01—Abstract
Summary
Summary of the 10-K filed March 1, 2022. Cited figures are marked; the original filing is the authoritative source.
Plains All American Pipeline, L.P.
(PAA) reported net income attributable to PAA of $593 milliona for 2021, compared with a net loss of $2.590 billion in 2020 and net income of $2.171 billion in 2019. The 2020 loss was driven by a $2.515 billion goodwill impairment and other non-cash impairments. Product sales revenues rose to $40.88 billion in 2021 from $22.06 billion, reflecting higher prices and volumes, while Adjusted EBITDA declined to $2.29 billion from $2.56 billion.
The company attributed lower Segment Adjusted EBITDA to less favorable crude oil market conditions, partially offset by lower field operating costs. During 2021 the Partnership formed the Plains Oryx Permian Basin LLC joint venture with Oryx Midstream, in which PAA holds 65%, and completed asset sales totaling more than $4.5 billionb since 2016, including the Pine Prairie and Southern Pines natural gas storage facilities for net proceeds of about $850 million. Net cash provided by operating activities was $1.996 billion and Free Cash Flow after Distributions was $1.654 billion.
The company reduced debt, repaid $712 millionc of net commercial paper and credit facility borrowings, and repurchased $178 million of common units. Total face value of consolidated debt was about $9.3 billion at December 31, 2021, and liquidity exceeded $3 billion. The company states it targets an investment grade credit profile and a leverage multiple averaging 3.75x to 4.25x.
The filing also highlights ongoing exposure to Line 901 incident costs, which the company estimates at approximately $495 milliond in aggregate, and to risks from crude oil price volatility, competition and overbuild, and climate-related regulation. The 2022 capital plan calls for about $330 million of investment capital and $220 million of maintenance capital.
02—Key points
Key Highlights
- Net income attributable to PAA was $593 million in 2021, versus a net loss of $2.590 billion in 2020 that included a $2.515 billion goodwill impairment.
- Adjusted EBITDA was $2.29 billion in 2021, down from $2.56 billion in 2020; management cited less favorable crude oil market conditions for merchant activities.
- Product sales revenues increased to $40.88 billion from $22.06 billion, driven by higher prices and volumes.
- Free Cash Flow after Distributions was $1.654 billion in 2021, compared with negative $430 million in 2020.
- The Permian JV formation with Oryx Midstream closed in October 2021; PAA owns 65% and consolidates the entity.
- Consolidated debt face value was about $9.3 billion at year-end 2021, with over $3 billion of liquidity; the company repaid $712 million of net short-term borrowings.
- Estimated aggregate Line 901 incident costs are approximately $495 million, with $103 million of remaining undiscounted gross liability at year-end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Plains All American Pipeline kept $0.02.
- Revenue$42.08B100.0%
- Cost of revenue−$38.50B91.5%
- Gross profit$3.57B8.5%
- Operating costs−$2.72B6.5%
- Operating income$851.0M2.0%
- Interest, other & tax−$203.0M0.5%
- Net income$648.0M1.5%
Where FY2021 revenue went
$42.08B- Cost of revenue: $38.50B, 92% of revenue
- Net income: $648.0M, 1.5% of revenue
- Operating costs: $2.72B, 6.5% of revenue
Kept 1.5% as net incomeNet income $648.0M · 1.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed March 1, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $42.08B$23.29B | +80.7% |
| Cost of Revenue | $38.50B$20.43B | +88.5% |
| Gross Profit | $3.57B$2.86B | +25.0% |
| Operating Expenses | $41.23B$25.66B | +60.6% |
| Operating Income | $851.00M-$2.38B | +135.8% |
| Interest Expense | $425.00M$436.00M | −2.5% |
| Net Income | $648.00M-$2.59B | +125.0% |
05—Questions
Frequently Asked Questions
Why did PAA swing from a large net loss in 2020 to net income in 2021?
The 2020 net loss of $2.590 billion attributable to PAA was primarily driven by macroeconomic and industry challenges that led to a $2.515 billion goodwill impairment and about $3.4 billion of total impairment charges. In 2021 the company recorded net income of $593 million, although it still absorbed a net loss on asset sales and impairments of $592 million, mainly from the write-down of natural gas storage facilities held for sale.
How did the Permian JV affect PAA's financial position?
In October 2021 PAA merged its Permian Basin assets with Oryx Midstream's into the Permian JV, in a cashless, debt-free transaction. PAA owns 65% and consolidates the entity, with Oryx's 35% recorded as a noncontrolling interest. Noncontrolling interests on the balance sheet rose to $2.838 billion from $145 million, and the transaction was valued at $3.256 billion for purchase accounting.
What is PAA's capital allocation and distribution picture?
PAA paid common unit distributions of $0.18 per quarter in 2021, totaling $0.72 per unit, and $517 million in common distributions for the year. Preferred distributions were $149 million to Series A and $49 million to Series B holders. The Partnership also repurchased $178 million of common units under a $500 million program, leaving $272 million of remaining capacity at year-end. The company expects to fund its 2022 investment and maintenance capital of about $330 million and $220 million, respectively, primarily with retained cash flow.
What are the main risks flagged in the filing?
The filing highlights exposure to crude oil and NGL price and volume volatility, competition and capacity overbuild in areas such as the Permian Basin that could pressure rates and contract renewals, and dependence on shipper volumes. It also cites credit-rating risk, climate-related regulation and litigation, and cost exposure from the Line 901 incident, for which the company estimates aggregate costs of about $495 million and notes that actual costs could be materially higher.
06—Continue