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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on July 29, 2013


Registration No. 333-            

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



PLAINS GP HOLDINGS, L.P.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  4610
(Primary Standard Industrial
Classification Code Number)
  90-1005472
(IRS Employer
Identification Number)

333 Clay Street, Suite 1600
Houston, Texas 77002
(713) 646-4100
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)

Richard McGee
Executive Vice President
333 Clay Street, Suite 1600
Houston, Texas 77002
(713) 646-4100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

David P. Oelman
Alan Beck

Vinson & Elkins L.L.P.
1001 Fannin Street, Suite 2500
Houston, Texas 77002
(713) 758-2222

 

Joshua Davidson
Jason A. Rocha

Baker Botts L.L.P.
910 Louisiana Street
Houston, Texas 77002
(713) 229-1234



Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.



         If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

         If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

         If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

         If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Please read the definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

CALCULATION OF REGISTRATION FEE

             
   
Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)(2)

  Amount of
Registration Fee

 
   

Class A Shares

  $ 1,000,000,000   $ 136,400  

 

 
(1)
Includes Class A shares issuable upon exercise of the underwriters' option to purchase additional Class A shares.

(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

         The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, dated July 29, 2013

PROSPECTUS


PLAINS GP HOLDINGS, L.P.
Class A Shares
Representing Limited Partner Interests


This is the initial public offering of our Class A shares. We are a recently formed Delaware limited partnership that will elect to be treated as a corporation for U.S. federal income tax purposes. We expect the initial public offering price of our Class A shares to be between $             and $             per Class A share. Upon completion of this offering, we will own         % of the limited partner interests in Plains AAP, L.P., which directly owns all of the incentive distribution rights and indirectly owns the 2% general partner interest in Plains All American Pipeline, L.P. (NYSE: PAA), which we refer to as PAA. PAA is a publicly traded Delaware limited partnership that is engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as the processing, transportation, fractionation, storage and marketing of natural gas liquids. PAA also owns and operates natural gas storage facilities.

Before this offering, there has been no public market for our Class A shares. We intend to apply to list our Class A shares on the New York Stock Exchange under the symbol "PAGP."

Investing in our Class A shares involves risks. Please read "Risk Factors" beginning on page 23.

These risks include the following:

    Our cash flow will be entirely dependent upon the ability of PAA to make cash distributions to Plains AAP, and the ability of Plains AAP to make cash distributions to us.

    The incentive distributions Plains AAP is entitled to receive may be limited or modified without the consent of our shareholders, which may reduce cash distributions to you.

    Our shareholders will not elect or have the power to remove our general partner and until certain conditions are met will not vote in the election of our general partner's directors. Upon completion of this offering, the Existing Owners will own a sufficient number of shares to allow them to prevent the removal of our general partner.

    You will experience immediate and substantial dilution of $             per Class A share in the net tangible book value of your Class A shares.

    Conflicts of interest may arise as a result of our organizational structure and the relationships among us, PAA, our respective general partners, the Existing Owners and affiliated entities.

    If PAA were to become subject to entity-level taxation for federal or state tax purposes, then our cash available for distribution to you would be substantially reduced.

 
  Per Class A
Share
  Total

Initial public offering price

  $     $  

Underwriting discount

  $     $  

Proceeds to us (before expenses)

  $     $  

We have granted the underwriters a 30-day option to purchase up to an additional                     Class A shares on the same terms and conditions as set forth above if the underwriters sell more than                     Class A shares in this offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the Class A shares on or about                           , 2013.


Barclays

Prospectus dated                         , 2013


Table of Contents


TABLE OF CONTENTS

SUMMARY

    1  

Plains GP Holdings, L.P. 

    1  

Plains All American Pipeline, L.P. 

    5  

General

    5  

PAA's Primary Growth Drivers

    7  

PAA's Business Strategy

    9  

PAA's Financial Strategy

    10  

Our Financial Strategy

    11  

PAA's Competitive Strengths

    11  

Organizational Structure

    12  

Risk Factors

    16  

The Offering

    17  

Summary Historical and Pro Forma Financial Data

    21  

RISK FACTORS

    23  

Risks Inherent in an Investment in Us

    23  

Risks Related to Conflicts of Interest

    33  

Risks Related to PAA's Business

    36  

Tax Risks

    50  

FORWARD-LOOKING STATEMENTS

    53  

ORGANIZATIONAL STRUCTURE

    55  

Recapitalization

    56  

Our Class A Shares and Class B Shares

    57  

Exchangeable LP Structure

    57  

Ownership of Our General Partner; Election of Directors

    57  

Holding Company Structure

    58  

USE OF PROCEEDS

    59  

CAPITALIZATION

    60  

DILUTION

    61  

OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS

    62  

General

    62  

AAP Management Units

    65  

Our Initial Distribution Rate

    65  

Overview of Presentation

    69  

Unaudited Pro Forma Available Cash to Pay Distributions for the Year Ended December 31, 2012 and the Twelve Months Ended March 31, 2013

    69  

Estimated Minimum Cash Available for Distribution Based upon Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P. 

    72  

Assumptions and Considerations Related to the Estimated Minimum Cash Available for Distribution Based upon Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P. 

    75  

HOW WE MAKE CASH DISTRIBUTIONS

    80  

General

    80  

Definition of Available Cash

    80  

Our Sources of Available Cash

    80  

Shares

    81  

General Partner Interest

    81  

Distributions of Cash Upon Liquidation

    81  

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

    82  

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Table of Contents

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    84  

Overview

    84  

Overview of Operating Results, Capital Investments and Significant Activities

    86  

Acquisitions and Internal Growth Projects

    87  

Critical Accounting Policies and Estimates

    89  

Recent Accounting Pronouncements

    92  

Results of Operations

    92  

Liquidity and Capital Resources

    108  

Contingencies

    116  

Commitments

    116  

Off-Balance Sheet Arrangements

    117  

Investments in Unconsolidated Entities

    117  

PAA's Quantitative and Qualitative Disclosures About Market Risk

    117  

OUR BUSINESS

    120  

General

    120  

Our Financial Strategy

    124  

How Our Partnership Agreement Terms Differ from those of Other Publicly Traded Partnerships

    125  

Legal Proceedings

    125  

Employees

    125  

BUSINESS OF PLAINS ALL AMERICAN PIPELINE, L.P. 

    127  

General

    127  

PAA's Primary Growth Drivers

    128  

PAA's Business Strategy

    130  

PAA's Financial Strategy

    131  

PAA's Competitive Strengths

    131  

Global Petroleum Market Overview

    132  

Description of Segments and Associated Assets

    140  

Impact of Commodity Price Volatility and Dynamic Market Conditions on PAA's Business Model

    156  

Risk Management

    158  

Geographic Data; Financial Information about Segments

    158  

Customers

    158  

Competition

    159  

Regulation

    159  

Environmental, Health and Safety Regulation

    160  

Other Regulation

    167  

Operational Hazards and Insurance

    171  

Title to Properties and Rights-of-Way

    172  

Employees and Labor Relations

    172  

MANAGEMENT

    173  

Our Management and Governance

    173  

Directors and Executive Officers of Our General Partner and GP LLC

    174  

Independent Directors of GP LLC

    177  

Election of Directors

    178  

Our Board Committees

    180  

PAA GP Holdings LLC Long-Term Incentive Plan

    181  

AAP Management Units

    183  

Compensation of Our Officers

    184  

Compensation of Our Directors

    184  

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Table of Contents

Compensation Committee Interlocks and Insider Participation

    185  

COMPENSATION DISCUSSION AND ANALYSIS

    186  

PAA Background

    186  

Objectives

    186  

Elements of Compensation

    187  

Relation of Compensation Elements to Compensation Objectives

    189  

Application of Compensation Elements

    189  

Application in 2012

    192  

Other Compensation Related Matters

    193  

Relation of Compensation Policies and Practices to Risk Management

    194  

Summary Compensation Table

    195  

Grants of Plan-Based Awards Table

    196  

Narrative Disclosure to Summary Compensation Table

    196  

Employment Contracts

    197  

Outstanding Equity Awards at Fiscal Year-End

    198  

Option Exercises and Units Vested

    199  

Pension Benefits

    200  

Nonqualified Deferred Compensation and Other Nonqualified Deferred Compensation Plans

    200  

Potential Payments upon Termination or Change-in-Control

    201  

Confidentiality, Non-Compete and Non-Solicitation Arrangements

    206  

Compensation of Directors

    206  

Reimbursement of Expenses of PAA's General Partner and its Affiliates

    207  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

    208  

Plains GP Holdings, L.P. 

    208  

Ownership of General Partner Entities

    210  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    211  

Limited Partnership Agreement of Plains AAP, L.P. 

    211  

Administrative Agreement

    213  

Contribution Agreement

    213  

Registration Rights Agreement

    213  

CONFLICTS OF INTEREST, FIDUCIARY DUTIES AND ADMINISTRATIVE AGREEMENT

    214  

Conflicts of Interest

    214  

Potential for Conflicts

    214  

Conflicts Resolution

    216  

Fiduciary Duties of Our General Partner

    216  

Indemnification

    219  

Administrative Agreement

    220  

DESCRIPTION OF OUR SHARES

    221  

Class A Shares and Class B Shares

    221  

Exchange Right

    221  

Transfer of Class A Shares and Class B Shares

    221  

Transfer Agent and Registrar

    222  

COMPARISON OF RIGHTS OF HOLDERS OF PAA'S COMMON UNITS AND OUR CLASS A SHARES

    223  

DESCRIPTION OF OUR PARTNERSHIP AGREEMENT

    225  

Organization and Duration

    225  

Purpose

    225  

Power of Attorney

    226  

Capital Contributions

    226  

Applicable Law; Forum, Venue and Jurisdiction

    226  

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Table of Contents

Limited Liability

    226  

Limited Voting Rights

    227  

Transfer of Ownership Interests in Our General Partner

    228  

Issuance of Additional Securities

    229  

Amendments to Our Partnership Agreement

    229  

Merger, Sale or Other Disposition of Assets

    231  

Termination or Dissolution

    231  

Liquidation and Distribution of Proceeds

    232  

Withdrawal or Removal of the General Partner

    232  

Transfer of General Partner Interest

    233  

Change of Management Provision

    233  

Limited Call Right

    233  

Meetings; Voting

    234  

Public Election of Directors Following Trigger Date

    234  

Status as Limited Partner

    236  

Non-Citizen Assignees; Redemption

    236  

Indemnification

    236  

Reimbursement of Expenses

    237  

Books and Reports

    237  

Right to Inspect Our Books and Records

    237  

PLAINS ALL AMERICAN PIPELINE, L.P.'s CASH DISTRIBUTION POLICY

    238  

Distributions of Available Cash

    238  

Operating Surplus and Capital Surplus

    238  

Incentive Distribution Rights

    239  

Effect of Issuance of Additional Units

    239  

Quarterly Distributions of Available Cash

    239  

Distributions From Operating Surplus

    239  

Incentive Distribution Rights

    239  

Adjustments to Incentive Distribution Rights

    240  

Distributions from Capital Surplus

    240  

Adjustment to the Minimum Quarterly Distribution and Target Distribution Levels

    241  

Distribution of Cash Upon Liquidation

    242  

MATERIAL PROVISIONS OF THE PARTNERSHIP AGREEMENT OF PLAINS ALL AMERICAN PIPELINE,  L.P. 

    243  

Purpose

    243  

Power of Attorney

    243  

Reimbursements of PAA's General Partner

    243  

Issuance of Additional Securities

    243  

Amendments to PAA Partnership Agreement

    244  

Withdrawal or Removal of PAA's General Partner

    244  

Liquidation and Distribution of Proceeds

    244  

Change of Management Provisions

    245  

Limited Call Right

    245  

Indemnification

    245  

Registration Rights

    245  

SHARES ELIGIBLE FOR FUTURE SALE

    246  

Rule 144

    246  

Issuance of Additional Securities

    246  

Registration Rights Agreement

    247  

Lock-Up Agreements

    247  

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MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES FOR NON-U.S. HOLDERS

    248  

Non-U.S. Holder Defined

    249  

Distributions

    249  

Gain on Disposition of Class A Shares

    250  

U.S. Federal Estate Tax

    251  

Backup Withholding and Information Reporting

    251  

Legislation Affecting Class A Shares Held Through Foreign Accounts

    251  

INVESTMENT IN US BY EMPLOYEE BENEFIT PLANS

    253  

UNDERWRITING

    255  

Commissions and Expenses

    255  

Option to Purchase Additional Class A Shares

    255  

Lock-Up Agreements

    256  

Offering Price Determination

    256  

Indemnification

    257  

Stabilization, Short Positions and Penalty Bids

    257  

Electronic Distribution

    258  

New York Stock Exchange

    258  

Discretionary Sales

    258  

Stamp Taxes

    258  

Relationships

    258  

Selling Restrictions

    259  

LEGAL MATTERS

    262  

EXPERTS

    262  

WHERE YOU CAN FIND MORE INFORMATION

    262  

INDEX TO FINANCIAL STATEMENTS

    F-1  

APPENDIX A    Amended and Restated Agreement of Limited Partnership of Plains GP Holdings, L.P.

    A-1  

APPENDIX B    Glossary of Selected Terms

    B-1  



        You should rely only on the information contained or incorporated by reference in this prospectus and any free writing prospectus prepared by or on behalf of us or information to which we have referred you. We have not, and the underwriters have not, authorized anyone to provide you with additional or different information from that contained or incorporated by reference in this prospectus or any free writing prospectus. If anyone provides you with additional, different or inconsistent information you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. Unless otherwise indicated, you should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only, regardless of the time of delivery of this prospectus or any sale of Class A shares offered hereby.

        Except as otherwise indicated, the information presented in this prospectus assumes (1) an initial public offering price of $      per Class A share and (2) that the underwriters do not exercise their option to purchase additional Class A shares from us. All references in this prospectus to:

    "our," "we," and "us" refer to Plains GP Holdings, L.P. and its wholly owned subsidiaries, after giving effect to the reorganization transactions described in "Organizational Structure";

    "shares" refer to the Class A shares and Class B shares representing limited partner interests in us following this offering, and references to our "shareholders" refer to the persons holding such limited partner interests;

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Table of Contents

    "PAA" refer to Plains All American Pipeline, L.P. (NYSE: PAA) and its operating subsidiaries collectively, or to Plains All American Pipeline, L.P., individually, as the context may require;

    "PAA GP" refer to PAA GP LLC, the general partner of PAA;

    "AAP" refer to Plains AAP, L.P., which owns a 100% membership interest in PAA GP;

    "GP LLC" refer to Plains All American GP LLC, the general partner of AAP;

    our "general partner" refer to PAA GP Holdings LLC;

    our "partnership agreement" refer to the Amended and Restated Agreement of Limited Partnership of Plains GP Holdings, L.P. to be adopted in connection with the closing of this offering;

    "affiliates" of our general partner do not include the Existing Owners, other than PAA Management, L.P.; and

    "Existing Owners" refer to the entities and individuals that own capital interests in AAP and GP LLC as of the date of this prospectus, including, but not limited to, PAA Management, L.P. and certain entities affiliated with Occidental Petroleum Corporation, The Energy & Minerals Group, and Kayne Anderson Investment Management Inc.

        Except as otherwise indicated, all discussions in this prospectus regarding ownership in us or AAP assume no conversion of Class B Units (representing profits interests) in AAP held by members of PAA management, which we refer to as AAP management units. Please see "Summary—Organizational Structure" for a diagram depicting our organizational structure immediately following the completion of this offering (assuming the underwriters' option to purchase additional Class A shares is not exercised).

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Table of Contents


SUMMARY

        This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical consolidated financial statements and pro forma condensed consolidated financial statements and the notes to those financial statements, and the other documents to which we refer for a more complete understanding of this offering. Furthermore, you should carefully read "Risk Factors" and "Forward-Looking Statements" for more information about important risks that you should consider before making a decision to purchase Class A shares in this offering. We include a glossary of some of the terms used in this prospectus as Appendix B.


Plains GP Holdings, L.P.

        We are a recently formed Delaware limited partnership that will elect to be treated as a corporation for U.S. federal income tax purposes. Our only cash-generating assets at the closing of this offering will consist of                Class A Units in AAP, which we refer to as AAP units, which represent a      % limited partner interest in AAP. AAP currently owns all of the incentive distribution rights, or IDRs, and an indirect 2% general partner interest in PAA.

        PAA is a publicly traded limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of natural gas liquids ("NGL"). PAA is one of the largest publicly traded partnerships with an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. As of March 31, 2013, the market capitalization of PAA's common units totaled approximately $19 billion, and on an average daily basis, PAA transported over 3.5 million barrels of crude oil and NGL.

        PAA's principal business strategy is to provide competitive and efficient midstream transportation, terminalling, storage, processing, fractionation and supply and logistics services to producers, refiners and other customers. Toward this end, PAA endeavors to address regional supply and demand imbalances for crude oil and NGL in the United States and Canada by combining the strategic location and capabilities of its transportation, terminalling, storage, processing and fractionation assets with its extensive supply, logistics and distribution expertise. To a lesser extent, PAA also engages in similar activities for natural gas and refined products.

        Based on PAA's cash distribution declared for the quarter ended June 30, 2013, we expect our initial quarterly cash distribution to be $        per Class A share, or $        per Class A share on an annualized basis. In general, distributions on the Class A shares will be treated as distributions on corporate stock for federal income tax purposes. No Schedule K-1s will be issued with respect to the Class A shares, but instead holders of Class A shares will receive a Form 1099 from us with respect to distributions received on the Class A shares. We anticipate that available deductions will offset our taxable income for an extended period of time following the closing of this offering. During this period, which we estimate will include, at a minimum, each of the periods ending December 31, 2014, 2015 and 2016, none of the distributions paid to you should be treated as taxable dividend income under current existing federal tax regulations, but instead will be treated as a return of capital. Please read "—The Offering—Material Tax Consequences."

        Our primary business objective is to increase our cash available for distribution to our Class A shareholders through the execution by PAA of its business strategy. In addition, we may facilitate PAA's growth activities through various means, including, but not limited to, modifying PAA's IDRs, making loans, purchasing equity interests or providing other forms of financial support to PAA.

        Unless we directly acquire and hold assets or businesses in the future, our cash flows will be generated solely from the cash distributions we receive from AAP. AAP currently receives all of its cash flows from distributions on its direct and indirect interests in PAA. As required by its partnership

 

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agreement, PAA has historically distributed all of its available cash (net of reserves established by GP LLC) within 45 days of the end of each quarter. AAP's ownership of PAA's IDRs, together with its indirect ownership of the 2% general partner interest, entitles it to receive, without duplication:

    15% of all cash distributed in a quarter after $0.2250 has been distributed in respect of each common unit of PAA for that quarter;

    25% of all cash distributed in a quarter after $0.2475 has been distributed in respect of each common unit of PAA for that quarter; and

    50% of all cash distributed in a quarter after $0.3375 has been distributed in respect of each common unit of PAA for that quarter.

        Although not required to do so, in response to past requests by PAA management in connection with PAA's acquisition activities, the Existing Owners have approved temporary and permanent reductions in IDR payments. Such modifications were implemented with a view toward enhancing PAA's competitiveness for such acquisitions and managing the overall cost of equity capital while achieving an appropriate balance between short-term and long-term accretion to PAA's limited partners and the holders of its general partner interest and IDRs. While these IDR reductions reduced the amount of cash that would otherwise have been distributed in respect of the IDRs, we believe they have contributed to long-term accretion in the amount of distributions paid with respect to the IDRs through participation in PAA growth opportunities that may not have been available in the absence of such reductions.

        The Existing Owners have approved IDR reductions in connection with the closing of four prior PAA acquisitions: the Pacific Energy Partners, L.P. acquisition in 2006, the Rainbow Pipeline Company acquisition in 2008, the Vulcan Gas Storage acquisition in 2009, and the BP Canada Energy Company acquisition in 2012 (the "BP NGL Acquisition"). For the period from 2006 through the distribution date for the second quarter of 2013, these IDR reductions have totaled $105.5 million in the aggregate. Currently, the following IDR reductions are in place: $15.0 million in 2013 (of which $11.3 million will have been satisfied in connection with the distribution with respect to the quarter ended June 30, 2013), $11.3 million in 2014, and $10.0 million per year thereafter. Our general partner may, in certain circumstances, similarly support PAA in the future by agreeing to waive, modify or otherwise adjust payments relating to PAA's IDRs. Any such waiver, modification or other adjustment to the IDRs will require the consent of our general partner, but not our shareholders.

        We, the Existing Owners and the members of PAA management who hold AAP management units will each receive our proportionate share of the distributions received by AAP from PAA, after deducting certain general, administrative and other similar expenses, our public company expenses, payments of principal and interest on AAP's outstanding indebtedness, taxes and any capital contributed (or retained for future contribution) by AAP to maintain its indirect 2% general partner interest in PAA upon the issuance of additional PAA common units, except to the extent funded by debt. We intend to pay to our Class A shareholders, on a quarterly basis, distributions equal to the cash AAP distributes to us, less income taxes and any reserves established by our general partner.

