Plains All American Pipeline, L.P. (NYSE: PAA),
announced today that its wholly owned subsidiary Plains Midstream Canada
ULC has entered into a definitive agreement with BP to acquire its
Canadian natural gas liquids (NGL) and liquefied petroleum gas (LPG)
business for total consideration of approximately $1.67 billion. The
acquisition is subject to regulatory approval and customary closing
conditions and is anticipated to close late in the first quarter or
early in the second quarter of 2012. The Partnership will be holding a
conference call to provide additional information on this acquisition
and to provide an update on its other acquisition activities today at
10:00 a.m. Eastern – details below.
"BP's Canadian NGL business is an asset-rich platform that significantly
expands our LPG asset footprint, providing a supply-based complement to
our existing demand-focused business and making PAA one of the largest
LPG service providers in North America," said Greg L. Armstrong,
Chairman and CEO of PAA. "We expect to be able to generate meaningful
operating and commercial synergies by more fully connecting, integrating
and utilizing these assets together with our existing North American LPG
assets and our Canadian crude oil assets and activities."
Armstrong continued, "Based on the accretive nature of this transaction
and the four other acquisitions announced today, we are increasing our
2012 distribution growth target to 8% - 9% over our current annualized
distribution of $3.98 per common unit." Armstrong noted that as a result
of PAA's existing credit lines, and receipt of bank commitments for a
new $1.0 - $1.2 billion, 364-day liquidity facility, the Partnership is
well positioned to complete the transactions while maintaining a strong
balance sheet and liquidity position. The Partnership completed a $385
million equity offering in early November and is forecasting to retain
approximately $300 million of cash flow in excess of distributions
during 2011.
In connection with the transaction, the Partnership's general partner
owners have agreed to reduce their incentive distribution rights by $15
million per year for each of the first two years following the
acquisition and $10 million per year thereafter. Armstrong noted that
this is the fourth time PAA's general partner owners have agreed to
unilaterally modify their incentive distribution rights, and the first
time such action has included a permanent IDR reduction.
The assets to be acquired include ownership interests of varying levels
in and contractual rights relating to approximately 2,600 miles of
pipelines, approximately 20 million barrels of LPG storage capacity,
seven fractionation plants with approximately 232,000 barrels per day of
capacity, multiple straddle plants and two field gas processing plants
with an aggregate capacity of approximately 8 billion cubic feet per
day, as well as approximately 10 million barrels of long-term and
seasonal NGL inventory as of October 1, 2011. The business also includes
various supply contracts at other field gas processing plants, shipping
arrangements on third-party NGL pipelines and long-term leases on 720
rail cars used to move product among various locations. Collectively,
the BP assets and activities provide access to approximately 140,000 to
150,000 barrels per day of NGL supply that are transported through a
fully integrated network to fractionation facilities and markets in
Western and Eastern Canada and the Great Lakes region of the United
States.
Barclays Capital served as financial advisor and Bennett Jones LLP
served as legal counsel to PAA in connection with the transaction.
Conference Call Details
Plains All American Pipeline will be hosting a conference call today,
December 1, 2011 at 10:00 a.m. Eastern to provide additional details
regarding the transaction, PAA's other acquisition activities and the
Partnership's outlook for the future. To participate in the call, please
dial 1-800-288-8974. International callers may dial 612-332-0335; no
password or reservation number is required. The call and accompanying
slides will be webcast live. The webcast may be accessed at the
following link: http://www.videonewswire.com/event.asp?id=84011.
A copy of the slide presentation to be used in conjunction with the call
will be posted prior to the call under the "Conference Call Summaries"
title in the "Conference Calls" tab of the "Investor Relations" page of
the Partnership's website: www.paalp.com.
A telephonic replay will be available beginning December 1, 2011, at
approximately 12:00 p.m. Eastern and will continue until January 1,
2012, at 11:59 p.m. Eastern. To access the replay, dial toll free
800-475-6701. International callers should dial 320-365-3844. The replay
access code is 227034. An audio replay in MP3 format will also be
available after the call under the "Conference Calls" tab of the
"Investor Relations" section of the Partnership's website.
PAA owns a network of approximately 16,000 miles of liquids pipelines,
approximately 90 million barrels of liquids storage capacity and handles
more than 3 million barrels of physical product on a daily basis.
Plains All American Pipeline, L.P. is a publicly traded master limited
partnership engaged in the transportation, storage, terminalling and
marketing of crude oil, refined products and liquefied petroleum gas and
other natural gas related petroleum products. Through its general
partner interest and majority equity ownership position in PAA Natural
Gas Storage, L.P. (NYSE: PNG), PAA is also engaged in the development
and operation of natural gas storage facilities. PAA is headquartered in
Houston, Texas.
Forward Looking Statements
Except for the historical information contained herein, the matters
discussed in this release are forward-looking statements that involve
certain risks and uncertainties that could cause actual results to
differ materially from results anticipated in the forward-looking
statements. These risks and uncertainties include, among other things,
our ability to consummate the transaction; the successful integration
and future performance of acquired assets or businesses and the risks
associated with operating in lines of business that are distinct and
separate from our historical operations; failure to implement or
capitalize on planned internal growth projects; maintenance of our
credit rating and ability to receive open credit from our suppliers and
trade counterparties; continued creditworthiness of, and performance by,
our counterparties, including financial institutions and trading
companies with which we do business; the effectiveness of our risk
management activities; 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; abrupt or severe declines or
interruptions in outer continental shelf production located offshore
California and transported on our pipeline systems; shortages or cost
increases of supplies, materials or labor; the availability of adequate
third-party production volumes for transportation and marketing in the
areas in which we operate and other factors that could cause declines in
volumes shipped on our pipelines by us and third-party shippers, such as
declines in production from existing oil and gas reserves or failure to
develop additional oil and gas reserves; fluctuations in refinery
capacity in areas supplied by our mainlines and other factors affecting
demand for various grades of crude oil, refined products and natural gas
and resulting changes in pricing conditions or transportation throughput
requirements; the availability of, and our ability to consummate,
acquisition or combination opportunities; our ability to obtain debt or
equity financing on satisfactory terms to fund additional acquisitions,
expansion projects, working capital requirements and the repayment of
indebtedness; the impact of current and future laws, rulings,
governmental regulations, accounting standards and statements and
related interpretations; the effects of competition; interruptions in
service on third-party pipelines; increased costs or lack of
availability of insurance; fluctuations in the debt and equity markets,
including the price of our units at the time of vesting under our
long-term incentive plans; the currency exchange rate of the Canadian
dollar; weather interference with business operations or project
construction; risks related to the development and operation of natural
gas storage facilities; factors affecting demand for natural gas and
natural gas storage services and rates; future developments and
circumstances at the time distributions are declared; general economic,
market or business conditions and the amplification of other risks
caused by volatile financial markets, capital constraints and pervasive
liquidity concerns; and other factors and uncertainties inherent in the
transportation, storage, terminalling and marketing of crude oil,
refined products and liquefied petroleum gas and other natural gas
related petroleum products discussed in the Partnership's filings with
the Securities and Exchange Commission.
Plains All American Pipeline, L.P.
Roy I. Lamoreaux,713-646-4222
– 800-564-3036
Director, Investor Relations
or
Al
Swanson, 800-564-3036
Executive Vice President, CFO