☐ 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	New York Stock Exchange

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. (Check one):

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 July 31, 2020, there were 728,100,398 Common Units outstanding.

Table of Contents

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 June 30 , 2020 and December 31, 2019			3
Condensed Consolidated Statements of Operations: For the three and six months ended June 30 , 2020 and 2019			4
Condensed Consolidated Statements of Comprehensive Income/(Loss): For the three and six months ended June 30 , 2020 and 2019			5
Condensed Consolidated Statements of Changes in Accumulated Other Comprehensive Income/(Loss): For the six months ended June 30 , 2020 and 2019			5
Condensed Consolidated Statements of Cash Flows: For the six months ended June 30 , 2020 and 2019			6
Condensed Consolidated Statements of Changes in Partners’ Capital: For the three and six months ended June 30 , 2020 and 2019			7
Notes to the Condensed Consolidated Financial Statements:
1. Organization and Basis of Consolidation and Presentation			9
2. Summary of Significant Accounting Policies			11
3. Revenues and Accounts Receivable			12
4. Net Income/(Loss) Per Common Unit			15
5. Inventory, Linefill and Base Gas and Long-term Inventory			17
6. Goodwill			18
7. Investments in Unconsolidated Entities			19
8. Debt			20
9. Partners’ Capital and Distributions			21
10. Derivatives and Risk Management Activities			22
11. Related Party Transactions			28
12. Commitments and Contingencies			29
13. Operating Segments			34
14. Acquisitions, Divestitures and Asset Impairments			37

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			39
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			65
Item 4. CONTROLS AND PROCEDURES			66

PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS			67
Item 1A. RISK FACTORS			67
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			67
Item 3. DEFAULTS UPON SENIOR SECURITIES			67
Item 4. MINE SAFETY DISCLOSURES			67
Item 5. OTHER INFORMATION			67
Item 6. EXHIBITS			67
SIGNATURES			72

Table of Contents

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)


	June 30, 2020		December 31, 2019
	(unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	40	$	45
Restricted cash	64		37
Trade accounts receivable and other receivables, net	1,919		3,614
Inventory	662		604
Other current assets	476		312
Total current assets	3,161		4,612

PROPERTY AND EQUIPMENT	18,269		18,948
Accumulated depreciation	(3,669)		(3,593)
Property and equipment, net	14,600		15,355

OTHER ASSETS
Investments in unconsolidated entities	3,781		3,683
Goodwill	—		2,540
Linefill and base gas	962		981
Long-term operating lease right-of-use assets, net	416		466
Long-term inventory	125		182
Other long-term assets, net	992		858
Total assets	$	24,037	$	28,677

LIABILITIES AND PARTNERS’ CAPITAL

CURRENT LIABILITIES
Trade accounts payable	$	2,141	$	3,686
Short-term debt	729		504
Other current liabilities	763		827
Total current liabilities	3,633		5,017

LONG-TERM LIABILITIES
Senior notes, net	9,067		8,939
Other long-term debt, net	326		248
Long-term operating lease liabilities	356		387
Other long-term liabilities and deferred credits	853		891
Total long-term liabilities	10,602		10,465

COMMITMENTS AND CONTINGENCIES (NOTE 12)

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 (728,100,398 and 728,028,576 units outstanding, respectively)	7,367		10,770
Total partners’ capital excluding noncontrolling interests	9,659		13,062
Noncontrolling interests	143		133
Total partners’ capital	9,802		13,195
Total liabilities and partners’ capital	$	24,037	$	28,677

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

Table of Contents

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per unit data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(unaudited)						(unaudited)
REVENUES
Supply and Logistics segment revenues	$	2,925	$	7,914	$	10,833	$	15,936
Transportation segment revenues	151		188		338		385
Facilities segment revenues	149		151		323		307
Total revenues	3,225		8,253		11,494		16,628

COSTS AND EXPENSES
Purchases and related costs	2,525		7,244		9,893		14,362
Field operating costs	253		340		557		667
General and administrative expenses	72		75		141		151
Depreciation and amortization	166		147		333		283
(Gains)/losses on asset sales and asset impairments, net (Note 14)	(1)		(4)		618		—
Goodwill impairment losses (Note 6)	—		—		2,515		—
Total costs and expenses	3,015		7,802		14,057		15,463

