Plains GP Holdings LP
11/07/2025 | Press release | Distributed by Public on 11/07/2025 15:48
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The following discussion is intended to provide investors with an understanding of our financial condition and results of our operations and should be read in conjunction with our historical Consolidated Financial Statements and accompanying notes and Management's Discussion and Analysis of Financial Condition and Results of Operations as presented in our 2024 Annual Report on Form 10-K. For more detailed information regarding the basis of presentation for the following financial information, see the Condensed Consolidated Financial Statements and related notes that are contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Our discussion and analysis includes the following:
•Executive Summary
•Results of Operations
•Liquidity and Capital Resources
•Recent Accounting Pronouncements
•Forward-Looking Statements
Executive Summary
Company Overview
We are a Delaware limited partnership that has elected to be taxed as a corporation for United States federal income tax purposes. As of September 30, 2025, our sole cash-generating assets consisted of an approximate 85% limited partner interest in AAP. We also own a 100% managing member interest in GP LLC, which holds the non-economic general partner interest in AAP. As of September 30, 2025, AAP directly owned a limited partner interest in PAA through its ownership of approximately 233.0 million PAA common units (approximately 31% of PAA's total outstanding common units and Series A preferred units combined). AAP is the sole member of PAA GP, which holds the non-economic general partner interest in PAA.
PAA's business model integrates large-scale supply aggregation capabilities with the ownership and operation of critical midstream infrastructure systems that connect major producing regions to key demand centers and export terminals. As one of the largest crude oil midstream service providers in North America, PAA owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil producing basins (including the Permian Basin) and transportation corridors and at major market hubs in the United States and Canada. PAA's assets and the services it provides are primarily focused on crude oil and, to a lesser extent, NGL.
Pending Sale of Canadian NGL Business
On June 17, 2025, we entered into a definitive SPA with Keyera, pursuant to which Keyera agreed to acquire all of the issued and outstanding shares of Plains Midstream Canada ULC, our wholly-owned subsidiary that owns substantially all of the Canadian NGL Business. This transaction supports our strategic objective to focus on our core midstream crude oil operations and to reduce exposure to commodity price fluctuations and seasonality. While we will divest the Canadian NGL Business as part of the sale, we will retain substantially all NGL assets in the United States and will also retain all crude oil assets in Canada. This transaction is expected to close in the first quarter of 2026, subject to the satisfaction or waiver of customary closing conditions, including receipt of regulatory approvals. We determined that in conjunction with entering into the SPA, the operations of the Canadian NGL Business meet the criteria for classification as held for sale and for discontinued operations reporting, as the sale will represent a strategic shift that will have a major effect on our operations and financial results. We have applied these changes retrospectively to all periods presented. See Note 1 and Note 2 to our Condensed Consolidated Financial Statements for additional information.
Unless otherwise indicated, the discussion below relates to our continuing operations and excludes amounts related to discontinued operations.
Overview of Operating Results
We recognized net income of $1,279 million for the nine months ended September 30, 2025compared to net income of $953 million for the first nine months of 2024.See the "Results of Operations" section below for discussion of significant drivers of our results from continuing operations.
Results of Operations
Consolidated Results
The following table sets forth an overview of our consolidated financial results calculated in accordance with GAAP (in millions, except per share data):
|
Three Months Ended September 30, |
Variance |
Nine Months Ended September 30, |
Variance | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Product sales revenues | $ | 11,150 | $ | 12,021 | $ | (871) | (7) | % | $ | 32,389 | $ | 35,606 | $ | (3,217) | (9) | % | ||||||||||||||||||||||||||||||||||
| Services revenues | 428 | 435 | (7) | (2) | % | 1,309 | 1,248 | 61 | 5 | % | ||||||||||||||||||||||||||||||||||||||||
| Purchases and related costs | (10,585) | (11,540) | 955 | 8 | % | (30,862) | (34,086) | 3,224 | 9 | % | ||||||||||||||||||||||||||||||||||||||||
| Field operating costs | (288) | (408) | 120 | 29 | % | (873) | (962) | 89 | 9 | % | ||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | (84) | (87) | 3 | 3 | % | (255) | (251) | (4) | (2) | % | ||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (230) | (226) | (4) | (2) | % | (696) | (675) | (21) | (3) | % | ||||||||||||||||||||||||||||||||||||||||
|
Gains/(losses) on asset sales, net
|
92 | - | 92 | N/A | 64 | (2) | 66 | ** | ||||||||||||||||||||||||||||||||||||||||||
| Equity earnings in unconsolidated entities | 96 | 97 | (1) | (1) | % | 292 | 298 | (6) | (2) | % | ||||||||||||||||||||||||||||||||||||||||
|
Gain on investments in unconsolidated entities, net
|
- | - | - | N/A | 31 | - | 31 | N/A | ||||||||||||||||||||||||||||||||||||||||||
|
Interest expense, net
|
(112) | (97) | (15) | (15) | % | (330) | (287) | (43) | (15) | % | ||||||||||||||||||||||||||||||||||||||||
| Other income, net | (9) | 10 | (19) | ** | 5 | 14 | (9) | (64) | % | |||||||||||||||||||||||||||||||||||||||||
|
Income tax expense from continuing operations
|
(30) | (18) | (12) | (67) | % | (76) | (106) | 30 | 28 | % | ||||||||||||||||||||||||||||||||||||||||
|
Income from continuing operations, net of tax
|
428 | 187 | 241 | 129 | % | 998 | 797 | 201 | 25 | % | ||||||||||||||||||||||||||||||||||||||||
|
Income from discontinued operations, net of tax (1)
|
76 | 114 | (38) | (33) | % | 281 | 156 | 125 | 80 | % | ||||||||||||||||||||||||||||||||||||||||
| Net income | 504 | 301 | 203 | 67 | % | 1,279 | 953 | 326 | 34 | % | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (421) | (268) | (153) | (57) | % | (1,081) | (839) | (242) | (29) | % | ||||||||||||||||||||||||||||||||||||||||
| Net income attributable to PAGP | $ | 83 | $ | 33 | $ | 50 | 152 | % | $ | 198 | $ | 114 | $ | 84 | 74 | % | ||||||||||||||||||||||||||||||||||
|
Basic net income per Class A share:
|
||||||||||||||||||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.31 | $ | 0.01 | $ | 0.30 | ** | $ | 0.60 | $ | 0.36 | $ | 0.24 | 67 | % | |||||||||||||||||||||||||||||||||||
| Discontinued operations | 0.11 | 0.16 | (0.05) | (31) | % | 0.40 | 0.22 | 0.18 | 82 | % | ||||||||||||||||||||||||||||||||||||||||
| Basic net income per Class A share | $ | 0.42 | $ | 0.17 | $ | 0.25 | 147 | % | $ | 1.00 | $ | 0.58 | $ | 0.42 | 72 | % | ||||||||||||||||||||||||||||||||||
| Basic weighted average Class A shares outstanding | 198 | 197 | 1 | 1 | % | 198 | 197 | 1 | 1 | % | ||||||||||||||||||||||||||||||||||||||||
|
Diluted net income per Class A share:
|
||||||||||||||||||||||||||||||||||||||||||||||||||
| Continuing operations | $ | 0.31 | $ | 0.01 | $ | 0.30 | ** | $ | 0.60 | $ | 0.36 | $ | 0.24 | 67 | % | |||||||||||||||||||||||||||||||||||
| Discontinued operations | 0.10 | 0.16 | (0.06) | (38) | % | 0.39 | 0.22 | 0.17 | 77 | % | ||||||||||||||||||||||||||||||||||||||||
| Diluted net income per Class A share | $ | 0.41 | $ | 0.17 | $ | 0.24 | 141 | % | $ | 0.99 | $ | 0.58 | $ | 0.41 | 71 | % | ||||||||||||||||||||||||||||||||||
| Diluted weighted average Class A shares outstanding | 233 | 197 | 36 | 18 | % | 233 | 197 | 36 | 18 | % | ||||||||||||||||||||||||||||||||||||||||
** Indicates that variance as a percentage is not meaningful.
(1)See Note 2 to our Condensed Consolidated Financial Statements for a reconciliation of the line items comprising income from discontinued operations, net of tax.
