01—Abstract
Summary
Summary of the 10-K filed February 27, 2013. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(PAA) filed its annual report on Form 10-K on February 27, 2013, for fiscal year 2012. The Partnership reported net income attributable to Plains of $1.094 billiona, or $2.40 per diluted limited partner unit, compared with $966 million, or $2.44 per diluted unit, in 2011. Total revenues were $37.797 billion, and Adjusted EBITDA was $2.107 billion versus $1.598 billion in 2011, with implied distributable cash flow of $1.550 billion.
Results were driven by fee-based growth in the Transportation and Facilities segments from acquisitions such as BP NGL ($1.68 billionb) and by a stronger Supply and Logistics segment, partly offset by lower NGL margins and a $168 million impairment charge. The Partnership ended 2012 with total debt of $7.406 billion, approximately $2.4 billion of available liquidity, and a working capital deficit of about $36 million. It raised approximately $3.0 billion in debt and equity during the year and received credit rating upgrades from two agencies.
The quarterly distribution paid on February 14, 2013 was $0.5625c per unit, an increase the filing describes as approximately 9.8% year over year. Management reports that the company was in compliance with all debt covenants. Key risks flagged in the filing include crude oil market volatility and differentials, reliance on the forward market structure, exposure to pipeline integrity and environmental releases (including a Rangeland release with estimated remediation of $51 million), regulatory and derivative-rule changes, and the company's reliance on a $7.4 billion debt load and investment-grade credit ratings.
02—Key points
Key Highlights
- Net income attributable to Plains of $1.094 billion ($2.40 per diluted LP unit) in 2012, up from $966 million ($2.44 per diluted unit) in 2011.
- Adjusted EBITDA of $2.107 billion in 2012 versus $1.598 billion in 2011; implied DCF of $1.550 billion versus $1.149 billion.
- Total revenues of $37.797 billion in 2012 versus $34.275 billion in 2011, with Supply and Logistics revenues of $36.440 billion.
- Completed the $1.68 billion BP NGL Acquisition on April 1, 2012, and the $503 million USD Rail Terminal Acquisition in December 2012, with 2012 acquisition capital totaling $2.286 billion.
- Total debt of $7.406 billion at year-end 2012 and approximately $2.4 billion of liquidity; in compliance with all covenants.
- Quarterly distribution of $0.5625 per unit paid February 14, 2013, described as an approximately 9.8% year-over-year increase; 2012 declared distributions of $2.11 per unit versus $1.95 in 2011.
- Impairment losses of approximately $168 million in 2012, primarily related to the Pier 400 terminal project and the planned sale of certain refined products pipeline systems.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Plains All American Pipeline kept $0.03.
- Revenue$37.80B100.0%
- Cost of revenue−$35.85B94.9%
- Gross profit$1.95B5.1%
- Operating costs−$520.0M1.4%
- Operating income$1.43B3.8%
- Interest, other & tax−$331.0M0.9%
- Net income$1.09B2.9%
Where FY2012 revenue went
$37.80B- Cost of revenue: $35.85B, 95% of revenue
- Net income: $1.09B, 2.9% of revenue
- Operating costs: $520.0M, 1.4% of revenue
- Interest, other & tax: $331.0M, 0.9% of revenue
Kept 2.9% as net incomeNet income $1.09B · 2.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 27, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $37.80B$34.27B | +10.3% |
| Gross Profit | $1.95B$1.56B | +24.7% |
| Operating Expenses | $36.37B$32.98B | +10.3% |
| Operating Income | $1.43B$1.30B | +9.8% |
| Interest Expense | $288.00M$253.00M | +13.8% |
| Net Income | $1.09B$966.00M | +13.3% |
| EPS (Basic) | $2.41$2.46 | −2.0% |
| EPS (Diluted) | $2.40$2.44 | −1.6% |
05—Questions
Frequently Asked Questions
How did PAA's profitability change in 2012?
Net income attributable to Plains rose to $1.094 billion ($2.40 per diluted LP unit) from $966 million ($2.44 per diluted unit) in 2011. Total segment profit increased to $1.945 billion from $1.560 billion, led by Supply and Logistics ($753 million), Transportation ($710 million) and Facilities ($482 million). Depreciation and amortization rose to $482 million, which included the impairment charges.
What acquisitions and growth investments did PAA make in 2012?
The company completed the BP NGL Acquisition for about $1.68 billion, the USD Rail Terminal Acquisition for $503 million, and several other acquisitions totaling about $150 million. Internal growth projects totaled $1.185 billion and maintenance capital was $170 million. The 2013 expansion capital program is projected at $1.05 billion to $1.20 billion.
How strong is PAA's balance sheet and liquidity?
At December 31, 2012, consolidated debt was about $7.4 billion, including $6.3 billion of long-term debt, and partners' capital was $7.146 billion. Available liquidity was about $2.4 billion across the PAA revolver, the hedged inventory facility and PNG's credit facility. The filing states the company maintains a targeted profile consistent with investment-grade ratings, and Standard & Poor's and Moody's rated its senior unsecured debt investment grade.
What are the main risks to PAA's cash distributions?
Risks cited include crude oil price structure and volatility, a decline in throughput volumes, potential rate challenges on FERC and Canadian regulated pipelines, environmental releases and integrity spending, the impact of Dodd-Frank derivative rules on margin requirements, and rising debt costs or credit downgrades. Distributions are not guaranteed and depend on available cash, which is reduced by reserves set by the general partner.
What is the outlook for PAA's Supply and Logistics segment?
The filing says 2012 benefited from wide location and quality differentials and high volatility, and management does not expect those conditions to persist at 2012 levels. It expects crude oil market volatility to continue and notes that new infrastructure may reduce unit margins over time. Supply and Logistics segment profit rose to $753 million in 2012 from $647 million in 2011.
06—Continue