        The cash distributions AAP receives from PAA are tied to (i) PAA's per unit distribution level and (ii) the number of PAA common units outstanding. An increase in either factor (assuming the other factor remains constant or increases) will generally, absent additional IDR reductions, result in an increase in the amount of cash distributions AAP receives from PAA, a portion of which we, in turn, receive from AAP. Because the IDRs currently participate at the maximum target cash distribution level, future growth in distributions we receive from PAA will not result from an increase in the target cash distribution level associated with the IDRs. Since its initial public offering, the growth of PAA's business has resulted in significant increases in both its per unit distribution level and outstanding equity capitalization. Since May 2004, on a split-adjusted basis, PAA has increased its quarterly cash distribution by approximately 109% from $0.28125 per common unit, or $1.125 on an annualized basis,

 

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to $0.5875 per common unit, or $2.35 on an annualized basis, for the quarter ended June 30, 2013. During the same period, PAA issued a total of approximately 218 million common units, representing an increase of approximately 175% of total common units outstanding.

        The graph below illustrates the historical growth in PAA's actual distributions per unit, the number of PAA common units outstanding and the aggregate distributions paid by PAA during each of the periods presented.

GRAPHIC


Note:
Historical PAA distributions per unit and PAA units outstanding adjusted for two-for-one unit split completed on October 1, 2012.

(1)
Represents estimated distributions to be paid during 2013, assuming the distribution paid in respect of the third quarter is held constant relative to the distribution of $0.5875 per unit paid in respect of the second quarter.

(2)
Represents average units outstanding as of the record date for each quarterly distribution paid during the period. The average units outstanding during the 2013 period assume the units outstanding as of the record date for the third quarter distribution is held constant for the fourth quarter.

 

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        The graph below illustrates the historical growth in PAA's annual distributions paid in respect of the 2% general partner interest and the IDRs. These distributions to AAP have grown at a compound annual growth rate (CAGR) of approximately 47% since 2004 (based on an assumed annualized distribution rate of $2.31 per unit for 2013, as described below).

GRAPHIC


Note:
Amounts shown in the graph are historical aggregate distributions by PAA to AAP and are net of IDR reductions. Amounts shown in the graph have also not been reduced for amounts payable by AAP to AAP management units, which are quantified below the graph as "AAP Management Unit Distributions." Neither the amounts shown in the graph nor the AAP Management Unit Distributions take into account the funding of any contribution necessary to maintain AAP's indirect 2% general partner interest in PAA. Please read "—Our Financial Strategy" and "Management—AAP Management Units."

(1)
Represents estimated distributions to be paid during 2013, assuming the distribution paid in respect of the third quarter is held constant relative to the distribution of $0.5875 per unit paid in respect of the second quarter.

 

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        The graph set forth below illustrates the impact on distributions from PAA to AAP as a result of PAA raising or lowering its quarterly cash distribution from PAA's declared distribution with respect to the second quarter of 2013 of $0.5875 per unit, or $2.35 on an annualized basis, based on AAP's direct and indirect ownership of partnership interests in PAA as of the closing of this offering and assuming that PAA's outstanding partnership interests remain constant. This information is presented for illustrative purposes only and is not intended to be a prediction of future performance.

GRAPHIC


Note:
Amounts shown in the graph represent potential distributions by PAA to AAP assuming different hypothetical PAA distributions per common unit and are net of permanent $10 million annual IDR reductions associated with the BP NGL Acquisition. Amounts shown in the graph have not been reduced for amounts payable by AAP to AAP management units, which are quantified below the graph as "AAP Management Unit Distributions."

        The impact on AAP of changes in PAA's per unit cash distribution levels will vary depending on several factors, including the number of PAA's outstanding common units on the record date for cash distributions and the impact of the IDR structure. In addition, the level of cash distributions AAP receives is subject to risks associated with the underlying business of, and an investment in, PAA. Please read "Risk Factors."


Plains All American Pipeline, L.P.

General

        PAA manages its operations through three operating segments: (i) Transportation, (ii) Facilities, and (iii) Supply and Logistics. Following is a description of the activities and assets for each of PAA's business segments as of December 31, 2012:

        Transportation Segment.    PAA's transportation segment operations generally consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. PAA generates revenue through a combination of tariffs, third-party leases of pipeline capacity and other transportation fees. As of December 31, 2012, PAA employed a variety of owned or leased long-term physical assets throughout the United States and Canada in this segment, including approximately:

    17,400 miles of active crude oil, NGL and refined products pipelines and gathering systems;

 

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    23 million barrels of active, above-ground tank capacity used primarily to facilitate pipeline throughput;

    582 trailers (primarily in Canada); and

    104 transport and storage barges and 51 transport tugs through its interest in Settoon Towing, LLC ("Settoon Towing").

        PAA also includes in this segment its equity earnings from its investments in Settoon Towing and the White Cliffs, Butte, Frontier and Eagle Ford pipeline systems, in which it owns noncontrolling interests.

        Facilities Segment.    PAA's facilities segment operations generally consist of fee-based activities associated with providing storage, terminalling and throughput services for crude oil, refined products, NGL and natural gas, NGL fractionation and isomerization services and natural gas and condensate processing services. PAA generates revenue through a combination of month-to-month and multi-year leases and processing arrangements. As of December 31, 2012, PAA owned, operated or employed a variety of long-term physical assets throughout the United States and Canada in this segment, including:

    approximately 74 million barrels of crude oil and refined products storage capacity primarily at its terminalling and storage locations;

    approximately 22 million barrels of NGL storage capacity;

    approximately 93 billion cubic feet ("Bcf") of natural gas storage working capacity;

    approximately 16 Bcf of base gas in storage facilities;

    11 natural gas processing plants located throughout Canada and the Gulf Coast area of the United States;

    seven fractionation plants located throughout Canada and the United States with an aggregate gross processing capacity of approximately 272,100 barrels per day, and an isomerization and fractionation facility in California with an aggregate processing capacity of approximately 14,000 barrels per day;

    approximately 1,400 miles of active pipelines that support PAA's facilities assets, consisting primarily of NGL and natural gas pipelines; and

    23 crude oil and NGL rail terminals located throughout the United States and Canada.

        Supply and Logistics Segment.    PAA's supply and logistics segment operations generally consist of the following merchant-related activities:

    the purchase of U.S. and Canadian crude oil at the wellhead, the bulk purchase of crude oil at pipeline, terminal and rail facilities, and the purchase of cargos at their load port and various other locations in transit;

    the storage of inventory during contango market conditions and the seasonal storage of NGL;

    the purchase of NGL from producers, refiners, processors and other marketers;

    the resale or exchange of crude oil and NGL at various points along the distribution chain to refiners or other resellers to maximize profits; and

    the transportation of crude oil and NGL on trucks, barges, railcars, pipelines and ocean-going vessels from various receipt points to market hub locations or directly to end users such as refineries, processors and fractionation facilities.

        In addition to substantial working inventories associated with PAA's merchant activities, as of December 31, 2012, the supply and logistics segment also owned significant volumes of crude oil and

 

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NGL classified as long-term assets for linefill or minimum inventory requirements and employs a variety of owned or leased physical assets throughout the United States and Canada, including approximately:

    11 million barrels of crude oil and NGL linefill in pipelines owned by PAA;

    5 million barrels of crude oil and NGL linefill in pipelines owned by third parties and other long-term inventory;

    815 trucks and 926 trailers; and

    5,380 railcars (net of railcars subleased to other parties).

        For additional information regarding PAA's assets, please read "Business of Plains All American Pipeline, L.P."


PAA's Primary Growth Drivers

        The changing supply and demand dynamics for North American crude oil continue to create opportunities for midstream providers of logistics and infrastructure assets. As a result of advances in horizontal drilling and fracturing technology over the last several years and their application to various large scale resource plays, certain historical trends have been reversed as domestic oil supplies have increased substantially and are expected to increase even more substantially over the next five years and potentially beyond. This production is being developed both in mature producing areas such as the Rockies, the Permian Basin in West Texas and the Mid-Continent region, as well as in less mature, but rapidly growing areas such as the Eagle Ford Shale in South Texas and the Bakken Shale in North Dakota. Actual and anticipated production increases in all of these regions combined with actual and anticipated volumes from Canada have strained or are expected to strain existing transportation, terminalling and downstream infrastructure. These changes have resulted in significant alterations to historical patterns of crude oil movements among regions of the U.S. For example, the quantity of crude oil transported from the Gulf Coast area into the Midwest has declined, but the overall change in crude oil flows has resulted in an increased demand for storage and terminalling services at Cushing, Oklahoma and Patoka, Illinois.

        In addition to overall production growth, significant shifts in the type and location of crude oil being produced from these regions have resulted in additional strains on existing infrastructure. Notably, this change in crude oil quality is inconsistent with the sizeable, multi-year investments made by a number of U.S. refining companies in order to expand their capabilities to process heavier, sour grades of crude oil. This divergence between readily available supplies of light sweet crude and increased refinery demand for heavy sour crude has begun to cause differentials between crude oil grades and qualities to change relative to historical levels and become much more dynamic and volatile.

        Overall, volatility of multiple aspects of the crude oil market, including absolute price, market structure and grade and location differentials has increased over time and PAA expects volatility to continue. Some factors that PAA believes are causing and will continue to cause volatility in the market include:

    the multi-year narrowing of the gap between crude oil supply and demand in North America;

    fluctuations in international supply and demand related to the economic environment, geopolitical events and armed conflicts;

    regional supply and demand imbalances and changes in refinery capacity and specific capabilities;

    significant fluctuations in absolute price as well as grade and location differentials;

    political instability in critical producing nations; and

 

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    policy decisions made by various governments around the world attempting to navigate energy challenges.

        The complexity and volatility of the crude oil market creates opportunities to solve the logistical inefficiencies inherent in the business. The combination of (i) a significant increase in North American production volumes, (ii) a change in crude oil qualities and related differentials, and (iii) a high utilization of existing pipeline and terminal infrastructure, together with resulting increased volatility in crude oil markets, has stimulated multiple industry initiatives to build new pipeline and terminal infrastructure, convert certain pipeline assets to alternative service or reverse flows and expand the use of trucks, rail and barges for the movement of crude oil and condensate.

        As a midstream company primarily focused on North American crude oil logistics and infrastructure, PAA believes that it is well positioned to benefit from these industry fundamentals and market conditions. PAA expects to do this through the construction of new infrastructure and the acquisitions of existing infrastructure, and by supporting such constructed or acquired assets with a commercial presence in significant producing and consuming regions of North America.

        Organic Growth Projects.    PAA's strategic asset location and its relationships with customers provide it with opportunities for organic growth through the construction of additional assets that are complementary to its existing asset base or the expansion of its asset base into new businesses or market areas. Over the past fifteen years, PAA has implemented internal expansion capital projects totaling over $4.5 billion, of which approximately $2.4 billion was invested over the 2009 to 2012 period. PAA believes that the diversity and balance of its organic project portfolio (i.e., relatively large number of projects that are small to medium sized and spread across multiple geographic regions) reduces its overall exposure to cost overruns, timing delays and other adverse market developments with respect to a particular project or region. PAA's 2013 capital plan is representative of the diversity and balance of its overall organic project portfolio. The following expansion projects are included in PAA's 2013 capital plan as of May 2013:

Basin/ Region
  Project   2013 Plan
Amount(1)
($ in millions)
  Description

Permian

  Cactus Pipeline     50   310 miles of new pipeline; 200,000 Bbls/d capacity pipeline from the Permian Basin to the Eagle Ford JV Pipeline

  Spraberry Area Pipeline Projects     40   New pipeline systems, expansion of existing area system and multiple producer connections

Eagle Ford

  PAA/Enterprise Products Partners Eagle Ford Joint Venture     95   New pipeline; 1,800,000 Bbls of storage capacity along system and marine terminal dock at Corpus Christi, TX

  Pipeline Gathering Projects and Related Facilities     75   Gardendale Gathering System expansion and new condensate stabilization facility

Mid-Continent

  Mississippian Lime Pipeline     180   190 miles of new pipeline; 150,000 Bbls/d of capacity from Coldwater, KS to Cushing, OK

  Western Oklahoma Extension     40   95 miles of new pipeline; 75,000 Bbls/d of capacity from Reydon, OK to Orion Station in Major County, OK

  Cushing Terminal Projects     20   1,000,000 Bbls of additional storage capacity and manifold enhancements



             

 

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Basin/ Region
  Project   2013 Plan
Amount(1)
($ in millions)
  Description

Rockies/Williston

  White Cliffs Pipeline Expansion     90   34.5% interest in 80,000 Bbls/d expansion of capacity

East Coast

  Yorktown, Virginia Terminal Projects     80   140,000 Bbls/d of additional rail unloading capacity; dock and terminal enhancements

Gulf Coast

  Gulf Coast Pipeline     90   40 miles of new pipeline originating at PAA's Ten Mile terminal in Mobile County, AL

  St. James Terminal Projects     55   1,100,000 Bbls of additional storage capacity; pipeline connections; dock enhancement

Canada

  Rainbow II Pipeline     130   187 miles of new pipeline; 35,000 Bbls/d of capacity from Edmonton to Nipisi, Alberta

Other

  Rail Terminal Projects     90   Includes new rail facilities and terminal construction and expansion projects located at or near Tampa, CO; Bakersfield, CA; Carr, CO; and Van Hook, ND

  PAA Natural Gas Storage     42   Miscellaneous projects

  Shafter Expansion     25   15-mile NGL pipeline system; 10,000 Bbls/d of capacity from Elk Hills, CA to Shafter, CA

  Other Projects     298   Primarily multiple, smaller projects comprised of pipeline connections, upgrades and truck stations, new tank construction and refurbishing, pipeline linefill purchases and carry-over of projects from prior years
             

  Total   $ 1,400    
             

(1)
Represents the portion of the total project cost expected to be incurred during 2013.

        Acquisitions.    The acquisition of midstream assets and businesses that are strategic and complementary to PAA's existing operations constitutes an integral component of its business strategy and growth objectives. Such assets and businesses include crude oil, refined products and NGL logistics assets, natural gas storage assets and other energy assets that have characteristics and opportunities similar to these business lines and enable PAA to leverage its assets, knowledge and skill sets. Over the past fifteen years, PAA has completed and integrated over 80 acquisitions with an aggregate purchase price of approximately $10.5 billion, which figures include 32 acquisitions totaling approximately $5.2 billion in aggregate purchase price over the last five years.

        Consistent with its business strategy, PAA is continuously engaged in discussions with potential sellers regarding the possible purchase of assets and operations that are strategic and complementary to PAA's existing operations. For more information about PAA's acquisition strategy, please read "Business of Plains All American Pipeline, L.P.—PAA's Primary Growth Drivers—Acquisitions."


PAA's Business Strategy

        PAA's principal business strategy is to provide competitive and efficient midstream transportation, terminalling, storage, processing, fractionation and supply and logistics services to producers, refiners and other customers. Toward this end, PAA endeavors to address regional supply and demand imbalances for crude oil and NGL in the United States and Canada by combining the strategic location and capabilities of its transportation, terminalling, storage, processing and fractionation assets with its extensive supply, logistics and distribution expertise. To a lesser extent, PAA also engages in similar activities for natural gas and refined products. We believe PAA's successful execution of this strategy

 

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will enable it to generate sustainable earnings and cash flow. PAA intends to manage and grow its business by:

    commercially optimizing its existing assets and realizing cost efficiencies through operational improvements;

    using its transportation (including pipeline, rail, barge and truck), terminalling, storage, processing and fractionation assets in conjunction with its supply and logistics activities to capitalize on inefficient energy markets and to address physical market imbalances, mitigate inherent risks and increase margin;

    developing and implementing internal growth projects that (i) address evolving crude oil and NGL needs in the midstream transportation and infrastructure sector and (ii) are well positioned to benefit from long-term industry trends and opportunities;

    selectively pursuing strategic and accretive acquisitions that complement its existing asset base and distribution capabilities; and

    capitalizing on the anticipated long-term growth in demand for natural gas storage services in North America by owning and operating high-quality natural gas storage facilities and providing its current and future customers reliable, competitive and flexible natural gas storage and related services through its ownership interest in PNG.


PAA's Financial Strategy

        We believe that a major factor in PAA's continued success is its ability to maintain a competitive cost of capital and access to the capital markets. In that regard, PAA intends to maintain a credit profile that it believes is consistent with investment grade credit ratings. PAA has targeted a general credit profile with the following attributes:

    an average long-term debt-to-total capitalization ratio of approximately 45% to 50%;

    a long-term debt-to-adjusted EBITDA multiple averaging between 3.5x and 4.0x;

    an average total debt-to-total capitalization ratio of approximately 60%; and

    an average adjusted EBITDA-to-interest coverage multiple of approximately 3.3x or better.

        The first two of these four metrics include long-term debt as a critical measure. PAA also incurs short-term debt in connection with its supply and logistics activities that involve the simultaneous purchase and forward sale of crude oil, NGL and natural gas. The crude oil, NGL and natural gas purchased in these transactions are hedged. PAA does not consider the working capital borrowings associated with these activities to be part of its long-term capital structure. These borrowings are self-liquidating as they are repaid with sales proceeds. PAA also incurs short-term debt to fund New York Mercantile Exchange, or NYMEX, and IntercontinentalExchange, or ICE, margin requirements. In certain market conditions, these routine short-term debt levels may increase significantly above baseline levels.

        In order for PAA to maintain its targeted credit profile and achieve growth through internal growth projects and acquisitions, PAA intends to fund approximately 55% of the capital requirements associated with these activities with equity and cash flow in excess of distributions. From time to time, PAA may be outside the parameters of its targeted credit profile as, in certain cases, these capital expenditures and acquisitions may be financed initially using debt or there may be delays in realizing anticipated synergies from acquisitions or contributions from capital expansion projects to adjusted EBITDA.

 

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Our Financial Strategy

        Our financial strategy is designed to be complementary with PAA's financial and business strategies. Because our only cash-generating assets at the closing of this offering will consist of our partnership interests in AAP, which currently derives all of its cash flows from PAA's distributions, we intend to maintain a level of indebtedness at AAP such that it will not be material in relation to PAA's adjusted EBITDA or other financial metrics used in the evaluation of its business. As of March 31, 2013, AAP had $202 million of debt outstanding under its credit facility. In connection with future PAA equity issuances, we expect AAP may fund any capital contribution required to maintain its indirect 2% general partner interest in PAA with credit facility borrowings. We do not anticipate that additional debt associated with these contributions will be material to PAA's consolidated credit profile, as such equity issuances are typically used to pay down existing debt or fund PAA's growth through acquisitions or organic growth opportunities. We would expect to fund direct acquisitions made by us, if any, with a combination of debt and equity.


PAA's Competitive Strengths

        We believe that the following competitive strengths position PAA to successfully execute its principal business strategy:

    many of PAA's transportation segment and facilities segment assets are strategically located and operationally flexible;

    PAA possesses specialized crude oil market knowledge;

    PAA's supply and logistics activities typically generate a base level of margin with the opportunity to realize incremental margins;

    PAA has the evaluation, integration and engineering skill sets and the financial flexibility to continue to pursue acquisition and expansion opportunities; and

    PAA has an experienced management team whose interests are aligned with those of its unitholders.

 

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Organizational Structure

        The diagram below depicts our organizational structure immediately following the completion of this offering (assuming the underwriters' option to purchase additional Class A shares is not exercised):

GRAPHIC


(1)
We will initially own the remaining      % of the membership interests in our general partner, which percentage corresponds to our ownership percentage of AAP units (      %) following this offering (representing a      % economic interest in AAP, including the dilutive effect of the AAP management units).

(2)
The AAP management units are entitled to certain proportionate distributions paid by AAP. Please see "Management—AAP Management Units."

(3)
Includes PAA common units owned by the Existing Owners.

 

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Recapitalization

        We are a Delaware limited partnership formed in July 2013. Although we were formed as a limited partnership, we will elect to be taxed as a corporation for U.S. federal income tax purposes.

        The Existing Owners currently directly or indirectly own all of the ownership interests in AAP and GP LLC (other than the AAP management units). In connection with the completion of this offering, certain restructuring transactions will be effected, which will result in the revised organizational structure depicted above under "—Organizational Structure."

        Upon completion of these transactions, our sole assets will consist of (i) a 100% member interest in GP LLC, which holds a non-economic general partner interest in AAP, (ii)         AAP units (representing      % of the limited partner interests, and an approximate      % economic interest (including the dilutive effect of the AAP management units) in AAP, which directly or indirectly owns all of the IDRs and the 2% general partner interest in PAA), and (iii)         % of the membership interests in our general partner. Please read "Organizational Structure—Recapitalization."

