Net Income/(Loss) Per Common Unit

6 Months Ended

Jun. 30, 2022

We calculate basic and diluted net income/(loss) per common unit by dividing net income/(loss) attributable to PAA (after deducting amounts allocated to the preferred unitholders and participating securities) by the basic and diluted weighted average number of common units outstanding during the period. Participating securities include equity-indexed compensation plan awards that have vested distribution equivalent rights, which entitle the grantee to a cash payment equal to the cash distribution paid on our outstanding common units.

The diluted weighted average number of common units is computed based on the weighted average number of common units plus the effect of potentially dilutive securities outstanding during the period, which include (i) our Series A preferred units and (ii) our equity-indexed compensation plan awards. See Note 12 and Note 18 to our Consolidated Financial Statements included in Part IV of our 2021 Annual Report on Form 10-K for a discussion of our Series A preferred units and equity-indexed compensation plan awards. When applying the if-converted method prescribed by FASB guidance, the possible conversion of approximately 71 million Series A preferred units, on a weighted-average basis, were excluded from the calculation of diluted net income per common unit for the three and six months ended June 30, 2022 and 2021 as the effect was antidilutive for both periods. Our equity-indexed compensation plan awards that contemplate the issuance of common units are considered potentially dilutive unless (i) they become vested only upon the satisfaction of a performance condition and (ii) that performance condition has yet to be satisfied. Equity-indexed compensation plan awards that were deemed to be dilutive during the period were reduced by a hypothetical common unit repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB. For the three and six months ended June 30, 2022 and the six months ended June 30, 2021, approximately 0.8 million, 0.7 million, and 0.4 million, respectively, equity-indexed compensation plan awards, on a weighted-average basis, were dilutive, but did not change the presentation of diluted net income per common unit for the periods presented. For the three months ended June 30, 2021, approximately 0.7 million equity-indexed compensation awards, on a weighted-average basis, were excluded from the computation of diluted net loss per common unit as the effect was antidilutive.

The following table sets forth the computation of basic and diluted net income/(loss) per common unit (in millions, except per unit data):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Basic and Diluted Net Income/(Loss) per Common Unit
Net income/(loss) attributable to PAA	$	203	$	(220)	$	390	$	202
Distributions to Series A preferred unitholders	(37)		(37)		(74)		(74)
Distributions to Series B preferred unitholders	(12)		(12)		(25)		(25)
Distributions to participating securities	(1)		—		(1)		—

Net income/(loss) allocated to common unitholders (1)	$	153	$	(269)	$	290	$	103

Basic and diluted weighted average common units outstanding	702		720		703		721

Basic and diluted net income/(loss) per common unit	$	0.22	$	(0.37)	$	0.41	$	0.14

(1)We calculate net income/(loss) allocated to common unitholders based on the distributions pertaining to the current period’s net income. After adjusting for the appropriate period’s distributions, the remaining undistributed earnings or excess distributions over earnings (i.e., undistributed loss), if any, are allocated to the common unitholders and participating securities in accordance with the contractual terms of our partnership agreement in effect for the period and as further prescribed under the two-class method.