PLAINS GP HOLDINGS LP [PAGP] Filings

10-Q 1 pagp-20230331.htm 10-Q pagp-20230331

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, 2023

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

Commission File Number: 1-36132

________________________________________________________________

PLAINS GP HOLDINGS, L.P.

(Exact name of registrant as specified in its charter)


Delaware						90-1005472
(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
Class A Shares	PAGP	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 May 1, 2023, there were 194,407,642 Class A Shares outstanding.

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PLAINS GP HOLDINGS, 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 3 1 , 202 3 and December 31, 20 2 2			3
Condensed Consolidated Statements of Operations: For the three months ended March 3 1 , 202 3 and 202 2			4
Condensed Consolidated Statements of Comprehensive Income/(Loss): For the three months ended March 3 1 , 202 3 and 202 2			5
Condensed Consolidated Statements of Changes in Accumulated Other Comprehensive Income/(Loss): For the three months ended March 3 1 , 202 3 and 202 2			5
Condensed Consolidated Statements of Cash Flows: For the three months ended March 3 1 , 202 3 and 202 2			6
Condensed Consolidated Statements of Changes in Partners’ Capital: For the three months ended March 3 1 , 202 3 and 202 2			7
Notes to the Condensed Consolidated Financial Statements:
1. Organization and Basis of Consolidation and Presentation			8

2 . Revenues and Accounts Receivable			11
3 . Net Income Per Class A Share			14
4 . Inventory, Linefill and Long-term Inventory			15
5 . Debt			15
6 . Partners’ Capital and Distributions			16
7 . Derivatives and Risk Management Activities			19
8 . Related Party Transactions			23
9 . Commitments and Contingencies			24
1 0 . Segment Information			30
11. Divestitures			32

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			33
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			56

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PART I. FINANCIAL INFORMATION

Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)


	March 31, 2023		December 31, 2022
	(unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	529	$	404

Trade accounts receivable and other receivables, net	3,968		3,907
Inventory	463		729
Other current assets	165		318
Total current assets	5,125		5,358

PROPERTY AND EQUIPMENT	20,173		20,055
Accumulated depreciation	(4,976)		(4,802)
Property and equipment, net	15,197		15,253

OTHER ASSETS
Investments in unconsolidated entities	3,070		3,084
Intangible assets, net	2,073		2,145
Deferred tax asset	1,278		1,309
Linefill	962		961
Long-term operating lease right-of-use assets, net	347		349
Long-term inventory	257		284
Other long-term assets, net	430		464
Total assets	$	28,739	$	29,207

LIABILITIES AND PARTNERS’ CAPITAL

CURRENT LIABILITIES
Trade accounts payable	$	4,010	$	4,045
Short-term debt	708		1,159
Other current liabilities	650		689
Total current liabilities	5,368		5,893

LONG-TERM LIABILITIES
Senior notes, net	7,238		7,237
Other long-term debt, net	50		50
Long-term operating lease liabilities	307		308
Other long-term liabilities and deferred credits	1,012		1,081
Total long-term liabilities	8,607		8,676

COMMITMENTS AND CONTINGENCIES (NOTE 9)

PARTNERS’ CAPITAL
Class A shareholders (194,407,642 and 194,407,642 shares outstanding, respectively)	1,544		1,524
Noncontrolling interests	13,220		13,114
Total partners’ capital	14,764		14,638
Total liabilities and partners’ capital	$	28,739	$	29,207

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

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)


	Three Months Ended March 31,
	2023		2022
	(unaudited)
REVENUES
Product sales revenues	$	11,943	$	13,381
Services revenues	398		313
Total revenues	12,341		13,694

COSTS AND EXPENSES
Purchases and related costs	11,323		12,785
Field operating costs	357		346
General and administrative expenses	87		83
Depreciation and amortization	257		231
(Gains)/losses on asset sales and asset impairments, net	(154)		(42)
Total costs and expenses	11,870		13,403

OPERATING INCOME	471		291

OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities	89		97

Interest expense (net of capitalized interest of $2 and $1, respectively)	(98)		(107)
Other income/(expense), net	64		(37)