Our Class A Shares and Class B Shares

        Our partnership agreement provides for two classes of shares, Class A shares and Class B shares, representing limited partner interests in us. Only the holders of our Class A shares are entitled to participate in our distributions. Each Class A share will also be entitled to one vote on the limited matters to be voted on by our shareholders.

        Class B shares are not entitled to receive distributions but will be entitled to vote on the same basis as the Class A shares. Holders of Class A shares and Class B shares will vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law. We do not intend to list Class B shares on any stock exchange. All of our Class B shares will initially be owned by the Existing Owners. For a description of the rights and privileges of shareholders under our partnership agreement, including voting rights, please read "Description of Our Partnership Agreement."

Exchangeable LP Structure

        The Existing Owners and any permitted transferees of their AAP units will each have the right to exchange (the "Exchange Right") all or a portion of their AAP units into Class A shares at an exchange ratio of one Class A share for each AAP unit exchanged. The Exchange Right may be exercised only if, simultaneously therewith, an equal number of our Class B shares are transferred by the exercising party to us.

        For purposes of any transfer or exchange of AAP units initially owned by the Existing Owners and our Class B shares, the AAP partnership agreement and our partnership agreement will contain provisions effectively linking each such AAP unit with one of our Class B shares. Class B shares cannot be transferred without transferring an equal number of AAP units and vice versa.

        Additionally, if the Class A shares are publicly traded at any time after December 31, 2015, a holder of vested AAP management units will be entitled to exchange his or her AAP management units for AAP units and a like number of Class B shares based on a conversion ratio calculated in accordance with the AAP limited partnership agreement (which conversion ratio will not be more than one-to-one and we anticipate will be approximately 0.89 AAP units for each AAP management unit as of the date of the distribution that will be paid with respect to the second quarter of 2013). Following any such exchange, the holder will have the Exchange Right for our Class A shares described above.

 

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        The above mechanisms are subject to customary conversion rate adjustments for equity splits, equity dividends and reclassifications. For additional information, please read "Certain Relationships and Related Party Transactions—Limited Partnership Agreement of Plains AAP, L.P."

Ownership of Our General Partner; Election of Directors

        In connection with the recapitalization transactions referenced above under "—Recapitalization," the Existing Owners will initially own all of the membership interests in PAA GP Holdings LLC, our general partner, and will have the ability to appoint all the members of our general partner's board of directors. Our general partner's limited liability company agreement will include provisions linking the ownership of the membership interests in our general partner to the ownership of the outstanding AAP units. Membership interests in our general partner will not be allowed to be transferred without transferring an equivalent portion of AAP units and vice versa. As the Existing Owners reduce their ownership of AAP units through this offering and in connection with future exchanges of AAP units and Class B shares for Class A shares following this offering, the Existing Owners' ownership interest in our general partner will be reduced, and our ownership interest in our general partner will be proportionately increased. When the overall direct and indirect economic interest of the Existing Owners and their permitted transferees in AAP falls below 40% (calculated as described below), the following changes to our governance arrangements will be triggered: (i) within a certain period of time, our general partner's board of directors will be staggered into three classes; (ii) within a certain time period and subject to certain limitations, our Class A and Class B shareholders, voting together as a single class, will have the right to elect certain of our directors; and (iii) except for any party that already has the right to designate a director on our general partner's board of directors, any person or group (as such term is defined pursuant to applicable securities laws) that owns of record at least 10% of our combined Class A and Class B shares will be entitled to nominate a single director for election at an annual meeting. The 40% threshold referred to above will be calculated on a fully diluted basis that takes into account any Class A shares owned by the Existing Owners and their permitted transferees, assumes the exchange of all AAP management units for AAP units based on the applicable conversion factor and attributes the ownership of such AAP units to the Existing Owners. Please read "Description of our Partnership Agreement—Public Election of Directors Following Trigger Date."

Holding Company Structure

        Our post-offering organizational structure will allow the Existing Owners to retain a direct equity ownership in AAP, an entity that is classified as a partnership for U.S. federal income tax purposes. Investors in this offering will, by contrast, hold a direct equity ownership in us in the form of Class A shares, and an indirect ownership interest in AAP through our ownership of AAP units. Although we were formed as a limited partnership, we will elect to be taxed as a corporation for U.S. federal income tax purposes.

        Pursuant to our partnership agreement and the AAP partnership agreement, our capital structure and the capital structure of AAP will generally replicate one another and will provide for customary antidilution mechanisms in order to maintain the one-for-one exchange ratio between the AAP units and our Class B shares, on the one hand, and our Class A shares, on the other hand.

        The holders of interests in AAP units, including us, will be subject to tax on their proportionate share of any taxable income of AAP and will be allocated their proportionate share of any taxable loss of AAP. The AAP partnership agreement provides, to the extent cash is available, for tax related distributions pro rata to the holders of AAP units if GP LLC, as the general partner of AAP, determines that the taxable income of AAP will give rise to taxable income for an AAP unitholder.

 

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        For additional information, please read "Organizational Structure—Holding Company Structure" and "Certain Relationships and Related Party Transactions—Limited Partnership Agreement of Plains AAP, L.P."

Business Opportunities

        In connection with the closing of this offering, we, our general partner, AAP, PAA, PAA GP and GP LLC will enter into an administrative agreement to address, among other things, potential conflicts with respect to business opportunities that may arise among us, our general partner, AAP, PAA, PAA GP and GP LLC. The agreement will provide that if any business opportunity is presented to us, our general partner, AAP, PAA, PAA GP or GP LLC, then PAA will have the first right to pursue such business opportunity. PAA will be presumed to desire to pursue the business opportunity until such time as GP LLC advises our general partner and us that PAA has abandoned the pursuit of such business opportunity. We will have the right to pursue and/or participate in such business opportunity if invited to do so by PAA, or if PAA abandons the business opportunity and GP LLC so notifies our general partner.

Our and PAA's Management

        PAA GP Holdings LLC, our general partner, will manage our operations and activities, including, among other things, establishing the quarterly cash distribution for our Class A shares and cash reserves it believes are prudent to provide for the proper conduct of our business. GP LLC, as the general partner of AAP, who is the managing member of PAA GP, will be responsible for the management of PAA's operations and activities; however, as the managing member of GP LLC, we will effectively control the business and affairs of AAP and PAA. Our general partner will be responsible for exercising on our behalf any rights we have as the managing member of GP LLC.

        Our general partner's limited liability company agreement will provide for a board of directors consisting of seven members. Each of Oxy Holding Company (Pipeline), Inc., (an affiliate of Occidental Petroleum Corporation), EMG Investment LLC (an affiliate of The Energy & Minerals Group) and KAFU Holdings, L.P. (an affiliate of Kayne Anderson Investment Management Inc.) will, for so long as such entity and its affiliates continue to own at least a 10% limited partner interest in AAP (including for this purpose any indirect ownership interest in AAP through ownership of Class A shares), be entitled to designate one director to our general partner's board of directors. The limited liability company agreement will further provide that the Chief Executive Officer of our general partner will serve as a director and chairman of the board of our general partner. The remaining three members of our general partner's board of directors will initially be elected by the vote of the majority in interest of our general partner's members. These remaining three directors must be independent and qualify for service on the audit committee in accordance with applicable NYSE and SEC rules. It is anticipated that one of the independent directors of GP LLC will serve as a director of our general partner.

        In connection with the recapitalization of AAP, the size and make-up of GP LLC's board of directors will not change; however, the limited liability company agreement for GP LLC will be amended and restated in connection with closing to provide, among other things, that (i) GP LLC's Chief Executive Officer will continue to be a member of GP LLC's board and will serve as its chairman, (ii) the designated directors on our general partner's board of directors will be automatic appointees to GP LLC's board of directors, and (iii) the remaining four members of GP LLC's board of directors will initially consist of the four independent directors currently serving on GP LLC's board of directors and thereafter will be appointed by majority vote of our general partner's board of directors, acting on our behalf as the managing member of GP LLC.

        For additional information regarding our governance and related matters, please read "Management—Election of Directors."

 

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Administrative Agreement

        We and our general partner have no employees. All of our officers and other personnel necessary for our business to function (to the extent not out-sourced) will be employed by GP LLC, and AAP will pay GP LLC an annual fee for general and administrative services. This fee will initially be $         million per year and will be subject to adjustment on an annual basis based on the Consumer Price Index. The fee will also be subject to adjustment if a material event occurs that impacts the general and administrative services provided to us, such as acquisitions, entering into new lines of business or changes in laws, regulations or accounting rules. In addition to the general and administrative services provided to us by GP LLC, we also expect to incur direct annual expenses of approximately $         million per year for recurring costs associated with becoming a separate publicly traded entity, including expenses associated with (i) compensation for new directors, (ii) incremental director and officer liability insurance, (iii) listing on the NYSE, (iv) investor relations, (v) legal, (vi) tax and (vii) accounting. All of these direct expenses, other than income taxes payable by us, will be borne by AAP.

        In addition to the fee and expenses described above, AAP will reimburse GP LLC for expenses incurred (i) on our behalf, (ii) on behalf of our general partner, or (iii) for any other purpose related to our business and activities or those of our general partner, including any expenses relating to the maintenance of GP LLC's legal existence and good standing. AAP will also reimburse our general partner for any additional expenses incurred on our behalf or to maintain our legal existence and good standing.

Principal Executive Offices

        Our principal executive offices are located at 333 Clay Street, Suite 1600, Houston, Texas 77002, and our phone number is (713) 646-4100. Our website address will be                                . We expect to make our periodic reports and other information filed or furnished to the Securities and Exchange Commission available, free of charge, on our website. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute part of this prospectus.


Risk Factors

        An investment in our Class A shares involves risks. For more information about these and other risks, please read "Risk Factors." You should consider carefully these risk factors together with all of the other information included in this prospectus before you invest in our Class A shares.

 

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The Offering

Class A shares offered to the public

          Class A shares.

 

We may issue up to        additional Class A shares if the underwriters exercise in full their option to purchase additional Class A shares from us.

Class A shares outstanding after this offering

 

        Class A shares (        Class A shares if the underwriters exercise in full their option to purchase additional Class A shares from us). If all outstanding Class B shares and AAP units held by the Existing Owners were exchanged for newly issued Class A shares on a one-for-one basis,        Class A shares would be outstanding.

Class B shares outstanding after this offering

 

        Class B shares (        Class B shares if the underwriters exercise in full their option to purchase additional Class A shares from us), or one Class B share for each AAP unit held by the Existing Owners immediately following this offering. Class B shares have voting rights, but no right to receive distributions. Each Class B share, when combined with an AAP unit held by an Existing Owner, may be exchanged for a Class A share, in which case the Class B share would be cancelled.

Use of proceeds

 

We expect to receive approximately $        of net proceeds from the sale of the Class A shares, based upon the assumed initial public offering price of $        per Class A share (the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

We will distribute the net proceeds of this offering along with          of our Class B shares to the Existing Owners in exchange for their contribution to us of a        % limited partner interest in AAP (represented by            AAP units) and        % of the membership interests in our general partner. We will use the net proceeds resulting from any issuance of Class A shares upon the exercise of the underwriters' option to acquire an equivalent number of Class B shares and AAP units from the Existing Owners, in addition to a proportionate percentage of the membership interests in our general partner. Upon such acquisition, such Class B shares will be cancelled and the associated AAP units and membership interests will thereafter be owned by us. Please read "Use of Proceeds" and "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters—Ownership of General Partner Entities."

 

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Cash distributions

 

Upon the closing of this offering, we expect to pay quarterly distributions at an initial rate of $      per Class A share ($      per Class A share on an annual basis) to the extent we have sufficient cash distributions from AAP after payment of income taxes, if any, and reserves established by our general partner. We refer to the resulting amount of cash as "available cash." Our ability to pay cash distributions at this initial rate is subject to various restrictions and other factors described in more detail under the caption "Our Cash Distribution Policy and Restrictions on Distributions."

 

We will pay you a prorated cash distribution for the first quarter that we are publicly traded. This cash distribution will be paid for the period beginning on the closing date of this offering and ending on the last day of that fiscal quarter. We expect to pay this cash distribution in                    2014. Any distributions received by AAP from PAA related to periods prior to the closing of this offering will be distributed to the Existing Owners.

 

Our pro forma available cash for the year ended December 31, 2012 and the twelve months ended March 31, 2013 would have been approximately $         million and $         million, respectively. These amounts would have been sufficient for us to pay our aggregate annualized initial quarterly distribution of $         million on all of our Class A shares for such periods.

 

We believe that we will have sufficient available cash to pay the full annualized initial quarterly distribution for the twelve months ending September 30, 2014. Please read "Our Cash Distribution Policy and Restrictions on Distributions."

Issuance of additional securities

 

We can issue an unlimited number of additional Class A shares and other equity interests without the consent of our shareholders. Please read "Description of Our Partnership Agreement—Issuance of Additional Securities."

Limited voting rights

 

Our general partner will manage and operate us. You will have only limited voting rights on matters affecting our business. Holders of our Class A shares and Class B shares vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law or our partnership agreement.

 

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Our shareholders will not have the ability to elect our general partner or initially vote in the election of the directors of our general partner. Our general partner may not be removed except by a vote of the holders of at least 662/3% of our outstanding shares, including any shares owned by our general partner, the Existing Owners (or certain transferees in private, non-exchange transactions) and their respective affiliates, voting together as a single class. Following the completion of this offering, the Existing Owners will own a sufficient number of our shares to prevent the removal of our general partner. Please read "Description of Our Partnership Agreement—Limited Voting Rights."

Voting power of Class A shares immediately after giving effect to this offering

 

        % (or 100% if all outstanding Class B shares and AAP units held by the Existing Owners were exchanged for newly issued Class A shares on a one-for-one basis).

 

        % if the underwriters exercise in full their option to purchase additional Class A shares from us (or 100% if all outstanding Class B shares and AAP units held by the Existing Owners were exchanged for newly issued Class A shares on a one-for-one basis).

Voting power of Class B shares immediately after giving effect to this offering

 

        % (or none if all outstanding Class B shares and AAP units held by the Existing Owners were exchanged for newly issued Class A shares on a one-for-one basis).

 

        % if the underwriters exercise in full their option to purchase additional Class A shares from us (or none if all outstanding Class B shares and AAP units held by the Existing Owners were exchanged for newly issued Class A shares on a one-for-one basis).

Limited call right

 

If at any time our general partner, the Existing Owners (or certain transferees in private, non-exchange transactions) and their respective affiliates own more than 80% of our outstanding Class A shares and Class B shares on a combined basis, our general partner will have the right, but not the obligation, to purchase all of the outstanding Class A shares at a price not less than the then current market price of the Class A shares. At the completion of this offering, our general partner will not own any of our outstanding shares and the Existing Owners will own approximately        % of our outstanding shares.

 

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Material tax consequences

 

Although we were formed as a limited partnership, we will elect to be taxed as a corporation for U.S. federal income tax purposes. Distributions on the Class A shares will be treated as distributions on corporate stock for federal income tax purposes. No Schedule K-1s will be issued with respect to the Class A shares, but instead holders of Class A shares will receive a Form 1099 from us with respect to distributions received on the Class A shares. Like distributions on corporate stock, our distributions will only be treated as dividends to the extent of our current or accumulated earnings and profits (as computed for federal income tax purposes). Our initial acquisition of interests in AAP will result in deductions that we anticipate will offset a substantial portion of our taxable income for an extended period of time following closing. In addition, as the Existing Owners exchange their retained interests in AAP and Class B shares in us into our Class A shares in the future, we expect to benefit from additional tax deductions resulting from those exchanges, the amount of which will vary depending on the value of the Class A shares at the time of the exchange. For additional information relating to our exchangeable structure, please read "Organizational Structure."

 

We estimate that for an extended period of time following the closing of this offering, which we estimate will include, at a minimum, each of the periods ending December 31, 2014, 2015 and 2016, none of the distributions paid to you should be treated as taxable dividend income under current existing federal tax regulations, but instead will be treated as a return of capital. Distributions not treated as taxable dividends will reduce your tax basis in your Class A shares, or will be taxable as capital gain to the extent they exceed your tax basis in your Class A shares.

Agreement to be bound by the partnership agreement

 

By purchasing a Class A share, you will be deemed to have agreed to be bound by all the terms of our partnership agreement.

Listing and trading symbol

 

We intend to apply to list our Class A shares on the New York Stock Exchange under the symbol "PAGP."

 

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Summary Historical and Pro Forma Financial Data

        We were formed in July 2013 and, therefore, do not have historical financial statements. Upon completion of this offering, we will own and control GP LLC and will own an approximate        % limited partner interest in AAP. Accordingly, the historical consolidated financial data below are of GP LLC. We have no separate operating activities apart from those conducted by PAA, and our cash flows will consist solely of distributions from AAP related to its direct and indirect ownership of partnership interests in PAA.

        The summary historical statements of operations and cash flow data for the years ended December 31, 2010, 2011 and 2012, and the balance sheet data as of December 31, 2011 and 2012 are derived from the audited financial statements of GP LLC included elsewhere in this prospectus. The summary historical statements of operations and cash flow data for the three months ended March 31, 2012 and 2013, and the balance sheet data as of March 31, 2013 are derived from the unaudited financial statements of GP LLC included elsewhere in this prospectus. The summary historical balance sheet data as of December 31, 2010 and March 31, 2012 are derived from unaudited financial statements of GP LLC that are not included elsewhere in this prospectus.

        The summary pro forma financial data presented for the year ended December 31, 2012 and as of and for the three months ended March 31, 2013 reflects our historical operating results as adjusted to give pro forma effect to the following transactions, as if such transactions had occurred on January 1, 2012:

    completion of the BP NGL Acquisition and certain other acquisitions during the year ended December 31, 2012;

    the transactions contemplated by the contribution agreement described in this prospectus under the caption "Organizational Structure—Recapitalization" and "Certain Relationships and Related Party Transactions—Contribution Agreement"; and

    the sale of                Class A shares in this offering and application of the net proceeds from this offering, as described in "Use of Proceeds" and "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters—Ownership of General Partner Entities."

        We derived the data in the following table from, and it should be read together with and is qualified in its entirety by reference to, the historical financial statements referenced above and our pro forma financial statements and the accompanying notes included elsewhere in this prospectus. The table should also be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations."

        For a description of all of the assumptions used in preparing the unaudited pro forma financial statements, you should read the notes to the pro forma financial statements. The pro forma financial

 

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data should not be considered as indicative of the historical results we would have had or the results that we will have after this offering.

 
  Consolidated Historical for Plains
All American GP LLC
  Pro Forma for Plains GP
Holdings, L.P.
 
 
   
   
   
  Three Months
Ended March 31,
   
  Three
Months
Ended
March 31,
2013
 
 
  Year Ended December 31,    
 
 
  Year Ended
December 31,
2012
 
 
  2010   2011   2012   2012   2013  
 
  (in millions, except per share amounts)
 

Statement of operations data:

                                           

Total revenues

  $ 25,893   $ 34,275   $ 37,797   $ 9,218   $ 10,620              

Net income

  $ 501   $ 987   $ 1,118   $ 234   $ 535              

Net income attributable to the parent

  $ 2   $ 2   $ 3   $   $ 1              

Pro forma per share data:

                                           

Pro forma basic net income per Class A share

                                           

Pro forma diluted net income per Class A share

                                           

Balance sheet data (at end of period):

                                           

Total assets

  $ 13,734   $ 15,414   $ 19,259   $ 17,115   $ 19,466              

Long-term debt

  $ 4,831   $ 4,720   $ 6,520   $ 5,994   $ 6,531              

Total debt

  $ 6,161   $ 5,406   $ 7,606   $ 6,760   $ 7,222              

Members' Equity/Partners' Capital:

                                           

Members' Equity/Partners' Capital (excluding noncontrolling interests)

  $   $   $   $   $              

Noncontrolling interests

    4,391     5,794     6,968     6,332     7,311              
                                   

Total Members' Equity/Partners' Capital

  $ 4,391   $ 5,794   $ 6,968   $ 6,332   $ 7,311              
                                   

Other data:

                                           

Net cash provided by operating activities

  $ 248   $ 2,357   $ 1,232   $ 315   $ 978              

Net cash used in investing activities

  $ (851 ) $ (2,020 ) $ (3,392 ) $ (1,890 ) $ (444 )            

Net cash provided by/(used in) financing activities

  $ 613   $ (337 ) $ 2,159   $ 1,563   $ (533 )            

Capital expenditures:

                                           

Acquisitions

  $ 407   $ 1,404   $ 2,286   $ 21   $ 1              

Internal growth projects

  $ 355   $ 531   $ 1,185   $ 236   $ 358              

Maintenance

  $ 93   $ 120   $ 170   $ 35   $ 44              

 

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RISK FACTORS

        You should consider carefully the following risk factors, together with all of the other information included in this prospectus, in your evaluation of an investment in our Class A shares. Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows and results of operations. In that case, we might not be able to pay or sustain our expected initial quarterly distribution on our Class A shares, the trading price of our Class A shares could decline and you could lose all or part of your investment.


