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Partners' Capital and Distributions | 12 Months Ended
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Dec. 31, 2018
Partners' Capital Notes [Abstract] |
Partners' Capital and Distributions | Partners’ Capital and Distributions Units Outstanding At December 31, 2018, partners’ capital consisted of outstanding common units and Series A and Series B preferred units, which represent limited partner interests in us, which give the holders thereof the right to participate in distributions and to exercise the other rights or privileges as outlined in our partnership agreement. Our general partner has a non-economic interest in us. However, prior to the closing of the Simplification Transactions, our outstanding common units and Series A preferred units represented a 98% effective aggregate ownership interest in us and our subsidiaries after giving effect to the 2% general partner interest. See Note 1 for discussion of the Simplification Transactions. The following table presents the activity for our preferred and common units:
| Limited Partners
| Series A Preferred Units |  | Series B Preferred Units |  | Common Units
Outstanding at December 31, 2015 | — |  |  | — |  |  | 397,727,624 |
Sale of Series A preferred units | 61,030,127 |  |  | — |  |  | — |
Issuances of Series A preferred units in connection with in-kind distributions | 3,358,726 |  |  | — |  |  | — |
Sales of common units | — |  |  | — |  |  | 26,278,288 |
Issuance of common units in connection with Simplification Transactions (Note 1) | — |  |  | — |  |  | 244,707,926 |
Issuances of common units under LTIP | — |  |  | — |  |  | 480,581 |
Outstanding at December 31, 2016 | 64,388,853 |  |  | — |  |  | 669,194,419 |
Issuances of Series A preferred units in connection with in-kind distributions | 5,307,689 |  |  | — |  |  | — |
Sale of Series B preferred units | — |  |  | 800,000 |  |  | — |
Sales of common units | — |  |  | — |  |  | 54,119,893 |
Issuance of common units in connection with acquisition of interest in Advantage Joint Venture (Note 7) | — |  |  | — |  |  | 1,252,269 |
Issuances of common units under LTIP | — |  |  | — |  |  | 622,557 |
Outstanding at December 31, 2017 | 69,696,542 |  |  | 800,000 |  |  | 725,189,138 |
Issuance of Series A preferred units in connection with in-kind distribution | 1,393,926 |  |  | — |  |  | — |
Issuance of common units upon AAP Management Units becoming earned | — |  |  | — |  |  | 559,649 |
Issuances of common units under LTIP | — |  |  | — |  |  | 613,137 |
Outstanding at December 31, 2018 | 71,090,468 |  |  | 800,000 |  |  | 726,361,924 |
Issuances of Units Series A Preferred Unit Issuance On January 28, 2016 (the “Issuance Date”), we completed the private placement of approximately 61.0 million Series A preferred units representing limited partner interests in us for a cash purchase price of $26.25 per unit (the “Issue Price”), resulting in total net proceeds to us, after deducting offering expenses and the 2% transaction fee due to the purchasers and including our general partner’s proportionate capital contribution, of approximately $1.6 billion. Certain of the purchasers or their affiliates are related parties. See Note 16 for additional information. The Series A preferred units rank pari passu with our Series B preferred units, and senior to our common units and to each other class or series of our equity securities with respect to distribution rights and rights upon liquidation. The holders of the Series A preferred units receive cumulative quarterly distributions, subject to customary antidilution adjustments, equal to $0.525 per unit ($2.10 per unit annualized). With respect to quarters ending on or prior to December 31, 2017 (the “Initial Distribution Period”), we elected to pay distributions on our Series A preferred units in additional Series A preferred units. The Initial Distribution Period ended with the February 2018 distribution; as such, with respect to quarters ending after the Initial Distribution Period, distributions on our Series A preferred units are paid in cash. The holders may convert their Series A preferred units into common units, generally on a one-for-one basis and subject to customary anti-dilution adjustments, at any time, in whole or in part, subject to certain minimum conversion amounts (and not more often than once per quarter). We may convert the Series A preferred units into common units at any time (but not more often than once per quarter) after the third anniversary of the Issuance Date (January 28, 2019), in whole or in part, subject to certain minimum conversion amounts, if the closing price of our common units is greater than 150% of the Issue Price for the preceding 20 trading days. The Series A preferred units vote on an as-converted basis with our common units and have certain other class voting rights with respect to any amendment to our partnership agreement that would adversely affect any rights, preferences or privileges of the Series A preferred units. In addition, upon certain events involving a change of control, the holders of the Series A preferred units may elect, among other potential elections, to convert the Series A preferred units into common units at the then applicable conversion rate. For a period of 30 days following (a) the fifth anniversary of the Issuance Date of