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, 2016	101,206,526	138,043,486		491,910,863
Conversion of AAP Management Units ⁽¹⁾	—	1,557,860		—
Exchange Right exercises ⁽¹⁾	2,172,236	(2,172,236	)	—
Redemption Right exercises ⁽¹⁾	—	(3,486,333	)	3,486,333
Sales of Class A shares	50,086,326	—		—
Sales of common units by a subsidiary	—	—		4,033,567
Issuance of common units by a subsidiary for acquisition of interest in Advantage Joint Venture (Note 6)	—	—		1,252,269
Issuance of Series A preferred units by a subsidiary	—	—		2,601,300
Other	7,810	—		122,344
Outstanding at June 30, 2017	153,472,898	133,942,777		503,406,676



	Class A Shares	Class B Shares
Outstanding at December 31, 2015	86,099,037	141,485,588
Conversion of AAP Management Units ⁽¹⁾	—	6,742,383
Exchange Right exercises ⁽¹⁾	14,169,317	(14,169,317	)
Issuance of Class A shares under LTIP	7,811	—
Outstanding at June 30, 2016	100,276,165	134,058,654

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⁽¹⁾	See Note 11 to our Consolidated Financial Statements included in Part IV of our 2016 Annual Report on Form 10-K for information regarding conversions of AAP Management Units, Exchange Rights and Redemption Rights.

Distributions

The following table details the distributions paid to our Class A shareholders during or pertaining to the first six months of 2017 (in millions, except per share data):



Distribution Payment Date	Distributions to Class A Shareholders		Distributions per Class A Share
August 14, 2017 ⁽¹⁾	$	84	$	0.55
May 15, 2017	$	84	$	0.55
February 14, 2017	$	57	$	0.55

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⁽¹⁾	Payable to shareholders of record at the close of business on July 31, 2017 for the period April 1, 2017 through June 30, 2017.

The amount of cash available to distribute to our Class A shareholders is completely dependent upon the amount of cash distributed by PAA to AAP in respect of its common units; therefore, any change in the distribution level on PAA's common units will have a corresponding impact on the distribution level on our Class A shares. On August 7, 2017, PAA's management announced that it was engaged in discussions with our Board of Directors regarding a reassessment of PAA's approach to distributions. See "—Subsidiary Distributions" below for additional information.

Sales of Class A Shares

The following table summarizes our sales of Class A shares during the six months ended June 30, 2017 (net proceeds in millions):



Type of Offering	Class A Shares Issued	Net Proceeds ⁽¹⁾
Continuous Offering Program	1,786,326	$	61	⁽²⁾
Underwritten Offering	48,300,000	1,474
	50,086,326	$	1,535


⁽¹⁾	Amounts are net of costs associated with the offerings.


⁽²⁾	We pay commissions to our sales agents in connection with issuances of Class A shares under our Continuous Offering Program. We paid $1 million of such commissions during the six months ended June 30, 2017.

Pursuant to the Omnibus Agreement entered into by the Plains Entities in connection with the Simplification Transactions, we used the net proceeds from the sale of our 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 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 us to purchase from PAA an equivalent number of common units of PAA. See "—Subsidiary Sales of Common Units" below.

The cash purchase by PAGP of additional units issued by AAP and corresponding cash purchase by AAP of additional common units issued by PAA results in the allocation of the fair value of the proceeds between controlling and noncontrolling interests in AAP and PAA based on their respective ownership percentages. Additionally, in accordance with ASC 810, an adjustment in partners' capital based on historical carrying value is recognized by PAGP's Class A shareholders on their increase in ownership of subsidiary entities and a corresponding adjustment is recognized in partners' capital by PAGP's noncontrolling interests due to the dilution of their ownership interest. The allocation to noncontrolling interests results from the difference between the fair value per unit of the additional units issued and the historical carrying value per unit. Such amounts are reflected in "Sales of Class A shares" on our Condensed Consolidated Statements of Changes in Partners' Capital.

Consolidated Subsidiaries

Noncontrolling Interests in Subsidiaries

As of June 30, 2017, noncontrolling interests in our subsidiaries consisted of (i) a 64% limited partner interest in PAA, (ii) an approximate 47% limited partner interest in AAP and (iii) a 25% interest in SLC Pipeline LLC.

