Note 3—Acquisitions and Dispositions

The following acquisitions were accounted for using the acquisition method of accounting and the determination of the fair value of the assets and liabilities acquired has been estimated in accordance with the applicable accounting guidance.

2013 Acquisitions

During the year ended December 31, 2013, we completed an acquisition for aggregate consideration of approximately $19 million. The assets acquired included a trucking business included in our Transportation segment. We recognized goodwill of approximately $6 million related to this acquisition.

2012 Acquisitions

BP NGL Acquisition

On April 1, 2012, we acquired all of the outstanding shares of BP Canada Energy Company (“BPCEC”), a wholly owned subsidiary of BP Corporation North America Inc. (“BP North America”) from Amoco Canada International Holdings B.V. (the “Seller”). Total consideration for this acquisition (referred to herein as the “BP NGL Acquisition”), which was based on an October 1, 2011 effective date, was approximately $1.68 billion in cash, including $17 million of imputed interest, subject to working capital and other adjustments.

The determination of the fair value of the assets and liabilities acquired is as follows (in millions):

				Average
				Depreciable
Description	Amount			Life (in years)
Working capital	$	241		N/A
Property and equipment	1,081			5 - 70
Linefill	85			N/A
Long-term inventory	165			N/A
Intangible assets (contract)	130			13
Goodwill	236			N/A
Deferred tax liability	(236		)	N/A
Environmental liability	(14		)	N/A
Other long-term liabilities	(5		)	N/A
Total	$	1,683

The purchase price was equal to the fair value of the net tangible and intangible assets acquired, excluding the resulting deferred tax liability and goodwill. The deferred tax liability is determined by the difference between the fair value of the acquired assets and liabilities and the tax basis for those assets and liabilities. The resulting liability gives rise to an equal and offsetting goodwill balance for this transaction.

Intangible assets above consisted of a contract with a 13 year life. Amortization of this contract under the declining balance method was approximately $31 million and $41 million during the years ended December 31, 2013 and 2012, respectively, and the future amortization through 2017 is estimated as follows:

2014	$	10
2015	$	8
2016	$	7
2017	$	6

The BP NGL Acquisition was pre-funded through various means, including the issuance of common units and senior notes in March 2012 for net proceeds of approximately $1.69 billion. During the year ended December 31, 2012, we incurred approximately $13 million of acquisition-related costs associated with the BP NGL Acquisition. Such costs are reflected as a component of “General and administrative expenses” in our Consolidated Statement of Operations.

USD Rail Terminal Acquisition

On December 12, 2012, we completed a transaction with U.S. Development Group (referred to herein as the “USD Rail Terminal Acquisition”) for an aggregate consideration of approximately $503 million, paid in cash. Through the USD Rail Terminal Acquisition, we acquired four operating crude oil rail terminals and one terminal under development. The determination of the fair value of the assets and liabilities acquired was approximately $1 million of working capital, $76 million of property and equipment and $426 million of goodwill. The goodwill arising from the USD Rail Terminal Acquisition represents anticipated opportunities to generate future cash flows from the rail facilities by utilizing them to reduce capacity constraints in certain geographic market areas.

Other 2012 Acquisitions

During the year ended December 31, 2012, we completed several additional acquisitions for an aggregate consideration of approximately $150 million. The assets acquired primarily included crude oil and condensate gathering pipelines, a truck unloading terminal and trailers that are utilized in our Transportation segment, and terminal facilities included in our Facilities segment. We recognized goodwill of approximately $10 million related to these acquisitions.

Pro Forma Results

Disclosure of the revenues and earnings from the BP NGL Acquisition, USD Rail Terminal Acquisition and our other 2012 acquisitions in our results for the year ended December 31, 2012 is not practicable as they are not being operated as standalone subsidiaries. Selected unaudited pro forma results of operations for the years ended December 31, 2012 and 2011, assuming our 2012 acquisitions had occurred on January 1, 2011, are presented below (in millions, except per unit amounts):

	Year Ended December 31,
	2012		2011
Total revenues	$	38,729	$	37,493
Net income attributable to PAA	$	1,149	$	1,153
Limited partner interest in net income attributable to PAA	$	846	$	928
Net income per limited partner unit:
Basic	$	2.57	$	3.01
Diluted	$	2.55	$	2.99