the Series A preferred units and (b) each subsequent anniversary of the Issuance Date, the holders of the Series A preferred units, acting by majority vote, may 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”). The Preferred Distribution Rate Reset Option is accounted for as an embedded derivative. See Note 13 for additional information. If the holders of the Series A preferred units have exercised the Preferred Distribution Rate Reset Option, then, at any time following 30 days after the sixth anniversary of the Issuance Date, we may redeem all or any portion of the outstanding Series A preferred units in exchange for cash, common units (valued at 95% of the volume-weighted average price of our common units for a trading day period specified in our partnership agreement) or a combination of cash and common units at a redemption price equal to 110% of the Issue Price, plus any accrued and unpaid distributions. Series B Preferred Unit Issuance On October 10, 2017, we issued 800,000 Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units representing limited partner interests in us (the “Series B preferred units”) at a price to the public of $1,000 per unit. We used the net proceeds of $788 million, after deducting the underwriters’ discounts and offering expenses, from the issuance of the Series B preferred units to repay amounts outstanding under our credit facilities and commercial paper program and for general partnership purposes. The Series B preferred units represent perpetual equity interests in us, and they have no stated maturity or mandatory redemption date and are not redeemable at the option of the holders under any circumstances. Holders of the Series B preferred units generally have no voting rights, except for limited voting rights with respect to (i) potential amendments to our partnership agreement that would have a material adverse effect on the existing preferences, rights, powers or duties of the Series B preferred units, (ii) the creation or issuance of any parity securities if the cumulative distributions payable on then outstanding Series B preferred units are in arrears, (iii) the creation or issuance of any senior securities and (iv) the payment of distributions to our common unitholders out of capital surplus. The Series B preferred units rank, as to the payment of distributions and amounts payable on a liquidation event, pari passu with our outstanding Series A preferred units and senior to our common units. The Series B preferred units have a liquidation preference of $1,000 per unit. Holders of our Series B preferred units are entitled to receive, when, as and if declared by our general partner out of legally available funds for such purpose, cumulative semiannual or quarterly cash distributions, as applicable. Distributions on the Series B preferred units accrue and are cumulative from October 10, 2017, the date of original issue, and are payable semiannually in arrears on the 15th day of May and November through and including November 15, 2022, and after November 15, 2022, quarterly in arrears on the 15th day of February, May, August and November of each year. The initial distribution rate for the Series B preferred units from and including October 10, 2017 to, but not including, November 15, 2022 is 6.125% per year of the liquidation preference per unit (equal to $61.25 per unit per year). On and after November 15, 2022, distributions on the Series B preferred units will accumulate for each distribution period at a percentage of the liquidation preference equal to the then-current three-month LIBOR plus a spread of 4.11%. Upon the occurrence of certain rating agency events, we may redeem the Series B preferred units, in whole but not in part, at a price of $1,020 (102% of the liquidation preference) per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared. In addition, at any time on or after November 15, 2022, we may redeem the Series B preferred units, at our option, in whole or in part, at a redemption price of $1,000 per Series B preferred unit plus an amount equal to all accumulated and unpaid distributions thereon to, but not including, the date of redemption, whether or not declared. Common Unit Issuances We have entered into several equity distribution agreements under our Continuous Offering Program, pursuant to which we may offer and sell, through sales agents, common units representing limited partner interests. We may also sell common units through overnight or underwritten offerings. In addition, we may sell or otherwise issue common units to AAP pursuant to the Omnibus Agreement entered into by the Plains Entities in connection with the November 2016 Simplification Transactions. Sales of Common Units. We did not conduct any sales of common units during the year ended December 31, 2018. The following table summarizes our sales of common units for the years ended December 31, 2017 and 2016 (net proceeds in millions):
Year |  | Type of Offering |  | Common Units Issued |  | Net Proceeds (1) (2) |
2017 |  | Continuous Offering Program |  | 4,033,567 |  |  | $ | 129 |  | (3)
2017 |  | Omnibus Agreement (4) |  | 50,086,326 |  | (5) | 1,535 |  |
2017 Total |  |  |  | 54,119,893 |  |  | $ | 1,664 |  |
2016 Total |  | Continuous Offering Program |  | 26,278,288 |  |  | $ | 805 |  | (3)
(1) | Amounts are net of costs associated with the offerings.