OPERATING INCOME/(LOSS)	210		451		(2,563)		1,165

OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities	81		83		191		172
Gain on/(impairment of) investments in unconsolidated entities, net (Note 7)	(69)		—		(91)		267
Interest expense (net of capitalized interest of $5, $11, $11 and $22, respectively)	(108)		(103)		(215)		(203)
Other income/(expense), net	18		(6)		(13)		18

INCOME/(LOSS) BEFORE TAX	132		425		(2,691)		1,419
Current income tax expense	(15)		(24)		(22)		(53)
Deferred income tax benefit	27		47		12		52

NET INCOME/(LOSS)	144		448		(2,701)		1,418
Net income attributable to noncontrolling interests	(2)		(2)		(4)		(2)
NET INCOME/(LOSS) ATTRIBUTABLE TO PAA	$	142	$	446	$	(2,705)	$	1,416

NET INCOME/(LOSS) PER COMMON UNIT (NOTE 4):
Net income/(loss) allocated to common unitholders — Basic	$	92	$	395	$	(2,805)	$	1,311
Basic weighted average common units outstanding	728		727		728		727
Basic net income/(loss) per common unit	$	0.13	$	0.54	$	(3.85)	$	1.80

Net income/(loss) allocated to common unitholders — Diluted	$	92	$	433	$	(2,805)	$	1,389
Diluted weighted average common units outstanding	728		800		728		800
Diluted net income/(loss) per common unit	$	0.13	$	0.54	$	(3.85)	$	1.74

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

Table of Contents

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in millions)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
	(unaudited)						(unaudited)
Net income/(loss)	$	144	$	448	$	(2,701)	$	1,418
Other comprehensive income/(loss)	116		51		(212)		109
Comprehensive income/(loss)	260		499		(2,913)		1,527
Comprehensive income attributable to noncontrolling interests	(2)		(2)		(4)		(2)
Comprehensive income/(loss) attributable to PAA	$	258	$	497	$	(2,917)	$	1,525

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, 2019	$	(259)	$	(674)	$	—	$	(933)

Reclassification adjustments	5		—		—		5
Unrealized loss on hedges	(61)		—		—		(61)
Currency translation adjustments	—		(157)		—		(157)
Other	—		—		1		1
Total period activity	(56)		(157)		1		(212)
Balance at June 30, 2020	$	(315)	$	(831)	$	1	$	(1,145)


	Derivative Instruments		Translation Adjustments		Other		Total
	(unaudited)
Balance at December 31, 2018	$	(177)	$	(853)	$	—	$	(1,030)

Reclassification adjustments	5		—		—		5
Unrealized loss on hedges	(58)		—		—		(58)
Currency translation adjustments	—		161		—		161
Other	—		—		1		1
Total period activity	(53)		161		1		109
Balance at June 30, 2019	$	(230)	$	(692)	$	1	$	(921)

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

Table of Contents

PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Six Months Ended June 30,
	2020		2019
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)	$	(2,701)	$	1,418
Reconciliation of net income/(loss) to net cash provided by operating activities:
Depreciation and amortization	333		283
(Gains)/losses on asset sales and asset impairments, net (Note 14)	618		—
Goodwill impairment losses (Note 6)	2,515		—
Equity-indexed compensation expense	4		24
Inventory valuation adjustments	232		—
Deferred income tax benefit	(12)		(52)
Loss on foreign currency revaluation	23		12
Settlement of terminated interest rate hedging instruments	(100)		(22)
Change in fair value of Preferred Distribution Rate Reset Option (Note 10)	(17)		(16)
Equity earnings in unconsolidated entities	(191)		(172)
Distributions on earnings from unconsolidated entities	236		200
(Gain on)/impairment of investments in unconsolidated entities, net (Note 7)	91		(267)
Other	10		12
Changes in assets and liabilities, net of acquisitions	(67)		44
Net cash provided by operating activities	974		1,464

