PLAINS ALL AMERICAN PIPELINE LP

Previous wording

During the first six months of 2024, we recognized net income attributable to PAA of $515 million compared to $715 million during the first six months of 2023. Net income for the 2023 period includes favorable impacts from gains on asset sales and the mark-to-market adjustment of the Preferred Distribution Rate Reset Option, contributing to the relative decrease in net income in 2024. Our Crude Oil segment results were more favorable for the first six months of 2024 compared to 2023 and our NGL segment results were relatively flat year-over-year.

Current wording

During the first nine months of 2024, we recognized net income attributable to PAA of $736 million compared to $918 million during the first nine months of 2023. Results from our operations increased for the first nine months of 2024 over the comparable 2023 period due to more favorable results from our Crude Oil segment, partially offset by less favorable results from our NGL segment. Net income for the 2023 period includes favorable impacts from gains on asset sales and the mark-to-market adjustment of the Preferred Distribution Rate Reset Option, contributing to the relative decrease in net income in 2024. In addition, the 2024 results were impacted by an increase in costs associated with settlements related to the Line 901 incident that occurred in May 2015 and higher income tax expense.

Previous wording

(1)“Interest expense, net” and “Other income, net” each include $15 million for the three and six months ended June 30, 2024 related to interest on promissory notes between and amongst PAA and related entities.

Current wording

(1)“Interest expense, net” and “Other income, net” each include $16 million and $31 million for the three and nine months ended September 30, 2024, respectively, related to interest on promissory notes by and among PAA and certain Plains entities.

Previous wording

Product sales revenues and purchases increased for the three and six months ended June 30, 2024 compared to the same periods in 2023 primarily due to higher commodity prices in the 2024 periods.

Current wording

Product sales revenues and purchases increased for the three months ended September 30, 2024 compared to the same period in 2023 primarily due to higher crude oil sales volumes in the 2024 period, partially offset by lower commodity prices.

Previous wording

Revenues from services increased for the three and six months ended June 30, 2024 compared to the same periods in 2023 primarily due to higher pipeline volumes and tariff escalations, as well as the impact of acquisitions.

Current wording

Revenues from services increased for the nine months ended September 30, 2024 compared to the same period in 2023 primarily due to higher pipeline volumes and tariff escalations, as well as the impact of acquisitions, partially offset by timing of revenue recognition in the third quarter of 2023.

Previous wording

The increase in general and administrative expenses for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to (i) higher information systems costs due to ongoing systems conversion and integration work and (ii) higher employee-related costs, including an increase in equity-indexed compensation expense (a portion of which is excluded in the calculation of Adjusted EBITDA and Segment Adjusted EBITDA).

Current wording

The increase in general and administrative expenses for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to (i) higher employee-related costs and (ii) higher information systems costs due to ongoing systems conversion and integration work.

Previous wording

The net gain on asset sales for the six months ended June 30, 2023 was primarily comprised of a gain of approximately $140 million related to the sale of our Keyera Fort Saskatchewan facility in the first quarter of 2023. See Note 7 to our Consolidated Financial Statements included in Part IV of our 2023 Annual Report on Form 10-K for additional information.

Current wording

The net gain on asset sales for the nine months ended September 30, 2023 was primarily comprised of a gain of approximately $140 million related to the sale of our Keyera Fort Saskatchewan facility in the first quarter of 2023. See Note 7 to our Consolidated Financial Statements included in Part IV of our 2023 Annual Report on Form 10-K for additional information.

Previous wording

component of the variance in other income year-over-year. These amounts are excluded from our non-GAAP performance measures Adjusted EBITDA and Implied DCF. As such, the interest expense and interest income associated with these notes is presented on a net basis in the reconciliation of these metrics to Net Income. See the “—Non-GAAP Financial Measures” section below.

Current wording

For the three and nine months ended September 30, 2024, “Interest expense, net” and “Other income, net” each include interest expense and interest income associated with promissory notes payable and receivable by and among PAA and certain Plains entities, which is the primary driver of the increase in interest expense compared to the same periods in 2023 and is a component of the variance in other income year-over-year. These amounts are excluded from our non-GAAP performance measures Adjusted EBITDA and Implied DCF. As such, the interest expense and interest income associated with these notes is presented on a net basis in the reconciliation of these metrics to Net Income. See the “—Non-GAAP Financial Measures” section below.

Previous wording

(1)Represents interest expense associated with promissory notes between and amongst PAA and related entities, as described above.