Continuing Operations
The following discussion of our results of operations focuses on PAA's continuing operations.
Revenues and Purchases
Fluctuations in our revenues and purchases and related costs are primarily associated with our merchant activities and are generally explained by changes in commodity prices and the impact of gains and losses related to derivative instruments used to manage our commodity price exposure. Because both product sales revenues and purchases and related costs are generally based off of the same pricing indices, the market price of the commodities will not necessarily have an impact on the absolute margins related to those sales and purchases.
A majority of our crude oil sales and purchases are indexed to the prompt month price of the NYMEX Light, Sweet crude oil futures contract ("NYMEX Price"). The following table presents the range of the NYMEX Price over the last two years (in dollars per barrel):
|
NYMEX Price
|
|||||||||||||||||
| Low | High | Average | |||||||||||||||
| Three Months Ended September 30, 2025 | $ | 62 | $ | 70 | $ | 65 | |||||||||||
| Three Months Ended September 30, 2024 | $ | 66 | $ | 84 | $ | 75 | |||||||||||
| Nine Months Ended September 30, 2025 | $ | 57 | $ | 80 | $ | 67 | |||||||||||
| Nine Months Ended September 30, 2024 | $ | 66 | $ | 87 | $ | 78 | |||||||||||
Product sales revenues (including the impact of derivative mark-to-market valuations) and purchases decreased for the three and nine months ended September 30, 2025 compared to the same periods in 2024 primarily due to lower commodity prices in the 2025 periods, partially offset by higher crude oil sales volumes in the 2025 periods.
Services revenues for the nine months ended September 30, 2025 increased compared to the same period in 2024 primarily due to higher pipeline volumes and tariff escalations, as well as the impact of recently completed acquisitions, partially offset by the impact from lower commodity prices in the 2025 period.
See further discussion of our net revenues (defined as revenues less purchases and related costs) in the "-Analysis of Operating Segments" section below.
Field Operating Costs
See discussion of field operating costs in the "-Analysis of Operating Segments" section below.
General and Administrative Expenses
The increase in general and administrative expenses for the nine months ended September 30, 2025 compared to the same periods in 2024 was primarily due to transaction costs associated with our recent acquisitions, partially offset by lower information systems costs due to the completion of certain systems conversion and integration work, which was also the primarily driver of the decrease in general and administrative expenses for the comparative three-month period.
Depreciation and Amortization
The increase in depreciation and amortization for the nine months ended September 30, 2025 compared to the same periods in 2024 was largely driven by acquisitions.
Gains/Losses on Asset Sales, Net
In connection with the pending sale of the Canadian NGL Business, we entered into a deal-contingent forward currency instrument to hedge the currency exchange risk associated with the sale in CAD. The 2025 periods were impacted by the mark-to-market of this instrument. See Note 8 to our Condensed Consolidated Financial Statements for additional information regarding this instrument and our derivatives and hedging activities. See Note 1 to our Condensed Consolidated Financial Statements for additional information regarding the pending sale of the Canadian NGL Business.
Equity Earnings
See discussion of Equity earnings in unconsolidated entities in the "-Analysis of Operating Segments" section below.
Gain on Investments in Unconsolidated Entities, Net
We recognized a net gain of $31 million related to our acquisition of the remaining 50% interest in Cheyenne in the first quarter of 2025. See Note 12 to our Condensed Consolidated Financial Statements for additional information regarding this transaction.
Interest Expense, Net
The following table summarizes the components impacting Interest expense, net (in millions):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
|
Interest expense on borrowings (1)
|
$ | 116 | $ | 99 | $ | 339 | $ | 294 | ||||||||||||||||||
| Capitalized interest | (4) | (2) | (9) | (7) | ||||||||||||||||||||||
| $ | 112 | $ | 97 | $ | 330 | $ | 287 | |||||||||||||||||||
(1)The increase in interest expense for the 2025 periods compared to the same periods in 2024 was primarily driven by PAA's issuance of $1.0 billion, 5.95% senior notes in January 2025 and $650 million, 5.70% senior notes in June 2024, partially offset by the repayment of $750 million, 3.60% senior notes in November 2024. See Note 6 to our Condensed Consolidated Financial Statements for additional information regarding senior notes.
Other Income, Net
Other income, net primarily includes interest income and gains and losses on foreign revaluation related to the impact from the change in the CAD to USD exchange rate on the portion of our intercompany net investment that is not long-term in nature.
Income Tax Expense
The net unfavorable income tax variance for the three months ended September 30, 2025 compared to the same period in 2024 was primarily due to higher earnings, including PAA earnings attributable to PAGP, partially offset by (i) lower year-over-year income within our Canadian operations as impacted by fluctuations of derivative mark-to-market valuations and (ii) lower income tax expense in 2025 associated with Canadian withholding tax on dividends from our Canadian entities to other Plains entities.
The net favorable income tax variance for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to the impact of (i) lower income tax expense in 2025 associated with Canadian withholding tax on dividends from our Canadian entities to other Plains entities, partially offset by (ii) higher year-over-year income within our Canadian operations as impacted by fluctuations of derivative mark-to-market valuations and (iii) higher PAA earnings attributable to PAGP.
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with GAAP, management uses additional measures known as "non-GAAP financial measures" in its evaluation of past performance and prospects for the future. The primary additional measures used by management are Adjusted EBITDA and Adjusted EBITDA attributable to PAA.
Our definition and calculation of certain non-GAAP financial measures may not be comparable to similarly-titled measures of other companies. Adjusted EBITDA and Adjusted EBITDA attributable to PAA are reconciled to Net Income, the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, our Condensed Consolidated Financial Statements and accompanying notes.
Non-GAAP Financial Performance Measures
Adjusted EBITDA is defined as earnings from continuing operations and discontinued operations before (i) interest expense, (ii) income tax (expense)/benefit from continuing operations and discontinued operations, (iii) depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities) from continuing operations and discontinued operations, (iv) gains and losses on asset sales, asset impairments and other, net from continuing operations and discontinued operations, (v) gains on investments in unconsolidated entities, net and (vi) adjusted for certain selected items impacting comparability. Adjusted EBITDA attributable to PAA excludes the portion of Adjusted EBITDA that is attributable to noncontrolling interests in consolidated joint venture entities.
