Plains GP (PAGP) - 2025 Q4 - Annual Report

Financial Structure and Debt Management - As of December 31, 2025, PAA's publicly-traded senior notes comprised approximately 85% of its long-term debt[37] - PAA targets a leverage multiple averaging between 3.25x to 3.75x, with an average long-term debt-to-total capitalization ratio of approximately 50% or less[38] - The company has completed acquisitions totaling over $5.7 billion from 2016 to December 31, 2025, with approximately $2.8 billion completed in 2025[118] - Asset sales and partial interest sales to strategic joint venture partners have exceeded $5.0 billion, with a pending divestiture of the Canadian NGL Business expected to close by the end of Q1 2026[118] Crude Oil Segment Operations - The Crude Oil segment includes 20,405 miles of active crude oil transportation pipelines and gathering systems, with an average daily volume of 9,680 barrels per day for the year ended December 31, 2025[52] - The Crude Oil segment has a commercial crude oil storage capacity of 76 million barrels at terminalling and storage locations[51] - PAA operates over 5,600 miles of gathering pipelines in the Permian Basin, with a capacity of approximately 3.9 million barrels per day[57] - The intra-basin pipeline system in the Permian Basin has a capacity of approximately 3.1 million barrels per day, connecting gathering pipelines to mainline pipelines[58] - PAA's long-haul pipelines represent over 2.8 million barrels per day of currently operational takeaway capacity out of the Permian Basin[59] Transportation and Storage Capacity - The company has a condensate processing facility with an aggregate processing capacity of 120,000 barrels per day[51] - The Eagle Ford Pipeline has a total capacity of approximately 660,000 barrels per day, connecting production from the Permian Basin and Eagle Ford area to Corpus Christi, Texas refiners and terminals[67] - The Eagle Ford Corpus Christi terminal has a commercial storage capacity of approximately 1 million barrels, while the Cactus III terminal provides over 3 million barrels of commercial storage capacity[68] - The Cactus II Pipeline has a capacity of approximately 670,000 barrels per day, enhancing access to the Corpus Christi market[69] - The Cushing terminal has a commercial storage capacity of 27 million barrels and is connected to long-haul pipelines from the Permian Basin and Rocky Mountain regions[74] - The Capline Pipeline, in which the company holds a 54% interest, extends from Patoka, Illinois to various terminals in St. James, Louisiana, supported by long-term shipper commitments[76] - The Diamond Pipeline has a total capacity of approximately 200,000 barrels per day, connecting the Cushing Terminal to Valero's refinery in Memphis, Tennessee[77] NGL Business Operations - The Canadian NGL Business includes four natural gas processing plants and six fractionation plants with an aggregate usable capacity of approximately 180,000 barrels per day[92] - The NGL segment revenues are primarily derived from providing storage and/or terminalling services to third-party customers and the transport, storage, and sale of specification NGL products[87] - NGL storage facilities have a total capacity of approximately 24 million barrels[96] - The Empress facility processes up to 5.7 Bcf of natural gas per day, producing approximately 65,000 to 100,000 barrels per day of ethane and 40,000 to 60,000 barrels per day of NGL mix[99] - The Fort Saskatchewan facility has an inlet design capacity of 112,000 barrels per day, with 57,000 barrels per day of full C3+ fractionation capability[101] - The Sarnia fractionator can process an average of approximately 100,000 barrels per day of NGL products[102] - The Co-Ed NGL pipeline system has a transportation capacity of approximately 70,000 barrels per day[100] Revenue and Market Exposure - ExxonMobil Corporation accounted for approximately 31% of revenues for the years ended December 31, 2025, 2024, and 27% for 2023[110] - The prompt month NYMEX light, sweet futures contract price ranged from a low of approximately $55 per barrel to a high of approximately $80 per barrel in 2025[103] - The company is engaged in over 25 joint venture and UJI arrangements across multiple North American basins[116] Compliance and Regulatory Environment - The company is subject to extensive legal requirements and regulations that could result in substantial fines and penalties, impacting profitability[121] - Canada requires large emitters of GHG to report emissions, with a threshold lowered from 50 kt/y to 10 kt/y, affecting four facilities[142] - The U.S. Clean Water Act imposes strict controls on pollutant discharge, with potential penalties for non-compliance[143] - The U.S. Oil Pollution Act subjects facility owners to significant liability for oil spill consequences, impacting operational costs[144] - The U.S. Army Corps of Engineers has authorized pipeline construction under Nationwide Permit 12, which may face legal challenges[145] - The Corps proposed to renew its nationwide permits program in June 2025, with potential for increased costs and project delays due to legal challenges[146] - Uncertainty exists regarding the federal jurisdiction under the Clean Water Act, which could delay project permitting and increase compliance costs[147] - The Endangered Species Act may restrict development activities affecting endangered species, leading to increased project costs[148] - The Energy Policy Act of 2005 allows FERC to impose civil penalties for violations, with fines up to approximately $17,000 per day[155] - The indexing methodology for pipeline rates may hinder cost recovery, affecting cash flows due to regulatory challenges[154] - Compliance with cybersecurity directives from the Transportation Security Administration may significantly impact operations[162] Employee and Workforce Management - As of December 31, 2025, GP LLC and PMC ULC employed approximately 3,900 people in North America, with about 2,800 in the U.S. and 1,100 in Canada[169] - Approximately 70% of the workforce, or about 2,750 employees, are field employees, including around 550 in the trucking division[169] - The company prioritizes employee health and safety, investing in training, equipment, and wellness programs, including free mental and behavioral support[170] - The compensation and benefits programs include competitive salaries, health insurance, retirement savings plans, and education reimbursement[172] - The company has a comprehensive training program covering field operations, health and safety, regulatory compliance, and leadership skills[171] - Approximately 200 employees in Canada are covered by collective bargaining agreements, which are open for renegotiation from 2026 to 2028[169] Taxation and Financial Reporting - Distributions on Class A shares will be treated as dividends for U.S. federal income tax purposes to the extent paid from current or accumulated earnings and profits[186] - Non-U.S. holders may be subject to a 30% U.S. withholding tax on distributions unless a lower rate is provided by an applicable income tax treaty[186] - Future exchanges of AAP units and Class B shares for Class A shares will result in additional basis adjustments, potentially leading to further tax deductions[179] - The company has made elections under Section 754 of the Code, resulting in basis adjustments that may offset taxable income for an extended period[179] - The company expects to remain a U.S. Real Property Holding Corporation (USRPHC) for U.S. federal income tax purposes, impacting non-U.S. holders of Class A shares[192] - Non-U.S. holders may be subject to a 30% branch profits tax on gains connected to U.S. trade or business activities[196] - Backup withholding will not apply to distributions if non-U.S. holders certify their non-U.S. status using IRS Form W-8BEN or W-8BEN-E[194] Accounting and Financial Estimates - A hypothetical 5% variance in estimates for accruals and contingent liabilities could impact earnings by approximately $9 million[481] - The company did not record any charges related to inventory valuation adjustments for the years ended December 31, 2025, 2024, and 2023[489] - Changes in assumptions regarding inventory liquidation timing can materially impact net realizable value[489] - The company assesses property and equipment for impairment based on subjective assumptions regarding future cash flows[485] - A hypothetical 5% variance in retirement obligation estimates could impact earnings by approximately $6 million[483] - The company provides annual reports and other financial information on its website, which is not incorporated by reference into its filings with the SEC[199] - Recent accounting pronouncements may affect the company's consolidated financial statements[492]