Current wording

(1)Represents interest expense associated with promissory notes by and among PAA and certain Plains entities, as described above.

Previous wording

(1)Represents interest income associated with promissory notes between and amongst PAA and related entities, as described above.

Current wording

(1)Represents interest income associated with promissory notes by and among PAA and certain Plains entities, as described above.

Previous wording

(2)The activity during the periods presented was primarily related to the impact from the change in the USD to CAD exchange rate on the portion of our intercompany net investment that is not long-term in nature.

Current wording

(2)The activity during the periods presented was primarily related to the impact from the change in the CAD to USD exchange rate on the portion of our intercompany net investment that is not long-term in nature.

Previous wording

The net favorable income tax variance for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to the tax impact of (i) the Keyera Fort Saskatchewan divestiture in the first quarter of 2023 and (ii) lower year-over-year income within our Canadian operations as impacted by fluctuations of derivative mark-to-market valuations, partially offset by (iii) higher income tax expense in the second quarter of 2024 associated with Canadian withholding tax on dividends from our Canadian entities to other Plains entities.

Current wording

The net unfavorable income tax variance for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to higher income tax expense in the second quarter of 2024 associated with Canadian withholding tax on dividends from our Canadian entities to other Plains entities.

Previous wording

The increase in amounts attributable to noncontrolling interests for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to higher income recognized by the Permian JV resulting from higher volumes and contributions from acquisitions.

Current wording

The increase in amounts attributable to noncontrolling interests for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to higher volumes, as well as contributions from acquisitions completed by the Permian JV.

Previous wording

Adjusted EBITDA is defined as earnings before interest expense, income tax (expense)/benefit, depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities), gains and losses on asset sales, gains or losses on investments in unconsolidated entities and interest income on promissory notes between and amongst PAA and related entities, adjusted for certain selected items impacting comparability. Adjusted EBITDA attributable to PAA excludes the portion of Adjusted EBITDA that is attributable to noncontrolling interests.

Current wording

Adjusted EBITDA is defined as earnings before interest expense, income tax (expense)/benefit, depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities), gains and losses on asset sales, gains or losses on investments in unconsolidated entities and interest income on promissory notes by and among PAA and certain Plains entities, adjusted for certain selected items impacting comparability. Adjusted EBITDA attributable to PAA excludes the portion of Adjusted EBITDA that is attributable to noncontrolling interests.

Previous wording

(1)Represents “Interest expense, net” as reported on our Condensed Consolidated Statements of Operations, net of interest income associated with promissory notes between and amongst PAA and related entities.

Current wording

(1)Represents “Interest expense, net” as reported on our Condensed Consolidated Statements of Operations, net of interest income associated with promissory notes by and among PAA and certain Plains entities.

Previous wording

(6)“Other income, net” on our Condensed Consolidated Statements of Operations, excluding interest income on promissory notes between and amongst PAA and related entities, adjusted for selected items impacting comparability (“Adjusted other income, net”) is included in Adjusted EBITDA and excluded from Segment Adjusted EBITDA.

Current wording

(6)“Other income, net” on our Condensed Consolidated Statements of Operations, excluding interest income associated with promissory notes by and among PAA and certain Plains entities, adjusted for selected items impacting comparability (“Adjusted other income, net”) is included in Adjusted EBITDA and excluded from Segment Adjusted EBITDA.

Previous wording

(9)Excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps, as well as interest income on promissory notes between and amongst PAA and related entities.

Current wording

(9)Amount excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps and is net of interest income associated with promissory notes by and among PAA and certain Plains entities.

Previous wording

Our Crude Oil segment operations generally consist of gathering and transporting crude oil using pipelines, gathering systems, trucks and, at times, on barges or railcars, in addition to providing terminalling, storage and other related services utilizing our integrated assets across the United States and Canada. Our assets provide services to third parties as well as to our merchant activities. Our merchant activities include the purchase of crude oil supply and the movement of this supply on our assets or third-party assets to sales locations, including our terminals, third-party connecting carriers, regional hubs or to refineries. Our merchant activities are governed by our risk management policies.

Current wording

Our Crude Oil segment operations generally consist of gathering and transporting crude oil using pipelines (including gathering systems), trucks and, at times, on barges or railcars, in addition to providing terminalling, storage and other related services utilizing our integrated assets across the United States and Canada. Our assets provide services to third parties as well as to our merchant activities. Our merchant activities include the purchase of crude oil supply and the movement of this supply on our assets or third-party assets to sales locations, including our terminals, third-party connecting carriers, regional hubs or to refineries. Our merchant activities are governed by our risk management policies.