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 to supplement related GAAP financial measures, (i) provide additional information about our operating performance, (ii) provide investors with the same financial analytical framework upon which management bases financial, operational, compensation and planning/budgeting decisions and (iii) present measures that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These non-GAAP measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) gains and losses on 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 either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our operating results and/or (v) other items that we believe should be excluded in understanding our 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 "Other current liabilities" in our Condensed Consolidated Financial Statements. We also adjust for amounts billed by our equity method investees related to deficiencies under minimum volume commitments. Such amounts are presented net of applicable amounts subsequently recognized into revenue. We have defined all such items as "selected items impacting comparability." We do not necessarily consider all of our selected items impacting comparability to be non-recurring, infrequent or unusual, but we believe that an understanding of these selected items impacting comparability is material to the evaluation of our operating results and prospects.
Although we present selected items impacting comparability that management considers 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, divestitures, investment capital projects and numerous other factors as discussed, as applicable, in "-Analysis of Operating Segments."
Discontinued Operations.Management believes that the presentation of certain Non-GAAP financial performance measures, such as Adjusted EBITDA and Adjusted EBITDA attributable to PAA, on a consolidated basis (e.g., the aggregate of continuing operations and discontinued operations) provides more relevant and useful information regarding our performance and results of operations than presenting such metrics only on a continuing operations or discontinued operations basis. In addition, as the potential sale of the Canadian NGL Business is not anticipated to close until the first quarter of 2026, management continues to view the Canadian NGL Business as a component of our overall company performance and ability to fund distributions to our unitholders in the near term.
The following table sets forth the reconciliation of the non-GAAP financial performance measures Adjusted EBITDA and Adjusted EBITDA attributable to PAA to Net Income (in millions):
|
Three Months Ended September 30, |
Variance |
Nine Months Ended September 30, |
Variance | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
|
Net income (1)
|
$ | 504 | $ | 301 | $ | 203 | 67 | % | $ | 1,279 | $ | 953 | $ | 326 | 34 | % | |||||||||||||||||||||||||||||||||||||
|
Interest expense, net
|
112 | 97 | 15 | 15 | % | 330 | 287 | 43 | 15 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Income tax expense from continuing operations
|
30 | 18 | 12 | 67 | % | 76 | 106 | (30) | (28) | % | |||||||||||||||||||||||||||||||||||||||||||
|
Income tax expense from discontinued operations (2)
|
27 | 37 | (10) | (27) | % | 96 | 51 | 45 | 88 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Depreciation and amortization from continuing operations
|
230 | 226 | 4 | 2 | % | 696 | 675 | 21 | 3 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Depreciation and amortization from discontinued operations (2)
|
- | 31 | (31) | (100) | % | 57 | 94 | (37) | (39) | % | |||||||||||||||||||||||||||||||||||||||||||
|
(Gains)/losses on asset sales, net from continuing operations
|
(92) | - | (92) | N/A | (64) | 2 | (66) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
(Gains)/losses on asset sales, net from discontinued operations (2)
|
2 | 1 | 1 | 100 | % | 15 | (1) | 16 | ** | ||||||||||||||||||||||||||||||||||||||||||||
|
Gain on investments in unconsolidated entities, net
|
- | - | - | N/A | (31) | - | (31) | N/A | |||||||||||||||||||||||||||||||||||||||||||||
|
Depreciation and amortization of unconsolidated entities (3)
|
21 | 22 | (1) | (5) | % | 62 | 59 | 3 | 5 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Unallocated general and administrative expenses(4)
|
1 | 1 | - | - | % | 4 | 5 | (1) | (20) | % | |||||||||||||||||||||||||||||||||||||||||||
|
Selected Items Impacting Comparability (1):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Derivative activities and inventory valuation adjustments
|
(48) | (105) | 57 | ** | (75) | 78 | (153) | ** | |||||||||||||||||||||||||||||||||||||||||||||
| Long-term inventory costing adjustments | 14 | 31 | (17) | ** | 30 | 8 | 22 | ** | |||||||||||||||||||||||||||||||||||||||||||||
| Deficiencies under minimum volume commitments, net | (6) | 15 | (21) | ** | (21) | 10 | (31) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Rail fleet amortization expense related to discontinued operations (5)
|
(10) | - | (10) | ** | (10) | - | (10) | ** | |||||||||||||||||||||||||||||||||||||||||||||
| Equity-indexed compensation expense | 10 | 9 | 1 | ** | 28 | 28 | - | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Foreign currency revaluation
|
(4) | 2 | (6) | ** | 7 | (22) | 29 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Line 901 incident
|
- | 120 | (120) | ** | - | 120 | (120) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Transaction-related expenses
|
- | - | - | ** | 7 | - | 7 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Selected Items Impacting Comparability - Segment Adjusted EBITDA (1) (6)
|
(44) | 72 | (116) | ** | (34) | 222 | (256) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Foreign currency revaluation (7)
|
15 | (1) | 16 | ** | 13 | 6 | 7 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Selected Items Impacting Comparability - Adjusted EBITDA (1) (8)
|
(29) | 71 | (100) | ** | (21) | 228 | (249) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA (1) (8)
|
$ | 806 | $ | 805 | $ | 1 | - | % | $ | 2,499 | $ | 2,459 | $ | 40 | 2 | % | |||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA attributable to noncontrolling interests in consolidated joint ventures (9)
|
(137) | (146) | 9 | 6 | % | (404) | (408) | 4 | 1 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Adjusted EBITDA attributable to PAA (1)
|
$ | 669 | $ | 659 | $ | 10 | 2 | % | $ | 2,095 | $ | 2,051 | $ | 44 | 2 | % | |||||||||||||||||||||||||||||||||||||
** Indicates that variance as a percentage is not meaningful.
(1)Includes results from continuing operations and discontinued operations.
(2)See Note 2 to our Condensed Consolidated Financial Statements for additional information.
(3)We exclude our proportionate share of the depreciation and amortization expense (including write-downs related to cancelled projects and impairments) of unconsolidated entities when reviewing Adjusted EBITDA, similar to our consolidated assets.
(4)Represents general and administrative expenses incremental to those of PAA, which are not allocated to our reporting segments in determining Segment Adjusted EBITDA and are excluded in the non-GAAP financial performance measures utilized by management.
(5)Depreciation and amortization on the long-lived assets of the Canadian NGL Business disposal group ceased upon meeting the criteria to be classified as assets held for sale. Management believes that the presentation of Adjusted EBITDA and Implied DCF on a consolidated basis (e.g., the aggregate of continuing operations and discontinued operations) provides more relevant and useful information regarding our performance and results of operations than presenting such metrics only on a continuing operations or discontinued operations basis. We therefore include an adjustment for the impact of amortization of the rail fleet associated with the Canadian NGL Business in our calculation of Adjusted EBITDA. See Note 1 to our Condensed Consolidated Financial Statements for additional information regarding the pending sale of the Canadian NGL Business. Also see the "-Non-GAAP Financial Measures" section above.
(6)For a more detailed discussion of these selected items impacting comparability, see the footnotes to the segment financial data tables in Note 11 to our Condensed Consolidated Financial Statements.
(7)During the periods presented, there were fluctuations in the value of CAD to USD, resulting in the realization of foreign exchange gains and losses on the settlement of foreign currency transactions as well as the revaluation of monetary assets and liabilities denominated in a foreign currency. The associated gains and losses are not integral to our results and were thus classified as a selected item impacting comparability.
(8)"Other income, net" on our Condensed Consolidated Statements of Operations, adjusted for selected items impacting comparability ("Adjusted other income, net") is included in Adjusted EBITDA and excluded from Segment Adjusted EBITDA.