Risks Inherent in an Investment in Us

Our cash flow will be entirely dependent upon the ability of PAA to make cash distributions to AAP, and the ability of AAP to make cash distributions to us.

        The source of our earnings and cash flow will initially consist exclusively of cash distributions from AAP, which will initially consist exclusively of cash distributions from PAA. The amount of cash that PAA will be able to distribute to its partners, including AAP, each quarter principally depends upon the amount of cash it generates from its business. For a description of certain factors that can cause fluctuations in the amount of cash that PAA generates from its business, please read "—Risks Related to PAA's Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." PAA may not have sufficient available cash each quarter to continue paying distributions at its current level or at all. If PAA reduces its per unit distribution, either because of reduced operating cash flow, higher expenses, capital requirements or otherwise, we will have less cash available for distribution to you and would likely be required to reduce our per share distribution to you. You should also be aware that the amount of cash PAA has available for distribution depends primarily upon PAA's cash flow, including cash flow from the release of financial reserves as well as borrowings, and is not solely a function of profitability, which will be affected by non-cash items. As a result, PAA may make cash distributions during periods when it records losses and may not make cash distributions during periods when it records profits.

        Furthermore, AAP's ability to distribute cash to us and our ability to distribute cash received from AAP to our Class A shareholders is limited by a number of factors, including:

    AAP's payment of costs and expenses associated with our, GP LLC's and its operations, including expenses we will incur as a result of being a public company, to the extent they are not subject to reimbursement by PAA;

    our payment of any income taxes;

    interest expense and principal payments on any future indebtedness incurred by AAP or us;

    restrictions on distributions contained in AAP's credit facility and any future debt agreements entered into by AAP or us;

    reserves necessary for us to pay a ratable amount to AAP as necessary to permit AAP to make required capital contributions to PAA to maintain PAA GP's 2% general partner interest in PAA, as required by the partnership agreement of PAA upon the issuance of additional partnership interests by PAA; and

    reserves our general partner establishes for the proper conduct of our business, to comply with applicable law or any agreement binding on us or our subsidiaries (exclusive of PAA and its subsidiaries).

        We believe that we will have sufficient available cash to pay the full initial quarterly distribution on all of our Class A shares. For additional information, please read "Our Cash Distribution Policy and Restrictions on Distributions." In the future, we can provide no assurance that we will be able to pay distributions at or above our estimated initial quarterly distribution of $        per Class A share, or

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$        on an annualized basis. The actual amount of cash that is available for distribution to our Class A shareholders will depend on numerous factors, many of which are beyond our control or the control of our general partner.

The IDRs AAP is entitled to receive may be limited or modified without the consent of our shareholders, which may reduce cash distributions to you.

        We own a        % limited partner interest in AAP, which owns all of the IDRs, which entitle AAP to receive increasing percentages (up to a maximum of 48%, to the extent not modified) of any cash distributed by PAA in excess of $0.225 per PAA common unit in any quarter. The vast majority of the cash flow we receive from AAP is derived from its ownership of these IDRs. For the twelve months ending September 30, 2014, approximately        % of the cash that we expect to receive from AAP will be attributable to AAP's ownership of the IDRs. Please read "Our Cash Distribution Policy and Restrictions on Distributions."

        PAA, like other publicly traded partnerships, will generally only undertake an acquisition or expansion capital project if, after giving effect to related costs and expenses, the transaction would be expected to be accretive, meaning it would increase cash distributions per unit in future periods. Because AAP currently participates in the IDRs at all levels, including the highest sharing level of 48%, to the extent not modified, it is harder for an acquisition or capital project to show accretion for the common unitholders of PAA than if the IDRs received less incremental cash flow. We therefore expect that AAP may determine, in certain cases, to propose a reduction to the IDRs to facilitate a particular acquisition or expansion capital project. Such a reduction may relate to all of the cash flow on the IDRs or only to the expected cash flow from the transaction and may be either temporary or permanent in nature. Any such reduction of IDRs will reduce the amount of cash that would have otherwise been distributed by AAP to us, which will in turn reduce the cash distributions we would otherwise be able to pay to you. The Existing Owners have approved IDR reductions in connection with the closing of four prior PAA acquisitions: the Pacific Energy Partners, L.P. acquisition in 2006, the Rainbow Pipeline Company acquisition in 2008, the Vulcan Gas Storage acquisition in 2009, and the BP NGL Acquisition in 2012. For the period from 2006 through the distribution date for the second quarter of 2013, these IDR reductions have totaled $105.5 million in the aggregate. Currently, the following IDR reductions are in place: $15.0 million in 2013 (of which $11.3 million will have been satisfied in connection with the distribution with respect to the quarter ended June 30, 2013), $11.3 million in 2014, and $10.0 million per year thereafter. Our shareholders will not be able to vote on, or otherwise prohibit our general partner from taking, similar actions in the future and our general partner may elect to modify the incentive distributions without considering the interests of the holders of the Class A shares.

Any modification to the IDRs may be based on assumptions that may not be realized, which may reduce cash distributions to you.

        Our general partner has the right to approve any waiver, reduction, limitation or modification to PAA's IDRs without the consent of our shareholders. In determining whether or not to approve any such modification, our general partner's board of directors or its conflicts committee may consider whatever information it subjectively believes is adequate in making such determination. Our general partner's board of directors or its conflicts committee must also subjectively believe that any such modification is fair and reasonable to us. Our general partner's board is not obligated to refer any such matters to the conflicts committee. Any determination with respect to such modification could include consideration of one or more financial cases based on a number of business, industry, economic, legal, regulatory and other assumptions applicable to the proposed transaction. The assumptions will generally involve current estimates of future conditions, which are difficult to predict and realization of many of the assumptions will be beyond our general partner's control. Moreover, the uncertainty and risk of inaccuracy associated with any financial projection will increase with the length of the forecasted

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period. To the extent such assumptions are not realized, the expected benefits from increases in distributions from PAA to AAP may not materialize, and our distributions to our Class A shareholders may be reduced.

A reduction in PAA's distributions will disproportionately affect the amount of cash distributions to which AAP is currently entitled.

        AAP's ownership of PAA's IDRs entitle it to receive increasing percentages, up to 48%, to the extent not modified, of all cash distributed by PAA above specified levels. A decrease in the amount of distributions paid by PAA to less than $0.3375 per unit per quarter would reduce AAP's percentage of the incremental cash distributions above $0.225 per common unit per quarter from 48% to 23%. As a result, any such reduction in quarterly cash distributions from PAA would have the effect of disproportionately reducing the amount of distributions that AAP receives from PAA in respect of the IDRs as compared to cash distributions PAA makes with respect to its 2% general partner interest and common units.

PAA may issue additional limited partner interests or other equity securities, which may increase the risk that PAA will not have sufficient available cash to maintain or increase its cash distribution level.

        PAA has wide latitude to issue additional limited partner interests on the terms and conditions established by its general partner. AAP receives cash distributions from PAA on its direct and indirect partnership interests in PAA. Because the vast majority of the cash we receive from AAP is attributable to its ownership of the IDRs, payment of distributions on additional PAA limited partner interests may increase the risk that PAA will be unable to maintain or increase its quarterly cash distribution per unit, which in turn may reduce the amount of incentive distributions AAP receives and the available cash that we have to distribute to our Class A shareholders.

If distributions on our Class A shares are not paid with respect to any fiscal quarter, including those at the anticipated initial distribution rate, our Class A shareholders will not be entitled to receive that quarter's payments in the future.

        Our distributions to our Class A shareholders will not be cumulative. Consequently, if distributions on our Class A shares are not paid with respect to any fiscal quarter, including those at the anticipated initial distribution rate, our Class A shareholders will not be entitled to receive that quarter's payments in the future.

Our cash distribution policy and PAA's cash distribution policy limit our ability to grow.

        Because we distribute all of our available cash, our growth may not be as fast as the growth of businesses that reinvest their available cash to expand ongoing operations. In fact, because currently our cash flow is generated solely from distributions we receive from AAP, which are derived from AAP's direct and indirect partnership interests in PAA, our growth will initially be completely dependent upon PAA. The amount of distributions received by AAP is based on PAA's per unit distribution paid on each PAA common unit and the number of PAA common units outstanding. Please read "Plains All American Pipeline, L.P.'s Cash Distribution Policy." If we issue additional Class A shares or we were to incur debt or be required to pay taxes, the payment of distributions on those additional Class A shares or interest on that debt or payment of such taxes could increase the risk that we will be unable to maintain or increase our cash distribution levels.

        Consistent with the terms of its partnership agreement, PAA distributes to its partners its available cash each quarter. In determining the amount of cash available for distribution, PAA sets aside cash reserves, which it uses, among other things, to fund a portion of its acquisitions and growth capital expenditures. Additionally, PAA has relied upon external financing sources, including commercial borrowings and other debt and equity issuances, to fund its acquisitions and growth capital

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expenditures. Accordingly, to the extent PAA does not have sufficient cash reserves or is unable to finance growth externally, its cash distribution policy will significantly impair its ability to grow. In addition, to the extent PAA issues additional units in connection with any acquisitions or growth capital expenditures, the payment of distributions on those additional units may increase the risk that PAA will be unable to maintain or increase its per unit distribution level, which in turn may impact the available cash that we have to distribute to our Class A shareholders. The incurrence of additional debt by PAA to finance its growth strategy would result in increased interest expense to PAA, which in turn may reduce the available cash that we have to distribute to our Class A shareholders.

Our rate of growth may be reduced to the extent we purchase equity interests from PAA, which will reduce the relative percentage of the cash we receive from the IDRs.

        Our business strategy includes, where appropriate, supporting the growth of PAA by making loans, purchasing equity interests or providing other forms of financial support to PAA to provide funding for the acquisition of a business or asset or for an internal growth project. To the extent we purchase equity interests from PAA that are not entitled to distributions or do not receive distributions at the same rates as the IDRs, the rate of our distribution growth may be reduced, at least in the short term, as less of our cash distributions will come from our ownership of IDRs, whose distributions increase at a faster rate than PAA's common units and any similar equity interests PAA may issue in the future.

Restrictions in AAP's credit facility could limit its ability to make distributions to us, thereby limiting our ability to make distributions to our Class A shareholders.

        AAP's credit facility contains various operating and financial restrictions and covenants. AAP's ability to comply with these restrictions and covenants may be affected by events beyond its control, including prevailing economic, financial and industry conditions. If AAP is unable to comply with these restrictions and covenants, any indebtedness under this credit facility may become immediately due and payable and AAP's lenders' commitment to make further loans under this credit facility may terminate. AAP might not have, or be able to obtain, sufficient funds to make these accelerated payments.

        AAP's payment of principal and interest on any indebtedness will reduce its cash distributions to us, thereby reducing our cash available for distribution on our Class A shares. AAP's credit facility will limit our ability to pay distributions to our Class A shareholders during an event of default or if an event of default would result from the distribution.

        For more information regarding AAP's credit facility, please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

Substantially all of AAP's assets, including the IDRs and its indirect 2% general partner interest in PAA, are pledged under AAP's credit facility.

        Substantially all of AAP's assets, including the IDRs and its indirect 2% general partner interest in PAA, are pledged as security under AAP's credit facility. AAP's credit facility contains customary and other events of default. Upon an event of default, the lenders under AAP's credit facility could foreclose on AAP's assets, including the IDRs and its indirect 2% general partner interest in PAA, which are the only assets from which our cash flows are derived. This would have a material adverse effect on our business, financial condition and results of operations.

Our shareholders will not elect or have the power to remove our general partner and until certain conditions are met will not vote on our general partner's directors. Upon completion of this offering, the Existing Owners will own a sufficient number of shares to allow them to prevent the removal of our general partner.

        Our shareholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management's decisions regarding our business. The board of directors of our general partner, including our independent directors, will initially be designated and elected by the

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Existing Owners or their designees. Our shareholders initially will not have the ability to elect our general partner or the members of the board of directors of our general partner. When the overall direct and indirect economic interest of the Existing Owners and their permitted transfees in AAP falls below 40% (calculated as described below), subject to certain time and other limitations, which we refer to as a "trigger date," our shareholders will have the right to elect certain of our general partner's directors. The 40% threshold referred to above will be calculated on a fully diluted basis that takes into account any Class A shares owned by the Existing Owners and their permitted transferees, assumes the exchange of all AAP management units for AAP units based on the applicable conversion factor and attributes the ownership of such AAP units to the Existing Owners. However, as a result of our resulting governance arrangements, including a staggered board of directors, limitations on director nomination rights and the 20% voting limitation in our partnership agreement, it will be difficult for one or more of our shareholders to gain control of our general partner's board of directors. Moreover, a period of up to three years, in certain circumstances, may lapse between the occurrence of a trigger date and the first meeting of shareholders called to elect members of our board of directors.

        In addition, if our Class A shareholders are dissatisfied with the performance of our general partner, they will have little ability to remove our general partner. Our general partner may not be removed except by vote of the holders of at least 662/3% of our outstanding shares (including both Class A and Class B shares). At the completion of this offering and assuming no exercise of the underwriters' option to purchase additional Class A shares, the Existing Owners will own        % of our outstanding shares. This ownership level will enable the Existing Owners to prevent our general partner's removal. Please read "Description of Our Partnership Agreement—Withdrawal or Removal of the General Partner."

        As a result of these provisions, the price at which our shares will trade may be lower because of the absence or reduction of a takeover premium in the trading price.

You will experience immediate and substantial dilution of $        per Class A share in the net tangible book value of your Class A shares.

        The initial public offering price of our Class A shares is substantially higher than the pro forma net tangible book value per share immediately after the offering. If you purchase Class A shares in this offering you will incur immediate and substantial dilution in the pro forma net tangible book value per share from the price you pay for the Class A shares. Please read "Dilution."

Our general partner may cause us to issue additional Class A shares or other equity securities, including equity securities that are senior to our Class A shares, or cause AAP to issue additional securities, in each case without your approval, which may adversely affect you.

        Our general partner may cause us to issue an unlimited number of additional Class A shares or other equity securities of equal rank with the Class A shares, or cause AAP to issue additional securities, in each case without shareholder approval. In addition, we may issue an unlimited number of shares that are senior to our Class A shares in right of distribution, liquidation and voting. Except for Class A shares issued in connection with the exercise of an Exchange Right, which will result in the cancellation of an equivalent number of Class B shares and therefore have no effect on the total number of outstanding shares, the issuance of additional Class A shares or our other equity securities of equal or senior rank, or the issuance by AAP of additional securities, will have the following effects:

    each shareholder's proportionate ownership interest in us may decrease;

    the amount of cash available for distribution on each Class A share may decrease;

    the relative voting strength of each previously outstanding Class A share may be diminished;

    the ratio of taxable income to distributions may increase; and

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    the market price of the Class A shares may decline.

        Please read "Description of Our Partnership Agreement—Issuance of Additional Securities."

The ownership of our general partner may be transferred to a third party who could replace our current management team without shareholder consent.

        Subject to certain rights of first refusal and related change of control provisions, the owners of our general partner may directly or indirectly transfer their respective ownership interests in our general partner to one or more third parties. Assuming such transfers result in a transfer of control over our general partner, the new owner or owners of our general partner may then be in a position to replace the board of directors and officers of our general partner and to control the decisions taken by the board of directors and officers. Any such acquisition of control would also provide such new owner or owners with effective control of PAA's business and operations.

If PAA's unitholders remove PAA GP, AAP may be required to sell or exchange its indirect general partner interest and its IDRs and we would lose the ability to manage and control PAA.

        We currently manage our investment in PAA through our membership interest in GP LLC, the general partner of AAP. PAA's partnership agreement, however, gives unitholders of PAA the right to remove PAA GP upon the affirmative vote of holders of 662/3% of PAA's outstanding units. If PAA GP withdraws as general partner in compliance with PAA's partnership agreement or is removed as general partner of PAA where cause (as defined in PAA's partnership agreement) does not exist and a successor general partner is elected in accordance with PAA's partnership agreement, AAP could elect to receive cash in exchange for its 2% general partner interest and the IDRs (if then owned by AAP). If PAA GP withdraws in circumstances other than those described in the preceding sentence and a successor general partner is elected in accordance with PAA's partnership agreement, the successor general partner will have the option to purchase the 2% general partner interest and the IDRs (if then owned by AAP) for their fair market value. If PAA GP or the successor general partner do not exercise their options, PAA GP's interests would be converted into common units based on an independent valuation. In each case, PAA GP would also lose its ability to manage PAA. While the cash or common units PAA GP would receive are intended under the terms of PAA's partnership agreement to fully compensate PAA GP in the event such an exchange is received, the value of the investments AAP makes with the cash or the common units received by PAA GP may not over time be equivalent to the value of the general partner interest and the IDRs had AAP retained them. Please read "Material Provisions of the Partnership Agreement of Plains All American Pipeline, L.P."

        In addition, if PAA GP is removed as general partner of PAA, we would face an increased risk of being deemed an investment company. Please read "—If in the future we cease to manage and control PAA, we may be deemed to be an investment company under the Investment Company Act of 1940."

You may not have limited liability if a court finds that shareholder action constitutes control of our business.

        Under Delaware law, you could be held liable for our obligations to the same extent as a general partner if a court determined that the right or the exercise of the right by our shareholders as a group to remove or replace our general partner, to approve some amendments to the partnership agreement or to take other action under our partnership agreement constituted participation in the "control" of our business. Additionally, the limitations on the liability of holders of limited partner interests for the liabilities of a limited partnership have not been clearly established in many jurisdictions.

        Furthermore, Section 17-607 of the Delaware Revised Uniform Limited Partnership Act provides that, under some circumstances, a shareholder may be liable to us for the amount of a distribution for a period of three years from the date of the distribution. Please read "Description of Our Partnership Agreement—Limited Liability" for a discussion of the implications of the limitations on liability to a shareholder.

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If in the future we cease to manage and control PAA, we may be deemed to be an investment company under the Investment Company Act of 1940.

        If we cease to indirectly manage and control PAA and are deemed to be an investment company under the Investment Company Act of 1940, we would either have to register as an investment company under the Investment Company Act of 1940, obtain exemptive relief from the Securities and Exchange Commission or modify our organizational structure or our contractual rights to fall outside the definition of an investment company. Registering as an investment company could, among other things, materially limit our ability to engage in transactions with affiliates, including the purchase and sale of certain securities or other property to or from our affiliates, restrict the ability of PAA and us to borrow funds or engage in other transactions involving leverage, require us to add additional directors who are independent of us and our affiliates, and adversely affect the price of our Class A shares.

Our partnership agreement restricts the rights of shareholders owning 20% or more of our shares.

        Our shareholders' voting rights are restricted by the provision in our partnership agreement generally providing that any shares held by a person or group that owns 20% or more of any class of shares then outstanding, other than our general partner, the Existing Owners (or certain transferees in private, non-exchange transactions), their respective affiliates and persons who acquired such shares with the prior approval of our general partner's board of directors, cannot be voted on any matter. In addition, our partnership agreement contains provisions limiting the ability of our shareholders to call meetings or to acquire information about our operations, as well as other provisions limiting our shareholders' ability to influence the manner or direction of our management. As a result, the price at which our Class A shares will trade may be lower because of the absence or reduction of a takeover premium in the trading price.

If PAA's general partner, which is owned by AAP, is not fully reimbursed or indemnified for obligations and liabilities it incurs in managing the business and affairs of PAA, its value, and, therefore, the value of our Class A shares, could decline.

        AAP, GP LLC and their affiliates may make expenditures on behalf of PAA for which PAA GP will seek reimbursement from PAA. Under Delaware partnership law, PAA GP has unlimited liability for the obligations of PAA, such as its debts and environmental liabilities, except for those contractual obligations of PAA that are expressly made without recourse to the general partner. To the extent PAA GP incurs obligations on behalf of PAA, it is entitled to be reimbursed or indemnified by PAA. If PAA is unable or unwilling to reimburse or indemnify PAA GP, PAA GP may not be able to satisfy those liabilities or obligations, which would reduce AAP's cash flows to us.

The price of our Class A shares may be volatile, and a trading market that will provide you with adequate liquidity may not develop.

