Plains All American Pipeline, L.P. (PAA)

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Plains All American Pipeline, L.P. (PAA)

NAPTP 2013 Master Limited Partnership Investor Conference Call

May 22, 2013, 09:00 am ET

Executives

Greg Armstrong - Chairman & CEO

Analysts

Presentation

Unidentified Speaker

Good morning. In an effort to keep things on time, we’ll go ahead and get started with our next presentation. I am very pleased to introduce Greg Armstrong; Chairman and CEO of Plains All American Pipeline. For those of you that aren’t familiar which I am sure pretty much everybody is, Plains All American Pipeline at the PAA level owns or operates over 18,000 miles of pipe; probably at this point over a 115 million barrels of storage. In our opinion, one of the most geographically diverse vertically integrated MLPs. And certainly everything all encompassing from the wellhead to the burner tip as it relates to crude oil and associated liquids.

So with that I’ll turn it over to Greg.

Greg Armstrong

Good morning. As has probably been the case for the last couple of presentations, our [lawyers] aren’t here in body, but they are here in spirit and they send their regards. Today's presentation, I will break it down into four component parts. First is introduction to PAA for those that are not familiar with PAA. Talk a little bit about the environment that we are operating in right now in the foreseeable future so we will talk about crude oil market fundamentals and then we will talk about PAA’s strategic positioning with respect to that market outlook and what that translates into in terms of capital investment opportunities. And then I will finish with a financial overview and just a few take away points.

From a structure standpoint PAA like many of the other MLPs has a typical structure, but in PAA's case there's two exceptions; one, we do have a majority controlled interest in another publicly traded partnership called PAA Natural Gas Storage which is just a 100% focused in on the natural gas storage business and then the other element of as you see on the upper right hand side of the slide is unlike other entities we do not have a public GP nor do we have a GP that's controlled by any one given party. We have a very diverse set of owners; a very long term oriented and focused and the dropdown box below the GP shows that they have been very supportive with respect to acquisition transactions when it comes time to modifying their incentive distribution rights to facilitate the accretion of an acquisition early on to the limited partner holders.

As [Dave] mentioned, very large asset footprint, 18,000 miles of pipelines, large portion storage, a diverse set of assets with respect to providing transportation from the wellhead we move it by truck, by train, barge, tug, and just about any other way that we can if there's not margin in it we will use people and buckets, but and right now there's quite a bit of margin in the crude oil business.

From a financial profile, we are just short of [$20 billion] in total assets and enterprise value excluding our General Partner of right at [$26 billion] and we are rated BBB flat, BAA2. We provide a significant amount of public guidance in our 8-Ks if you haven't seen that I would encourage you to take a look at it. For this year we are projecting the midpoint of our guidance range has adjusted EBITDA of $2.16 billion and adjusted net income about $1.4 billion.

We conduct our activities on four product platforms, crude oil, natural gas liquids, refined products and natural gas storage; far and away the largest component of our activities is on the crude oil platform that's where I’ll spent most of my time talking about today. That probably represents in the area of 80% to 85% of the product related activities.

We conduct our business through three segments, supply and logistics, facilities and transportation. The latter two facilities and transportation are fee based activities; that's where the majority of our capital expenditures are being made and to the chart to the right you can see the green and the light green represent those two fee based segments. And steady increase in the fee based activities and we expect that to continue for a number of years based upon the capital that we have already spend or in the process of spending.

I would also point out that all three of our segments are underpinned by significant asset presence; even our supply and logistics that is not fee based it is what we call margin based. That will actually take title to the product there to wellhead, send it simultaneously at a major delivery location and then we simply manage that gross margin by transporting the product ourselves either on our own pipelines or assets or the assets of others.

Overall, we expect our baseline activities, for fee based activities to about 75%, during periods when there are high volatile conditions that are favourable for our business because again our supply and logistics enables us to capture that. You can see there is what we have is what we call outsize performance during those years; we have had a series of years that’s been the case. We typically refer to that as non-baseline activities and as you will see later in the presentation, we retain that element of the cash flow and reinvest in the businesses as opposed to using it for distributions.

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