(9)Reflects amounts attributable to noncontrolling interests in the Permian JV, Cactus II and Red River.
Analysis of Operating Segments
We manage our operations through two operating segments: Crude Oil and NGL. Our CODM (our Chief Executive Officer) evaluates segment performance based on measures including Segment Adjusted EBITDA. See Note 11 to our Condensed Consolidated Financial Statements for our definition of Segment Adjusted EBITDA and a reconciliation of Segment Adjusted EBITDA to Income from Continuing Operations, Net of Tax. See Note 19 to our Consolidated Financial Statements included in Part IV of our 2024 Annual Report on Form 10-K for our definition of maintenance capital.
Crude Oil Segment
Our Crude Oil segment operations generally consist of gathering and transporting crude oil using pipelines (including gathering systems), trucks and, at times, on barges or railcars, in addition to providing terminalling, storage and other related services utilizing our integrated assets across the United States and Canada. Our assets provide services to third parties as well as to our merchant activities. Our merchant activities include the purchase of crude oil supply and the movement of this supply on our assets or third-party assets to sales locations, including our terminals, third-party connecting carriers, regional hubs or to refineries. Our merchant activities are governed by our risk management policies.
Our Crude Oil segment generates revenue through a combination of tariffs, pipeline capacity agreements and other transportation fees, month-to-month and multi-year storage and terminalling agreements and the sale of gathered and bulk-purchased crude oil. Tariffs and other fees on our pipeline systems are typically based on volumes transported and vary by receipt point and delivery point. Fees for our terminalling and storage services are based on capacity leases and throughput volumes. Generally, results from our merchant activities are impacted by (i) increases or decreases in our lease gathering crude oil purchases volumes and (ii) volatility in commodity price differentials, particularly grade and location differentials, as well as time spreads. The segment results also include the direct fixed and variable field costs of operating the crude oil assets, as well as an allocation of indirect operating and general and administrative costs.
The following tables set forth our operating results from our Crude Oil segment:
|
Operating Results(1)
|
Three Months Ended September 30, |
Variance |
Nine Months Ended September 30, |
Variance | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 11,559 | $ | 12,444 | $ | (885) | (7) | % | $ | 33,620 | $ | 36,761 | $ | (3,141) | (9) | % | |||||||||||||||||||||||||||||||||||||
| Purchases and related costs | (10,572) | (11,529) | 957 | 8 | % | (30,802) | (34,014) | 3,212 | 9 | % | |||||||||||||||||||||||||||||||||||||||||||
| Field operating costs | (281) | (400) | 119 | 30 | % | (853) | (938) | 85 | 9 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Segment general and administrative expenses (2)
|
(74) | (78) | 4 | 5 | % | (229) | (223) | (6) | (3) | % | |||||||||||||||||||||||||||||||||||||||||||
| Equity earnings in unconsolidated entities | 96 | 97 | (1) | (1) | % | 292 | 298 | (6) | (2) | % | |||||||||||||||||||||||||||||||||||||||||||
|
Other segment items (3):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Depreciation and amortization of unconsolidated entities
|
21 | 22 | (1) | ** | 62 | 59 | 3 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Derivative activities and inventory valuation adjustments
|
(30) | (13) | (17) | ** | (2) | 20 | (22) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Long-term inventory costing adjustments
|
10 | 34 | (24) | ** | 27 | 10 | 17 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Deficiencies under minimum volume commitments, net
|
(6) | 15 | (21) | ** | (21) | 10 | (31) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Equity-indexed compensation expense
|
10 | 9 | 1 | ** | 28 | 28 | - | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Foreign currency revaluation
|
(3) | 2 | (5) | ** | 6 | (18) | 24 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Line 901 incident
|
- | 120 | (120) | ** | - | 120 | (120) | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Transaction-related expenses
|
- | - | - | ** | 7 | - | 7 | ** | |||||||||||||||||||||||||||||||||||||||||||||
|
Segment amounts attributable to noncontrolling interests in consolidated joint ventures
|
(137) | (146) | 9 | ** | (402) | (406) | 4 | ** | |||||||||||||||||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 593 | $ | 577 | $ | 16 | 3 | % | $ | 1,733 | $ | 1,707 | $ | 26 | 2 | % | |||||||||||||||||||||||||||||||||||||
| Maintenance capital expenditures | $ | 36 | $ | 48 | $ | (12) | (25) | % | $ | 110 | $ | 135 | $ | (25) | (19) | % | |||||||||||||||||||||||||||||||||||||
|
Three Months Ended September 30, |
Variance |
Nine Months Ended September 30, |
Variance | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Volumes | 2025 | 2024 | Volumes | % | 2025 | 2024 | Volumes | % | |||||||||||||||||||||||||||||||||||||||||||||
|
Crude oil pipeline tariff (by region)(4) (5)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Permian Basin
|
7,490 | 6,944 | 546 | 8 | % | 7,196 | 6,692 | 504 | 8 | % | |||||||||||||||||||||||||||||||||||||||||||
|
South Texas / Eagle Ford
|
538 | 416 | 122 | 29 | % | 524 | 396 | 128 | 32 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Mid-Continent
|
564 | 532 | 32 | 6 | % | 506 | 516 | (10) | (2) | % | |||||||||||||||||||||||||||||||||||||||||||
| Other | 1,291 | 1,274 | 17 | 1 | % | 1,319 | 1,298 | 21 | 2 | % | |||||||||||||||||||||||||||||||||||||||||||
| Total crude oil pipeline tariff | 9,883 | 9,166 | 717 | 8 | % | 9,545 | 8,902 | 643 | 7 | % | |||||||||||||||||||||||||||||||||||||||||||
** Indicates that variance as a percentage is not meaningful.
(1)Revenues and costs and expenses include intersegment amounts.
(2)Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.
(3)Represents adjustments included in the performance measure utilized by our CODM in the evaluation of segment results. See Note 11 to our Condensed Consolidated Financial Statements for additional discussion of such adjustments.
(4)Average daily volumes in thousands of barrels per day calculated as the total volumes (attributable to our interest for assets owned by unconsolidated entities or through undivided joint interests) for the period divided by the number of days in the period. Volumes associated with acquisitions represent total volumes for the number of days we actually owned the assets divided by the number of days in the period.
(5)Includes volumes (attributable to our interest) from assets owned by unconsolidated entities.
Segment Adjusted EBITDA
Crude Oil Segment Adjusted EBITDA for the three and nine months ended September 30, 2025 increased versus comparable results for the three and nine months ended September 30, 2024. The benefit to the 2025 period from higher tariff volumes on our pipelines, tariff escalations and contributions from recently completed acquisitions was largely offset by fewer market-based opportunities.
The following is a more detailed discussion of the significant factors impacting Segment Adjusted EBITDA for the three and nine months ended September 30, 2025 compared to the same periods in 2024.
Net Revenues and Equity Earnings. Our results were favorably impacted by (i) volume growth across our pipeline systems largely driven by increased production in the Permian Basin region, (ii) contributions from recently completed acquisitions in the Permian Basin and South Texas regions and (iii) the benefit of tariff escalations. These favorable impacts were partially offset by (iv) fewer market-based opportunities, (v) lower commodity prices, which resulted in lower revenues from pipeline loss allowance in the 2025 periods, and (vi) the impact from certain Permian long-haul contract rates resetting to market in the third quarter of 2025.