INCOME BEFORE TAX	526		244
Current income tax expense	(61)		(19)
Deferred income tax expense	(22)		(16)

NET INCOME	443		209
Net income attributable to noncontrolling interests	(374)		(187)
NET INCOME ATTRIBUTABLE TO PAGP	$	69	$	22

Basic and diluted weighted average Class A shares outstanding	194		194

Basic and diluted net income per Class A share	$	0.35	$	0.11

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

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in millions)


	Three Months Ended March 31,
	2023		2022
	(unaudited)
Net income	$	443	$	209
Other comprehensive income/(loss)	(1)		74
Comprehensive income	442		283
Comprehensive income attributable to noncontrolling interests	(373)		(240)
Comprehensive income attributable to PAGP	$	69	$	43

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

PLAINS GP HOLDINGS, 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, 2022	$	(107)	$	(846)	$	(1)	$	(954)

Reclassification adjustments	2		—		—		2
Unrealized loss on hedges	(5)		—		—		(5)
Currency translation adjustments	—		1		—		1
Other	—		—		1		1
Total period activity	(3)		1		1		(1)
Balance at March 31, 2023	$	(110)	$	(845)	$	—	$	(955)


	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)

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

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


	Three Months Ended March 31,
	2023		2022
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	443	$	209
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	257		231
(Gains)/losses on asset sales and asset impairments, net	(154)		(42)


Deferred income tax expense	22		16



Change in fair value of Preferred Distribution Rate Reset Option (Note 7)	(58)		44
Equity earnings in unconsolidated entities	(89)		(97)
Distributions on earnings from unconsolidated entities	108		96

Other	15		4
Changes in assets and liabilities, net of acquisitions	198		(122)
Net cash provided by operating activities	742		339

CASH FLOWS FROM INVESTING ACTIVITIES

Investments in unconsolidated entities	(4)		(3)
Additions to property, equipment and other	(122)		(101)
Cash paid for purchases of linefill	—		(39)
Proceeds from sales of assets	284		53


Other investing activities	—		9
Net cash provided by/(used in) investing activities	158		(81)

CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under PAA commercial paper program (Note 5)	—		382




Repayments of PAA senior notes (Note 5)	(400)		(750)


Repurchase of common units by a subsidiary	—		(25)
Distributions paid to Class A shareholders (Note 6)	(52)		(35)
Distributions paid to noncontrolling interests (Note 6)	(268)		(188)


Other financing activities	(55)		20
Net cash used in financing activities	(775)		(596)

Effect of translation adjustment	—		3

Net increase/(decrease) in cash and cash equivalents and restricted cash	125		(335)
Cash and cash equivalents and restricted cash, beginning of period	404		456
Cash and cash equivalents and restricted cash, end of period	$	529	$	121

Cash paid/(received) for:
Interest, net of amounts capitalized	$	65	$	74
Income taxes, net of amounts refunded	$	(18)	$	23

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

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(in millions)


	Class A Shareholders		Noncontrolling Interests		Total Partners’ Capital
	(unaudited)
Balance at December 31, 2022	$	1,524	$	13,114	$	14,638
Net income	69		374		443
Distributions (Note 6)	(52)		(273)		(325)



Other comprehensive loss	—		(1)		(1)





Other	3		6		9
Balance at March 31, 2023	$	1,544	$	13,220	$	14,764


	Class A Shareholders		Noncontrolling Interests		Total Partners’ Capital
	(unaudited)
Balance at December 31, 2021	$	1,533	$	12,644	$	14,177
Net income	22		187		209
Distributions	(35)		(200)		(235)

Other comprehensive income	21		53		74


Repurchase of common units by a subsidiary	—		(25)		(25)

Other	(1)		2		1
Balance at March 31, 2022	$	1,540	$	12,661	$	14,201

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

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Organization and Basis of Consolidation and Presentation

Organization

Plains GP Holdings, L.P. (“PAGP”) is a Delaware limited partnership formed in 2013 that has elected to be taxed as a corporation for United States federal income tax purposes. PAGP does not directly own any operating assets; as of March 31, 2023, its principal source of cash flow is derived from an indirect investment in Plains All American Pipeline, L.P. (“PAA”), a publicly traded Delaware limited partnership. As used in this Form 10-Q and unless the context indicates otherwise (taking into account the fact that PAGP has no operating activities apart from those conducted by PAA and its subsidiaries), the terms “Partnership,” “we,” “us,” “our,” “ours” and similar terms refer to PAGP and its subsidiaries.