Previous wording

Crude Oil Segment Adjusted EBITDA increased for the three and six months ended June 30, 2024 compared to the same periods in 2023 primarily due to higher tariff volumes on our pipelines, tariff escalations and contributions from acquisitions, partially offset by fewer market-based opportunities.

Current wording

Crude Oil Segment Adjusted EBITDA increased for the three and nine months ended September 30, 2024 compared to the same periods in 2023 primarily due to higher tariff volumes on our pipelines, tariff escalations and contributions from acquisitions, partially offset by fewer market-based opportunities.

Previous wording

The following is a more detailed discussion of the significant factors impacting Segment Adjusted EBITDA for the three and six months ended June 30, 2024 compared to the same periods in 2023.

Current wording

The following is a more detailed discussion of the significant factors impacting Segment Adjusted EBITDA for the three and nine months ended September 30, 2024 compared to the same periods in 2023.

Previous wording

Net Revenues and Equity Earnings. Our results were favorably impacted by (i) volume growth across our pipeline systems driven by increased production as well as increased movements from the Rocky Mountain region to Cushing, Oklahoma, (ii) tariff escalations and (iii) contributions from acquisitions.

Current wording

Net Revenues and Equity Earnings. Our results were favorably impacted by (i) volume growth across our pipeline systems driven by increased production in the Permian Basin region as well as increased movements from the Rocky Mountain region to Cushing, Oklahoma, (ii) the benefit of tariff escalations and (iii) contributions from acquisitions.

Previous wording

Additionally, our results for the three and six months ended June 30, 2024 compared to 2023 reflect fewer crude oil market-based opportunities.

Current wording

Additionally, our results for the three and nine months ended September 30, 2024 compared to the same periods in 2023 reflect fewer crude oil market-based opportunities.

Previous wording

Field Operating Costs. For the three and six months ended June 30, 2024 compared to the same periods in 2023, we recognized higher expenses associated with (i) employee-related costs primarily resulting from higher average headcount and salaries, (ii) property taxes due to the impact of favorable adjustments in 2023 and (iii) incremental operating costs associated with acquisitions. The unfavorable variance for the three and six months ended June 30, 2024 compared to 2023 was partially offset by (iv) lower utilities-related costs as a result of lower prices, partially offset by higher volumes, (v) a decrease in the amount of drag reducing agents used and (vi) decreased costs resulting from lower third-party trucked volumes.

Current wording

Field Operating Costs. For the three and nine months ended September 30, 2024 compared to the same periods in 2023, we recognized higher expenses associated with (i) an increase in costs associated with settlements related to the Line 901 incident that occurred in May 2015 (which impact field operating costs, but are excluded from Segment Adjusted EBITDA, and thus are reflected as an “Adjustment” in the table above), (ii) employee-related costs primarily resulting from higher average headcount and salaries, (iii) property taxes due to the impact of favorable adjustments in 2023 and (iv) incremental operating costs associated with acquisitions, partially offset by (v) decreased costs resulting from lower third-party trucked volumes. Field operating costs for the nine months ended September 30, 2024 compared to the same period in 2023 were also favorably impacted by lower utilities-related costs as a result of lower prices, partially offset by higher volumes and an increase in the amount of drag reducing agents used.

Previous wording

The increase in maintenance capital spending for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to timing of routine integrity maintenance.

Current wording

The increase in maintenance capital spending for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to higher costs resulting from increased pipeline integrity activities and trucking lease buyouts. Additionally, the three months ended September 30, 2024 compared to the same 2023 period was further impacted by timing of tank integrity activities.

Previous wording

NGL Segment Adjusted EBITDA increased for the three months ended June 30, 2024 compared to 2023 as a result of higher propane and butane sales volumes, primarily due to turnarounds impacting sales volumes in the second quarter of 2023, and incremental margins from iso-to-normal butane spread benefits in the second quarter of 2024.

Current wording

NGL Segment Adjusted EBITDA decreased for the three and nine months ended September 30, 2024 compared to the same periods in 2023 primarily as a result of the impact of lower realized frac spreads, partially offset by higher propane and butane sales volumes. The nine months ended September 30, 2024 compared to the same period in 2023 further benefited from incremental margins from iso-to-normal butane spreads in the first half of 2024.