Field Operating Costs.The decrease in field operating costs for the three and nine months ended September 30, 2025 compared to the same periods in 2024 was primarily due to the recognition in the third quarter of 2024 of costs associated with settlements related to the Line 901 incident that occurred in May 2015 (which impact field operating costs, but are excluded from Segment Adjusted EBITDA, and thus are reflected as an "Adjustment" in the table above). This was partially offset by higher expenses resulting from acquisitions and higher volumes in the 2025 periods. In addition, the nine-month period was further impacted by higher expenses associated with (i) environmental remediation costs and (ii) property taxes.
Maintenance Capital
The decrease in maintenance capital spending for the three and nine months ended September 30, 2025 compared to the same periods in 2024 was primarily due to lower costs resulting from timing of certain pipeline integrity activities.
NGL Segment
Our NGL segment operations involve NGL storage and terminalling from our four NGL assets located in the United States, namely our Bumstead, Shafter, San Pedro and Tampa facilities. Our NGL segment revenues are primarily derived from (i) providing storage and/or terminalling services at these facilities to third-party customers for a fee and (ii) the transport, storage and sale of specification NGL products. The segment results also include the direct fixed and variable field costs of operating our four NGL facilities, as well as an allocation of indirect operating costs and general and administrative expenses.
The following table sets forth our operating results from our NGL segment:
|
Operating Results(1)
|
Three Months Ended September 30, |
Variance |
Nine Months Ended September 30, |
Variance | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | $ | % | 2025 | 2024 | $ | % | |||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 24 | $ | 20 | $ | 4 | 20 | % | $ | 92 | $ | 106 | $ | (14) | (13) | % | |||||||||||||||||||||||||||||||||||||
| Purchases and related costs | (18) | (19) | 1 | 5 | % | (74) | (85) | 11 | 13 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Field operating costs (2)
|
(7) | (8) | 1 | 13 | % | (20) | (24) | 4 | 17 | % | |||||||||||||||||||||||||||||||||||||||||||
|
Segment general and administrative expenses(2) (3)
|
(9) | (8) | (1) | (13) | % | (22) | (23) | 1 | 4 | % | |||||||||||||||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA | $ | (10) | $ | (15) | $ | 5 | 33 | % | $ | (24) | $ | (26) | $ | 2 | 8 | % | |||||||||||||||||||||||||||||||||||||
| Maintenance capital expenditures | $ | - | $ | 2 | $ | (2) | (100) | % | $ | 2 | $ | 5 | $ | (3) | (60) | % | |||||||||||||||||||||||||||||||||||||
(1)Revenues and costs and expenses include intersegment amounts.
(2)Field operating costs and segment general and administrative expenses include certain costs that are part of the overhead of continuing operations.
(3)Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.
Segment Adjusted EBITDA
The Segment Adjusted EBITDA loss for all periods presented is largely driven by costs that are part of the overhead of our NGL activities and are included in continuing operations as they are not related to contracts or arrangements that will be included in the sale of the Canadian NGL Business. These costs include information technology, insurance and other shared services costs.
Liquidity and Capital Resources
General
Our primary sources of liquidity are (i) cash flow from operating activities and (ii) borrowings under PAA's credit facilities or commercial paper program. In addition, we may supplement these primary sources of liquidity with proceeds from asset sales, and in the past have utilized funds received from sales of equity and debt securities. Our primary cash requirements include, but are not limited to, (i) ordinary course of business uses, such as the payment of amounts related to the purchase of crude oil, NGL and other products, payment of other expenses and interest payments on outstanding debt, (ii) investment and maintenance capital activities, (iii) acquisitions of assets or businesses, (iv) repayment of principal on long-term debt and (v) distributions to our Class A shareholders and noncontrolling interests. In addition, we may use cash for repurchases of common equity. We generally expect to fund our short-term cash requirements through cash flow generated from operating activities and/or borrowings under PAA's credit facilities or commercial paper program. In addition, we generally expect to fund our long-term needs, such as those resulting from investment capital activities, acquisitions or refinancing long-term debt, through a variety of sources, which may include any or a combination of the sources listed above.
As of September 30, 2025, we had a working capital surplus of $218 million and approximately $3.9 billion of liquidity available to meet our ongoing operating, investing and financing needs (subject to continued covenant compliance) as noted below (in millions):
|
As of September 30, 2025 |
|||||
|
Availability under PAA senior unsecured revolving credit facility (1) (2) (3)
|
$ | 1,350 | |||
|
Availability under PAA senior secured hedged inventory facility (1) (2) (3)
|
1,323 | ||||
|
Amounts outstanding under PAA commercial paper program (3)
|
- | ||||
| Subtotal | 2,673 | ||||
|
Cash and cash equivalents (4)
|
1,181 | ||||
| Total | $ | 3,854 | |||
(1)Represents availability prior to giving effect to borrowings outstanding under the PAA commercial paper program, which reduce available capacity under the credit facilities.
(2)Available capacity under the PAA senior unsecured revolving credit facility and the PAA senior secured hedged inventory facility was reduced by outstanding letters of credit issued under these facilities of less than $1 million and $27 million, respectively.
(3)We borrowed approximately $1.8 billion under PAA's commercial paper program and credit facilities to initially fund the EPIC acquisition in November 2025. See Note 12 to our Condensed Consolidated Financial Statements for additional information regarding the EPIC acquisition.
(4)Cash on hand at September 30, 2025 was utilized to redeem PAA's $1.0 billion, 4.65% senior notes on October 3, 2025.
Usage of PAA's credit facilities, and, in turn, its commercial paper program, is subject to ongoing compliance with covenants. The credit agreements for PAA's revolving credit facilities (which impact PAA's ability to access its commercial paper program because they provide the financial backstop that supports its short-term credit ratings) and the indentures governing its senior notes contain cross-default provisions. A default under PAA's credit agreements or indentures would permit the lenders to accelerate the maturity of the outstanding debt. As long as PAA is in compliance with the provisions in its credit agreements, its ability to make distributions of available cash is not restricted. PAA was in compliance with the covenants contained in its credit agreements and indentures as of September 30, 2025.
We believe that we have, and will continue to have, the ability to access the PAA commercial paper program and credit facilities, which we use to meet our short-term cash needs. We believe that our financial position remains strong and we have sufficient liquid assets, cash flow from operating activities and borrowing capacity under the credit agreements to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. We are, however, subject to business and operational risks that could adversely affect our cash flow, including extended disruptions in the financial markets and/or energy price volatility resulting from current macroeconomic and geopolitical conditions, including actions by the Organization of Petroleum Exporting Countries (OPEC). A prolonged material decrease in our cash flows would likely produce an adverse effect on our borrowing capacity and cost of borrowing. Our borrowing capacity and borrowing costs are also impacted by PAA's credit rating. See Item 1A. "Risk Factors" included in our 2024 Annual Report on Form 10-K for further discussion regarding risks that may impact our liquidity and capital resources.
Cash Flow from Operating Activities
For a comprehensive discussion of the primary drivers of cash flow from operating activities, including the impact of varying market conditions and the timing of settlement of our derivatives, see Item 7. "Liquidity and Capital Resources-Cash Flow from Operating Activities" included in our 2024 Annual Report on Form 10-K.
Net cash provided by operating activities from continuing operations for the first nine months of 2025 and 2024 was $1.833 billion and $1.592 billion, respectively, and primarily resulted from earnings from our operations.