As of March 31, 2023, we owned an approximate 81% limited partner interest in Plains AAP L.P. (“AAP”) through our ownership of approximately 194.4 million Class A units of AAP (“AAP Units”). We also own a 100% managing member interest in Plains All American GP LLC (“GP LLC”), a Delaware limited liability company that holds the non-economic general partner interest in AAP. AAP is a Delaware limited partnership that, as of March 31, 2023, directly owned a limited partner interest in PAA through its ownership of approximately 240.8 million PAA common units (approximately 31% of PAA’s total outstanding common units and Series A preferred units combined). AAP is the sole member of PAA GP LLC (“PAA GP”), a Delaware limited liability company that directly holds the non-economic general partner interest in PAA.

PAA’s 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, PAA owns 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. PAA’s assets and the services it provides are primarily focused on and conducted through two operating segments: Crude Oil and NGL. See Note 10 for further discussion of our operating segments.

PAA GP Holdings LLC, a Delaware limited liability company, is our general partner. Our general partner manages our operations and activities and is responsible for exercising on our behalf any rights we have as the sole and managing member of GP LLC, including responsibility for conducting the business and managing the operations of AAP and PAA. GP LLC employs our domestic officers and personnel involved in the operation and management of AAP and PAA. PAA’s Canadian officers and personnel are employed by our subsidiary, Plains Midstream Canada ULC.

References to the “Plains Entities” include us, our general partner, GP LLC, AAP, PAA GP and PAA and its subsidiaries.

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PLAINS GP HOLDINGS, 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 2022 Annual Report on Form 10-K. The accompanying condensed consolidated financial statements include the accounts of PAGP 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, 2022 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, 2023 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 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.

Management judgment is required to evaluate whether PAGP controls an entity. Key areas of that evaluation include (i) determining whether an entity is a variable interest entity (“VIE”); (ii) determining whether PAGP is the primary beneficiary of a VIE, including evaluating which activities of the VIE most significantly impact its economic performance and the degree of power that PAGP and its related parties have over those activities through variable interests; and (iii) identifying events that require reconsideration of whether an entity is a VIE and continuously evaluating whether PAGP is a VIE’s primary beneficiary.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We have determined that our subsidiaries, PAA and AAP, are VIEs and should be consolidated by PAGP because:

•The limited partners of PAA and AAP lack (i) substantive “kick-out rights” (i.e., the right to remove the general partner) based on a simple majority or lower vote and (ii) substantive participation rights and thus lack the ability to block actions of the general partner that most significantly impact the economic performance of PAA and AAP, respectively.

•AAP is the primary beneficiary of PAA because it has the power to direct the activities that most significantly impact PAA’s performance and the right to receive benefits, and obligation to absorb losses, that could be significant to PAA.

•PAGP is the primary beneficiary of AAP because it has the power to direct the activities that most significantly impact AAP’s performance and the right to receive benefits, and obligation to absorb losses, that could be significant to AAP.

With the exception of a deferred tax asset of $1.278 billion and $1.309 billion as of March 31, 2023 and December 31, 2022, respectively, substantially all assets and liabilities presented on PAGP’s Condensed Consolidated Balance Sheets are those of PAA. Only the assets of each respective VIE can be used to settle the obligations of that individual VIE, and the creditors of each/either of those VIEs do not have recourse against the general credit of PAGP. PAGP did not provide any financial support to PAA or AAP during the three months ended March 31, 2023 or the year ended December 31, 2022. See Note 17 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding the Omnibus Agreement entered into by the Plains Entities on November 15, 2016.

