-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DGNQT/8k7Ya86pmW4R5QYdUiRrhWgpfO/nvw6KuFk/UvaZXA6q400KR7HqNsR2mx aFLwsO9AhCTvPb0NSM55Vw== 0001021408-02-006188.txt : 20020506 0001021408-02-006188.hdr.sgml : 20020506 ACCESSION NUMBER: 0001021408-02-006188 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020506 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20020506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLAINS ALL AMERICAN PIPELINE LP CENTRAL INDEX KEY: 0001070423 STANDARD INDUSTRIAL CLASSIFICATION: PIPE LINES (NO NATURAL GAS) [4610] IRS NUMBER: 760582150 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14569 FILM NUMBER: 02634409 BUSINESS ADDRESS: STREET 1: 500 DALLAS STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7136541414 MAIL ADDRESS: STREET 1: 500 DALLAS STREET 2: STE 700 CITY: HOUSTON STATE: TX ZIP: 77002 8-K 1 d8k.txt FORM 8-K FOR PERIOD ENDING 5/6/2002 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) - May 6, 2002 Plains All American Pipeline, L.P. (Name of Registrant as specified in its charter) DELAWARE 0-9808 76-0582150 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation or organization) Identification No.) 333 Clay Street Houston, Texas 77002 (713) 646-4100 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) N/A (Former name or former address, if changed since last report.) =============================================================================== Item 7. Financial Statements and Exhibits (c) Exhibit 99.1 - Press Release dated May 6, 2002. Item 9. Regulation FD Disclosure In accordance with General Instruction B.2. of Form 8K, the following information (including Exhibit 99.1) shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. Acquisition of Shell West Texas Pipeline Business Unit Plains All American Pipeline, L.P. (the "Partnership") announced today that it has reached a definitive agreement to acquire certain crude oil pipeline assets from Shell Pipeline Company LP (f/k/a Equilon Pipeline Company LLC) and Equilon Enterprises LLC (d.b.a. Shell Oil Products US)(collectively, "Shell"). The transaction is subject to the performance of customary due diligence and receipt of regulatory approvals and is expected to close within the next 90 days. Primary assets included in the transaction are interests in: (i) the Basin Pipeline System, (ii) the Rancho Pipeline System and (iii) the Permian Basin Gathering System. Total consideration for the assets is approximately $315 million. Historical operating and financial results are in the process of being audited, but unaudited information preliminarily indicates that the package of assets the Partnership is acquiring generated approximately $30 million of earnings before interest, depreciation, taxes and amortization ("EBITDA") during 2001 (estimated by the Partnership using unaudited historical data conformed to the Partnership's measurement of EBITDA from its existing assets). Allowing for a 12 to 18 month period to phase in the expense-related synergies, implement and commercialize operations and shut-down or otherwise optimize certain marginal assets included in the package, the Partnership anticipates that the projected EBITDA run rate will increase over time such that the EBITDA run rate for the third year under the Partnership's ownership is expected to be approximately $37.5 million. Terms of the Agreement Under the terms of the agreement, the Partnership will acquire from Shell for approximately $315 million cash (i) 100% of the outstanding partnership interests in Basin Pipeline Holdings LP, (ii) 100% of the outstanding partnership interests in Rancho Pipeline Holdings LP, (iii) the Permian Basin Gathering System and associated facilities and (iv) other small gathering assets. Description of Assets to be Acquired Basin Pipeline System. The Basin Pipeline System is a 514-mile mainline crude oil transmission system with a capacity of approximately 290,000 barrels per day into Cushing. During 2001, system throughput (as measured by deliveries at Cushing) averaged approximately 216,000 barrels per day. The size of the pipe ranges from 20 to 24 inches in diameter. The Basin system consists of three primary movements of crude oil: (1) barrels are shipped from Jal, New Mexico to facilities in Wink and Midland, Texas, where they are exchanged and/or further shipped to refining centers; (2) barrels are shipped by refiners to the Mid-Continent region on the Midland to Wichita Falls segment, with some of the barrels delivered to third-party pipelines; and (3) foreign and Gulf of Mexico barrels are delivered into Basin at Wichita Falls and these volumes, along with volumes that originate out of West Texas and New Mexico, are shipped to Cushing for further distribution to Mid-Continent or Midwest refineries. The Basin system also includes approximately 5.1 million barrels of crude oil storage capacity. Shell's ownership interest in the system ranges from approximately 78% to 89% depending upon the segment. Rancho Pipeline System. The Rancho Pipeline System is a 24-inch, 458-mile mainline crude oil transmission system with a capacity of approximately 150,000 barrels