Subsidiary Sales of Common Units

Continuous Offering Program. During the six months ended June 30, 2017, PAA issued an aggregate of approximately 4.0 million common units under its continuous offering program, generating proceeds of $129 million, net of $1 million of commissions paid to its sales agents.

The proceeds from the issuance of PAA common units were allocated among all of PAA’s common unitholders, including AAP, based on their percentage ownership of common units. Additionally, PAA’s capital attributable to AAP was adjusted based on historical carrying value, in accordance with ASC 810, to reflect the dilution of its interest in PAA as a result of the issuance of additional common units to the public unitholders. These adjustments were recognized by PAGP in proportion to PAGP’s ownership interest in AAP, which resulted in a net increase in partners’ capital attributable to PAGP resulting from the difference between the fair value per unit of the additional units issued and the historical carrying value per unit. Such amounts are reflected in "Sales of common units by a subsidiary" on our Condensed Consolidated Statements of Changes in Partners' Capital.

Omnibus Agreement. During the six months ended June 30, 2017, pursuant to the Omnibus Agreement discussed above, PAA sold (i) approximately 1.8 million common units to AAP in connection with our issuance of Class A shares under our Continuous Offering Program and (ii) 48.3 million common units to AAP in connection with our March 2017 underwritten offering.

Subsidiary Distributions

PAA Cash Distributions. The following table details the distributions to PAA’s partners paid in cash during or pertaining to the first six months of 2017 (in millions, except per unit data):



	Distributions						Cash Distribution per Common Unit
	Common Unitholders				Total Cash Distribution
Distribution Payment Date	Public		AAP		Total Cash Distribution
August 14, 2017 ⁽¹⁾	$	240	$	159	$	399	$	0.55
May 15, 2017	$	240	$	159	$	399	$	0.55
February 14, 2017	$	237	$	134	$	371	$	0.55


⁽¹⁾	Payable to unitholders of record at the close of business on July 31, 2017 for the period April 1, 2017 through June 30, 2017.

On August 7, 2017, PAA's management announced that it was engaged in discussions with our Board of Directors regarding a reassessment of PAA's approach to distributions, with a focus on resetting PAA's common unit distribution to a level supported by the distributable cash flow from PAA's fee-based Transportation and Facilities segments. As of such date, no final decisions had been made regarding such potential change, but PAA indicated that it intended to complete its reassessment and finalize any changes over the course of the ensuing sixty day period.

PAA In-Kind Distributions. On February 14, 2017, PAA issued 1,287,773 Series A preferred units in lieu of a cash distribution of $34 million on PAA's Series A preferred units outstanding as of the record date for such distribution. On May 15, 2017, PAA issued 1,313,527 Series A preferred units in lieu of a cash distribution of $34 million on PAA's Series A preferred units outstanding as of the record date for such distribution.

On August 14, 2017, PAA will issue 1,339,796 Series A preferred units in lieu of a cash distribution of $35 million on PAA's Series A preferred units outstanding as of July 31, 2017, the record date for such distribution.

AAP Distributions. The following table details the distributions paid to AAP’s partners during or pertaining to the first six months of 2017 from distributions received from PAA (in millions):



	Distribution to AAP's Partners
Distribution Payment Date	Noncontrolling Interests		PAGP		Total Cash Distributions
August 14, 2017 ⁽¹⁾	$	75	$	84	$	159
May 15, 2017	$	75	$	84	$	159
February 14, 2017	$	77	$	57	$	134

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⁽¹⁾	Payable to unitholders of record at the close of business on July 31, 2017 for the period April 1, 2017 through June 30, 2017.

Other Distributions. During the six months ended June 30, 2017, distributions of $1 million were paid to noncontrolling interests in SLC Pipeline LLC.

Deferred Tax Asset Impact from the Sale of Subsidiary Units

In connection with the sales of AAP units and PAA common units referenced above, a deferred asset was created. The tax basis of PAGP’s purchase of the additional units was accounted for at fair market value for U.S. federal income tax purposes, but the GAAP basis was impacted by the adjustments that are based on historical carrying value. The resulting basis difference resulted in a deferred tax asset that was recorded as a component of partner’s capital as it results from transactions with shareholders.