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Partners' Capital and Distributions

6 Months Ended

Jun. 30, 2011

Partners' Capital and Distributions

Partners' Capital and Distributions

Note 10—Partners’ Capital and Distributions

Noncontrolling Interests in a Subsidiary

As of June 30, 2011, noncontrolling interests consisted of the following: (i) an approximate 36% interest in PNG and (ii) a 25% interest in SLC Pipeline LLC.

During February 2011, in connection with the Southern Pines Acquisition, PNG completed a private placement of approximately 17.4 million PNG common units to third-party purchasers for net proceeds of approximately $370 million. In addition, we purchased approximately 10.2 million PNG common units for approximately $230 million, including our proportionate general partner contribution of $12 million (collectively, “the PNG offering”). Also, during May 2011, a portion of the PNG Transaction Grants vested and were settled with 58,672 PNG units, which were owned by us. See Note 10 to our Consolidated Financial Statements included in Part IV of our 2010 Annual Report on Form 10-K for further detail regarding the “PNG Transaction Grants.” As a result of these transactions, our aggregate ownership interest in PNG decreased from approximately 77% to approximately 64%. The following table sets forth our ownership changes in the limited partner units of PNG from December 31, 2010 to June 30, 2011 (units in millions):

		December 31, 2010		February 2011 PNG Issuance		Transaction Grants		June 30, 2011
PNG Units Owned by PAA:
Common Units		18.1		10.2		(0.1	)	28.2
Series A Subordinated Units		11.9		—		—		11.9
Series B Subordinated Units		13.5		—		—		13.5
Total PNG Units Owned by PAA		43.5		10.2		(0.1	)	53.6

In addition to our limited partner interest, we also own the general partner’s 2% interest and the incentive distribution rights in PNG.

In conjunction with the PNG offering, we recorded an increase in noncontrolling interest of $306 million and an increase to our partners’ capital of approximately $64 million. The increases result from the portion of the proceeds attributable to the respective ownership interests in PNG, adjusted for the impact of the dilution of our ownership interest resulting from this transaction.

The following table sets forth the impact of the changes in our ownership interest in PNG on our capital (in millions):

		For the Six Months Ended
		June 30,
		2011			2010
Net income attributable to Plains		$	408		$	282
Transfers to the noncontrolling interests:
Increase in capital from sale of PNG units		64			101
Change from net income attributable to Plains and net transfers to the noncontrolling interest		$	472		$	383

The following table reflects the changes in the noncontrolling interests in partners’ capital (in millions):

		For the Six Months Ended
		June 30,
		2011			2010
Beginning balance		$	231		$	63
Sale of noncontrolling interests in a subsidiary		306			167
Net income attributable to noncontrolling interests		10			2
Distributions to noncontrolling interests		(16		)	(1		)
Equity compensation expense		2			—
Ending Balance		$	533		$	231

PAA Distributions

The following table details the distributions paid during or pertaining to the first six months of 2011, net of reductions to the general partner’s incentive distributions (in millions, except per unit amounts):

				Distributions Paid												Distributions
				Common			General Partner									per limited
Date Declared		Date Paid or To Be Paid		Units			Incentive			2%			Total			partner unit
July 11, 2011		August 12, 2011 (1)		$	147		$	52		$	3		$	202		$	0.9825
April 11, 2011		May 13, 2011		$	145		$	50		$	3		$	198		$	0.9700
January 12, 2011		February 14, 2011		$	135		$	46		$	3		$	184		$	0.9575

(1) Payable to unitholders of record at the close of business on August 2, 2011, for the period April 1, 2011 through June 30, 2011.

In conjunction with the closing of certain acquisitions, our general partner agreed to temporarily reduce the amounts due it as incentive distributions. Following the distribution in August 2011, the aggregate incentive distribution reductions remaining will be approximately $1 million. See Note 5 to our Consolidated Financial Statements included in Part IV of our 2010 Annual Report on Form 10-K for further detail regarding our “General Partner Incentive Distributions.”

PAA Equity Offerings

During the six months ended June 30, 2011, we completed an equity offering of our common units as shown in the table below (in millions, except per unit data):

										General
				Gross			Proceeds			Partner						Net
Date		Units Issued		Unit Price			from Sale			Contribution			Costs			Proceeds
March 2011 (1)		7,935,000		$	64.00		$	508		$	10		$	(15	)	$	503

(1) This offering of common units was an underwritten transaction that required us to pay a gross spread. The net proceeds from this offering were used to reduce outstanding borrowings under our credit facilities and for general partnership purposes.