per day. During 2001, system throughput averaged approximately 98,000 barrels per day. The Rancho system transports crude oil from McCamey, Texas, to the Houston Ship Channel where it connects to the Houston refining complex. The Rancho system includes approximately 1.1 million barrels of crude oil storage capacity. Shell's ownership interest in the system ranges from approximately 45% to 58% depending upon the segment. Permian Basin Gathering System. The Permian Basin Gathering System is comprised of a 100% ownership interest in approximately 17 gathering systems and nine trunk lines with connecting injection stations and storage facilities. The Permian Basin system gathered approximately 85,000 barrels per day in 2001. The Permian Basin system includes approximately 3.0 million barrels of crude oil storage capacity. Other. The LeFors Gathering System is located in the Texas Panhandle and consists of approximately 68 miles of active trunk and gathering pipelines. In addition, there are approximately 800,000 barrels of tankage at stations in West Texas and New Mexico that are connected to, but not included in, the pipeline systems discussed above. Financing The Partnership presently intends to fund the transaction using existing availability under the Partnership's revolving credit facility. The Partnership intends to closely monitor both the equity and debt markets for desirable re-financing alternatives. Impact The following chart illustrates the quantitative impact of the assets to be acquired on selected operating and financial metrics of PAA: Pre- Post- Change Equilon Equilon -------------- Metric Transaction (1) Transaction Amount % ------ --------------- ----------- ------ ----- Operational Pipeline Transportation Volumes (bpd) 477,400 952,400 475,000 99% Miles of Pipe Owned 3,604 5,571 1,967 55% Tankage Capacity (MBbls.) 13,648(2) 23,573 9,925 73% Physical Barrels Handled (bpd) 1,005,900 1,480,900 475,000 47% Financial Total EBITDA (2002E) ($M) $124,500 $157,700 $33,200(3) 27% Notes: (1) Source: Partnership 2001 10-K, 8-K guidance for 2002 filed on March 6, 2002, and other Partnership data. (2) Includes the Partnership's Phase II and III construction projects at the Cushing Terminal, which will add a total of 2.2 million barrels of storage capacity. (3) 2002 amount represents PAA's estimate for the Shell assets to be acquired, incorporating PAA's estimate of annualized operational and administrative cost savings relative to 2001 levels. Press Release The Partnership has issued a press release with respect to the transaction, which is attached hereto on Exhibit 99.1. Forward-Looking Statements And Associated Risks All statements, other than statements of historical fact, included in this report are forward-looking statements, including, but not limited to, statements identified by the words "anticipate," "believe," "estimate," "expect," "plan," "intend" and "forecast" and similar expressions and statements regarding our business strategy, plans and objectives of our management for future operations. These statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. Certain factors could cause actual results to differ materially from results anticipated in the forward-looking statements. These factors include, but are not limited to: ... Abrupt or severe production declines or production interruptions in outer continental shelf crude oil production located offshore California and transported on the All American Pipeline; ... successful consummation of anticipated acquisitions; ... successful integration and future performance of acquired assets; ... the availability of adequate supplies of and demand for crude oil in the areas in which we operate; ... the effects of competition; ... the success of our risk management activities; ... the availability (or lack thereof) of acquisition or combination opportunities; ... our ability to receive credit on satisfactory terms; ... shortages or cost increases of power supplies, materials or labor; ... weather interference with business operations or project construction ... the impact of current and future laws and governmental regulations; ... environmental liabilities that are not covered by an indemnity or insurance; ... fluctuations in the debt and equity markets; and ... general economic, market or business conditions. The Partnership undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in the Partnership's filings with the Securities and Exchange Commission ("SEC"), which are incorporated by reference herein. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PLAINS ALL AMERICAN PIPELINE, L.P. Date: May 6, 2002 By: Plains AAP, L.P., its general partner By: Plains All American GP LLC, its general partner By: /s/ Phil Kramer ------------------------------------------- Name: Phil Kramer Title: Executive Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description ------- ----------- 99.1 Press Release dated May 6, 2002 EX-99.1 3 dex991.txt PRESS RELEASE EXHIBIT 99.1 Page 1 Contacts: Phillip D. Kramer A. Patrick Diamond Executive Vice President and CFO Manager, Special Projects 713/646-4560 - 800/564-3036 713/646-4487 - 800/564-3036 FOR IMMEDIATE RELEASE Plains All American Pipeline To Acquire West Texas Pipeline Business Unit from Shell (Houston - May 6, 2002) Plains All American Pipeline, L.P. (NYSE: PAA) announced today that it has reached a definitive agreement to acquire certain crude oil pipeline assets from Shell Pipeline Company LP (f.k.a. Equilon Pipeline Company LLC) and Equilon Enterprises LLC (d.b.a. Shell Oil Products US). The transaction is subject to the performance of customary due diligence and receipt of regulatory approvals and is expected to close within the next 90 days. Primary assets included in the transaction are interests in: (i) the Basin Pipeline System, (ii) the Rancho Pipeline System and (iii) the Permian Basin Gathering System. Total consideration for the assets is approximately $315 million. "The acquisition of Shell's West Texas pipeline assets is a seminal event for PAA," said Greg Armstrong, Chairman and Chief Executive Officer of the Partnership. "These assets significantly improve our ability to service the needs of West Texas producers and Midwest refiners as they provide us direct access to the prolific West Texas crude oil producing region as well as to foreign crude oil imports that are brought up from the Gulf Coast and moved into Cushing on the Basin system. Furthermore, the Basin system provides a direct trunk line connection to Cushing, Oklahoma, where we own significant crude oil storage capacity." Historical operating and financial results are in the process of being audited, but unaudited information preliminarily indicates that the package of assets the Partnership is acquiring generated approximately $30 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") during 2001 (estimated by the Partnership using unaudited historical data conformed to the Partnership's measurement of EBITDA from its existing assets). Terms of the Agreement Under the terms of the agreement, PAA will acquire from Shell for approximately $315 million cash (i) 100% of the outstanding partnership interests in Basin Pipeline Holdings LP, (ii) 100% of the outstanding partnership interests in Rancho Pipeline Holdings LP, (iii) the Permian Page 2 Basin Gathering System and associated facilities and (iv) other small gathering assets. Financing Plan The Partnership presently intends to fund the transaction using existing availability under its revolving credit facility. In order to position Plains All American to be able to quickly capitalize on future opportunities, the Partnership intends to closely monitor both the equity and debt markets for desirable re-financing alternatives, both to increase the equity underpinning the Partnership and to add length to its debt maturities. Conference Call: The Partnership will be discussing the transaction on its previously scheduled first quarter results conference call on Tuesday, May 7, 2002. The call will begin at 10:00 AM (Central). To participate in the call, please call 1-800-360-9865 at approximately 9:55 AM (Central). No password or reservation number is required. Webcast Instructions: To access the Internet webcast, please go to the Partnership's website at www.paalp.com, choose "investor relations", and then choose "conference calls". Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnership's website. Telephonic Replay Instructions: Call 1-800-428-6051 and enter PIN # 239736 The replay will be available beginning Tuesday, May 7, 2002, at approximately 1:00 PM (Central) and continue until midnight Friday, May 10, 2002. Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risk factors and uncertainties that could cause actual results to differ materially from results anticipated in forward-looking statements. These risks and uncertainties include, among other things, consummation of acquisition transactions, successful integration and future performance of assets acquired, abrupt or severe production declines or production interruptions in outer-continental shelf production located offshore California and transported on the All American Pipeline, availability of third party production volumes for transportation and marketing, demand for various grades of crude oil and resulting changes in pricing conditions, successful third party drilling efforts, regulatory changes, the availability of acquisition opportunities on terms favorable to the Partnership, unanticipated shortages or cost increases in materials and skilled labor, weather interference, and other factors and uncertainties inherent in the marketing, transportation, terminalling, gathering and storage of crude oil discussed in the Partnership's filings with the Securities and Exchange Commission. Plains All American Pipeline, L.P. is engaged in interstate and intrastate crude oil transportation, terminalling and storage, as well as crude oil gathering and marketing activities, primarily in Texas, California, Oklahoma, Louisiana and the Canadian Provinces of Alberta and Saskatchewan. The Partnership's common units are traded on the New York Stock Exchange under the symbol "PAA." The Partnership is headquartered in Houston, Texas. # # # -----END PRIVACY-ENHANCED MESSAGE-----