(2) | For the period prior to the closing of the Simplification Transactions, the amount includes our general partner’s proportionate capital contribution of $9 million during 2016.
(3) | We pay commissions to our sales agents in connection with common unit issuances under our Continuous Offering Program. We paid $1 million and $8 million of such commissions during 2017 and 2016, respectively.
(4) | Pursuant to the Omnibus Agreement entered into by the Plains Entities in connection with the Simplification Transactions, PAGP used the net proceeds from the sale of PAGP Class A shares, after deducting the sales agents’ commissions and offering expenses, to purchase from AAP a number of AAP units equal to the number of PAGP Class A shares sold in such offering at a price equal to the net proceeds from such offering. Also pursuant to the Omnibus Agreement, immediately following such purchase and sale, AAP used the net proceeds it received from such sale of AAP units to purchase from us an equivalent number of our common units.
(5) | Includes (i) approximately 1.8 million common units issued to AAP in connection with PAGP’s issuance of Class A shares under its Continuous Offering Program and (ii) 48.3 million common units issued to AAP in connection with PAGP’s March 2017 underwritten offering.
Issuance of Common Units for Earned AAP Management Units. During the year ended December 31, 2018, pursuant to the Omnibus Agreement entered into by the Plains Entities in connection with the Simplification Transactions, we issued 559,649 common units to AAP upon AAP Management Units becoming earned. See Note 1 for additional information regarding the Simplification Transactions. Distributions In accordance with our partnership agreement, after making distributions to holders of our outstanding preferred units, we distribute the remainder of our available cash to common unitholders of record within 45 days following the end of each quarter. Available cash is generally defined as all of our cash and cash equivalents on hand at the end of each quarter, less reserves established in the discretion of our general partner for future requirements. Our available cash also includes cash on hand resulting from borrowings made after the end of the quarter. Preferred Unit Distributions The following table details distributions paid to our preferred unitholders during the year presented (in millions, except per unit data):
|  | Series A Preferred Unitholders |  |  | Series B Preferred Unitholders
|  | Distribution (1) |  |  | Cash Distribution (2)
Year |  | Cash |  | Units |  |
2018 |  | $ | 112 |  |  | 1,393,926 |  |  |  | $ | 49 |
2017 |  | $ | — |  |  | 5,307,689 |  |  |  | $ | 5 |
2016 |  | $ | — |  |  | 3,358,726 |  |  |  | $ | — |
(1) | During the Initial Distribution Period, we elected to pay distributions on our Series A preferred units in additional Series A preferred units. The Initial Distribution Period ended with the February 2018 distribution; as such, with respect to quarters ending after the Initial Distribution Period, distributions on our Series A preferred units are paid in cash. During 2018, 2017 and 2016, we issued additional Series A preferred units in lieu of cash distributions of $37 million, $139 million and $89 million, respectively.
(2) | We paid a pro-rated initial distribution on the Series B preferred units on November 15, 2017 to holders of record at the close of business on November 1, 2017 in an amount equal to approximately $5.9549 per unit.