Investing Activities
Capital Expenditures
In addition to our operating needs, we also use cash for our investment capital projects, maintenance capital activities and acquisition activities. We fund these expenditures with cash generated by operating activities, financing activities and/or proceeds from asset sales. The following table summarizes our investment, maintenance and acquisition capital expenditures related to continuing operations and discontinued operations (in millions):
|
Net to PAA (1) (2)
|
Consolidated (2)
|
Continuing Operations
|
||||||||||||||||||||||||||||||||||||||||||
|
Nine Months Ended September 30, |
Nine Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||||||||||||||||||||||||
|
Capital Expenditures (3) (4)
|
2025 | 2024 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||
|
Crude Oil:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Investment capital
|
$ | 312 | $ | 158 | $ | 404 | $ | 221 | $ | 404 | $ | 221 | ||||||||||||||||||||||||||||||||
|
Maintenance capital
|
98 | 121 | 110 | 135 | 110 | 135 | ||||||||||||||||||||||||||||||||||||||
|
Acquisition capital (5)
|
832 | 141 | 904 | 146 | 904 | 146 | ||||||||||||||||||||||||||||||||||||||
| $ | 1,242 | $ | 420 | $ | 1,418 | $ | 502 | $ | 1,418 | $ | 502 | |||||||||||||||||||||||||||||||||
|
NGL:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Investment capital
|
$ | 89 | $ | 74 | $ | 89 | $ | 74 | $ | - | $ | - | ||||||||||||||||||||||||||||||||
|
Maintenance capital
|
51 | 53 | 51 | 53 | 2 | 5 | ||||||||||||||||||||||||||||||||||||||
| $ | 140 | $ | 127 | $ | 140 | $ | 127 | $ | 2 | $ | 5 | |||||||||||||||||||||||||||||||||
|
Total:
|
||||||||||||||||||||||||||||||||||||||||||||
|
Investment capital
|
$ | 401 | $ | 232 | $ | 493 | $ | 295 | $ | 404 | $ | 221 | ||||||||||||||||||||||||||||||||
|
Maintenance capital
|
149 | 174 | 161 | 188 | 112 | 140 | ||||||||||||||||||||||||||||||||||||||
|
Acquisition capital (5)
|
832 | 141 | 904 | 146 | 904 | 146 | ||||||||||||||||||||||||||||||||||||||
| $ | 1,382 | $ | 547 | $ | 1,558 | $ | 629 | $ | 1,420 | $ | 507 | |||||||||||||||||||||||||||||||||
(1)Excludes expenditures attributable to noncontrolling interests, which primarily relate to the Permian JV. Includes results from continuing operations and discontinued operations for all periods presented.
(2)Includes results from continuing operations and discontinued operations for all periods presented. Capital expenditures related to discontinued operations were $89 million and $49 million for investment and maintenance capital for the nine months ended September 30, 2025, respectively. Capital expenditures for investment and maintenance capital related to discontinued operations were $74 million and $48 million for the nine months ended September 30, 2024, respectively. There was no acquisition capital related to discontinued operations for any period presented.
(3)Capital expenditures made to expand the existing operating and/or earnings capacity of our assets are classified as "Investment capital." Capital expenditures made to replace and/or refurbish partially or fully depreciated assets in order to maintain the operating and/or earnings capacity of our existing assets are classified as "Maintenance capital."
(4)Contributions to unconsolidated entities, accounted for under the equity method of accounting, that are related to investment capital projects by such entities are recognized in "Investment capital." Acquisitions of initial investments or additional interests in unconsolidated entities are included in "Acquisition capital."
(5)Acquisition capital for the 2025 period primarily included the acquisitions of (i) Ironwood Midstream, (ii) Medallion Midstream by the Permian JV, (iii) the remaining 50% interest in Cheyenne Pipeline LLC through a non-cash transaction, (iv) Black Knight Midstream and (v) an additional 20% interest in BridgeTex Pipeline. See Note 12 to our Condensed Consolidated Financial Statements for additional information. Acquisition capital for the 2024 period primarily included the acquisition of additional ownership interests in equity method investees.
2025 Investment and Maintenance Capital. Total investment capital for the year ending December 31, 2025 is projected to be approximately $600 million ($490 million net to our interest), which includes approximately $110 million related to discontinued operations. Approximately half of our projected investment capital expenditures are expected to be invested in the Permian JV assets. Additionally, maintenance capital for 2025 is projected to be approximately $230 million ($215 million net to our interest), which includes approximately $70 million related to discontinued operations.
Ongoing Activities Related to Strategic Transactions
We are continuously engaged in the evaluation of potential transactions that support our current business strategy. In the past, such transactions have included the acquisition of assets that complement our existing footprint, the sale of non-core assets, the sale of partial interests in assets to strategic joint venture partners, and large investment capital projects. With respect to a potential acquisition or divestiture, we may conduct an auction process or participate in an auction process conducted by a third-party or we may negotiate a transaction with one or a limited number of potential sellers (in the case of an acquisition) or buyers (in the case of a divestiture). Such transactions could have a material effect on our financial condition and results of operations.
We typically do not announce a transaction until after we have executed a definitive agreement. In certain cases, in order to protect our business interests or for other reasons, we may defer public announcement of a transaction until closing or a later date. Past experience has demonstrated that discussions and negotiations regarding a potential transaction can advance or terminate in a short period of time. Moreover, the closing of any transaction for which we have entered into a definitive agreement may be subject to customary and other closing conditions, which may not ultimately be satisfied or waived. Accordingly, we can give no assurance that our current or future efforts with respect to any such transactions will be successful, and we can provide no assurance that our financial expectations with respect to such transactions will ultimately be realized. See Item 1A. "Risk Factors-Risks Related to PAA's Business-Acquisitions and divestitures involve risks that may adversely affect PAA's business" included in our 2024 Annual Report on Form 10-K.
Financing Activities
Our financing activities primarily relate to funding investment capital projects, acquisitions and refinancing of our debt maturities, as well as short-term working capital (including borrowings for NYMEX and ICE margin deposits) and hedged inventory borrowings related to our NGL business and contango market activities, and the payment of distributions to our shareholders and noncontrolling interests.
Borrowings and Repayments Under Credit Agreements
During the nine months ended September 30, 2025, we had net repayments under the PAA commercial paper program of $393 million. The net repayments resulted primarily from cash flow from operating activities and proceeds from the issuance of PAA's $1.25 billion aggregate principal amount of senior notes in September 2025, which offset borrowings during the period related to funding needs for capital investments, inventory purchases and other general partnership purposes.
During the nine months ended September 30, 2024, we had net repayments under PAA commercial paper program of $433 million. The net repayments resulted primarily from cash flow from operating activities and proceeds from the issuance of PAA's $650 million, 5.70% senior notes in June 2024, which offset borrowings during the period related to funding needs for capital investments, inventory purchases and other general partnership purposes.
Senior Notes
In January 2025, PAA completed the offering of $1.0 billion, 5.95% senior notes due June 2035 at a public offering price of 99.761%. Interest payments are due on June 15 and December 15 of each year, commencing on June 15, 2025. PAA used the net proceeds from this offering of approximately $988 million, after deducting the underwriting discount and offering expenses, to (i) fund the acquisitions completed during the nine months ended September 30, 2025, (ii) fund the repurchase of approximately 12.7 million of PAA's Series A preferred units in January 2025 and (iii) repay outstanding borrowings under PAA's credit facilities and commercial paper program and for general partnership purposes.