Subsequent Events

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

Recent Accounting Pronouncements

Except as discussed in our 2022 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, 2023 that are of significance or potential significance to us.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2—Revenues and Accounts Receivable

Revenue Recognition

We disaggregate our revenues by segment and type of activity. See Note 3 to our Consolidated Financial Statements included in Part IV of our 2022 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,
	2023		2022
Crude Oil segment revenues from contracts with customers
Sales	$	11,381	$	12,857
Transportation	250		155
Terminalling, Storage and Other	90		90
Total Crude Oil segment revenues from contracts with customers	$	11,721	$	13,102


	Three Months Ended March 31,
	2023		2022
NGL segment revenues from contracts with customers
Sales	$	660	$	845
Transportation	8		9
Terminalling, Storage and Other	28		25
Total NGL segment revenues from contracts with customers	$	696	$	879

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, 2023	Crude Oil		NGL		Total
Revenues from contracts with customers	$	11,721	$	696	$	12,417
Other revenues	37		(6)		31
Total revenues of reportable segments	$	11,758	$	690	$	12,448
Intersegment revenues elimination					(107)
Total revenues					$	12,341

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

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PLAINS GP HOLDINGS, 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, 2023		December 31, 2022
Billed and collected	Other current liabilities	$	88	$	104
Unbilled (1)	N/A	—		1
Total		$	88	$	105

(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 changes in the liability balance associated with contracts with customers (in millions):


	Contract Liabilities
Balance at December 31, 2022	$	229
Amounts recognized as revenue	(31)

Additions	6

Balance at March 31, 2023	$	204

Remaining Performance Obligations. The information below includes the amount of consideration allocated to partially and wholly unsatisfied remaining performance obligations under contracts that existed 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 contracts 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, 2023 (in millions):


	Remainder of 2023		2024		2025		2026		2027		2028 and Thereafter
Pipeline revenues supported by minimum volume commitments and capacity agreements (1)	$	253	$	339	$	360	$	131	$	94	$	236
Terminalling, storage and other agreement revenues	195		203		127		99		89		737
Total	$	448	$	542	$	487	$	230	$	183	$	973

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

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PLAINS GP HOLDINGS, 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 Topic 842, Leases; and

•Contracts within the scope of ASC Topic 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, 2023 and December 31, 2022, 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, 2023		December 31, 2022
Trade accounts receivable arising from revenues from contracts with customers	$	4,141	$	4,141
Other trade accounts receivables and other receivables (1)	6,912		7,216
Impact due to contractual rights of offset with counterparties	(7,085)		(7,450)
Trade accounts receivable and other receivables, net	$	3,968	$	3,907

(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 GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3—Net Income Per Class A Share

Basic net income per Class A share is determined by dividing net income attributable to PAGP by the weighted average number of Class A shares outstanding during the period. Our Class B and Class C shares do not share in the earnings of the Partnership; accordingly, basic and diluted net income per Class B and Class C share has not been presented.

Diluted net income per Class A share is determined by dividing net income attributable to PAGP by the diluted weighted average number of Class A shares outstanding during the period. For purposes of calculating diluted net income per Class A share, both the net income attributable to PAGP and the diluted weighted average number of Class A shares outstanding consider the impact of possible future exchanges of AAP units and the associated Class B shares into our Class A shares. In addition, the calculation of the diluted weighted average number of Class A shares outstanding considers the effect of potentially dilutive awards under the Plains GP Holdings, L.P. Long-Term Incentive Plan (the “PAGP LTIP”).

Exchanges of potentially dilutive AAP units are assumed to have occurred at the beginning of the period and the incremental income attributable to PAGP resulting from the assumed exchanges is representative of the incremental income that would have been attributable to PAGP if the assumed exchanges occurred on that date. See Note 12 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding exchanges of AAP units. PAGP LTIP awards that are deemed to be dilutive are reduced by a hypothetical share repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB. See Note 18 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding PAGP LTIP awards.

On a weighted-average basis, for each of the three months ended March 31, 2023 and 2022, the possible exchange of 47 million AAP units would not have had a dilutive effect on basic net income per Class A share. For each of the three months ended March 31, 2023 and 2022, our PAGP LTIP awards were dilutive; however, this did not change the presentation of diluted weighted average Class A shares outstanding or diluted net income per Class A share.