Previous wording

Net Revenues. Net revenues include the impact of derivative activities and long-term inventory costing adjustments, which are excluded from Segment Adjusted EBITDA and thus are reflected as an “Adjustment” in the table above. Excluding such impacts, net revenues increased for the second quarter of 2024 compared to 2023 and were relatively flat for the six months ended June 30, 2024 compared to 2023.

Current wording

Net Revenues. Net revenues include the impact of derivative activities and long-term inventory costing adjustments, which are excluded from Segment Adjusted EBITDA, and thus are reflected as an “Adjustment” in the table above. Excluding such impacts, net revenues decreased for the three and nine months ended September 30, 2024 compared to the same periods in 2023.

Previous wording

For both the three- and six-month periods ended June 30, 2024 compared to the same periods in 2023, we had lower field operating costs recoveries at our Empress straddle plants realized through our commercial agreements.

Current wording

The decrease in net revenues for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to (i) lower realized frac spreads and (ii) lower field operating cost recoveries at our Empress straddle plants realized through our commercial agreements, partially offset by (iii) higher propane and butane sales volumes.

Previous wording

Field Operating Costs. The decrease in field operating costs for the six months ended June 30, 2024 compared to the same period in 2023 was primarily due to decreased utilities-related costs largely as a result of lower prices, partially offset by higher maintenance and integrity costs. The decrease in utilities-related costs was partially offset by the lower benefit to net revenues of operating cost recoveries realized through commercial agreements.

Current wording

Field Operating Costs. The decrease in field operating costs for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was primarily due to (i) decreased utilities-related costs largely as a result of lower prices and (ii) a decrease in unrealized mark-to-market losses on power hedges (which impact our field operating costs, but are excluded from Segment Adjusted EBITDA, and thus are reflected as an “Adjustment” in the table above), partially offset by (iii) higher maintenance costs and (iv) higher employee-related costs primarily resulting from higher average headcount and salaries. The decrease in utilities-related costs was partially offset by the lower benefit to net revenues of operating cost recoveries realized through commercial agreements.

Previous wording

The decrease in maintenance capital spending for the three and six months ended June 30, 2024 compared to the same periods in 2023 was primarily due to timing of equipment repairs and replacement projects for certain of our pipeline systems and fractionation facilities.

Current wording

The decrease in maintenance capital spending for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily due to timing of equipment repairs and replacement projects for certain of our pipeline systems and fractionation facilities.

Previous wording

As of June 30, 2024, although we had a working capital deficit of $19 million, we had approximately $3.2 billion of liquidity available to meet our ongoing operating, investing and financing needs, subject to continued covenant compliance, as noted below (in millions):

Current wording

As of September 30, 2024, we had a working capital surplus of $33 million and approximately $3.3 billion of liquidity available to meet our ongoing operating, investing and financing needs, subject to continued covenant compliance, as noted below (in millions):

Previous wording

(2)Available capacity under our senior unsecured revolving credit facility and senior secured hedged inventory facility was reduced by outstanding letters of credit issued under these facilities of less than $1 million and $39 million, respectively.

Current wording

(2)Available capacity under our senior unsecured revolving credit facility and senior secured hedged inventory facility was reduced by outstanding letters of credit issued under these facilities of less than $1 million and $34 million, respectively.

Previous wording

(3)Excludes restricted cash of $3 million.

Current wording

(3)Excludes restricted cash of $4 million.

Previous wording

Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Adjusted Free Cash Flow is defined as Net cash provided by operating activities, less Net cash provided by/(used in) investing activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and the impact from the purchase and sale of linefill, net of proceeds from the sales of assets and further impacted by distributions to and contributions from noncontrolling interests. Adjusted Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions. Also see “Results of Operations–Non-GAAP Financial Measures” above for more information about our non-GAAP measures.

Current wording

Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Adjusted Free Cash Flow is defined as Net cash provided by operating activities, less Net cash provided by/(used in) investing activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and the impact from the purchase and sale of linefill, net of proceeds from the sales of assets and further impacted by distributions to and contributions from noncontrolling interests and proceeds from the issuance of related party notes. Adjusted Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions. Also see “Results of Operations–Non-GAAP Financial Measures” above for more information about our non-GAAP measures.

Previous wording

(2)Cash distributions paid to our preferred and common unitholders during the period presented.

Current wording

(3)Cash distributions paid to our preferred and common unitholders during the period presented.