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid in connection with acquisitions, net of cash acquired (Note 14)	(308)		(47)
Investments in unconsolidated entities	(314)		(259)
Additions to property, equipment and other	(472)		(642)
Proceeds from sales of assets (Note 14)	245		2


Cash paid for purchases of linefill and base gas	(12)		(24)
Other investing activities	3		(8)
Net cash used in investing activities	(858)		(978)

CASH FLOWS FROM FINANCING ACTIVITIES

Price	1.00	EPS	-2,989,000,000
Shares	-0	P/E	-0
MCap	-0	P/FCF	-0
Net Debt	8,505	EBIT	3,384
TEV	8,505	TEV/EBIT	3
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-10
10-Q	2020-03-31	Filed 2020-05-08
10-K	2019-12-31	Filed 2020-02-27
10-Q	2019-09-30	Filed 2019-11-07
10-Q	2019-06-30	Filed 2019-08-08
10-Q	2019-03-31	Filed 2019-05-10
10-K	2018-12-31	Filed 2019-02-27
10-Q	2018-09-30	Filed 2018-11-08
10-Q	2018-06-30	Filed 2018-08-09
10-Q	2018-03-31	Filed 2018-05-09
10-K	2017-12-31	Filed 2018-02-27
10-Q	2017-09-30	Filed 2017-11-09
10-Q	2017-06-30	Filed 2017-08-08
10-Q	2017-03-31	Filed 2017-05-10
10-K	2016-12-31	Filed 2017-02-23
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-10
10-K	2015-12-31	Filed 2016-02-25
10-Q	2015-09-30	Filed 2015-11-06
10-Q	2015-06-30	Filed 2015-08-07
10-Q	2015-03-31	Filed 2015-05-08
10-K	2014-12-31	Filed 2015-02-25
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-08-08
10-Q	2014-03-31	Filed 2014-05-09
10-K	2013-12-31	Filed 2014-02-28
10-Q	2013-09-30	Filed 2013-11-06
10-Q	2013-06-30	Filed 2013-08-08
10-Q	2013-03-31	Filed 2013-05-08
10-K	2012-12-31	Filed 2013-02-27
10-Q	2012-09-30	Filed 2012-11-07
10-Q	2012-06-30	Filed 2012-08-09
10-Q	2012-03-31	Filed 2012-05-08
10-K	2011-12-31	Filed 2012-02-28
10-Q	2011-09-30	Filed 2011-11-04
10-Q	2011-06-30	Filed 2011-08-05
10-Q	2011-03-31	Filed 2011-05-06
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-07
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-09-04	Officers, Regulation FD, Exhibits
8-K	2020-09-04	Regulation FD
8-K	2020-08-13	Officers
8-K	2020-08-11	Regulation FD
8-K	2020-08-04	Earnings, Exhibits
8-K	2020-06-15
8-K	2020-06-08
8-K	2020-05-20
8-K	2020-05-05
8-K	2020-03-24
8-K	2020-03-02
8-K	2020-02-04
8-K	2020-01-08
8-K	2019-12-09
8-K	2019-11-21
8-K	2019-11-05
8-K	2019-09-18
8-K	2019-09-16
8-K	2019-09-09
8-K	2019-08-15
8-K	2019-08-06
8-K	2019-06-06
8-K	2019-05-23
8-K	2019-05-15
8-K	2019-05-07
8-K	2019-02-21
8-K	2019-02-05
8-K	2018-12-31
8-K	2018-12-10
8-K	2018-12-04
8-K	2018-11-06
8-K	2018-10-15
8-K	2018-09-26
8-K	2018-09-14
8-K	2018-09-04
8-K	2018-08-20
8-K	2018-08-16
8-K	2018-08-07
8-K	2018-05-31
8-K	2018-05-22
8-K	2018-05-15
8-K	2018-05-08
8-K	2018-03-22
8-K	2018-02-06
8-K	2018-01-05

EX-31.1	paaq22020exhibit311.htm
EX-31.2	paaq22020exhibit312.htm
EX-32.1	paaq22020exhibit321.htm
EX-32.2	paaq22020exhibit322.htm

PAA 10Q Quarterly Report

Plains All American Pipeline Earnings 2020-06-30