        Prior to this offering there has been no public market for our Class A shares. An active market for our Class A shares may not develop or may not be sustained after this offering. The initial public offering price of our Class A shares will be determined by negotiations between us and the underwriters, based on several factors that we discuss in the "Underwriting" section of this prospectus. This price may not be indicative of the market price for our Class A shares after this initial public offering. The market price of our Class A shares could be subject to significant fluctuations after this offering, and may decline below the initial public offering price. You may be unable to resell your Class A shares at or above the initial public offering price. The following factors, among others, could affect our Class A share price:

    PAA's operating and financial performance and prospects and the trading price of its common units;

    the level of PAA's quarterly distributions and our quarterly distributions;

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    quarterly variations in the rate of growth of our financial indicators, such as distributable cash flow per Class A share, net income and revenues;

    changes in revenue or earnings estimates or publication of research reports by analysts;

    speculation by the press or investment community;

    sales of our Class A shares by our shareholders;

    the exercise by the Existing Owners of their exchange rights with respect to any retained AAP units;

    announcements by PAA or its competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, securities offerings or capital commitments;

    general market conditions;

    changes in accounting standards, policies, guidance, interpretations or principles;

    adverse changes in tax laws or regulations;

    domestic and international economic, legal and regulatory factors related to PAA's performance; and

    other factors described in these "Risk Factors."

        The equity markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A shares. In addition, potential investors may be deterred from investing in our Class A shares for various reasons, including the very limited number of publicly traded entities whose assets consist almost exclusively of partnership interests in a publicly traded partnership. The lack of liquidity may also contribute to significant fluctuations in the market price of our Class A shares and limit the number of investors who are able to buy our Class A shares.

Our Class A shares and PAA's common units may not trade in relation or proportion to one another.

        Our Class A shares and PAA's common units may not trade in simple relation or proportion to one another. Instead, while the trading prices of our Class A shares and PAA's common units are likely to follow generally similar broad trends, the trading prices may diverge because, among other things:

    with respect to the first $0.225 of distributable cash flow per common unit, PAA's cash distributions to its common unitholders have a priority over distributions on its IDRs;

    our cash flow is more volatile than the cash flow paid to PAA's common unitholders because we participate in tiered incentive distributions associated with the IDRs in PAA while PAA's common unitholders participate in all distributions made by PAA;

    we expect to pay federal income taxes in the future; and

    we may enter into other businesses separate and apart from PAA or any of its affiliates.

An increase in interest rates may cause the market price of our shares to decline.

        Like all equity investments, an investment in our Class A shares is subject to certain risks. In exchange for accepting these risks, investors may expect to receive a higher rate of return than would otherwise be obtainable from lower-risk investments. Accordingly, as interest rates rise, the ability of investors to obtain higher risk-adjusted rates of return by purchasing government-backed debt securities may cause a corresponding decline in demand for riskier investments generally, including yield-based equity investments such as publicly traded limited partnership interests. Reduced demand for our Class A shares resulting from investors seeking other more favorable investment opportunities may cause the trading price of our Class A shares to decline.

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Future sales of our Class A shares in the public market could reduce our Class A share price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

        Subject to certain limitations and exceptions, holders of AAP units may exchange their AAP units (together with a corresponding number of Class B shares) for Class A shares (on a one-for-one basis, subject to customary conversion rate adjustments for equity splits and reclassification and other similar transactions) and then sell those Class A shares. We may also issue additional Class A shares or convertible securities in subsequent public or private offerings. After the completion of this offering (assuming no exercise of the underwriters' option to purchase additional Class A shares), we will have                    outstanding Class A shares and                    outstanding Class B shares. The outstanding Class A shares, which will consist of all of the shares that we are issuing in this offering, may be resold immediately in the public market. The Existing Owners will own the Class B shares, all of which will be restricted from immediate exchange (into Class A shares) and resale under the federal securities laws and will be subject to the lock-up agreements between such parties and the underwriters described in "Underwriting." However, such Class B shares may be exchanged and the resulting Class A shares may be sold into the market in the future. We expect that the Existing Owners will be parties to a registration rights agreement with us which will require us to effect the registration of their shares in certain circumstances. Please read "Shares Eligible for Future Sale" and "Certain Relationships and Related Party Transactions."

        Prior to the completion of this offering, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of                of our Class A shares issued or reserved for issuance under our equity incentive plan. Subject to the satisfaction of vesting conditions and the expiration of lock-up agreements, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction.

        We cannot predict the size of future issuances of our Class A shares or securities convertible into Class A shares or the effect, if any, that future issuances and sales of our Class A shares will have on the market price of our Class A shares. Sales of substantial amounts of our Class A shares (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A shares.

The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our Class A shares.

        Certain of our affiliates, the Existing Owners, the directors and officers of our general partner and our general partner have entered into lock-up agreements with respect to the exchange of their Class B shares and subsequent sale of their resulting Class A shares, pursuant to which they are subject to certain exchange and resale restrictions for a period of       days following the effective date of the registration statement of which this prospectus forms a part. Representatives of the underwriters to this offering, at any time and without notice, may release all or any portion of the Class B shares subject to the foregoing lock-up agreements. If the restrictions under the lock-up agreements are waived, then the Class A shares issued upon exchange of the related Class B shares will be available for sale into the public markets, which could cause the market price of our Class A shares to decline and impair our ability to raise capital.

The Existing Owners hold a majority of the combined voting power of our Class A and Class B shares.

        Immediately following this offering, the Existing Owners will hold approximately        % of the combined voting power of our Class A and Class B shares (or        % if the underwriters exercise their option to purchase additional Class A shares in full). The Existing Owners are entitled to act separately in their own respective interests with respect to their partnership interests in us, and will initially have the ability to elect all of the members of our board of directors; accordingly, the Existing Owners will

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have the ability to control our management and affairs. Please read "Management—Election of Directors." In addition, they will be able to determine the outcome of all matters requiring shareholder approval, including certain mergers and other material transactions, and will be able to cause or prevent a change in the composition of our board of directors or a change in control of our company that could deprive our shareholders of an opportunity to receive a premium for their Class A shares as part of a sale of our company. So long as the Existing Owners continue to own a significant amount of our outstanding shares, even if such amount is less than 50%, they will continue to be able to strongly influence all matters requiring shareholder approval, regardless of whether or not other shareholders believe that the transaction is in their own best interests.

If we or PAA fails to establish and maintain effective internal control over financial reporting, our ability to accurately report our financial results could be adversely affected.

        We are not currently required to comply with the SEC's rules implementing Section 404 of the Sarbanes-Oxley Act of 2002, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a publicly traded company, we will be required to comply with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act of 2002, which will require our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we will be required to disclose material changes made to our internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC. To comply with the requirements of being a publicly traded company, we will need to implement additional internal controls, reporting systems and procedures. Once it is required to do so, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed, operated or reviewed.

If we or PAA fails to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, our shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Class A shares.

        Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a publicly traded partnership. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results will be harmed. We cannot be certain that our efforts to develop and maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to develop or maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our Class A shares.

A valuation allowance on our deferred tax asset could reduce our earnings.

        A significant deferred tax asset will be recorded as a result of certain of the transactions described in "Organizational Structure—Recapitalization." U.S. generally accepted accounting principles, or GAAP, require that a valuation allowance must be established for deferred tax assets when it is more likely than not that they will not be realized. If we were to determine that a valuation allowance was appropriate for our deferred tax asset, we would be required to take an immediate charge to earnings with a corresponding reduction of partners' equity and increase in balance sheet leverage as measured by debt to total capitalization.

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The NYSE does not require a limited partnership like us to comply with certain of its corporate governance requirements.

        Because we are a limited partnership, the NYSE does not require our general partner to have a majority of independent directors on its board of directors or to establish a compensation committee or a nominating and corporate governance committee. Accordingly, our shareholders will not have the same protections afforded to certain corporations that are subject to all of the NYSE corporate governance requirements. In addition, as a limited partnership we are not required to seek shareholder approval for issuances of Class A shares in excess of 20% of our outstanding equity securities, or for issuances of equity to certain affiliates.


Risks Related to Conflicts of Interest

        Our existing organizational structure and the relationships among us, PAA, our respective general partners, the Existing Owners and affiliated entities present the potential for conflicts of interest. Moreover, additional conflicts of interest may arise in the future among us and the entities affiliated with any general partner or similar interests we acquire or among PAA and such entities. For a further discussion of conflicts of interest that may arise, please read "Conflicts of Interest, Fiduciary Duties and Administrative Agreement."

Conflicts of interest may arise as a result of our organizational structure and the relationships among us, PAA, our respective general partners, the Existing Owners and affiliated entities.

        Our partnership agreement defines the duties of our general partner (and, by extension, its officers and directors). Our general partner's board of directors or its conflicts committee will have authority on our behalf to resolve any conflict involving us and they have broad latitude to consider the interests of all parties to the conflict.

        Conflicts of interest may arise between us and our shareholders, on the one hand, and our general partner and its owners and affiliated entities, on the other hand, or between us and our shareholders, on the one hand, and PAA and its unitholders, on the other hand. For a description of circumstances in which conflicts could arise, please read "Conflicts of Interest, Fiduciary Duties and Administrative Agreement—Potential for Conflicts." The resolution of these conflicts may not always be in our best interest or that of our shareholders.

The duties of our general partner's officers and directors may conflict with those of GP LLC who act on behalf of PAA GP and our general partner's officers and directors may face conflicts of interest in the allocation of administrative time between our business and PAA's business.

        We anticipate that all of the officers and a majority of the directors of our general partner will also be officers or directors of GP LLC acting on behalf of PAA GP and, as a result, have separate contractual duties that govern their management of PAA's business. Consequently, these officers and directors may encounter situations in which their obligations to us, on the one hand, and PAA, on the other hand, are in conflict. For a description of how these conflicts will be resolved, please read "Conflicts of Interest, Fiduciary Duties and Administrative Agreement—Conflicts Resolution." The resolution of these conflicts may not always be in our best interest or that of our shareholders.

        In addition, our general partner's officers who also serve as officers of GP LLC and act on behalf of PAA GP may face conflicts in allocating their time spent on our behalf and on behalf of PAA. These time allocations may adversely affect our or PAA's results of operations, cash flows, and financial condition. It is unlikely that these allocations will be the result of arms-length negotiations between our general partner and GP LLC.

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Our partnership agreement defines our general partner's duties to us and contains provisions that reduce the remedies available to our shareholders for actions that might otherwise be challenged as breaches of fiduciary or other duties under state law.

        Our partnership agreement contains provisions that substantially reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. For example, our partnership agreement:

    permits our general partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our general partner. This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, the Existing Owners, our affiliates or any limited partner. Examples include its right to vote membership interests in our general partner held by us on our behalf, the exercise of its limited call right, its rights to transfer or vote any shares it may own, the registration rights of the Existing Owners and its determination whether or not to consent to any merger or consolidation of our partnership or amendment to our partnership agreement;

    generally provides that our general partner will not have any liability to us or our shareholders for decisions made in its capacity as a general partner so long as it acted in good faith which, pursuant to our partnership agreement, requires a subjective belief that the determination, or other action or anticipated result thereof is in, or not opposed to, our best interests;

    generally provides that any resolution or course of action adopted by our general partner and its affiliates in respect of a conflict of interest will be permitted and deemed approved by all of our partners, and will not constitute a breach of our partnership agreement or any duty stated or implied by law or equity if the resolution or course of action in respect of such conflict of interest is:

    approved by a majority of the members of our general partner's conflicts committee after due inquiry, based on a subjective belief that the course of action or determination that is the subject of such approval is fair and reasonable to us;

    approved by majority vote of our Class A shares and Class B shares (excluding shares owned by our general partner and its affiliates);

    determined by our general partner (after due inquiry) to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or

    determined by our general partner (after due inquiry) to be fair and reasonable to us, which determination may be made taking into account the circumstances and the relationships among the parties involved (including our short-term or long-term interests and other arrangements or relationships that could be considered favorable or advantageous to us).

    provides that, to the fullest extent permitted by law, in connection with any action or inaction of, or determination made by, our general partner or the conflicts committee of our general partner's board of directors with respect to any matter relating to us, it shall be presumed that our general partner or the conflicts committee of our general partner's board of directors acted in a manner that satisfied the contractual standards set forth in our partnership agreement, and in any proceeding brought by any limited partner or by or on behalf of such limited partner or any other limited partner or our partnership challenging any such action or inaction of, or determination made by, our general partner, the person bringing or prosecuting such proceeding shall have the burden of overcoming such presumption; and

    provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or those other persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that such person's conduct was criminal.

        Please read "Conflicts of Interest, Fiduciary Duties and Administrative Agreement."

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By purchasing our Class A shares, each Class A shareholder automatically agrees to be bound by the provisions of our partnership agreement.

        By purchasing our Class A shares, each Class A shareholder automatically agrees to be bound by the provisions in our partnership agreement, including the provisions that substantially reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. This reflects the policy of the Delaware Act, which favors the principle of freedom of contract and the enforceability of partnership agreements. The failure of a limited partner or assignee to sign a partnership agreement does not render the partnership agreement unenforceable against that person. Please read "Conflicts of Interest, Fiduciary Duties and Administrative Agreement" and "Description of Our Partnership Agreement."

The Existing Owners may have interests that conflict with holders of our Class A shares.

        Immediately following this offering (assuming that the underwriters do not exercise their option to purchase additional Class A shares), the Existing Owners will own        % of our outstanding shares and        % of the AAP units. In addition, the Existing Owners own a portion of PAA's common units. As a result, the Existing Owners may have conflicting interests with holders of Class A shares. For example, the Existing Owners may have different tax positions from us which could influence their decisions regarding whether and when to cause us to dispose of assets. Please read "Certain Relationships and Related Party Transactions—Limited Partnership Agreement of Plains AAP, L.P."

        Furthermore, conflicts of interest could arise in the future between us, on the one hand, and the Existing Owners, on the other hand, concerning among other things, a decision whether to modify or limit the IDRs in the future or potential competitive business activities or business opportunities. These conflicts of interest may not be resolved in our favor.

If we are presented with business opportunities, PAA will have the first right to pursue such opportunities.

        Pursuant to the administrative agreement, we have agreed to certain business opportunity arrangements to address potential conflicts with respect to business opportunities that may arise among us, our general partner, PAA, PAA GP, AAP and GP LLC. If a business opportunity is presented to us, our general partner, PAA, PAA GP, AAP or GP LLC, then PAA will have the first right to pursue such business opportunity. The administrative agreement provides, among other things, that PAA will be presumed to desire to pursue the business opportunity until such time as GP LLC advises our general partner and us that PAA has abandoned the pursuit of such business opportunity. We will have the right to pursue and/or participate in such business opportunity if invited to do so by PAA, or if PAA abandons the business opportunity and GP LLC so notifies our general partner. This agreement limits our ability to pursue business opportunities. Please read "Certain Relationships and Related Party Transactions—Administrative Agreement" and "Conflicts of Interest, Fiduciary Duties and Administrative Agreement."

Our general partner's affiliates and the Existing Owners may compete with us.

        Our partnership agreement provides that our general partner will be restricted from engaging in any business activities other than acting as our general partner and those activities incidental to its ownership of interests in us. The restrictions contained in our general partner's limited liability company agreement are subject to a number of exceptions. Affiliates of our general partner and the Existing Owners will not be prohibited from engaging in other businesses or activities that might be in direct competition with us except to the extent they compete using our confidential information. For additional information regarding these agreements, please read "Certain Relationships and Related Party Transactions" and "—Limited Partnership Agreement of Plains AAP, L.P."

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Our general partner has a call right that may require you to sell your Class A shares at an undesirable time or price.

        If at any time more than 80% of our outstanding Class A shares and Class B shares on a combined basis (including Class A shares issuable upon the exchange of Class B shares) are owned by our general partner, the Existing Owners (or certain transferees in private, non-exchange transactions) or their respective affiliates, our general partner will have the right (which it may assign to any of its affiliates, the Existing Owners or us), but not the obligation, to acquire all, but not less than all, of the remaining Class A shares held by other persons at a price equal to the greater of (x) the current market price of the Class A shares as of the date three days before notice of exercise of the call right is first mailed and (y) the highest price paid by our general partner, the Existing Owners (or certain transferees in private, non-exchange transactions) or their respective affiliates for Class A shares during the 90 day period preceding the date such notice is first mailed. As a result, you may be required to sell your Class A shares at an undesirable time or price and may not receive any return on your investment. You may also incur a tax liability upon a sale of your Class A shares. Upon completion of this offering, the Existing Owners will own      % of the Class A shares and Class B shares on a combined basis. For additional information about the call right, please read "Description of Our Partnership Agreement—Limited Call Right."


Risks Related to PAA's Business

PAA may not be able to fully implement or capitalize upon planned growth projects.

        PAA has a number of organic growth projects that involve the construction of new midstream energy infrastructure assets or the expansion or modification of existing assets. Many of these projects involve numerous regulatory, environmental, commercial, economic, weather-related, political and legal uncertainties that are beyond its control, including the following:

    As these projects are undertaken, required approvals, permits and licenses may not be obtained, may be delayed or may be obtained with conditions that materially alter the expected return associated with the underlying projects;

    Despite the fact that PAA will expend significant amounts of capital during the construction phase of these projects, revenues associated with these organic growth projects will not materialize until the projects have been completed and placed into commercial service, and the amount of revenue generated from these projects could be significantly lower than anticipated for a variety of reasons;

    PAA may not be able to secure, or PAA may be significantly delayed in obtaining, all of the rights of way or other real property interests PAA needs to complete such projects, or the costs PAA incurs in order to obtain such rights of way or other interests may be greater than PAA anticipated;

    PAA may construct pipelines, facilities or other assets in anticipation of market demand that dissipates or market growth that never materializes;

    Due to unavailability or costs of materials, supplies, power, labor or equipment, the cost of completing these projects could turn out to be significantly higher than PAA budgeted and the time it takes to complete construction of these projects and place them into commercial service could be significantly longer than planned; and

    The completion or success of PAA's projects may depend on the completion or success of third-party facilities over which PAA has no control.

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        As a result of these uncertainties, the anticipated benefits associated with PAA's capital projects may not be achieved. In turn, this could negatively impact PAA's cash flow and its ability to make or increase cash distributions to its partners.

PAA's results of operations are influenced by the overall forward market for crude oil, and certain market structures or the absence of pricing volatility may adversely impact its results.

        Results from PAA's supply and logistics segment are influenced by the overall forward market for crude oil. A contango market is favorable to commercial strategies that are associated with storage capacity as it allows a party to simultaneously purchase crude oil at current prices for storage and sell at higher prices for future delivery. Wide contango spreads combined with price structure volatility generally have a favorable impact on PAA's results. A backwardated market (meaning that the price of crude oil for future deliveries is lower than current prices) has a positive impact on lease gathering margins because in certain circumstances crude oil gatherers can capture a premium for prompt deliveries; however, in this environment there is little incentive to store crude oil as current prices are above future delivery prices. In either case, margins can be improved when prices are volatile. The periods between these two market structures are referred to as transition periods. If the market is in a backwardated to transitional structure, PAA's results from its supply and logistics segment may be less than those generated during the more favorable contango market conditions. Additionally, a prolonged transition period or a lack of volatility in the pricing structure may further negatively impact PAA's results. Depending on the overall duration of these transition periods, how PAA has allocated its assets to particular strategies and the time length of its crude oil purchase and sale contracts and storage lease agreements, these transition periods may have either an adverse or beneficial effect on its aggregate segment profit. A prolonged transition from a backwardated market to a contango market, or vice versa (essentially a market that is neither in pronounced backwardation nor contango), represents the least beneficial environment for PAA's supply and logistics segment.

A natural disaster, catastrophe, terrorist attack or other event, including attacks on PAA's electronic and computer systems, could interrupt its operations and/or result in severe personal injury, property damage and environmental damage, which could have a material adverse effect on its financial position, results of operations and cash flows.

        Some of PAA's operations involve risks of personal injury, property damage and environmental damage, which could curtail its operations and otherwise materially adversely affect its cash flow. Virtually all of PAA's operations are exposed to potential natural disasters, including hurricanes, tornadoes, storms, floods and/or earthquakes. The location of PAA's assets and its customers' assets in the U.S. Gulf Coast region makes them particularly vulnerable to hurricane or tropical storm risk. In addition, since the September 11, 2001 terrorist attacks, the U.S. government has issued warnings that energy assets, specifically the nation's pipeline infrastructure, may be future targets of terrorist organizations. Terrorists may target PAA's physical facilities and hackers may attack its electronic and computer systems.

        If one or more of PAA's facilities, including electronic and computer systems, or any facilities or businesses that deliver products, supplies or services to PAA or that it relies on in order to operate its business, are damaged by severe weather or any other disaster, accident, catastrophe, terrorist attack or event, its operations could be significantly interrupted. These interruptions could involve significant damage or injury to people, property or the environment, and repairs could take from a week or less for minor incidents to six months or more for major interruptions. Any such event that interrupts the revenues generated by its operations, or which causes PAA to make significant expenditures not covered by insurance, could reduce its cash available for distribution to its partners and, accordingly, adversely affect its financial condition and the market price of its securities.