Previous wording

(3)Excess Adjusted Free Cash Flow after Distributions is retained to establish reserves for future distributions, capital expenditures, debt reduction and other partnership purposes. Adjusted Free Cash Flow after Distributions shortages may be funded from previously established reserves, cash on hand or from borrowings under our credit facilities or commercial paper program.

Current wording

(4)Excess Adjusted Free Cash Flow after Distributions is retained to establish reserves for future distributions, capital expenditures, debt reduction and other partnership purposes. Adjusted Free Cash Flow after Distributions shortages, if any, may be funded from previously established reserves, cash on hand or from borrowings under our credit facilities or commercial paper program.

Previous wording

Net cash provided by operating activities for the first six months of 2024 and 2023 was $1.072 billion and $1.631 billion, respectively, and primarily resulted from earnings from our operations. Both periods were also impacted by changes in working capital items. The 2024 period was impacted unfavorably, primarily by margin requirements related to our hedging activities. The 2023 period was impacted favorably, largely associated with reducing inventory levels during the period.

Current wording

Net cash provided by operating activities for the first nine months of 2024 and 2023 was $1.763 billion and $1.716 billion, respectively, and primarily resulted from earnings from our operations.

Previous wording

(3)Investment capital and maintenance capital, net to our 65% interest in the Permian JV, was approximately $144 million and $109 million, respectively, for the six months ended June 30, 2024, and approximately $141 million and $103 million, respectively, for the six months ended June 30, 2023.

Current wording

(3)Investment capital and maintenance capital, net to our 65% interest in the Permian JV, was approximately $232 million and $174 million, respectively, for the nine months ended September 30, 2024, and approximately $221 million and $158 million, respectively, for the nine months ended September 30, 2023.

Previous wording

2024 Investment and Maintenance Capital. Total investment capital for the year ending December 31, 2024 is projected to be approximately $465 million ($375 million net to our interest). Approximately half of our projected investment capital expenditures are expected to be invested in the Permian JV assets. Additionally, maintenance capital for 2024 is projected to be approximately $270 million ($250 million net to our interest). We expect to fund our 2024 investment and maintenance capital expenditures primarily with retained cash flow.

Current wording

2024 Investment and Maintenance Capital. Total investment capital for the year ending December 31, 2024 is projected to be approximately $455 million ($360 million net to our interest). Approximately half of our projected investment capital expenditures are expected to be invested in the Permian JV assets. Additionally, maintenance capital for 2024 is projected to be approximately $270 million ($250 million net to our interest). We expect to fund our 2024 investment and maintenance capital expenditures primarily with retained cash flow.

Previous wording

Proceeds from the sale of assets have generally been used to fund our investment capital projects and reduce debt levels. The following table summarizes the proceeds received during the first six months of 2024 and 2023 from sales of assets (in millions):

Current wording

Proceeds from the sale of assets have generally been used to fund our investment capital projects and reduce debt levels. The following table summarizes the proceeds received during the first nine months of 2024 and 2023 from sales of assets (in millions):

Previous wording

(1)Represents proceeds, including working capital adjustments, net of transaction costs. The proceeds from divestitures for the six months ended June 30, 2023 were primarily from the sale of our 21% non-operated/undivided joint interest in the Keyera Fort Saskatchewan facility in February 2023. See Note 7 to our Consolidated Financial Statements included in Part IV of our 2023 Annual Report on Form 10-K for additional discussion of this transaction.

Current wording

(1)Represents proceeds, including working capital adjustments, net of transaction costs. The proceeds from divestitures for the nine months ended September 30, 2023 were primarily from the sale of our 21% non-operated/undivided joint interest in the Keyera Fort Saskatchewan facility in February 2023. See Note 7 to our Consolidated Financial Statements included in Part IV of our 2023 Annual Report on Form 10-K for additional discussion of this transaction.

Previous wording

During the six months ended June 30, 2024, we had net repayments under our commercial paper program of $433 million. The net repayments resulted primarily from cash flow from operating activities and proceeds from the issuance of $650 million, 5.70% senior notes in June 2024, which offset borrowings during the period related to funding needs for capital investments, inventory purchases and other general partnership purposes.

Current wording

During the nine months ended September 30, 2024, we had net repayments under our commercial paper program of $433 million. The net repayments resulted primarily from cash flow from operating activities and proceeds from the issuance of $650 million, 5.70% senior notes in June 2024, which offset borrowings during the period related to funding needs for capital investments, inventory purchases and other general partnership purposes.