Plains All American Pipeline(PAA) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Condensed Consolidated Financial Statements The unaudited interim financial statements highlight the reclassification of the Canadian NGL business as discontinued operations Condensed Consolidated Balance Sheets Balance Sheet Highlights (in millions) | Balance Sheet Highlights (in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $4,688 | $4,802 | | Property and equipment, net | $14,177 | $13,446 | | Total assets | $27,155 | $26,562 | | Total current liabilities | $4,679 | $4,950 | | Senior notes, net | $8,133 | $7,141 | | Total liabilities | $14,206 | $13,466 | | Total partners' capital | $12,949 | $13,096 | Condensed Consolidated Statements of Operations Income Statement Highlights (in millions, except per unit data) | Income Statement Highlights (in millions, except per unit data) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $10,642 | $12,757 | $22,119 | $24,396 | | Operating Income | $239 | $332 | $594 | $688 | | Income from Continuing Operations | $227 | $298 | $607 | $639 | | Income from Discontinued Operations | $70 | $32 | $206 | $42 | | Net Income Attributable to PAA | $210 | $250 | $653 | $515 | | Basic and diluted net income per common unit | $0.21 | $0.26 | $0.70 | $0.55 | Condensed Consolidated Statements of Cash Flows Cash Flow Highlights (in millions) | Cash Flow Highlights (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,333 | $1,072 | | Net cash used in investing activities | ($1,423) | ($418) | | Net cash provided by/(used in) financing activities | $182 | ($545) | | Net increase in cash and cash equivalents | $111 | $103 | Notes to the Condensed Consolidated Financial Statements Detailed disclosures cover the pending CAD$5.15 billion sale of the Canadian NGL business, recent acquisitions, and increased debt levels - On June 17, 2025, PAA entered into a definitive agreement to sell its Canadian NGL Business to Keyera Corp for approximately CAD$5.15 billion (about $3.75 billion)[31][32] - Income from discontinued operations for the six months ended June 30, 2025, was $206 million, a significant increase from $42 million in the same period of 2024[40] - Total debt increased to $8.68 billion from $7.62 billion at year-end 2024, primarily due to a new $1.0 billion senior notes offering in January 2025[57][58] - On January 31, 2025, the company repurchased approximately 12.7 million of its Series A preferred units for about $333 million[62] - The company entered into a forward currency instrument to hedge the proceeds from the Canadian NGL sale, recognizing a $49 million loss in Q2 2025[80] - The estimated aggregate total cost for the May 2015 Line 901 incident is approximately $870 million[100] - During the first half of 2025, the company completed several acquisitions, including Ironwood Midstream for approximately $481 million and Medallion Midstream for $163 million[117][121] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, the strategic sale of the Canadian NGL business, and the company's strong liquidity position Results of Operations - Net income attributable to PAA for the six months ended June 30, 2025, was $653 million, compared to $515 million for the same period in 2024[129][131] - The decrease in product sales revenues for H1 2025 compared to H1 2024 was primarily due to lower commodity prices, partially offset by higher crude oil sales volumes[134] - Crude Oil Segment Adjusted EBITDA for H1 2025 was stable compared to H1 2024, as the benefit from higher tariff volumes and acquisitions was largely offset by fewer market-based opportunities and higher operating expenses[160] Non-GAAP Performance (in millions) | Non-GAAP Performance (in millions) | H1 2025 | H1 2024 | Variance % | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $1,693 | $1,654 | 2% | | Adjusted EBITDA attributable to PAA | $1,426 | $1,391 | 3% | | Implied DCF | $1,043 | $1,001 | 4% | Liquidity and Capital Resources - As of June 30, 2025, the company had approximately $2.7 billion of available liquidity, including cash and available capacity under its credit facilities[172] - Net cash from operating activities increased to $1.33 billion in H1 2025 from $1.07 billion in H1 2024[175] - Projected capital expenditures for the full year 2025 include approximately $580 million for investment capital and $250 million for maintenance capital[180] - In January 2025, the company issued $1.0 billion of 5.95% senior notes due 2035, using the proceeds to fund acquisitions, repurchase preferred units, and repay other borrowings[188] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages commodity, interest rate, and currency risks using derivatives, with significant exposure to USD/CAD exchange rate fluctuations - The company uses derivative instruments to manage exposure to commodity price risk (crude oil, power), interest rate risk, and currency exchange rate risk[206] - A 10% change in crude oil prices would result in a $6-7 million change in the fair value of the company's crude oil derivatives[208] - A 10% change in the USD-to-CAD exchange rate would result in a $334 million change in the fair value of the company's foreign currency derivatives, highlighting the significance of the hedge on the pending Canadian NGL business sale[211] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[213] - There were no material changes in internal control over financial reporting during the second quarter of 2025[214] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference the detailed discussion of legal matters from Note 10 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 10 to the Condensed Consolidated Financial Statements[217] Item 1A. Risk Factors This section refers to the comprehensive risk factor discussion in the 2024 Annual Report, noting no material changes - A full discussion of risk factors is available in Item 1A of the company's 2024 Annual Report on Form 10-K[218] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased approximately $8 million of its common units under its existing equity repurchase program during the quarter Common Unit Repurchases | Period | Total Units Purchased | Average Price Paid | Value of Remaining Authorization | | :--- | :--- | :--- | :--- | | April 1-30, 2025 | 476,695 | $15.74 | $190,043,261 | Other Items (3, 4, 5) The report confirms no defaults on senior securities, no mine safety disclosures, and no new insider trading arrangements - There were no defaults on senior securities, no mine safety disclosures to report, and no new Rule 10b5-1 trading arrangements for directors or officers during the quarter ended June 30, 2025[221][222][223] Item 6. Exhibits This section lists filed exhibits, including the Share Purchase Agreement for the sale of the Canadian NGL business - A key exhibit filed with this report is the Share Purchase Agreement dated June 17, 2025, for the sale of the Canadian NGL business to Keyera Corp[224]