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If PAA does not make acquisitions or if it makes acquisitions that fail to perform as anticipated, its future growth may be limited.

        PAA's ability to grow its distributions depends in part on its ability to make acquisitions that result in an increase in operating surplus per unit. If PAA is unable to make such accretive acquisitions either because PAA is (i) unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with the sellers, (ii) unable to raise financing for such acquisitions on economically acceptable terms or (iii) outbid by competitors, PAA's future growth will be limited. As a result, PAA may not be able to complete the number or size of acquisitions that it has targeted internally or to continue to grow as quickly as it has historically.

        In evaluating acquisitions, PAA generally prepares one or more financial cases based on a number of business, industry, economic, legal, regulatory and other assumptions applicable to the proposed transaction. Although PAA expects a reasonable basis will exist for those assumptions, the assumptions will generally involve current estimates of future conditions. Realization of many of the assumptions will be beyond PAA's control. Moreover, the uncertainty and risk of inaccuracy associated with any financial projection will increase with the length of the forecasted period. Some acquisitions may not be accretive in the near term, and will be accretive in the long term only if PAA is able to timely and effectively integrate the underlying assets and such assets perform at or near the levels anticipated in its acquisition projections.

PAA's acquisition strategy involves risks that may adversely affect its business.

        Any acquisition involves potential risks, including:

    performance from the acquired businesses or assets that is below the forecasts PAA used in evaluating the acquisition;

    a significant increase in PAA's indebtedness and working capital requirements;

    the inability to timely and effectively integrate the operations of recently acquired businesses or assets;

    the incurrence of substantial unforeseen environmental and other liabilities arising out of the acquired businesses or assets for which PAA is not indemnified by a credit-worthy party, including liabilities arising from the operation of the acquired businesses or assets prior to PAA's acquisition;

    risks associated with operating in lines of business that are distinct and separate from PAA's historical operations;

    customer or key employee loss from the acquired businesses; and

    the diversion of management's attention from other business concerns.

        Any of these factors could adversely affect PAA's ability to achieve anticipated levels of cash flows from its acquisitions, realize other anticipated benefits and its ability to pay distributions to its partners or meet its debt service requirements.

PAA's growth strategy requires access to new capital. Tightened capital markets or other factors that increase its cost of capital could impair its ability to grow.

        PAA continuously considers potential acquisitions and opportunities for organic growth projects. Acquisition transactions can be effected quickly, may occur at any time and may be significant in size relative to its existing assets and operations. PAA's ability to fund its capital projects and make acquisitions depends on whether it can access the necessary financing to fund these activities. Any limitations on its access to capital or increase in the cost of that capital could significantly impair its

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growth strategy, its ability to maintain its targeted credit profile, including maintaining its credit ratings, could affect PAA's cost of capital as well as its ability to execute its growth strategy. In addition, a variety of factors beyond its control could impact the availability or cost of capital, including domestic or international economic conditions, changes in key benchmark interest rates, the adoption of new or amended banking or capital market laws or regulations, the re-pricing of market risks and volatility in capital and financial markets.

        Due to these factors, PAA cannot be certain that funding for its capital needs will be available from bank credit arrangements or capital markets on acceptable terms. If funding is not available when needed, or is available only on unfavorable terms, PAA may be unable to implement its development plans, enhance its existing business, complete acquisitions and construction projects, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on its revenues and results of operations.

Loss of PAA's investment grade credit rating or the ability to receive open credit could negatively affect its ability to purchase crude oil, natural gas and NGL supplies or to capitalize on market opportunities.

        PAA believes that, because of its strategic asset base and complementary business model, PAA will continue to benefit from swings in market prices and shifts in market structure during periods of volatility in the crude oil, natural gas and NGL markets. The extent to which PAA is able to capture that benefit, however, is subject to numerous risks and uncertainties, including whether PAA will be able to maintain an attractive credit rating and continue to receive open credit from its suppliers and trade counterparties. PAA's senior unsecured debt is currently rated as "investment grade" by Standard & Poor's and Moody's Investors Service. A downgrade by either of such rating agencies could increase its borrowing costs, reduce its borrowing capacity and cause its counterparties to reduce the amount of open credit it receives from them. This could negatively impact PAA's ability to capitalize on market opportunities. For example, PAA's ability to utilize its crude oil storage capacity for merchant activities to capture contango market opportunities (meaning that the price of crude oil for future deliveries is higher than current prices) is dependent upon having adequate credit facilities, both in terms of the total amount of credit facilities and the cost of such credit facilities, which enables PAA to finance the storage of the crude oil from the time it completes the purchase of the oil until the time it completes the sale of the oil.

PAA is exposed to the credit risk of its customers in the ordinary course of its business activities.

        Risks of nonpayment and nonperformance by customers are a significant consideration in PAA's business. Although PAA has credit risk management policies and procedures that are designed to mitigate and limit its exposure in this area, there can be no assurance that PAA has adequately assessed and managed the creditworthiness of its existing or future counterparties or that there will not be an unanticipated deterioration in their creditworthiness or unexpected instances of nonpayment or nonperformance, all of which could have an adverse impact on PAA's cash flow and its ability to pay or increase its cash distributions to its partners.

        In those cases in which PAA provides division order services for crude oil purchased at the wellhead, it may be responsible for distribution of proceeds to all parties. In other cases, PAA pays all of or a portion of the production proceeds to an operator who distributes these proceeds to the various interest owners. These arrangements expose PAA to operator credit risk, and there can be no assurance that PAA will not experience losses in dealings with such operators and other parties.

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PAA's risk policies cannot eliminate all risks. In addition, any non-compliance with its risk policies could result in significant financial losses.

        Generally, it is PAA's policy to establish a margin for crude oil or other products it purchases by selling such products for physical delivery to third-party users, or by entering into a future delivery obligation under derivative contracts. Through these transactions, PAA seeks to maintain a position that is substantially balanced between purchases on the one hand, and sales or future delivery obligations on the other hand. PAA's policy is not to acquire and hold physical inventory or derivative products for the purpose of speculating on commodity price changes. These policies and practices cannot, however, eliminate all risks. For example, any event that disrupts PAA's anticipated physical supply of crude oil or other products could expose PAA to risk of loss resulting from price changes. PAA is also exposed to basis risk when crude oil or other products are purchased against one pricing index and sold against a different index. Moreover, PAA is exposed to some risks that are not hedged, including risks on certain of its inventory, such as linefill, which must be maintained in order to transport crude oil on its pipelines. In an effort to maintain a balanced position, specifically authorized personnel can purchase or sell an aggregate limit of up to 800,000 barrels of crude oil, refined products and NGL. Although this activity is monitored independently by PAA's risk management function, it exposes PAA to risks within predefined limits and authorizations.

        In addition, PAA's operations involve the risk of non-compliance with its risk policies. PAA has taken steps within its organization to implement processes and procedures designed to detect unauthorized trading; however, it can provide no assurance that these steps will detect and prevent all violations of its risk policies and procedures, particularly if deception, collusion or other intentional misconduct is involved.

PAA's operations are also subject to laws and regulations relating to protection of the environment and wildlife, operational safety, climate change and related matters that may expose PAA to significant costs and liabilities.

        PAA's operations involving the storage, treatment, processing and transportation of liquid hydrocarbons, including crude oil, NGL and refined products, as well as its operations involving the storage of natural gas, are subject to stringent federal, state and local laws and regulations governing the discharge of materials into the environment. PAA's operations are also subject to laws and regulations relating to protection of the environment and wildlife, operational safety, climate change and related matters. Compliance with all of these laws and regulations increases PAA's overall cost of doing business, including its capital costs to construct, maintain and upgrade equipment and facilities. For example, the adoption of legislation or regulatory programs to reduce emissions of greenhouse gases, including cap and trade programs, could require it to incur increased operating costs, such as costs to purchase and operate emissions control systems, to acquire emissions allowances or comply with new regulatory or reporting requirements. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of investigatory and remedial liabilities, the issuance of injunctions that may subject PAA to additional operational requirements and constraints or claims of damages to property or persons resulting from its operations. The laws and regulations applicable to PAA's operations are subject to change and interpretation by the relevant governmental agency, including the possibility that exemptions it currently qualifies for may be modified or changed in ways that require it to incur significant additional compliance costs. Any such change or interpretation adverse to PAA could have a material adverse effect on its operations, revenues, expenses and profitability.

        PAA has a history of incremental additions to the miles of pipelines it owns. PAA has also increased its terminal and storage capacity and operates several facilities on or near navigable waters and domestic water supplies. Although PAA has implemented programs intended to maintain the integrity of its assets (discussed below), as it acquires additional assets it historically has observed an

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increase in the number of releases of liquid hydrocarbons into the environment. These releases expose PAA to potentially substantial expense, including clean-up and remediation costs, fines and penalties and third-party claims for personal injury or property damage related to past or future releases. Some of these expenses could increase by amounts disproportionately higher than the relative increase in pipeline mileage and the increase in revenues associated therewith. PAA's refined products pipeline and terminal assets are also subject to significant compliance costs and liabilities. In addition, because of their increased volatility and tendency to migrate farther and faster than crude oil, releases of refined products into the environment can have a more significant impact than crude oil and require significantly higher expenditures to respond and remediate. The incurrence of such expenses not covered by insurance, indemnity or reserves could materially adversely affect PAA's results of operations.

        PAA currently devotes substantial resources to comply with DOT-mandated pipeline integrity rules. The 2006 Pipeline Safety Act requires the DOT to issue regulations for certain pipelines that were not previously subject to regulation. The DOT regulations include requirements for the establishment of pipeline integrity management programs and for protection of "high consequence areas" where a pipeline leak or rupture could produce significant adverse consequences. PAA has also developed and implemented certain pipeline integrity measures that go beyond regulatory mandate, some of which are now incorporated into the 2010 Consent Decrees. Please read "Business of Plains All American Pipeline, L.P.—Regulation."

        For 2013 and beyond, it will continue to focus on pipeline integrity management as a primary operational emphasis. In that regard, PAA has implemented programs intended to maintain the integrity of its assets, with a focus on risk reduction through testing, enhanced corrosion control, leak detection and damage prevention. PAA has an internal review process pursuant to which it examines various aspects of its pipeline and gathering systems that are not subject to the DOT pipeline integrity management mandate. The purpose of this process is to review the surrounding environment, condition and operating history of these pipeline and gathering assets to determine if such assets warrant additional investment or replacement. Accordingly, in addition to potential cost increases related to unanticipated regulatory changes or injunctive remedies resulting from regulatory agency enforcement actions, PAA may elect (as a result of its own internal initiatives) to spend substantial sums to ensure the integrity of and upgrade its pipeline systems to maintain environmental compliance and, in some cases, PAA may take pipelines out of service if it believes the cost of upgrades will exceed the value of the pipelines. PAA cannot provide any assurance as to the ultimate amount or timing of future pipeline integrity expenditures but any such expenditures could be significant. Please read "Business of Plains All American Pipeline, L.P.—Environmental, Health and Safety Regulation—United States."

PAA's profitability depends on the volume of crude oil, refined product, natural gas and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of its facilities, which can be negatively impacted by a variety of factors outside of its control.

        PAA's profitability could be materially impacted by a decline in the volume of crude oil, natural gas, refined product and NGL transported, gathered, stored or processed at its facilities. A material decrease in crude oil or natural gas production or crude oil refining, as a result of depressed commodity prices, natural decline rates attributable to oil and natural reservoirs, a decrease in exploration and development activities, supply disruptions, economic conditions or otherwise, could result in a decline in the volume of crude oil, natural gas, refined product or NGL handled by its facilities and other energy logistics assets.

        For example, a portion of PAA's transportation segment profit is derived from pipeline transportation tariffs associated with the Santa Ynez and Point Arguello fields located offshore California and the onshore fields in the San Joaquin Valley. PAA expects that there will continue to be natural production declines from each of these fields as the underlying reservoirs are depleted. In

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addition, any significant production disruption from OCS fields and the San Joaquin Valley due to production problems, transportation problems, earthquakes or other reasons could have a material adverse effect on PAA's business.

        In addition, catastrophic accidents, such as the 2010 explosion and sinking of the Deepwater Horizon drilling rig in the Gulf of Mexico and the resulting oil spill, could lead to increased governmental regulation of PAA's industry's operations in a number of areas, including health and safety, environmental and licensing, any of which could restrict the supply of crude oil available for transportation and have a negative impact on its profitability.

        Also, third-party shippers generally do not have long-term contractual commitments to ship crude oil on PAA's pipelines. A decision by a shipper to substantially reduce or cease to ship volumes of crude oil on its pipelines could cause a significant decline in its revenues.

        To maintain the volumes of crude oil PAA purchases in connection with its operations, it must continue to contract for new supplies of crude oil to offset volumes lost because of natural declines in crude oil production from depleting wells or volumes lost to competitors. Generally, because producers experience inconveniences in switching crude oil purchasers, such as delays in receipt of proceeds while awaiting the preparation of new division orders, producers typically do not change purchasers on the basis of minor variations in price. Thus, PAA may experience difficulty acquiring crude oil at the wellhead in areas where relationships already exist between producers and other gatherers and purchasers of crude oil.

Fluctuations in demand, which can be caused by a variety of factors outside of PAA's control, can negatively affect its operating results.

        Demand for crude oil and other hydrocarbon products PAA handles is dependent upon a variety of factors, including price, the impact of future economic conditions, fuel conservation measures, alternative fuel requirements, governmental regulation, including climate change regulations, and technological advances in fuel economy and energy generation devices. For example, the adoption of legislation or regulatory programs to reduce emissions of greenhouse gases could increase the cost of consuming crude oil and other hydrocarbon products, thereby causing a reduction in the demand for such products. Demand also depends on the ability and willingness of shippers having access to PAA's transportation assets to satisfy their demand by deliveries through those assets.

        Fluctuations in demand for crude oil, such as those caused by refinery downtime or shutdowns, can have a negative effect on PAA's operating results. Specifically, reduced demand in an area serviced by its transportation systems will negatively affect the throughput on such systems. Although the negative impact may be mitigated or overcome by PAA's ability to capture differentials created by demand fluctuations, this ability is dependent on location and grade of crude oil, and thus is unpredictable.

        Fluctuations in demand for NGL products, whether because of general or industry specific economic conditions, new government regulations, global competition, reduced demand by consumers for products made with NGL products, increased competition from petroleum-based feedstocks due to pricing differences, mild winter weather for some NGL products, particularly propane or other reasons, could result in a decline in the volume of NGL products PAA handles or a reduction of the fees it charges for its services. Also, increased supply of NGL products could reduce the value of NGL PAA handles and reduce the margins realized by it. Specifically, PAA's NGL products and their demand are affected as follows:

        Ethane.    Ethane is typically supplied as purity ethane and as part of an ethane-propane mix. Ethane is primarily used in the petrochemical industry as feedstock for ethylene, one of the basic building blocks for a wide range of plastics and other chemical products. Although ethane is typically extracted as part of the mixed NGL stream at gas processing plants, if natural gas prices increase significantly in relation to NGL product prices or if the demand for ethylene falls, it may be more profitable for natural gas processors to leave the ethane in the natural gas stream thereby reducing the volume of NGL delivered for fractionation and marketing.

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        Propane.    Propane is used as a petrochemical feedstock in the production of ethylene and propylene, as a heating, engine and industrial fuel and in agricultural applications such as crop drying. Changes in demand for ethylene and propylene could also adversely affect demand for propane. The demand for propane as a heating fuel is significantly affected by weather conditions. The volume of propane sold is at its highest during the six-month peak heating season of October through March. Demand for propane may be reduced during periods of warmer-than-normal weather.

        Normal Butane.    Normal butane is used in the production of isobutane, as a refined product blending component, as a fuel gas, either alone or in a mixture with propane, and in the production of ethylene and propylene. Changes in the composition of refined products resulting from governmental regulation, changes in feedstocks, products and economics, demand for heating fuel and for ethylene and propylene could adversely affect demand for normal butane.

        Iso-butane.    Iso-butane is predominantly used in refineries to produce alkylates to enhance octane levels. Accordingly, any action that reduces demand for motor gasoline or demand for isobutane to produce alkylates for octane enhancement might reduce demand for isobutane.

        Natural Gasoline.    Natural gasoline is used as a blending component for certain refined products and as a feedstock used in the production of ethylene and propylene. Changes in the mandated composition of motor gasoline resulting from governmental regulation and in demand for ethylene and propylene could adversely affect demand for natural gasoline.

        NGL and products produced from NGL also compete with products from global markets. Any reduced demand or increased supply for ethane, propane, normal butane, iso-butane or natural gasoline in the markets PAA accesses for any of the reasons stated above could adversely affect demand for the services it provides as well as NGL prices, which could negatively impact its operating results.

PAA's assets are subject to federal, state and provincial regulation. Rate regulation or a successful challenge to the rates it charges on its U.S. and Canadian pipeline systems may reduce the amount of cash it generates.

        PAA's U.S. interstate common carrier liquids pipelines, which include both crude oil and refined products pipelines, are subject to regulation by the FERC under the ICA. The ICA requires that tariff rates for liquids pipelines be just and reasonable and non-discriminatory. PAA is also subject to the Pipeline Safety Regulations of the DOT. PAA's intrastate pipeline transportation activities are subject to various state laws and regulations as well as orders of regulatory bodies.

        For PAA's U.S. interstate common carrier liquids pipelines subject to FERC regulation under the ICA, shippers may protest its pipeline tariff filings, file complaints against its existing rates or the FERC can investigate on its own initiative. Under certain circumstances, the FERC could limit PAA's ability to set rates based on its costs, or could order PAA to reduce its rates and could require the payment of reparations to complaining shippers for up to two years prior to the complaint. Natural gas storage facilities are subject to regulation by the FERC and certain state agencies.

        PAA's Canadian pipelines are subject to regulation by the NEB and by provincial authorities. Under the National Energy Board Act, the NEB could investigate the tariff rates or the terms and conditions of service relating to a jurisdictional pipeline on its own initiative upon the filing of a toll or tariff application, or upon the filing of a written complaint. If the NEB found the rates or terms of service relating to such pipeline to be unjust or unreasonable or unjustly discriminatory, the NEB could require PAA to change its rates, provide access to other shippers or change its terms of service. A provincial authority could, on the application of a shipper or other interested party, investigate the tariff rates or PAA's terms and conditions of service relating to its provincially regulated proprietary pipelines. If it found PAA's rates or terms of service to be contrary to statutory requirements, it could impose conditions it considers appropriate. A provincial authority could declare a pipeline to be a

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common carrier pipeline, and require PAA to change its rates, provide access to other shippers or otherwise alter its terms of service. Any reduction in PAA's tariff rates would result in lower revenue and cash flows.

Some of PAA's operations cross the U.S./Canada border and are subject to cross-border regulation.

        PAA's cross-border activities subject it to regulatory matters, including import and export licenses, tariffs, Canadian and U.S. customs and tax issues and toxic substance certifications. Such regulations include the Short Supply Controls of the Export Administration Act, the North American Free Trade Agreement and the Toxic Substances Control Act. Violations of these licensing, tariff and tax reporting requirements could result in the imposition of significant administrative, civil and criminal penalties.

PAA's sales of oil, natural gas, NGL and other energy commodities, and related transportation and hedging activities, expose it to potential regulatory risks.

        The Federal Trade Commission, the FERC and the Commodity Futures Trading Commission hold statutory authority to monitor certain segments of the physical and futures energy commodities markets. These agencies have imposed broad regulations prohibiting fraud and manipulation of such markets. With regard to PAA's physical sales of oil, natural gas, NGL or other energy commodities, and any related transportation and/or hedging activities that it undertakes, it is required to observe the market-related regulations enforced by these agencies, which hold substantial enforcement authority. PAA's sales may also be subject to certain reporting and other requirements. Additionally, to the extent that PAA enters into transportation contracts with natural gas pipelines that are subject to FERC regulation, it is subject to FERC requirements related to the use of such capacity. Any failure on PAA's part to comply with the regulations and policies of the FERC, the Federal Trade Commission or the Commodity Futures Trading Commission could result in the imposition of civil and criminal penalties. Failure to comply with such regulations, as interpreted and enforced, could have a material adverse effect on PAA's business, results of operations, financial condition and its ability to make cash distributions to its partners.

The adoption and implementation of new statutory and regulatory requirements for derivative transactions could have an adverse impact on PAA's ability to hedge risks associated with its business and increase the working capital requirements to conduct these activities.

        The Dodd Frank Wall Street Reform and Consumer Protection Act enacted in 2010 (the "Dodd Frank Act") provides for new statutory and regulatory requirements for swaps and other financial derivative transactions, including oil and gas hedging transactions. The Dodd Frank Act requires the CFTC, federal regulators of banks and other financial institutions, or the prudential regulators, and the SEC to promulgate rules implementing the new law.

