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Plains All American Pipeline L.P. Reports Operating Results (10-Q)

August 09, 2012 | About:
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10qk

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Plains All American Pipeline L.P. (PAA) filed Quarterly Report for the period ended 2012-06-30.

Plains All American Pipeline, L.p. has a market cap of $13.9 billion; its shares were traded at around $85.47 with a P/E ratio of 14.9 and P/S ratio of 0.4. The dividend yield of Plains All American Pipeline, L.p. stocks is 4.9%. Plains All American Pipeline, L.p. had an annual average earning growth of 16.2% over the past 10 years.

Highlight of Business Operations:

During the first six months of 2012, our net income attributable to Plains was approximately $609 million, or $2.88 per diluted limited partner unit, representing increases of 49% and 42%, respectively, as compared to net income attributable to Plains of approximately $408 million, or $2.03 per diluted limited partner unit, recognized during the first six months of 2011. The major items impacting the favorable performance between periods include increased utilization of certain existing transportation assets, incremental fee-based contributions associated with acquisition and expansion capital invested in our transportation and facilities segments and increased lease-gathering volumes and improved unit margins in our supply and logistics segment. The majority of the incremental volumes and a portion of the enhanced unit margins are attributable to the increased production from the development of North American crude oil and liquids-rich resource plays. Favorable basis and quality differentials and the mark-to-market impact for derivative instruments (partially offset by related write downs of inventory) also contributed substantially to margins in our supply and logistics segment. These favorable contributions to our supply and logistics segment were partially offset by lower margins on our NGL sales due to lower NGL prices and less favorable market conditions during the quarter.

· Loss Allowance Revenue As is common in the industry, our tariffs incorporate a loss allowance factor that is intended to, among other things, offset losses due to evaporation, measurement and other losses in transit. We value the variance of allowance volumes to actual losses at the estimated net realizable value (including the impact of gains and losses from derivative-related activities) at the time the variance occurred and the result is recorded as either an increase or decrease to tariff revenues. The loss allowance revenue increased by approximately $4 million and $15 million for the three and six months ended June 30, 2012 compared to the three and six months ended June 30, 2011. The increase was primarily due to higher volumes during the comparative 2012 periods, as well as the impact of gains from derivative activities.

· Other Acquisitions and Major Expansion Projects Expansion projects that were completed in phases throughout recent years at some of our major terminal locations, as well as the acquisition of our Yorktown facility in December 2011, favorably impacted revenues and volumes for the comparative 2012 periods. We estimate that these expansion and acquisition activities increased our revenues by approximately $11 million and $20 million, respectively, for the three and six months ended June 30, 2012 compared to the three and six months ended June 30, 2011. The most significant expansions were those completed at our Cushing and St. James facilities and resulted in increased storage capacity and rail and barge loading and receipt capability.

The New York Mercantile Exchange (NYMEX) benchmark price of crude oil ranged from approximately $77 to $106 per barrel and $90 to $115 per barrel during the three months ended June 30, 2012 and 2011, respectively, and from $77 to $111 per barrel and $84 to $115 per barrel during the six months ended June 30, 2012 and 2011, respectively. Because the commodities that we buy and sell are generally indexed to the same pricing indices for both the sales and purchases, revenues and costs related to purchases will fluctuate with market prices. However, the margins related to those sales and purchases will not necessarily have a corresponding increase or decrease. The absolute amount of our revenues and purchases increased for the three and six months ended June 30, 2012 and 2011 resulting from increases in volumes in the comparative 2012 periods.

Net cash provided by operating activities for the first six months of 2011 was approximately $972 million, also resulting primarily from earnings from our operations. Additionally, cash flow was positively impacted by the liquidation of (i) crude oil inventory that had been stored in a contango market, and (ii) NGL inventory used for heating.

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