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Plains All American Pipeline, L.P. and Plains GP Holdings ReportFirst-Quarter 2016 Results

HOUSTON, May 04, 2016 (BUSINESS WIRE) -- Plains All American Pipeline, L.P. (NYSE: PAA) and Plains GP Holdings (NYSE: PAGP) today reported first-quarter 2016 results.

Plains All American Pipeline, L.P.

Summary Financial Information [ (1) ] (unaudited)

(in millions, except per unit data)
Three Months Ended
March 31,
2016 2015 %

Change

Net income attributable to PAA

$ 202 $ 283 (29 )%
Diluted net income per common unit $ 0.07 $ 0.35 (80 )%
Diluted weighted average common units outstanding 399 385 4 %
EBITDA $ 448 $ 509 (12 )%
Three Months Ended
March 31,
2016 2015 %

Change

Adjusted net income attributable to PAA $ 355 $ 369 (4 )%
Diluted adjusted net income per common unit $ 0.45 $ 0.57 (21 )%
Adjusted EBITDA $ 621 $ 622 - %
Distribution per common unit declared for the period $ 0.700 $ 0.685 2.2 %

[(1)]

PAA’s reported results include the impact of items that affect comparability between reporting periods. The impact of certain of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding certain selected items that PAA believes impact comparability of financial results between reporting periods, as well as for information regarding non-GAAP financial measures (such as adjusted EBITDA) and their reconciliation to the most directly comparable measures as reported in accordance with GAAP.

“PAA reported first-quarter adjusted EBITDA of $621 million, which was approximately $51 million or 9% above the midpoint of our first-quarter guidance,” said Greg Armstrong, Chairman and CEO of Plains All American. “PAA’s results reflect a combination of performance above expectations, the inclusion of deficiency amounts for ship or pay obligations that have been billed or collected, and some timing related items expected to reverse later in the year.”

Armstrong added, “We are cautious over the near term as recent drilling and completion activity is meaningfully below levels of just a few months ago and what we anticipated in our initial 2016 guidance. These lower activity levels are starting to impact U.S. oil production and, accordingly, we are revising our full-year 2016 midpoint guidance for adjusted EBITDA downward by approximately 4% to $2.175 billion.

Importantly, PAA ended the first quarter of 2016 with $3.8 billion of committed liquidity and an improved balance sheet as a result of the $1.6 billion preferred equity offering completed in January. We believe PAA is well positioned to manage through near-term challenges and to prosper over the intermediate to long term as the industry recovers.”

The following table summarizes selected PAA financial information by segment for the first quarter of 2016:

Summary of Selected Financial Data by Segment [ (1) ] (unaudited)

(in millions)
Three Months Ended Three Months Ended
March 31, 2016 March 31, 2015
Transportation Facilities Supply and

Logistics

Transportation Facilities Supply and

Logistics

Reported segment profit $ 247 $ 159 $ 37 $ 241 $ 142 $ 130
Selected items impacting comparability of segment profit [ (2)] 22 8 147 5 2 101
Adjusted segment profit $ 269 $ 167 $ 184 $ 246 $ 144 $ 231
Percentage change in adjusted segment profit versus 2015 period 9 % 16 % (20 )%

[(1)]

PAA’s reported results include the impact of items that affect comparability between reporting periods. The impact of certain of these items is excluded from adjusted results. See the section of this release entitled "Non-GAAP Financial Measures and Selected Items Impacting Comparability" and the tables attached hereto for information regarding certain selected items that PAA believes impact comparability of financial results between reporting periods.

[(2)]

Certain of our non-GAAP financial measures may not be impacted by each of the selected items impacting comparability.

First-quarter 2016 Transportation adjusted segment profit increased 9% over comparable 2015 results. This increase was primarily driven by higher crude oil pipeline volumes associated with our Cactus pipeline, which was placed into service in April 2015, and the expansion of our pipeline system in the Delaware Basin. Such increases were partially offset by lower pipeline loss allowance revenues.

First-quarter 2016 Facilities adjusted segment profit increased by 16% over comparable 2015 results. This increase was primarily due to an increase in capacity and higher utilization of our crude oil storage facilities and lower operating expenses.