        In its rulemaking under the Dodd Frank Act the CFTC has issued final regulations to set position limits for certain futures and option contracts in the major energy markets and for swaps that are their economic equivalents. However, the position limits rule was vacated by the United States District Court for the District of Colombia in September 2012 and the CFTC has stated that it will appeal the District Court's decision. The CFTC also has finalized other regulations, including critical rulemakings on the definition of "swap," "security-based swap," "swap dealer" and "major swap participant." The CFTC also has issued rules that will require certain derivatives transactions to comply with clearing and trade-execution requirements (or take steps to qualify for an exemption to such requirements). The CFTC has not yet released final rules on margin or collateral requirements, and it is possible that any new rules will increase the amount of cash or collateral required to support exchange and over-the-counter derivative transactions. Other regulations also remain to be finalized, and the CFTC recently has delayed the compliance dates for various regulations already finalized. The Dodd Frank Act also may require the counterparties to PAA's derivative instruments to spin off some of their derivatives activities

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to a separate entity, which may not be as creditworthy as the current counterparty. As a result it is not possible at this time to predict with certainty the full effects of the Dodd Frank Act and CFTC rules on PAA and the timing of such effects.

        The majority of PAA's financial derivative transactions used for hedging purposes are currently executed and cleared over exchanges that already require the posting of margins or letters of credit based on initial and variation margin requirements. Depending on the rules and definitions adopted by the CFTC, PAA might, in the future, be required to provide additional cash margin or new cash collateral for its commodities hedging transactions (whether cleared over an exchange or over-the-counter). PAA intends to utilize the end-user exception to the clearing requirement in an effort to avoid margin requirements expected to be associated with clearing hedging transactions.

        Posting of additional cash margin or collateral could affect PAA's liquidity (defined as unrestricted cash on hand plus available credit under its revolving credit facility) and reduce PAA's ability to use cash for capital expenditures or other partnership purposes. A requirement to post additional cash margin or collateral could therefore reduce its ability to execute hedges necessary to reduce commodity price exposures thus protecting cash flows. PAA is at risk for reduced liquidity unless and until the CFTC adopts rules and definitions that relieve companies such as PAA from requirements to post additional cash margins or collateral for its exchange or over-the-counter derivative hedging activities. Even if PAA itself is not required to post additional cash margin or collateral for its derivative contracts, the banks and other derivatives dealers who are its contractual counterparties will be required to comply with other new requirements under the Dodd Frank Act and related rules, and the costs of their compliance will likely be passed on to customers such as PAA, thus decreasing the benefits to it of hedging transactions and reducing its profitability. In addition, implementation of the Dodd Frank Act and related rules and regulations could reduce the overall liquidity and depth of the markets for financial and other derivatives PAA utilizes in connection with its business, which could expose it to additional risks or limit the opportunities it is able to capture by limiting the extent to which it is able to execute its hedging strategies.

Legislation and regulatory initiatives relating to hydraulic fracturing could reduce domestic production of crude oil and natural gas.

        Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons from unconventional geological formations. Recent advances in hydraulic fracturing techniques have resulted in significant increases in crude oil and natural gas production in many basins in the United States and Canada. The process involves the injection of water, sand and chemicals under pressure into the formation to fracture the surrounding rock and stimulate production, and it is typically regulated by state and provincial oil and gas commissions. Hydraulic fracturing has been subject to increased scrutiny due to public concerns that it could result in contamination of drinking water supplies, and there have been a variety of legislative and regulatory proposals to prohibit, restrict or more closely regulate various forms of hydraulic fracturing. Any legislation or regulatory initiatives that curtail hydraulic fracturing could reduce the production of crude oil and natural gas in the United States or Canada, and could thereby reduce demand for PAA's transportation, terminalling and storage services as well as its supply and logistics services.

PAA may not be able to compete effectively in its transportation, facilities and supply and logistics activities, and its business is subject to the risk of a capacity overbuild of midstream energy infrastructure in the areas where it operates.

        PAA faces competition in all aspects of its business and can give no assurances that it will be able to compete effectively against its competitors. In general, competition comes from a wide variety of players in a wide variety of contexts, including new entrants and existing players and in connection with day-to-day business, organic growth projects, acquisitions and joint venture activities. Some of its

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competitors have capital resources many times greater than ours and control greater supplies of crude oil, natural gas or NGL.

        A significant driver of competition in some of the markets where PAA operates (including, for example, the Eagle Ford, Permian Basin and Rockies\Bakken areas) is the rapid development of new midstream energy infrastructure capacity driven by the combination of (i) significant increases in oil and gas production and development in the applicable production areas, both actual and anticipated, (ii) low barriers to entry and (iii) generally widespread access to relatively low cost capital. While this environment presents opportunities for PAA, it is also exposed to the risk that these areas become overbuilt, resulting in an excess of midstream energy infrastructure capacity. Most midstream projects require several years of "lead time" to develop and companies like PAA that develop such projects are exposed (to varying degrees depending on the contractual arrangements that underpin specific projects) to the risk that expectations for oil and gas development in the particular area may not be realized or that too much capacity is developed relative to the demand for services that ultimately materializes. In addition, as an established player in some markets, PAA also faces competition from aggressive new entrants to the market who are willing to provide services at a discount in order to establish relationships and gain a foothold in the market. If PAA experiences a significant capacity overbuild in one or more of the areas where it operates, it could have a significant adverse impact on its financial position, cash flows and ability to pay or increase distributions to its unitholders.

        With respect to PAA's crude oil activities, its competitors include other crude oil pipelines, the major integrated oil companies, their marketing affiliates, refiners, industrial companies, independent gatherers, investment banks, brokers and marketers of widely varying sizes, financial resources and experience. PAA competes against these companies on the basis of many factors, including geographic proximity to production areas, market access, rates, terms of service, connection costs and other factors.

        With respect to PAA's natural gas storage operations, the principal elements of competition are rates, terms of service, supply and market access and flexibility of service. Its natural gas storage facilities compete with several other storage providers, including regional storage facilities and utilities. Certain pipeline companies have existing storage facilities connected to their systems that compete with some of PAA's facilities.

        With regard to PAA's NGL operations, it competes with large oil, natural gas and natural gas liquids companies that may, relative to PAA, have greater financial resources and access to supplies of natural gas and NGL. The principal elements of competition are rates, processing fees (e.g., extraction premiums) paid to the owners or aggregators of natural gas to be processed, geographic proximity to the natural gas or NGL mix, available processing and fractionation capacity, transportation alternatives and their associated costs, and access to end user markets.

PAA may in the future encounter increased costs related to, and lack of availability of, insurance.

        Over the last several years, as the scale and scope of PAA's business activities has expanded, the breadth and depth of available insurance markets has contracted. As a result of these factors and other market conditions, premiums and deductibles for certain insurance policies has increased substantially. Accordingly, PAA can give no assurance that it will be able to maintain adequate insurance in the future at rates or on other terms it considers commercially reasonable. In addition, although PAA believes that it currently maintains adequate insurance coverage, insurance will not cover many types of interruptions or events that might occur and will not cover all risks associated with its operations. In addition, the proceeds of any such insurance may not be paid in a timely manner and may be insufficient if such an event were to occur. The occurrence of a significant event, the consequences of which are either not covered by insurance or not fully insured, or a significant delay in the payment of a major insurance claim, could materially and adversely affect PAA's financial position, results of operations and cash flows.

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The terms of PAA's indebtedness may limit its ability to borrow additional funds or capitalize on business opportunities. In addition, PAA's future debt level may limit its future financial and operating flexibility.

        As of March 31, 2013, PAA's consolidated debt outstanding was approximately $7.0 billion, consisting of approximately $6.3 billion principal amount of long-term debt (including senior notes) and approximately $0.7 billion of short-term borrowings (including current maturities of senior notes). As of March 31, 2013, it had approximately $2.7 billion of available borrowing capacity under its senior unsecured revolving credit facility, its senior secured hedged inventory facility and PNG's credit agreement.

        The amount of PAA's current or future indebtedness could have significant effects on its operations, including, among other things:

    a significant portion of PAA's cash flow will be dedicated to the payment of principal and interest on its indebtedness and may not be available for other purposes, including the payment of distributions on its units and capital expenditures;

    credit rating agencies may view PAA's debt level negatively;

    covenants contained in PAA's existing debt arrangements will require it to continue to meet financial tests that may adversely affect its flexibility in planning for and reacting to changes in its business;

    PAA's ability to obtain additional financing for working capital, capital expenditures, acquisitions and general partnership purposes may be limited;

    PAA may be at a competitive disadvantage relative to similar companies that have less debt; and

    PAA may be more vulnerable to adverse economic and industry conditions as a result of its significant debt level.

        PAA's credit agreements prohibit distributions on, or purchases or redemptions of, units if any default or event of default is continuing. In addition, the agreements contain various covenants limiting its ability to, among other things, incur indebtedness if certain financial ratios are not maintained, grant liens, engage in transactions with affiliates, enter into sale-leaseback transactions and sell substantially all of PAA's assets or enter into a merger or consolidation. PAA's credit facility treats a change of control as an event of default and also requires it to maintain a certain debt coverage ratio. PAA's senior notes do not restrict distributions to unitholders, but a default under its credit agreements will be treated as a default under the senior notes. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facilities and Indentures."

        PAA's ability to access capital markets to raise capital on favorable terms will be affected by its debt level, its operating and financial performance, the amount of its current maturities and debt maturing in the next several years, and by prevailing market conditions. Moreover, if the rating agencies were to downgrade its credit ratings, then it could experience an increase in its borrowing costs, face difficulty accessing capital markets or incurring additional indebtedness, be unable to receive open credit from its suppliers and trade counterparties, be unable to benefit from swings in market prices and shifts in market structure during periods of volatility in the crude oil market or suffer a reduction in the market price of its common units. If PAA is unable to access the capital markets on favorable terms at the time a debt obligation becomes due in the future, it might be forced to refinance some of its debt obligations through bank credit, as opposed to long-term public debt securities or equity securities, or sell assets. The price and terms upon which it might receive such extensions or additional bank credit, if at all, could be more onerous than those contained in existing debt agreements. Any such arrangements could, in turn, increase the risk that PAA's leverage may adversely

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affect its future financial and operating flexibility and thereby impact its ability to pay, cash distributions at expected rates.

Increases in interest rates could adversely affect PAA's business.

        As of March 31, 2013, PAA had approximately $7.0 billion of consolidated debt, of which approximately $ 6.3 billion was at fixed interest rates and approximately $0.7 billion was at variable interest rates (which excludes $100 million of variable rate debt when giving consideration to interest rate derivatives that swap floating rate debt for fixed). PAA is exposed to market risk due to the floating interest rates on its credit facilities. Its results of operations, cash flows and financial position could be adversely affected by significant increases in interest rates above current levels. Additionally, increases in interest rates could adversely affect PAA's supply and logistics segment results by increasing interest costs associated with the storage of hedged crude oil and NGL inventory.

Changes in currency exchange rates could adversely affect PAA's operating results.

        Because PAA is a U.S. dollar reporting company and also conduct operations in Canada, it is exposed to currency fluctuations and exchange rate risks that may adversely affect the U.S. dollar value of its earnings, cash flow and partners' capital under applicable accounting rules.

An impairment of goodwill or intangibles could reduce PAA's earnings.

        At March 31, 2013, PAA had approximately $2.5 billion of goodwill and approximately $454 million of intangibles. Goodwill is recorded when the purchase price of a business exceeds the fair market value of the acquired tangible and separately measurable intangible net assets. GAAP requires PAA to test goodwill for impairment on an annual basis or when events or circumstances occur indicating that goodwill might be impaired. GAAP requires that PAA amortize finite-lived intangibles over their estimated useful lives and test all of its intangibles for impairment when events or circumstances indicate the carrying value may not be recoverable. If PAA were to determine that any of its goodwill or intangibles were impaired, it would be required to take an immediate charge to earnings with a corresponding reduction of partners' equity and increase in balance sheet leverage as measured by debt to total capitalization.

PAA's natural gas storage facilities may not be able to deliver as anticipated, which could prevent it from meeting its contractual obligations and cause it to incur significant costs.

        Although PAA believes that its operating gas storage facilities have been designed to meet its contractual obligations with respect to wheeling, injection, withdrawal and gas specifications, if its facilities do not perform as designed and it fails to wheel, inject or withdraw natural gas at contracted rates, or cannot deliver natural gas consistent with contractual quality specifications, it could incur significant costs to satisfy its contractual obligations.

Marine transportation of crude oil has inherent operating risks.

        PAA's supply and logistics operations include purchasing crude oil that is carried on third-party tankers or barges. Such waterborne cargos are at risk of being damaged or lost because of events such as marine disaster, inclement weather, mechanical failures, grounding or collision, fire, explosion, environmental accidents, piracy, terrorism and political instability. Such occurrences could result in death or injury to persons, loss of property or environmental damage, delays in the delivery of cargo, loss of revenues, termination of contracts, governmental fines, penalties or restrictions on conducting business, higher insurance rates and damage to PAA's reputation and customer relationships generally. Although certain of these risks may be covered under PAA's insurance program, any of these circumstances or events could increase PAA's costs or lower its revenues.

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Maritime claimants could arrest the vessels carrying PAA's cargos.

        Crew members, suppliers of goods and services to a vessel, other shippers of cargo and other parties may be entitled to a maritime lien against that vessel for unsatisfied debts, claims or damages. In many jurisdictions, a maritime lienholder may enforce its lien by arresting a vessel through foreclosure proceedings. The arrest or attachment of a vessel carrying a cargo of PAA's oil could substantially delay its shipment.

        In addition, in some jurisdictions, under the "sister ship" theory of liability, a claimant may arrest both the vessel that is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could try to assert "sister ship" liability against one vessel carrying PAA's cargo for claims relating to a vessel with which PAA has no relationship.

PAA is dependent on use of third-party assets for certain of its operations.

        Certain of PAA's business activities require the use of third-party assets over which it may have little or no control. For example, a portion of PAA's storage and distribution business conducted in the Los Angeles basin (acquired in connection with the Pacific merger) receives waterborne crude oil through dock facilities operated by a third party in the Port of Long Beach. If at any time PAA's access to this dock was denied, and if access to an alternative dock could not be arranged, the volume of crude oil that it presently receives from its customers in the Los Angeles basin may be reduced, which could result in a reduction of facilities segment revenue and cash flow.

Non-utilization of certain assets, such as PAA's leased rail cars, could significantly reduce its profitability due fixed costs incurred to obtain the right to use such assets.

        From time to time in connection with PAA's business, it may lease or otherwise secure the right to use certain third-party assets (such as rail cars, trucks, barges, ships, pipeline capacity, storage capacity and other similar assets) with the expectation that the revenues PAA generates through the use of such assets will be greater than the fixed costs it incurs pursuant to the applicable leases or other arrangements. However, when such assets are not utilized or are under-utilized, PAA's profitability is negatively impacted because the revenues it earns are either non-existent or reduced, but it remains obligated to continue paying any applicable fixed charges, in addition to the potential of incurring other costs attributable to the non-utilization of such assets. For example, in connection with its rail operations, PAA leases all of its rail cars, typically pursuant to five-year leases that obligate it to pay the applicable lease rate without regard to utilization. If business conditions are such that a portion of PAA's rail fleet is not utilized for any period of time due to reduced demand for the services they provide, it will still be obligated to pay the applicable fixed lease rate for such rail cars. In addition, during the period of time that PAA is not utilizing such rail cars, it will incur incremental costs associated with the cost of storing such rail cars and will continue to incur costs for maintenance and upkeep. As of December 31, 2012, PAA leased 5,830 rail cars and its annualized lease costs for the year ended December 31, 2012 were over $45 million and are estimated to be over $65 million for the year ended December 31, 2013. Non-utilization of its leased rail cars and other similar assets in connection with its business could have a significant negative impact on PAA's profitability and cash flows.

Cost reimbursements due to PAA's general partner may reduce PAA's cash available for distribution to its partners.

        Prior to making any distribution to its partners, PAA will reimburse PAA GP and its affiliates, including officers and directors, for all expenses incurred on PAA's behalf (other than expenses related to the AAP management units). The reimbursement of expenses and the payment of fees could

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adversely affect PAA's ability to make distributions to its partners. PAA GP has sole discretion to determine the amount of these expenses. In addition, PAA GP and its affiliates may provide PAA with services for which PAA will be charged reasonable fees as determined by its general partner.

Cash distributions are not guaranteed and may fluctuate with PAA's performance and the establishment of financial reserves.

        Because distributions on PAA's partnership interests are dependent on the amount of cash it generates, distributions to PAA's common unitholders may fluctuate based on PAA's performance, which will result in fluctuations in the amount of distributions ultimately received by AAP. The actual amount of cash that is available to be distributed each quarter will depend on numerous factors, some of which are beyond PAA's control and the control of PAA GP. Cash distributions are dependent primarily on cash flow, including cash flow from financial reserves and working capital borrowings, and not solely on profitability, which is affected by non-cash items. Therefore, cash distributions might be made during periods when PAA records losses and might not be made during periods when it records profits.


Tax Risks

        As our only cash-generating assets at the closing of this offering will consist of our partnership interest in AAP and its related direct and indirect interests in PAA, our tax risks are primarily derivative of the tax risks associated with an investment in PAA.

The tax treatment of PAA depends on its status as a partnership for U.S. federal income tax purposes, as well as it not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service ("IRS") were to treat PAA as a corporation or PAA becomes subject to additional amounts of entity-level taxation for state or foreign tax purposes, it would reduce the amount of cash available for distribution to us and increase the portion of our distributions treated as taxable dividends.

        We currently own an      % limited partner interest in AAP, which indirectly owns PAA's 2% general partner interest, and directly owns all of PAA's IDRs. Accordingly, the value of our indirect investment in PAA, as well as the anticipated after-tax economic benefit of an investment in our Class A shares, depends largely on PAA being treated as a partnership for federal income tax purposes, which requires that 90% or more of PAA's gross income for every taxable year consist of qualifying income, as defined in Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code").

        Despite the fact that PAA is a limited partnership under Delaware law and, unlike us, has not elected to be treated as a corporation for federal income tax purposes, it is possible, under certain circumstances, for PAA to be treated as a corporation for federal income tax purposes. Although we do not believe, based on its current operations, that PAA will be so treated, a change in PAA's business could cause it to be treated as a corporation for federal income tax purposes or otherwise subject it to federal income taxation as an entity.

        If PAA were treated as a corporation for federal income tax purposes, it would pay federal income tax on its taxable income at the corporate tax rate, which is currently a maximum of 35%, and would likely pay state income taxes at varying rates. Distributions to PAA's partners, including AAP, would generally be taxed again as corporate distributions, and no income, gains, losses or deductions would flow through to PAA's partners. Because a tax would be imposed upon PAA as a corporation, its cash available for distribution would be substantially reduced. Therefore, treatment of PAA as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to us, likely causing a substantial reduction in the value of our Class A shares.

        Current law may change, causing PAA to be treated as a corporation for federal income tax purposes or otherwise subjecting PAA to entity-level taxation. In addition, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise

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and other forms of taxation. For example, PAA is subject to entity-level tax on the portion of its income apportioned to Texas in the prior year. Imposition of any similar taxes on PAA in additional states will reduce its cash available for distribution to its partners.

        PAA's partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects PAA to taxation as a corporation or otherwise subjects PAA to entity-level taxation for federal income tax purposes, PAA's minimum quarterly distribution and target distribution amounts will be adjusted to reflect the impact of that law on PAA. If this were to happen, the amount of distributions AAP receives from PAA and our resulting cash flows could be reduced substantially, which would adversely affect our ability to pay distributions.

        Moreover, if PAA were treated as a corporation we would not be entitled to the deductions associated with our initial acquisition of interests in AAP or subsequent exchanges of retained AAP interests and Class B shares for our Class A shares. As a result, if PAA were treated as a corporation, (i) our liability for taxes would likely be higher, further reducing our cash available for distribution, and (ii) a greater portion of the cash we are able to distribute will be treated as a taxable dividend.

        PAA also owns an approximate 63% interest in PNG, which itself is a publicly-traded partnership subject to the same tax rules and risks as PAA.

The tax treatment of publicly traded partnerships such as PAA could be subject to potential legislative, judicial, or administrative changes and differing interpretations, possibly on a retroactive basis.

        The present U.S. federal income tax treatment of publicly traded partnerships, including PAA, may be modified by administrative, legislative or judicial changes, or differing interpretations at any time. Any modifications to the U.S. federal income tax laws that may be applied retroactively or prospectively could make it more difficult or impossible to meet the expectation of future cash distributions or reduce the cash available for distributions to our shareholders. For example, from time to time, members of Congress propose and consider substantive changes to the existing federal income tax laws that affect publicly traded partnerships. Currently, one such legislative proposal would eliminate the qualifying income exception to the treatment of all publicly traded partnerships as corporations upon which PAA relies for its treatment as a partnership for U.S. federal income tax purposes. PAA is unable to predict whether any of these changes or other proposals will be reintroduced or ultimately will be enacted. Any such changes could negatively impact the value of our indirect investment in PAA. Any modification to the U.S. federal income tax laws may be applied retroactively and could make it more difficult or impossible to meet the exception for certain publicly traded partnerships to be treated as partnerships for U.S. federal income tax purposes.

