(Houston - October 22, 2008) -- Plains All American Pipeline, L.P. (NYSE:PAA) today announced a cash distribution of $0.8925 per unit ($3.57 per unit on an annualized basis) on all of its outstanding limited partner units. The distribution will be payable on November 14, 2008, to holders of record of such units at the close of business on November 4, 2008. The distribution represents an increase of approximately 6.3% over the quarterly distribution of $0.84 per unit paid in November 2007 and an increase of approximately 0.6% over the August 2008 distribution of $0.8875 per unit. This constitutes the 18th consecutive increase in quarterly distributions for the Partnership and the 25th increase in the last 31 quarters.
"The Partnership's 6.3% distribution growth in 2008 is solidly within our targeted 5% to 8% range for annualized distribution growth established at the beginning of 2008, but is below the increased range we targeted in connection with the Rainbow Pipeline acquisition," said Greg L. Armstrong, Chairman and CEO. "As we deliberated our distribution level for this quarter, we felt it was important and prudent to adapt to the recent and severe deterioration in global financial markets by balancing the near-term benefits of distribution growth with the long-term benefits of retaining excess cash flow during such challenging times for capital formation. We will continue to monitor these market conditions as they evolve and it is our intent to maintain an appropriate balance between these two important considerations."
"We believe PAA is well positioned to continue to deliver solid operating and financial results and to execute an attractive organic growth capital program in 2009 that is not dependent on raising additional capital," continued Armstrong. "The fundamentals of PAA's energy infrastructure business remain sound as we see continued demand for PAA's assets and services, which play a crucial role in the distribution of North American energy products."
"Recent turmoil in the financial markets has highlighted in a profound way the importance of a strong balance sheet and liquidity position – attributes that PAA has valued and maintained for quite some time," said Armstrong. "Although we did not anticipate the severity and magnitude of the adverse conditions that have beset the global financial markets, we have been preparing for a significant softening of the U.S. economy and financial markets. Accordingly, we have taken a number of proactive and preemptive steps to maintain PAA's financial strength and flexibility and our ability to generate baseline cash flow."
Armstrong stated that these preparations have included:
- Pre-funding or contemporaneously funding acquisitions and expansion capital programs in order to maintain a strong balance sheet and high levels of liquidity;
- Maintaining a diversified and scalable expansion capital program; and
- Entering into long-term leases on newly constructed tanks and tanks previously reserved for PAA's proprietary use, thereby increasing the Partnership's fee-based business activities while also reducing potential working capital requirements.
The Partnership stated that as of September 30, 2008, it had $765 million of availability (net of approximately $73 million of issued letters of credit) under its $1.6 billion, committed revolving credit facility that matures in 2012. The $762 million balance outstanding under the credit facility at September 30th primarily relates to a routine seasonal LPG inventory build, the majority of which has been sold using forward physical or financial contracts for delivery during the 2008/2009 winter heating season.
The Partnership's long-term debt at September 30, 2008, was $3.2 billion (which is unchanged from June 30, 2008). This debt consists entirely of senior unsecured notes, with fixed interest rates on 98% of the balance. The average maturity of PAA's senior notes is approximately 13 years, with only one series of senior notes maturing in the next three years ($175 million in August 2009).
The Partnership currently estimates that its expansion capital program for 2009 will approximate $250 million. The vast majority of funding for the 2009 capital program and the remainder of the 2008 capital program will be provided by a combination of proceeds associated with planned reductions in crude oil and LPG inventories, cash flow in excess of equity distributions and pending asset sales. Accordingly, the Partnership believes that it will maintain ample liquidity and healthy credit metrics throughout 2009 without needing to access the capital markets for equity or debt.
The Partnership is scheduled to release its third-quarter operating and financial results on November 5, 2008, at which time it also expects to furnish via Form 8-K operating and financial guidance for the fourth quarter of 2008 and additional commentary on preliminary operating and financial guidance for full year 2009, which was initially furnished on Form 8-K on May 29, 2008. A conference call with the financial community is scheduled for November 6, 2008, to discuss such information, which will include additional details regarding the Partnership's overall positioning in the current environment and its plans for 2009.
Forward Looking Statements
Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward-looking statements. These risks and uncertainties include, among other things: failure to implement or capitalize on planned internal growth projects; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; the success of our risk management activities; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; abrupt or severe declines or interruptions in outer continental shelf production located offshore California and transported on our pipeline system; shortages or cost increases of power supplies, materials or labor; the availability of adequate third-party production volumes for transportation and marketing in the areas in which we operate and other factors that could cause declines in volumes shipped on our pipelines by us and third-party shippers, such as declines in production from existing oil and gas reserves or failure to develop additional oil and gas reserves; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; the availability of, and our ability to consummate, acquisition or combination opportunities; our access to capital to fund additional acquisitions and our ability to obtain debt or equity financing on satisfactory terms; the successful integration and future performance of acquired assets and businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; unanticipated changes in crude oil market structure and volatility (or lack thereof); the impact of current and future laws, rulings, governmental regulations and interpretations; the effects of competition; interruptions in service and fluctuations in tariffs or volumes on third-party pipelines; increased costs or lack of availability of insurance; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; the currency exchange rate of the Canadian dollar; weather interference with business operations or project construction; risks related to the development and operation of natural gas storage facilities; general economic, market or business conditions; and other factors and uncertainties inherent in the transportation, storage, terminalling, and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products discussed in the Partnership's filings with the Securities and Exchange Commission.
Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. Through its 50% ownership in PAA/Vulcan Gas Storage LLC, the partnership is also engaged in the development and operation of natural gas storage facilities. The Partnership is headquartered in Houston, Texas.
Contacts:
Roy I. Lamoreaux
Manager, Investor Relations
713-646-4222 or 800-564-3036
A. Patrick Diamond
Vice President
713-646-4487 or 800-564-3036
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