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


	Three Months Ended March 31,
	2023		2022
Basic and Diluted Net Income per Class A Share
Net income attributable to PAGP	$	69	$	22
Basic and diluted weighted average Class A shares outstanding	194		194

Basic and diluted net income per Class A share	$	0.35	$	0.11

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 4—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, 2023						December 31, 2022
	Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)		Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)
Inventory
Crude oil	5,373	barrels	$	342	$	63.65	6,713	barrels	$	452	$	67.33
NGL	3,427	barrels	111		$	32.39	7,285	barrels	270		$	37.06

Other	N/A		10		N/A		N/A		7		N/A
Inventory subtotal			463						729

Linefill
Crude oil	15,459	barrels	907		$	58.67	15,480	barrels	906		$	58.53
NGL	1,865	barrels	55		$	29.49	1,876	barrels	55		$	29.32

Linefill subtotal			962						961

Long-term inventory
Crude oil	3,136	barrels	227		$	72.39	3,102	barrels	246		$	79.30
NGL	1,063	barrels	30		$	28.22	1,066	barrels	38		$	35.65
Long-term inventory subtotal			257						284

Total			$	1,682					$	1,974

(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 5—Debt

Debt consisted of the following (in millions):


	March 31, 2023		December 31, 2022
SHORT-TERM DEBT



PAA senior notes:

2.85% senior notes due January 2023 (1)	$	—	$	400
3.85% senior notes due October 2023	700		700
Other	8		59
Total short-term debt	708		1,159

LONG-TERM DEBT
PAA senior notes, net of unamortized discounts and debt issuance costs of $45 and $46, respectively	7,238		7,237


Other	50		50
Total long-term debt	7,288		7,287
Total debt (2)	$	7,996	$	8,446

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)These senior notes were redeemed on January 31, 2023.

(2)PAA’s fixed-rate senior notes had a face value of approximately $8.0 billion and $8.4 billion as of March 31, 2023 and December 31, 2022, respectively. We estimated the aggregate fair value of these notes as of March 31, 2023 and December 31, 2022 to be approximately $7.3 billion and $7.6 billion, respectively. PAA’s 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. The fair value estimate for PAA’s senior notes is based upon observable market data and is classified in Level 2 of the fair value hierarchy.

Borrowings and Repayments

Total borrowings under the PAA credit facilities and commercial paper program for the three months ended March 31, 2023 and 2022 were approximately $1.5 billion and $5.6 billion, respectively. Total repayments under the PAA credit facilities and commercial paper program were approximately $1.5 billion and $5.2 billion for the three months ended March 31, 2023 and 2022, 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.

On January 31, 2023, PAA redeemed its 2.85%, $400 million senior notes due January 2023.

Letters of Credit

In connection with our merchant activities, we provide certain suppliers with irrevocable standby letters of credit to secure our obligation for the purchase and transportation of crude oil and NGL. Additionally, we issue letters of credit to support insurance programs, derivative transactions, including hedging-related margin obligations, and construction activities. At March 31, 2023 and December 31, 2022, we had outstanding letters of credit of $144 million and $102 million, respectively.

Note 6—Partners’ Capital and Distributions

Shares Outstanding

The following tables present the activity for our Class A shares, Class B shares and Class C shares:


	Class A Shares	Class B Shares	Class C Shares
Outstanding at December 31, 2022	194,407,642	46,205,947	528,442,538
Conversion of AAP Management Units (1) (2)	—	388,839	—

Redemption Right exercises (1)	—	(181,916)	181,916

Other	—	—	35,508
Outstanding at March 31, 2023	194,407,642	46,412,870	528,659,962


	Class A Shares	Class B Shares	Class C Shares
Outstanding at December 31, 2021	194,192,777	46,645,514	534,596,831
Conversion of AAP Management Units (1)	—	205,024	—
Exchange Right exercises (1)	35,700	(35,700)	—
Redemption Right exercises (1)	—	(11,957)	11,957
Repurchase and cancellation of common units by a subsidiary under the Common Equity Repurchase Program	—	—	(2,375,299)
Other	—	—	51,937
Outstanding at March 31, 2022	194,228,477	46,802,881	532,285,426

(1)See Note 12 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding conversions of AAP Management Units, Exchange Rights and Redemption Rights.