On February 14, 2019, we paid a cash distribution of $37 million to our Series A preferred unitholders. At December 31, 2018, we had accrued approximately $6 million of distributions payable to our Series B preferred unitholders. At December 31, 2018, such amounts were accrued as distributions payable in “Other current liabilities” on our Consolidated Balance Sheet. Common Unit Distributions The following table details distributions paid to common unitholders (and, prior to the Simplification Transactions, our general partner) during the year presented (in millions, except per unit data):
|  | Distributions Paid |  |  | Distributions per common unit
Year |  | Public |  | AAP (1) |  | Total |  |
2018 |  | $ | 532 |  |  | $ | 339 |  |  | $ | 871 |  |  |  | $ | 1.20 |
2017 |  | $ | 849 |  |  | $ | 537 |  |  | $ | 1,386 |  |  |  | $ | 1.95 |
2016 |  | $ | 1,062 |  |  | $ | 565 |  |  | $ | 1,627 |  |  |  | $ | 2.65 |
(1) | Prior to the Simplification Transactions, our general partner was entitled to receive (i) distributions with respect to its 2% indirect general partner interest and (ii) as the holder of our IDRs, incentive distributions if the amount we distributed with respect to any quarter exceeded certain specified levels. The Simplification Transactions, which closed on November 15, 2016, included the permanent elimination of our IDRs and the economic rights associated with our 2% general partner interest in exchange for the issuance by us to AAP of approximately 244.7 million common units. As such, beginning with the distribution pertaining to the fourth quarter of 2016, our general partner is no longer entitled to receive distributions on the IDRs or general partner interest. During the years ended December 31, 2018 and 2017, AAP received distributions on the common units it owned.
On January 8, 2019, we declared a cash distribution of $0.30 per unit on our outstanding common units. The total distribution of $218 million was paid on February 14, 2019 to unitholders of record on January 31, 2019, for the period October 1, 2018 through December 31, 2018. Of this amount, approximately $84 million was paid to AAP. Income Allocation We allocate net income for partners’ capital presentation purposes by applying the allocation methodology in our partnership agreement. Following the closing of the Simplification Transactions, net income is allocated 100% to our common unitholders, after giving effect to income allocations for cash distributions to our Series A preferred unitholders and guaranteed payments attributable to our Series B preferred unitholders. In accordance with our partnership agreement, our Series A preferred unitholders are not allocated income for paid-in-kind distributions for partners’ capital presentation purposes. For periods prior to the Simplification Transactions, our general partner and common unitholders were allocated income based on their respective partnership percentages, after giving effect to income allocations for (i) incentive distributions, if any, to our general partner for distributions declared and paid following the close of each quarter and (ii) cash distributions to our Series A preferred unitholders. Our Series A preferred unitholders were not allocated income for paid-in-kind distributions for partners’ capital presentation purposes. For purposes of determining basic and diluted net income per common unit, income is allocated as prescribed in FASB guidance for calculating earnings per unit, including a deduction to income available to common unitholders for distributions attributable to the period (whether paid in cash or in-kind) on our Series A and Series B preferred units. See Note 4 for additional information. Noncontrolling Interests in Subsidiaries During the fourth quarter of 2017, we sold SLC Pipeline LLC, in which we previously owned a 75% interest and had consolidated under GAAP. As a result of this sale, the noncontrolling interest of 25% was derecognized. We did not have any noncontrolling interests in subsidiaries at December 31, 2018 or 2017. See Note 7 for additional information regarding the sale of SLC Pipeline LLC.

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- Definition The entire disclosure for the formation, structure, control and ownership of the partnership. Disclosures related to accounts comprising partners' capital. Includes balances of general partners' capital account, limited partners' capital account, preferred partners' capital account and total partners' capital account and units outstanding; accumulated other comprehensive income; amount and nature of changes to amount of partner's capital and units outstanding by class, rights and privileges for each class of units; distribution policies and distributions paid by unit class; impact of and correction of an error in previously issued financial statements; limitations of partners' liability; redemption, conversion and distribution policies; and deferred compensation related to the issuance of units. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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