Plains All American Pipeline, L.P. (NYSE:PAA),
today announced that it has completed two acquisitions and entered into
definitive agreements for two additional acquisitions since the
beginning of the 2011 fourth quarter. Aggregate consideration for these
four acquisitions is approximately $620 million.
The two completed transactions include the acquisitions of a South Texas
crude oil and condensate gathering system and a Canadian trucking
operation. The Partnership has signed definitive agreements with Western
Refining ("Western") to purchase a multi-product storage facility in
Yorktown, Va. and a pipeline in the Permian Basin. The two transactions
with Western are subject to receipt of regulatory approvals and
customary closing conditions and are expected to close by December 31,
2011.
"These four transactions are bolt-on acquisitions and provide an
excellent complement to our existing infrastructure," said Greg L.
Armstrong, Chairman & CEO of Plains All American. "We expect to generate
meaningful synergies as we interconnect and integrate these assets into
our operations. Including our planned expansion activities, we currently
expect to invest an additional $100 million to $150 million in these
assets over the next 24 months."
Armstrong also provided comments with respect to PAA's adjusted earnings
before interest, taxes, depreciation and amortization ("EBITDA") for the
fourth quarter of 2011. Armstrong stated that although these
acquisitions are not expected to have any meaningful impact on its
fourth-quarter results, PAA expects Adjusted EBITDA for the fourth
quarter to exceed the midpoint of its quarterly guidance by
approximately 10% to 15%. This expected performance is the result of
strong fundamentals, generally favorable market conditions and solid
execution in all three business segments. This updated outlook does not
incorporate potential adjustments for equity compensation expense due to
variances in PAA's year-end unit price or its probability assessment
with respect to future distribution levels. In a Form 8-K furnished on
November 2, 2011, the Partnership provided a guidance range for adjusted
EBITDA for the fourth quarter of 2011 of $395 million to $425 million,
with a midpoint of $410 million.
Acquisition Descriptions
The Partnership recently closed the acquisition of 100 percent of the
member interests in Velocity South Texas Gathering, LLC ("Velocity")
from Velocity Midstream Partners, LLC. The assets acquired include
approximately 120 miles of crude oil and condensate gathering and
transportation pipelines currently in advanced stages of construction in
the Eagle Ford area of South Texas.
Upon completion, this gathering system will have a throughput capacity
of approximately 150,000 barrels per day and an aggregate of 185,000
barrels of condensate storage capacity located at Catarina and
Gardendale. The system, which extends through portions of Dimmit, Webb
and La Salle counties, is underpinned by long-term acreage dedications
or volume commitments from several large producers. The pipeline system
has the ability to be expanded up to 185,000 barrels per day and both
terminal locations have room for future expansion.
The Gardendale storage hub will have access to PAA's Eagle Ford pipeline
as well as other transportation alternatives, including third party
pipelines, truck and rail. Over the next 18 to 24 months, PAA expects to
complete current construction, extend the system to access additional
condensate barrels and other crude oil-oriented portions of the Eagle
Ford resource play, and increase terminal capacity at Gardendale from
150,000 barrels to 250,000 barrels.
Simmons & Company International served as financial advisor to PAA in
its acquisition of the member interests in Velocity and Evercore
Partners served as the financial advisor to Velocity Midstream Partners,
LLC.
In early October, the Partnership also closed the acquisition of a small
trucking operation in Canada.
The first transaction with Western includes a 6.6 million barrel crude
oil, refined products and LPG storage and distribution terminal located
on an idled refinery site in Yorktown, Va. Over the next 18 to 24
months, PAA plans to disassemble and sell surplus equipment located at
the acquired site and enhance the connectivity and performance of the
Yorktown terminal. The facility will have access to a number of
transportation alternatives, including the Colonial Pipeline, deep-water
port access on the York River capable of receiving and loading ships and
barges, and access to rail and truck loading and unloading facilities.
The Yorktown facility will be capable of terminalling and storing crude
oil, refined products, propane, butane, ethanol and other bio-diesel
fuels.
The second transaction with Western includes an 82-mile, 16-inch
pipeline segment and associated connections and tankage in New Mexico.
The pipeline will provide up to 100,000 barrels per day of crude oil
transportation capacity from southeastern New Mexico (an area with
increased drilling activity) to the Jal, New Mexico station, the
origination of PAA's Basin Pipeline system.
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.
Non-GAAP Financial Measures
EBITDA is a non-GAAP financial measure. Net income and cash flows from
operations are the most directly comparable GAAP measures to EBITDA.
Adjusted EBITDA excludes selected items impacting comparability. The
Partnership's Form 8-K furnished on November 2, 2011 presents a
calculation of Adjusted EBITDA and a reconciliation of EBITDA to net
income. A copy of the November 2nd Form 8-K is available on
the Partnership's website (www.paalp.com)
under "Investor Relations – Operating and Financial Guidance." In
addition, the Partnership maintains on its website a reconciliation of
all non-GAAP financial information, such as EBITDA, that it reconciles
to the most comparable GAAP measures. To access the information,
investors should click on the "Investor Relations" link on the
Partnership's home page and then the "Non-GAAP Reconciliations" link on
the Investor Relations page.
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 Western acquisitions; 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 or
refinancing 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 or 800-564-3036
Director, Investor Relations
Al
Swanson, 800-564-3036
Executive Vice President, CFO