01—Abstract
Summary
Summary of the 10-K filed March 3, 2005. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(PAA) reported 2004 net income of $130.0 milliona, or $1.89 per limited partner unit, on total revenues of $20.98 billion, up from $12.59 billion in 2003 and $8.38 billion in 2002. Growth was driven mainly by acquisitions completed in 2003 and 2004, most notably the Link Energy LLC crude oil and pipeline operations (approximately $332 million, effective April 1, 2004) and the Capline and Capwood pipeline interests (approximately $158.5 million). Segment profit rose to $248.7 million from $144.4 million, with the pipeline segment at $157.2 million and gathering, marketing, terminalling and storage at $91.5 million.
Total assets were $3.16 billionb at year end and long-term debt was $949.0 million. The company stated it was slightly above its targeted long-term debt-to-EBITDA ratio because of 2004 acquisitions. The filing describes a partnership that transports crude oil through about 15,000 miles of active gathering and mainline pipelines and stores crude oil at about 37 million barrels of terminalling and storage capacity, most notably at the Cushing Interchange in Oklahoma.
Its credit ratings were BBB- (S&P) and Baa3 (Moody's), both stable and investment grade as of February 2005. Declared distributions were $2.30c per unit in 2004, and the quarterly distribution was $0.6125 per unit.
Key risks disclosed include declining volumes from offshore California fields that feed the All American Pipeline, exposure to crude oil price and market structure swings, a pending Bureau of Industry and Security export licensing matter for which no penalty can yet be estimated, and an environmental reserve of $19.8 milliond. The company also reported two pipeline releases in December 2004 and January 2005 with estimated aggregate remediation costs of $1.7 million and $1.4 million.
02—Key points
Key Highlights
- Net income of $130.0 million ($1.89 per limited partner unit) for 2004, compared with $59.4 million in 2003 and $65.3 million in 2002.
- Total revenues of $20.98 billion for 2004, up from $12.59 billion in 2003, with segment profit of $248.7 million versus $144.4 million.
- Major 2004 acquisitions included Link Energy LLC (approximately $332 million) and Capline/Capwood pipeline interests (approximately $158.5 million), plus a Schaefferstown propane storage facility (approximately $32 million).
- Investment-grade credit ratings of BBB- (S&P) and Baa3 (Moody's), both stable as of February 2005.
- Declared distributions of $2.30 per unit in 2004; the most recent quarterly distribution was $0.6125 per unit.
- Total assets of $3.16 billion and long-term debt of $949.0 million at December 31, 2004.
- Concentrated exposure to declining offshore California volumes: the Santa Ynez and Point Arguello fields fell to 54,000 average daily barrels in 2004 from 74,000 in 2000.
03—Questions
Frequently Asked Questions
What drove the increase in revenues and segment profit in 2004?
The filing attributes the growth primarily to acquisitions completed in 2003 and 2004, including Link Energy LLC and the Capline and Capwood interests, along with favorable, volatile crude oil market conditions in the gathering, marketing, terminalling and storage segment. Crude oil lease gathered volumes rose to 589 thousand barrels per day from 437 thousand in 2003.
How much debt does the partnership carry and is it within its targeted credit profile?
Total debt was $1,124.5 million and long-term debt was $949.0 million at December 31, 2004. The company said it was slightly above its targeted long-term debt-to-EBITDA ratio of about 3.5x, mainly due to 2004 acquisitions and including less than a full year of their results in EBITDA. Its targeted long-term debt-to-total capitalization is about 55% or less.
What are the main risks to future cash distributions?
The filing cites declining production from the Santa Ynez and Point Arguello offshore California fields, crude oil price and market structure volatility, the success of acquisitions and their integration, access to capital, environmental liabilities not covered by insurance or reserves, and a pending Bureau of Industry and Security export licensing matter with possible penalties that cannot yet be estimated. Distributions are not guaranteed and depend on cash flow rather than only on profitability.
What is the status of the Sperber class action lawsuit?
The lawsuit, filed in December 2003 on behalf of common unitholders and related to the proposed acquisition of Plains Resources Inc., has been settled in principle. The court approved the settlement, and it will become final in March 2005 unless appeals are filed.
What is the company's planned spending for 2005?
The company expects to invest approximately $100 million in expansion capital projects during 2005, including $18.0 million for Link-related upgrades, $16.0 million for the Trenton pipeline expansion and $13.0 million for the Cushing Phase V expansion. It also expects approximately $19.0 million in maintenance capital.
04—Continue