First-quarter 2016 Supply and Logistics adjusted segment profit decreased by 20% as compared to 2015 results. This decrease was primarily driven by lower volumes and margins associated with our U.S. crude oil lease gathering due to crude oil production declines in certain basins and the resulting increase in competitive pressures for lease gathered barrels as well as lower margins from our NGL sales activities. Such decreases were partially offset by the benefit of contango storage opportunities.

Plains GP Holdings

PAGP’s sole assets are its ownership interest in PAA’s general partner and incentive distribution rights. As the control entity of PAA, PAGP consolidates PAA’s results into its financial statements, which is reflected in the condensed consolidating balance sheet and income statement tables included at the end of this release. Information regarding PAGP’s distributions is reflected below:

Q1 2016 Q4 2015 Q1 2015
Distribution per Class A share declared for the period $ 0.231 $ 0.231 $ 0.222
Q1 2016 distribution percentage growth from prior periods - % 4.1 %

Conference Call

PAA and PAGP will hold a conference call on May 5, 2016 (see details below). Prior to this conference call, PAA will furnish a current report on Form 8-K, which will include material in this news release as well as PAA’s financial and operational guidance for the second quarter and full year of 2016. A copy of the Form 8-K will be available at www.plainsallamerican.com, where PAA and PAGP routinely post important information.

The PAA and PAGP conference call will be held at 11:00 a.m. ET on Thursday, May 5, 2016 to discuss the following items:

1. PAA's first-quarter 2016 performance;

2. The status of major expansion projects;

3. Capitalization and liquidity;

4. Financial and operating guidance for the second quarter and full year of 2016; and

5. PAA and PAGP’s outlook for the future.

Conference Call Access Instructions

To access the Internet webcast of the conference call, please go to www.plainsallamerican.com, under the “Investor Relations” section of the website (navigate to:Investor Relations / either “PAA” or “PAGP” / News & Events / Quarterly Earnings). Following the live webcast, an audio replay in MP3 format will be available on the website within two hours after the end of the call and will be accessible for a period of 365 days.

Non-GAAP Financial Measures and Selected Items Impacting Comparability

To supplement our financial information presented in accordance with GAAP, management uses additional measures that are known as “non-GAAP financial measures” (such as adjusted EBITDA and implied distributable cash flow (“DCF”)) in its evaluation of past performance and prospects for the future. Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) the mark-to-market of derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are related to investing activities (such as the purchase of linefill) and inventory valuation adjustments, as applicable, (iii) long–term inventory costing adjustments, (iv) items that are not indicative of our core operating results and business outlook and/or (v) other items that we believe should be excluded in understanding our core operating performance. These measures may further be adjusted to include amounts related to deficiencies associated with minimum volume commitments whereby we have billed the counterparties for their deficiency obligation and such amounts are recognized as deferred revenue in “Accounts payable and accrued liabilities” in our Condensed Consolidated Financial Statements. Such amounts are presented net of applicable amounts subsequently recognized into revenue. We have defined all such items as “Selected Items Impacting Comparability.” Due to the nature of the selected items, certain selected items impacting comparability may impact certain non-GAAP financial measures, referred to as adjusted results, but not impact other non-GAAP financial measures. We consider an understanding of these selected items impacting comparability to be material to the evaluation of our operating results and prospects.

Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

Adjusted EBITDA and other non-GAAP financial measures are reconciled to the most comparable measures as reported in accordance with GAAP for the periods presented in the tables attached to this release, and should be viewed in addition to, and not in lieu of, our Condensed Consolidated Financial Statements and notes thereto. In addition, PAA maintains on its website (www.plainsallamerican.com) a reconciliation of adjusted EBITDA and certain commonly used non-GAAP financial information to the most comparable GAAP measures. To access the information, investors should click on “PAA” under the "Investor Relations" tab on the home page, select the "Financial Information" tab and navigate to the “Non-GAAP Reconciliations” link.

Forward Looking Statements

Except for the historical information contained herein, the matters discussed in this release consist of forward-looking statements that involve certain risks and uncertainties that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. These risks and uncertainties include, among other things, declines in the volume of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our assets, whether due to declines in production from existing oil and gas reserves, failure to develop or slowdown in the development of additional oil and gas reserves, whether from reduced cash flow to fund drilling or the inability to access capital, or other factors; the effects of competition; failure to implement or capitalize, or delays in implementing or capitalizing, on expansion projects; unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof); environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of...


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