2011 Acquisitions

Southern Pines Acquisition

On February 9, 2011, we acquired 100% of the equity interests in SG Resources from SGR Holdings, L.L.C. (the “Southern Pines Acquisition”) for an aggregate purchase price of approximately $765 million in cash (approximately $750 million, net of cash and other working capital acquired). The purchase price included the release of restricted cash of approximately $20 million held in escrow prior to the closing of the acquisition. The primary asset of SG Resources is the Southern Pines Energy Center (“Southern Pines”), a FERC-regulated, salt-cavern natural gas storage facility located in Greene County, Mississippi.

The fair value of assets acquired and liabilities assumed was as follows (in millions):

			Average
			Depreciable
Description	Amount		Life (in years)
Inventory	$	14	N/A
Property and equipment	340		5 - 70
Base gas	3		N/A
Other working capital (including approximately $13 million of cash acquired)	15		N/A
Intangible assets	92		2 - 10
Goodwill	301		N/A
Total	$	765

The allocation of fair value to intangible assets above was comprised of a tax abatement valued at approximately $15 million and contracts valued at approximately $77 million. Goodwill or indefinite lived intangible assets will not be subject to depreciation or amortization, but will be subject to periodic impairment testing and, if necessary, will be written down to fair value should circumstances warrant.

Several factors contributed to a purchase price in excess of the fair value of the net tangible and intangible assets acquired. Such factors included the strategic location of the Southern Pines facility, the limited alternative locations and the extended lead times required to develop and construct such facility, along with its operational flexibility, organic expansion capabilities and synergies anticipated to be obtained from combining Southern Pines with our existing asset base. This acquisition is reflected in our Facilities segment.

Other 2011 Acquisitions

Western Acquisition. On December 29, 2011, we completed two transactions with Western Refining for a combined consideration of approximately $220 million in cash. Through the first transaction, we acquired crude oil, refined products and NGL storage and the associated manifold and pumping equipment located at Western’s Yorktown, Virginia refinery site, which we operate as a terminal, as well as certain intangible assets. The second transaction included an 82-mile, 16-inch segment of pipeline that originates in Chaves County, New Mexico and connects into our Basin Pipeline system at Jal, New Mexico. The transaction includes associated tankage, piping and other related assets at the Lynch and Jal Stations.

Gardendale Gathering System Acquisition. On November 29, 2011, we completed the acquisition of 100% of the member interests in Velocity from Velocity Midstream Partners, LLC for an aggregate consideration of approximately $349 million in cash. The assets acquired included approximately 120 miles of crude oil and condensate gathering and transportation pipelines (the “Gardendale Gathering System”) in the Eagle Ford Shale. We recognized goodwill of approximately $155 million associated with this acquisition, which was primarily related to the potential incremental income from anticipated growth projects.

Additional2011 Acquisitions. During 2011, we completed six additional acquisitions for an aggregate consideration of approximately $20 million. These acquisitions included propane storage and terminal facilities included in our Facilities segment, a trucking business included in our Transportation segment as well as the right to ship on third-party pipelines, the revenues of which are included in our Supply and Logistics segment.

The determination of fair value of assets acquired and liabilities assumed for all other acquisitions completed during 2011, including the Western and Gardendale Gathering System acquisitions, is as follows (in millions):

Description	Amount
Inventory	$	2
Linefill	2
Property and equipment	280
Other working capital, net of cash acquired	(6		)
Intangible assets	142
Environmental liability	(9		)
Goodwill	178
Total	$	589

Dispositions

During 2013, 2012 and 2011, we sold various property and equipment for proceeds totaling approximately $200 million, $22 million and $12 million, respectively. Gains of less than $1 million and approximately $6 million and a loss of approximately $6 million were recognized in 2013, 2012 and 2011, respectively, related to these sales.

In February 2013, we signed a definitive agreement to sell certain refined products pipeline systems and related assets included in our Transportation segment. At December 31, 2012, these assets were classified as held for sale on our Consolidated Balance Sheet (in “Other current assets”). We closed a portion of the transaction on July 1, 2013 and the balance in November 2013.