XML 17 R10.htm IDEA: XBRL DOCUMENT v2.4.0.8
Organization and Basis of Presentation
 9 Months Ended
Sep. 30, 2013
Organization and Basis of Presentation  
Organization and Basis of Presentation

Note 1—Organization and Basis of Presentation

 

Organization

 

 

Plains All American Pipeline, L.P. is a Delaware limited partnership formed in 1998. As used in this Form 10-Q and unless the context indicates otherwise, the terms “Partnership,” “Plains,” “PAA,” “we,” “us,” “our,” “ours” and similar terms refer to Plains All American Pipeline, L.P. and its subsidiaries.  Our 2% general partner interest is held by PAA GP LLC, a Delaware limited liability company, whose sole member is Plains AAP, L.P., a Delaware limited partnership. On October 21, 2013, Plains GP Holdings, L.P., a Delaware limited partnership that has elected to be treated as a corporation for U.S. federal income tax purposes (“PAGP”) completed its initial public offering. As a result of the offering, PAGP currently owns an approximate 21.8% limited partner interest in Plains AAP, L.P.  The remaining limited partner interests in Plains AAP, L.P. continue to be held by the owners of PAA’s general partner entities immediately prior to PAGP’s initial public offering.  In addition to its ownership of PAA GP LLC, Plains AAP, L.P. also owns all of the incentive distribution rights in PAA. Plains All American GP LLC, a Delaware limited liability company, is Plains AAP, L.P.’s general partner.  References to our “general partner,” as the context requires, include any or all of PAA GP LLC, Plains AAP, L.P. and Plains All American GP LLC.

 

We engage in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids (“NGL”). The term NGL includes ethane and natural gasoline products as well as propane and butane, products which are also commonly referred to as liquefied petroleum gas (“LPG”). When used in this document, NGL refers to all NGL products including LPG. Through our general partner interest and majority equity ownership position in PAA Natural Gas Storage, L.P. (NYSE: PNG), we also own and operate natural gas storage facilities.  Our business activities are conducted through three operating segments: (i) Transportation, (ii) Facilities and (iii) Supply and Logistics.  See Note 13 for further discussion of our operating segments.

 

Potential Acquisition of Publicly-held Common Units of PNG

 

On October 22, 2013, we announced our entry into a definitive agreement and plan of merger (the “Merger Agreement”) with PNG that provides for a merger whereby PNG will become our wholly-owned subsidiary through a unit-for-unit exchange (the “Merger”). Under the terms of the Merger Agreement, we will issue 0.445 PAA common units for each outstanding PNG common unit held by unitholders other than us, plus cash in lieu of any fractional PAA common units otherwise issuable in the Merger. There are approximately 33.0 million PNG common units owned by unitholders other than us and consummation of the transaction is expected to result in the issuance of approximately 14.7 million PAA common units. In connection with the closing of the Merger, the owners of our general partner have agreed to reduce their incentive distribution rights under our Partnership Agreement by $12 million in each of 2014 and 2015, $10 million in 2016 and $5 million per year thereafter.

 

The closing of the Merger is subject to the satisfaction of certain conditions, including the approval of the Merger and the Merger Agreement at a special meeting of the unitholders of PNG by the affirmative vote of holders of a majority of the outstanding PNG common units (including PNG common units held by us) voting as a separate class and the affirmative vote of holders of a majority of PNG’s outstanding subordinated units voting as a separate class. We own 100% of the membership interests in the general partner of PNG, 100% of the outstanding subordinated units of PNG and approximately 46% of the 61.2 million outstanding common units of PNG. Pursuant to the Merger Agreement, we have agreed to vote our common units and subordinated units in favor of the Merger. We anticipate that the Merger will close in the latter half of the fourth quarter of 2013 or the first quarter of 2014, and that the previously announced quarterly distribution of $0.3575 per PNG common unit payable to holders of record of such units on November 1, 2013 will be paid on November 14, 2013 as scheduled.

 

Definitions

 

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

 

AOCI

=

Accumulated other comprehensive income

Bcf

=

Billion cubic feet

Btu

=

British thermal unit

CAD

=

Canadian dollar

CME

=

Chicago Mercantile Exchange

DERs

=

Distribution equivalent rights

EBITDA

=

Earnings before interest, taxes, depreciation and amortization

FASB

=

Financial Accounting Standards Board

FERC

=

Federal Energy Regulatory Commission

GAAP

=

Generally accepted accounting principles in the United States

ICE

=

IntercontinentalExchange

 

LIBOR

=

London Interbank Offered Rate

LLS

=

Light Louisiana Sweet

LTIP

=

Long-term incentive plan

Mcf

=

Thousand cubic feet

MLP

=

Master limited partnership

NGL

=

Natural gas liquids including ethane, natural gasoline products, propane and butane

NPNS

=

Normal purchases and normal sales

NYMEX

=

New York Mercantile Exchange

NYSE

=

New York Stock Exchange

PLA

=

Pipeline loss allowance

PNG

=

PAA Natural Gas Storage, L.P.

SEC

=

Securities and Exchange Commission

USD

=

United States dollar

WTI

=

West Texas Intermediate

WTS

=

West Texas Sour

 

Basis of Consolidation and Presentation

 

The accompanying unaudited condensed consolidated interim financial statements and notes thereto should be read in conjunction with our 2012 Annual Report on Form 10-K. The financial statements have been prepared in accordance with the instructions for interim reporting as set forth by the SEC. 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. Certain reclassifications have been made to information from previous years to conform to the current presentation. The condensed consolidated balance sheet data as of December 31, 2012 was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the three and nine months ended September 30, 2013 should not be taken as indicative of results to be expected for the entire year.

 

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