(2)Following this conversion, no AAP Management Units remain outstanding.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Distributions

The following table details distributions to our Class A shareholders paid during or pertaining to the first three months of 2023 (in millions, except per share data):


Distribution Payment Date	Distributions to Class A Shareholders		Distributions per Class A Share


May 15, 2023 (1)	$	52	$	0.2675
February 14, 2023	$	52	$	0.2675

(1)Payable to shareholders of record at the close of business on May 1, 2023 for the period from January 1, 2023 through March 31, 2023.

Consolidated Subsidiaries

Noncontrolling Interests in Subsidiaries

As of March 31, 2023, noncontrolling interests in our subsidiaries consisted of (i) limited partner interests in PAA including a 69% interest in PAA’s common units and PAA’s Series A preferred units combined and 100% of PAA’s Series B preferred units, (ii) an approximate 19% limited partner interest in AAP, (iii) a 35% interest in Plains Oryx Permian Basin LLC (the “Permian JV”), (iv) a 30% interest in Cactus II Pipeline LLC (“Cactus II”) and (v) a 33% interest in Red River Pipeline Company LLC (“Red River”).

Subsidiary Distributions

PAA Series A Preferred Unit Distributions. After the fifth anniversary of the January 28, 2016 issuance date of PAA’s Series A preferred units, the holders of PAA’s Series A preferred units, acting by majority vote, had the option to 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. Treasury Securities plus 5.85% (the “Preferred Distribution Rate Reset Option”). In January 2023, the Series A preferred unitholders elected the Preferred Distribution Rate Reset Option which resulted in an increase in the quarterly distribution rate to approximately $0.615 per unit. This new distribution rate was effective on January 31, 2023. The quarterly distribution to be paid in May 2023 will reflect a pro-rated amount of approximately $0.585 per unit. The following table details distributions to PAA’s Series A preferred unitholders paid during or pertaining to the first three months of 2023 (in millions, except per unit data):


	Series A Preferred Unitholders
Distribution Payment Date	Cash Distribution		Distribution per Unit


May 15, 2023 (1)	$	42	$	0.585
February 14, 2023	$	37	$	0.525

(1)Payable to unitholders of record at the close of business on May 1, 2023 for the period from January 1, 2023 through March 31, 2023. At March 31, 2023, such amount was accrued as distributions payable in “Other current liabilities” on our Condensed Consolidated Balance Sheet.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PAA Series B Preferred Unit Distributions. 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. The following table details distributions paid or to be paid to PAA’s Series B preferred unitholders (in millions, except per unit data):


	Series B Preferred Unitholders
Distribution Payment Date	Cash Distribution		Distribution per Unit
May 15, 2023 (1)	$	18	$	22.18
February 15, 2023	$	18	$	22.27

(1)Payable to unitholders of record at the close of business on May 1, 2023 for the period from February 15, 2023 through May 14, 2023. At March 31, 2023, approximately $9 million of accrued distributions payable to PAA’s Series B preferred unitholders was included in “Other current liabilities” on our Condensed Consolidated Balance Sheet.

PAA Common Unit Distributions. The following table details distributions to PAA’s common unitholders paid during or pertaining to the first three months of 2023 (in millions, except per unit data):

PLAINS GP HOLDINGS LP [PAGP] Filings
10-Q	[2023-05-10]
10-K	[2023-03-01]
10-Q	[2022-11-08]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-01]
10-Q	[2021-11-08]
10-Q	[2021-08-06]
10-Q	[2021-05-10]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-02-27]
10-Q	[2019-11-07]
10-Q	[2019-08-08]
10-Q	[2019-05-10]
10-K	[2019-02-27]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-09]
10-K	[2018-02-27]
10-Q	[2017-11-09]
10-Q	[2017-08-08]
10-Q	[2017-05-10]
10-K	[2017-02-23]
10-Q	[2016-11-08]
10-Q	[2016-08-08]
10-Q	[2016-05-10]
10-K	[2016-02-25]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-02-25]
10-Q	[2014-11-07]
10-Q	[2014-08-12]
10-Q	[2014-05-13]
10-K	[2014-03-12]
10-Q	[2013-11-22]
S-1	[2013-07-29]