In September 2025, PAA completed the offering of $1.25 billion aggregate principal amount of senior notes, consisting of $700 million, 4.70% senior notes due January 2031 and $550 million, 5.60% senior notes due January 2036 at a public offering price of 99.865% and 99.798%, respectively. Interest payments on these notes are due on January 15 and July 15 of each year, commencing on January 15, 2026. PAA used the net proceeds from this offering of approximately $1.2 billion, after deducting the underwriting discount and offering expenses, to (i) redeem on October 3, 2025 the principal amount of its $1.0 billion, 4.65% senior notes due October 2025 and (ii) fund a portion of the purchase price for the EPIC Pipeline acquisition.
See Note 7 and Note 12 to our Condensed Consolidated Financial Statements for additional information regarding our Series A preferred units and our recently completed and pending acquisitions, respectively.
Common Equity Repurchase Program
PAA repurchased 0.5 million common units under the Common Equity Repurchase Program (the "Program") through open market purchases that settled during the nine months ended September 30, 2025, for a total purchase price of $8 million, including commissions and fees. The repurchased PAA common units were canceled immediately upon acquisition, as were the Class C shares held by PAA associated with the repurchased common units. There were no repurchases under the Program during the nine months ended September 30, 2024. At September 30, 2025, the remaining available capacity under the Program was $190 million. See Note 11 to our Consolidated Financial Statements included in Part IV of our 2024 Annual Report on Form 10-K for additional information regarding the Program.
Registration Statements
PAGP Registration Statements.We have filed with the SEC a shelf registration statement that, subject to effectiveness at the time of use, allows us to issue up to a specified amount of equity securities ("PAGP Traditional Shelf"). At September 30, 2025, we had approximately $939 million of unsold securities available. We also have access to a universal shelf registration statement ("PAGP WKSI Shelf"), which provides us with the ability to offer and sell an unlimited amount of equity securities, subject to market conditions and our capital needs. We did not conduct any offerings under the PAGP Traditional Shelf or PAGP WKSI Shelf during the nine months ended September 30, 2025.
PAA Registration Statements.PAA periodically accesses the capital markets for both equity and debt financing. PAA has filed with the SEC a universal shelf registration statement that, subject to effectiveness at the time of use, allows PAA to issue up to a specified amount of debt or equity securities ("PAA Traditional Shelf"), under which PAA had approximately $1.1 billion of unsold securities available at September 30, 2025. PAA did not conduct any offerings under the PAA Traditional Shelf during the nine months ended September 30, 2025. PAA also has access to a universal shelf registration statement ("PAA WKSI Shelf"), which provides it with the ability to offer and sell an unlimited amount of debt and equity securities, subject to market conditions and its capital needs. The offerings of PAA's $1.0 billion, 5.95% senior notes in January 2025, $700 million, 4.70% senior notes and $550 million, 5.60% senior notes in September 2025 were conducted under its WKSI Shelf.
Series A Preferred Unit Repurchase
On January 31, 2025, PAA repurchased approximately 12.7 million units, or 18%, of its outstanding Series A preferred units at the issue price of $26.25 per unit for a purchase price of approximately $333 million, plus accrued and unpaid distributions through January 30, 2025 of approximately $10 million. PAA used a portion of the net proceeds from its January 2025 senior notes offering to fund this repurchase. See Note 7 to our Condensed Consolidated Financial Statements for more information regarding PAA's Series A preferred units.
Distributions to Our Class A Shareholders
On November 14, 2025, we will pay a quarterly cash distribution of $0.38 per Class A share ($1.52 per Class A share on an annualized basis) to shareholders of record at the close of business on October 31, 2025 for the period from July 1, 2025 through September 30, 2025. See Note 7 to our Condensed Consolidated Financial Statements for details of distributions paid during the first nine months of 2025.
Distributions to Noncontrolling Interests
Distributions to noncontrolling interests represent amounts paid on interests in consolidated entities that are not owned by us. As of September 30, 2025, noncontrolling interests in our subsidiaries consisted of (i) limited partner interests in PAA including a 69% interest in PAA's common units and PAA's Series A preferred units combined and 100% of PAA's Series B preferred units, (ii) an approximate 15% limited partner interest in AAP, (iii) a 35% interest in the Permian JV, (iv) a 30% interest in Cactus II and (v) a 33% interest in Red River.
Distributions to PAA's Series A preferred unitholders.On November 14, 2025, PAA will pay a quarterly cash distribution of approximately $0.615 per unit to its Series A preferred unitholders of record at the close of business on October 31, 2025 for the period from July 1, 2025 through September 30, 2025.
Distributions to PAA's Series B preferred unitholders. On November 17, 2025, PAA will pay a quarterly cash distribution of approximately $21.93 per unit to its Series B preferred unitholders of record at the close of business on November 3, 2025 for the period from August 15, 2025 through November 14, 2025.
Distributions to PAA's common unitholders.On November 14, 2025, PAA will pay a quarterly cash distribution of $0.38 per common unit ($1.52 per unit on an annualized basis) to common unitholders of record at the close of business on October 31, 2025 for the period from July 1, 2025 through September 30, 2025.
See Note 7 to our Condensed Consolidated Financial Statements for details of distributions paid during or pertaining to the nine months ended September 30, 2025, including distributions to PAA's preferred unitholders.
Contingencies
For a discussion of contingencies that may impact us, see Note 10 to our Condensed Consolidated Financial Statements.
Commitments
Purchase Obligations.In the ordinary course of doing business, we purchase crude oil from third parties under contracts, the majority of which range in term from thirty-day evergreen to five years, with a limited number of contracts with remaining terms extending up to 10 years. We establish a margin for these purchases by entering into various types of physical and financial sale and exchange transactions through which we seek to maintain a position that is substantially balanced between purchases on the one hand and sales and future delivery obligations on the other. We do not expect to use a significant amount of internal capital to meet these obligations, as the obligations will be funded by corresponding sales to entities that we deem creditworthy or who have provided credit support we consider adequate.
The following table includes our best estimate of the amount and timing of these payments as of September 30, 2025 (in millions):
| Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | 2030 and Thereafter | Total | |||||||||||||||||||||||||||||||||||
|
Crude oil and other purchases (1)
|
$ | 6,546 | $ | 20,496 | $ | 18,425 | $ | 16,159 | $ | 15,072 | $ | 35,624 | $ | 112,322 | |||||||||||||||||||||||||||
(1)Amounts are primarily based on estimated volumes and market prices based on average activity during September 2025. The actual physical volume purchased and actual settlement prices will vary from the assumptions used in the table. Uncertainties involved in these estimates include levels of production at the wellhead, weather conditions, changes in market prices and other conditions beyond our control.
EPIC Acquisition.Through two separate transactions completed in the fourth quarter of 2025, we acquired 100% of the entity that owns the EPIC Pipeline for aggregate consideration of approximately $2.9 billion, inclusive of approximately $1.1 billion of debt assumed. We initially funded the EPIC acquisition by assuming the $1.1 billion of existing debt and funding the $1.8 billion equity portion through a combination of PAA's commercial paper and credit facility borrowings and cash on hand. See Note 12 to our Condensed Consolidated Financial Statements for additional information regarding the EPIC acquisition.
