01—Abstract
Summary
Summary of the 10-K filed March 31, 1999. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(PAA) was formed in late 1998 to acquire and operate the midstream crude oil business and assets of Plains Resources Inc. Its operations are concentrated in California, Texas, Oklahoma, Louisiana and the Gulf of Mexico, and it is engaged in crude oil pipeline transportation, terminalling and storage, and gathering and marketing. Its core assets are the 1,233-mile All American Pipeline, the 45-mile SJV Gathering System, and the two million barrel Cushing Terminal. The Partnership completed its initial public offering on November 23, 1998, receiving net proceeds of approximately $244.7 milliona.
For the year ended December 31, 1998, pro forma gross margin was $74.1 millionb, EBITDA was $68.2 million, and net income was $43.9 million. Pro forma revenues were $1.57 billion, compared with $1.75 billion in pro forma 1997 revenues, and the filing attributes the decline mainly to lower Santa Ynez field volumes. The balance sheet at December 31, 1998 shows total assets of $610.2 million, total debt of $184.8 million, and partners' equity of $277.6 million.
The Partnership carries a $175 millionc term loan facility, which is fixed at a weighted average rate of approximately 5.24% on the LIBOR portion through two interest rate swaps. The Partnership also has a $50 million revolving credit facility and a $175 million letter of credit facility. The minimum quarterly distribution is $0.45 per unit, and a partial distribution of $0.193 per unit was paid on February 12, 1999.
The filing notes that a signed agreement to acquire Scurlock Permian LLC and certain other pipeline assets from Marathon Ashland Petroleum for approximately $138 milliond is expected to close in the second quarter of 1999. Key risks include dependence on Santa Ynez and Point Arguello production, the uncertain future of offshore California reserves, and Year 2000 compliance exposure.
02—Key points
Key Highlights
- IPO completed November 23, 1998 with 13,085,000 common units and net proceeds of approximately $244.7 million; common units priced at $20.00 and traded at $17.125 on March 22, 1999
- Pro forma 1998 gross margin of $74.1 million, EBITDA of $68.2 million and net income of $43.9 million
- All American Pipeline is a 1,233-mile, 30-inch crude oil pipeline from California to West Texas with 300,000 barrels per day design capacity, and the SJV Gathering System has about 140,000 barrels per day capacity
- Exxon (Santa Ynez) and Chevron (Point Arguello) committed to ship all production on the All American Pipeline through August 2007 under minimum tariff agreements
- Pending acquisition of Scurlock Permian LLC and certain pipeline assets from Marathon Ashland Petroleum for approximately $138 million in cash, expected to close in the second quarter of 1999
- Total debt of $184.8 million at December 31, 1998, with $175 million term loan hedged through two interest rate swaps at a weighted average rate of approximately 5.24% on the LIBOR portion
- Pro forma tariff volumes fell from 165,000 to 125,000 barrels per day in 1998, reflecting lower Santa Ynez field production; tariff revenues were $57.5 million, down 30% from $82.1 million
03—Questions
Frequently Asked Questions
What assets does Plains All American Pipeline own?
The Partnership owns the 1,233-mile All American Pipeline from California to West Texas, the 45-mile SJV Gathering System in the San Joaquin Valley, and the two million barrel Cushing Terminal at the Cushing Interchange in Oklahoma. It also owns the Ingleside Terminal in Texas and roughly 5.0 million barrels of linefill.
How did the Partnership perform financially in 1998?
On a pro forma basis for the year ended December 31, 1998, the Partnership reported gross margin of $74.1 million, EBITDA of $68.2 million and net income of $43.9 million on revenues of $1.57 billion. Pro forma net income in 1997 was a loss of $10.1 million, which included a non-cash impairment charge of $64.2 million.
What is the Partnership's debt position?
At December 31, 1998, total debt was $184.8 million. The Partnership had $175 million outstanding under its Term Loan Facility, which matures in 2005 and was assumed from the General Partner. The $50 million Revolving Credit Facility had no amounts outstanding at year-end, and $9.8 million was outstanding under the Letter of Credit Facility's borrowing sublimit.
What distributions do unitholders receive?
The Partnership's minimum quarterly distribution is $0.45 per unit, or $1.80 annually. A prorated distribution of $0.193 per unit was paid on February 12, 1999 for the period from November 23 through December 31, 1998, totaling about $5.8 million. The Subordination Period will not end before December 31, 2003.
What are the main risks to the Partnership's business?
The filing cites dependence on crude oil supply and demand in its operating areas, the impact of crude oil price fluctuations, and competition. Pipeline volumes depend heavily on the Santa Ynez and Point Arguello fields, and Chevron has given notice of its resignation as Point Arguello operator. Future offshore California development is uncertain, and environmental liabilities and Year 2000 compliance are also identified as risks.
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