Letters of Credit.In connection with our merchant activities, we provide certain suppliers with irrevocable standby letters of credit to secure our obligation for the purchase and transportation of crude oil, NGL and natural gas. Our liabilities with respect to these purchase obligations are recorded in accounts payable on our balance sheet in the month the product is purchased. Generally, these letters of credit are issued for periods of up to seventy days and are terminated upon completion of each transaction. Additionally, we issue letters of credit to support insurance programs, derivative transactions, including hedging-related margin obligations, and construction activities. At September 30, 2025 and December 31, 2024, we had outstanding letters of credit of approximately $70 million and $90 million, respectively.
Recent Accounting Pronouncements
See Note 1 to our Condensed Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS
All statements included in this report, other than statements of historical fact, are forward-looking statements, including but not limited to statements incorporating the words "anticipate," "believe," "estimate," "expect," "plan," "intend" and "forecast," as well as similar expressions and statements regarding our business strategy, plans and objectives for future operations. The absence of such words, expressions or statements, however, does not mean that the statements are not forward-looking. Any such forward-looking statements reflect our current views with respect to future events, based on what we believe to be reasonable assumptions. Certain factors could cause actual results or outcomes to differ materially from the results or outcomes anticipated in the forward-looking statements. The most important of these factors include, but are not limited to:
•our expected receipt of, and amounts of, distributions from Plains AAP, L.P., and the effect thereof on our ability to pay distributions to our Class A shareholders;
•risks related to the Canadian NGL Business divestiture (as defined herein), including the risk that the Canadian NGL Business divestiture is not consummated on the terms expected or on the anticipated schedule, or at all, and the effect of the announcement or pendency of the Canadian NGL Business divestiture on our business relationships, operating results, employees, stakeholders and business generally;
•general economic, market or business conditions in the United States and elsewhere (including the potential for a recession or significant slowdown in economic activity levels, the risk of persistently high inflation and supply chain issues, the impact of global public health events, such as pandemics, on demand and growth, and the timing, pace and extent of economic recovery) that impact (i) demand for crude oil, drilling and production activities and therefore the demand for the midstream services we provide and (ii) commercial opportunities available to us;
•declines in global crude oil demand and/or crude oil prices or other factors that correspondingly lead to a significant reduction of North American crude oil and NGL production (whether due to reduced producer cash flow to fund drilling activities or the inability of producers to access capital, or both, the unavailability of pipeline and/or storage capacity, the shutting-in of production by producers, government-mandated pro-ration orders, or other factors), which in turn could result in significant declines in the actual or expected volume of crude oil and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of our assets and/or the reduction of the margins we can earn or the commercial opportunities that might otherwise be available to us;
•fluctuations in refinery capacity and other factors affecting demand for various grades of crude oil and NGL and resulting changes in pricing conditions or transportation throughput requirements;
•unanticipated changes in crude oil and NGL market structure, grade differentials and volatility (or lack thereof);
•the effects of competition and capacity overbuild in areas where we operate, including downward pressure on rates, volumes and margins, contract renewal risk and the risk of loss of business to other midstream operators who are willing or under pressure to aggressively reduce transportation rates in order to capture or preserve customers;
•the availability of, and PAA's ability to consummate, acquisitions, divestitures, joint ventures or other strategic opportunities and realize benefits therefrom, including the Canadian NGL Business divestiture and the EPIC acquisition;
•the successful operation of joint ventures and joint operating arrangements PAA enters into from time to time, whether relating to assets operated by PAA or by third parties, and the successful integration and future performance of acquired assets or businesses, including the EPIC acquisition;
•environmental liabilities, litigation or other events that are not covered by an indemnity, insurance or existing reserves;
•negative societal sentiment regarding the hydrocarbon energy industry and the continued development and consumption of hydrocarbons, which could influence consumer preferences and governmental or regulatory actions that adversely impact our business;
•the occurrence of a natural disaster, catastrophe, terrorist attack (including eco-terrorist attacks) or other event that materially impacts our operations, including cyber or other attacks on our or our service providers' electronic and computer systems;
•weather interference with business operations or project construction, including the impact of extreme weather events or conditions (including hurricanes, floods, wildfires and drought);
•the impact of current and future laws, rulings, legislation, governmental regulations, executive orders, trade policies, trade tariffs, accounting standards and statements, and related interpretations that (i) prohibit, restrict or regulate the development of oil and gas resources and the related infrastructure on lands dedicated to or served by our pipelines, (ii) negatively impact our ability to develop, operate or repair midstream assets, or (iii) otherwise negatively impact our business or increase our exposure to risk;
•negative impacts on production levels in the Permian Basin or elsewhere due to issues associated with (or laws, rules or regulations relating to) hydraulic fracturing and related activities (including wastewater injection or disposal), including earthquakes, subsidence, expansion or other issues;
•the pace of development of natural gas or other infrastructure and its impact on expected crude oil production growth in the Permian Basin;
•the refusal or inability of our customers or counterparties to perform their obligations under their contracts with us (including commercial contracts, asset sale agreements and other agreements), whether justified or not and whether due to financial constraints (such as reduced creditworthiness, liquidity issues or insolvency), market constraints, legal constraints (including governmental orders or guidance), the exercise of contractual or common law rights that allegedly excuse their performance (such as force majeure or similar claims) or other factors;
•loss of key personnel and inability to attract and retain new talent;
•disruptions to futures markets for crude oil, NGL and other petroleum products, which may impair our ability to execute our commercial or hedging strategies;
•the effectiveness of our risk management activities;
•shortages or cost increases of supplies, materials or labor;
•maintenance of PAA's credit ratings and ability to receive open credit from our suppliers and trade counterparties;
•our inability to perform our obligations under our contracts, whether due to non-performance by third parties, including our customers or counterparties, market constraints, third-party constraints, supply chain issues, legal constraints (including governmental orders or guidance), or other factors or events;
•the incurrence of costs and expenses related to unexpected or unplanned capital or maintenance expenditures, third-party claims or other factors;
•failure to implement or capitalize, or delays in implementing or capitalizing, on investment capital projects, whether due to permitting delays, permitting withdrawals or other factors;
•tightened capital markets or other factors that increase our cost of capital or limit our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, investment capital projects, working capital requirements and the repayment or refinancing of indebtedness;
•the amplification of other risks caused by volatile or closed financial markets, capital constraints, liquidity concerns and inflation;
•the use or availability of third-party assets upon which our operations depend and over which we have little or no control;
•the currency exchange rate of the Canadian dollar to the United States dollar;
•the deferral of current revenue recognition attributable to deficiency payments received from customers who fail to ship or move their minimum contracted volumes;
•significant under-utilization of our assets and facilities;
•increased costs, or lack of availability, of insurance;
•fluctuations in the debt and equity markets, including the price of PAA's units at the time of vesting under its long-term incentive plans;
•risks related to the development and operation of our assets; and
•other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil, as well as in the processing, transportation, fractionation, storage and marketing of NGL.
Other factors described herein, as well as factors that are unknown or unpredictable, could also have a material adverse effect on future results. Please read "Risk Factors" discussed in Item 1A of our 2024 Annual Report on Form 10-K. Except as required by applicable securities laws, we do not intend to update these forward-looking statements and information.
Plains GP Holdings LP published this content on November 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 07, 2025 at 21:48 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]