The sale or exchange of 50% or more of PAA's capital and profits interests during any twelve-month period will result in its termination as a partnership for federal income tax purposes.

        PAA will be considered to have constructively terminated as a partnership for tax purposes if there are sales or exchanges which, in the aggregate, constitute 50% or more of the total interests in its capital and profits within a twelve-month period. For purposes of measuring whether the 50% threshold is reached, multiple sales of the same interest are counted only once. PAA's termination would, among other things, result in the closing of its taxable year for all unitholders, which would result in PAA filing two tax returns for one fiscal year and could result in a deferral of depreciation deductions allowable in computing PAA's taxable income. In the case of a unitholder reporting on a taxable year other than a calendar year, the closing of PAA's taxable year may also result in more than twelve months of PAA's taxable income or loss being includable in his taxable income for the year of termination. PAA's termination currently would not affect its classification as a partnership for federal income tax purposes, but it would result in PAA being treated as a new partnership for tax purposes. If PAA were treated as a new partnership, PAA would be required to make new tax elections and could be subject

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to penalties if it was unable to determine that a termination occurred. The IRS has recently announced a relief procedure whereby if a publicly traded partnership that has technically terminated requests and the IRS grants special relief, among other things, the partnership may be permitted to provide only a single Schedule K-1 to unitholders for the tax years in which the termination occurs.

Our current tax treatment may change, which could affect the value of our Class A shares or reduce our cash available for distribution.

        Our expectation that our initial acquisition of interests in AAP will result in deductions that will offset a substantial portion of our taxable income for an extended period of time following the closing of this offering and that such deductions will also result in our distributions not constituting taxable dividends for an extended period of time thereafter is based on current law with respect to the amortization of basis adjustments associated with our acquisition of interests in AAP. Similarly, our expectation that exchanges by the Existing Owners of their retained interests in AAP and Class B shares in us for our Class A shares in the future will result in additional tax deductions is based on current law with respect to such exchanges. Changes in federal income tax law relating to such tax treatment could result in (i) our being subject to additional taxation at the entity level with the result that we would have less cash available for distribution, and (ii) a greater portion of our distributions being treated as taxable dividends. Moreover, we are subject to tax in numerous jurisdictions. Changes in current law in these jurisdictions, particularly relating to the treatment of deductions attributable to acquisitions of interests in AAP, could result in our being subject to additional taxation at the entity level with the result that we would have less cash available for distribution.

Any decrease in our Class A share price could adversely affect our amount of cash available for distribution.

        Changes in certain market conditions may cause our Class A share price to decrease. If our Existing Owners exchange their retained interests in AAP and Class B shares in us for our Class A shares at a point in time when our Class A share price is below the price at which Class A shares are being sold in this offering, the ratio of our income tax deductions to gross income would decline. This decline could result in our being subject to tax sooner than expected, our tax liability being greater than expected, or a greater portion of our distributions being treated as taxable dividends.

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FORWARD-LOOKING STATEMENTS

        All statements included in this prospectus, other than statements of historical fact, are forward-looking statements, including but not limited to statements incorporating the words "anticipate," "believe," "estimate," "expect," "plan," "intend" and "forecast," as well as similar expressions and statements regarding our or PAA's business strategy, plans and objectives for future operations. The absence of such words, expressions or statements, however, does not mean that the statements are not forward-looking. Any such forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions. Certain factors could cause actual results or outcomes to differ materially from the results or outcomes anticipated in the forward-looking statements. The most important of these factors include, but are not limited to:

    our ability to pay distributions to our Class A shareholders;

    our expected receipt of, and amounts of, distributions from AAP;

    PAA's failure to implement or capitalize, or delays in implementing or capitalizing, on planned internal growth projects;

    unanticipated changes in crude oil market structure, grade differentials and volatility (or lack thereof);

    the availability of, and PAA's ability to consummate, acquisition or combination opportunities;

    PAA's successful integration and future performance of acquired assets or businesses and the risks associated with operating in lines of business that are distinct and separate from its historical operations;

    the occurrence of a natural disaster, catastrophe, terrorist attack or other event, including attacks on PAA's electronic and computer systems;

    tightened capital markets or other factors that increase PAA's cost of capital or limit PAA's access to capital;

    maintenance of PAA's credit rating and its ability to receive open credit from its suppliers and trade counterparties;

    continued creditworthiness of, and performance by, PAA's counterparties, including financial institutions and trading companies with which it does business;

    the effectiveness of PAA's risk management activities;

    environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves;

    declines in the volume of crude oil, refined product and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of PAA's facilities, whether due to declines in production from existing oil and gas reserves, failure to or slowdown in the development of additional oil and gas reserves or other factors;

    shortages or cost increases of supplies, materials or labor;

    fluctuations in refinery capacity in areas supplied by PAA's 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;

    PAA's ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness;

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    the impact of current and future laws, rulings, governmental regulations, accounting standards and statements, and related interpretations;

    non-utilization of PAA's assets and facilities;

    the effects of competition;

    interruptions in service on third-party pipelines;

    increased costs or lack of availability of insurance;

    fluctuations in the debt and equity markets, including the price of PAA's units at the time of vesting under its 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 PAA's facilities;

    factors affecting demand for natural gas and natural gas storage services and rates;

    general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; and

    other factors and uncertainties inherent in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the storage of natural gas and the processing, transportation, fractionation, storage and marketing of natural gas liquids.

        Other factors described elsewhere in this prospectus, or factors that are unknown or unpredictable, could also have a material adverse effect on future results. Please read "Risk Factors." Except as required by applicable securities laws, we do not intend to update these forward-looking statements and information.

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ORGANIZATIONAL STRUCTURE

        The diagram below depicts our simplified organizational structure immediately following the completion of this offering (assuming the underwriters' option to purchase additional Class A shares is not exercised):

GRAPHIC


(1)
We will initially own the remaining        % of the membership interests in our general partner, which percentage corresponds to our ownership percentage of AAP units (        %) following this offering (representing a        % economic interest in AAP, including the dilutive effect of the AAP management units).

(2)
The AAP management units are entitled to certain proportionate distributions paid by AAP. Please see "Management—AAP Management Units."

(3)
Includes PAA common units owned by the Existing Owners.

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Recapitalization

        We are a Delaware limited partnership formed in July 2013. Although we were formed as a limited partnership, we will elect to be taxed as a corporation for U.S. federal income tax purposes.

        The Existing Owners currently directly or indirectly own all of the ownership interests in AAP and GP LLC (other than the AAP management units). In connection with the completion of this offering, the following transactions will be effected, which will result in the revised organizational structure depicted above under "Organizational Structure";

    The existing 1% general partner interest in AAP currently held by GP LLC will be converted into a non-economic general partner interest and a 1% limited partner interest in AAP represented by            AAP units. Such AAP units will be distributed by GP LLC to the Existing Owners;

    The Existing Owners will contribute their respective membership interests in GP LLC to our general partner in exchange for membership interests in our general partner, and our general partner will then contribute such interests in GP LLC to us in exchange for the continuation of its non-economic general partner interest in us;

    The Existing Owners will contribute to us (i)             AAP units (representing a        % limited partner interest, and an approximate        % economic interest (including the dilutive effect of the AAP management units), in AAP) and (ii) an aggregate        % of the membership interests in our general partner, in exchange for            of our Class B shares and the right to receive an amount equal to the net proceeds of this offering. Please read "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters—Ownership of General Partner Entities."

    We will issue            of our Class A shares to the public;

    The AAP limited partnership agreement will be amended and restated to provide that (i) the number of AAP units held by us and the Existing Owners will be adjusted so that the relative limited partner interest in AAP held by us and the Existing Owners stays the same after increasing the number of AAP units we own so that it equals the number of Class A shares issued to the public, (ii) the AAP units will not have any voting rights other than legally unwaivable voting rights, (iii) each Existing Owner will have the right to exchange its AAP units and a like number of Class B shares for Class A shares on a one-for-one basis, as described below under "—Exchangeable LP Structure," and (iv) each holder of AAP management units will receive, upon the exchange of any such AAP management units into AAP units and a like number of Class B shares, an associated right to exchange such AAP units and Class B shares for Class A shares on a one-for-one basis, as described below under "—Exchangeable LP Structure";

    We will receive, after deducting underwriting discounts and commissions and offering expenses, net proceeds of approximately $        from the issuance and sale of            Class A shares at an assumed initial public offering price of $        per Class A share (the midpoint of the price range set forth on the cover page of this prospectus), and we will distribute these proceeds to the Existing Owners as described above; and

    We will also enter into an administrative agreement as described under "Certain Relationships and Related Party Transactions—Administrative Agreement."

        Upon completion of the recapitalization described above, our sole assets will consist of (i) a 100% member interest in GP LLC, which holds a non-economic general partner interest in AAP, (ii) AAP units (representing        % of the limited partner interests, and an approximate        % economic interest (including the dilutive effect of the AAP management units), in AAP, which directly or

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indirectly owns all of the IDRs and the 2% general partner interest in PAA), and (iii)         % of the membership interests in our general partner.


Our Class A Shares and Class B Shares

        Our partnership agreement provides for two classes of shares, Class A shares and Class B shares, representing limited partner interests in us. Only the holders of our Class A shares are entitled to participate in our distributions. Each Class A share will also be entitled to one vote on the limited matters to be voted on by our shareholders.

        Class B shares are not entitled to receive distributions but will be entitled to vote on the same basis as the Class A shares. Holders of Class A shares and Class B shares will vote together as a single class on all matters presented to our shareholders for their vote or approval, except as otherwise required by applicable law. We do not intend to list Class B shares on any stock exchange. All of our Class B shares will initially be owned by the Existing Owners.


Exchangeable LP Structure

        The Existing Owners and any permitted transferees of their AAP units will each have the right to exchange (the "Exchange Right") all or a portion of their AAP units into Class A shares at an exchange ratio of one Class A share for each AAP unit exchanged. The Exchange Right may be exercised only if, simultaneously therewith, an equal number of our Class B shares are transferred by the exercising party to us.

        For purposes of any transfer or exchange of AAP units initially owned by the Existing Owners and our Class B shares, the AAP partnership agreement and our partnership agreement will contain provisions effectively linking each such AAP unit with one of our Class B shares. Our Class B shares cannot be transferred without transferring an equal number of AAP units and vice versa.

        Additionally, if the Class A shares are publicly traded at any time after December 31, 2015, a holder of vested AAP management units will be entitled to exchange his or her AAP management units for AAP units and a like number of Class B shares based on a conversion ratio calculated in accordance with the AAP limited partnership agreement (which conversion ratio will not be more than one-to-one and we anticipate will be approximately 0.89 AAP units for each AAP management unit as of the date of the distribution that will be paid with respect to the second quarter of 2013). Following any such exchange, the holder will have the Exchange Right for our Class A shares.

        The above mechanisms are subject to customary conversion rate adjustments for equity splits, equity dividends and reclassifications. For additional information, please read "Certain Relationships and Related Party Transactions—Limited Partnership Agreement of Plains AAP, L.P."


Ownership of Our General Partner; Election of Directors

        In connection with the recapitalization transactions referenced above under "—Recapitalization," the Existing Owners will initially own all of the membership interests in PAA GP Holdings LLC, our general partner and will have the ability to appoint all the members of our general partner's board of directors. Our general partner's limited liability company agreement will include provisions linking the ownership of the membership interests in our general partner to the ownership of the outstanding AAP units. Membership interests in our general partner will not be allowed to be transferred without transferring an equivalent portion of AAP units and vice versa. As the Existing Owners reduce their ownership of AAP units through this offering and in connection with future exchanges of AAP units and Class B shares for Class A shares following this offering, the Existing Owners' ownership interest in our general partner will be reduced, and our ownership interest in our general partner will be proportionately increased. When the overall direct and indirect economic interest of the Existing

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Owners and their permitted transferees in AAP falls below 40% (calculated as described below), the following changes to our governance arrangements will be triggered: (i) within a certain period of time, our general partner's board of directors will be staggered into three classes; (ii) subject to certain limitations, our Class A and Class B shareholders, voting together as a single class, will have the right to elect certain of our directors; and (iii) except for any party that already has the right to designate a director on our general partner's board of directors, any person or group (as such term is defined pursuant to applicable securities laws) that owns of record at least 10% of our combined Class A and Class B shares will be entitled to nominate a single director for election at an annual meeting. The 40% threshold referred to above will be calculated on a fully diluted basis that takes into account any Class A shares owned by the Existing Owners and their permitted transferees, assumes the exchange of all AAP management units for AAP units based on the applicable conversion factor and attributes the ownership of such AAP units to the Existing Owners. Please read "Description of our Partnership Agreement—Public Election of Directors Following Trigger Date."


Holding Company Structure

        Our post-offering organizational structure will allow the Existing Owners to retain a direct equity ownership in AAP, an entity that is classified as a partnership for U.S. federal income tax purposes. Investors in this offering will, by contrast, hold a direct equity ownership in us in the form of Class A shares, and an indirect ownership interest in AAP through our ownership of AAP units. Although we were formed as a limited partnership, we will elect to be taxed as a corporation for U.S. federal income tax purposes.

        Pursuant to our partnership agreement and the AAP partnership agreement, our capital structure and the capital structure of AAP will generally replicate one another and will provide for customary antidilution mechanisms in order to maintain the one-for-one exchange ratio between the AAP units and our Class B shares, on the one hand. and our Class A shares, on the other hand.

        The holders of interests in AAP units, including us, will be subject to tax on their proportionate share of any taxable income of AAP and will be allocated their proportionate share of any taxable loss of AAP. The AAP partnership agreement provides, to the extent cash is available, for tax related distributions pro rata to the holders of AAP units if GP LLC, as the general partner of AAP, determines that the taxable income of AAP will give rise to taxable income for an AAP unitholder. Generally, these tax distributions will be computed based on our estimate of the taxable income of AAP that is allocable to a holder of AAP units, multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual resident in New York, New York (taking into account the non-deductibility of certain expenses and the character of AAP's income).

        We may accumulate cash balances in future years resulting from distributions from AAP. To the extent we do not distribute such cash balances as a distribution on our Class A shares and instead decide to hold or recontribute such cash balances to AAP for use in its operations, holders who exchange AAP units and Class B shares for Class A shares in the future could also benefit from any value attributable to such accumulated cash balances.

        For additional information, please read "Certain Relationships and Related Party Transactions—Limited Partnership Agreement of Plains AAP, L.P."

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USE OF PROCEEDS

        We expect to receive approximately $         of net proceeds from the sale of the Class A shares, based upon the assumed initial public offering price of $        per Class A share (the midpoint of the price range set forth on the cover page of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        We will distribute the net proceeds of this offering to the Existing Owners. Please read "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters—Ownership of General Partner Entities."

        If the underwriters exercise their option to purchase additional Class A shares, we intend to use the proceeds resulting from any issuance of Class A shares upon such exercise to acquire an equivalent number of Class B shares and AAP units from the Existing Owners, in addition to a proportionate percentage of the membership interests in our general partner. Upon such acquisition, such Class B shares will be cancelled and the associated AAP units and membership interests will thereafter be owned by us.

        A $1.00 increase or decrease in the assumed initial public offering price of $        per Class A share would cause the net proceeds from the offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, to increase or decrease, respectively, by approximately $         million.

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CAPITALIZATION

        We were formed in July 2013 and, therefore, do not have historical financial statements. The following table sets forth the consolidated historical capitalization as of March 31, 2013:

    on an actual basis for GP LLC; and

    on an as adjusted basis for Plains GP Holdings, L.P. to give effect to the transactions under "Organizational Structure" that will occur simultaneously with the closing of this offering, and the application of the net proceeds from this offering as set forth under "Use of Proceeds," assuming an initial public offering price of $        per Class A share (the midpoint of the range set forth on the cover of this prospectus).

        The historical financial data of GP LLC presented in the table below is derived from and should be read in conjunction with GP LLC's historical financial statements, including the accompanying notes, included elsewhere in this prospectus. There have been no material changes to the capitalization of GP LLC since March 31, 2013.

 
  As of March 31, 2013  
 
  Plains All
American GP LLC
Historical
  Plains GP
Holdings, L.P.
As Adjusted
 
 
  (in millions)
 

Short-Term Debt:

             

Debt Obligations of AAP:

             

AAP senior secured revolving credit facility

  $ 2   $ 2  

Debt Obligations of PAA:

             

PAA senior secured hedged inventory facility

    325     325  

PAA senior unsecured revolving credit facility

    18     18  

PNG senior unsecured revolving credit facility

    93     93  

PAA 5.63% senior notes due December 2013

    250     250  

Other

    3     3  
           

Total Short-Term Debt

    691     691  

Long-Term Debt:

             

Debt Obligations of AAP:

             

AAP term loan

    200     200  

Debt Obligations of PAA:

             

Senior notes, net of unamortized discount

    6,010     6,010  

Long-term debt under credit facilities and other

    321     321  
           

Total Long-Term Debt

    6,531     6,531  
           

Total Debt

  $ 7,222   $ 7,222  
           

Members' Equity/Partners' Capital

             

Members' Equity/Partners' Capital (excluding noncontrolling interests')

  $        

Noncontrolling interests

    7,311        
           

Total Members' Equity/Partners' Capital

  $ 7,311        
           

Total Capitalization, Including Short-Term Debt

  $ 14,533        
           

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DILUTION

        Dilution is the amount by which the offering price paid by the purchasers of Class A shares sold in this offering will exceed the pro forma net tangible book value per Class A share after the offering. Net tangible book value per share is determined by dividing our tangible net worth (tangible assets less total liabilities) by the total number of outstanding shares. On a pro forma basis as of March 31, 2013, after giving effect to the transactions described under "Organizational Structure," and assuming the underwriters' option to purchase additional Class A shares is not exercised, our net tangible book value would have been approximately $         million, or $        per share. Purchasers of Class A shares in this offering will experience immediate and substantial dilution in the net tangible book value per share for accounting purposes, as illustrated in the table below.

Assumed initial public offering price per Class A share

        $           

Net tangible book value per share before the offering

  $                 

Increase per share attributable to purchasers in the offering

             
             

Less: Pro forma net tangible book value per share after the offering

             
             

Immediate dilution in net tangible book value per share to purchasers in the offering

        $           
             

        The following table sets forth the number of Class A and Class B shares that we will issue and the total consideration contributed to us by our general partner and paid by the purchasers of Class A shares at $        per share, the midpoint of the range of the initial public offering prices set forth on the cover page of this prospectus, calculated before deduction of estimated underwriting discounts and commissions:

 
  Shares Acquired   Total
Consideration
 
 
  Number   Percent   Amount   Percent  

Existing Owners—Class B

                          %                         %

New investors—Class A

                          %                         %
                   

Total

                          %                         %

 
  (In thousands)  

Book value of net assets contributed

  $    

Less: Distribution to Existing Owners from net proceeds of this offering

       
       

Total consideration

  $    
       

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OUR CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS

        You should read the following discussion of our cash distribution policy in conjunction with the more detailed information regarding the factors and assumptions upon which our cash distribution policy is based in "—Assumptions and Considerations Related to the Estimated Minimum Necessary PAA Adjusted EBITDA" below. In addition, you should read "Forward-Looking Statements" and "Risk Factors" for information regarding statements that do not relate strictly to historical or current facts and material risks inherent in our and PAA's business.

        For additional information regarding our historical and pro forma operating results, you should refer to GP LLC's audited historical financial statements for the years ended December 31, 2010, 2011 and 2012, GP LLC's unaudited historical financial statements for the three months ended March 31, 2012 and 2013, and our pro forma financial statements for the three months ended March 31, 2013 and the year ended December 31, 2012, each included elsewhere in this prospectus.


General

        Rationale for Our Cash Distribution Policy.    Our partnership agreement requires us to distribute all of our available cash quarterly. Generally, our available cash is all cash on hand at the date of determination of available cash for the distribution in respect of such quarter (including expected distributions from AAP in respect of such quarter) after the payment of our expenses and the establishment of cash reserves. Our partnership agreement will not restrict our ability to borrow to pay distributions.

        It is important that you understand that our cash flow is generated solely from distributions we receive from AAP. AAP currently receives all of its cash flows from distributions on its direct and indirect partnership interests in PAA. AAP is therefore entirely dependent upon the ability of PAA to make cash distributions to its partners. We currently have no independent operations. Accordingly, we believe we will initially have low cash requirements. Therefore, we believe that our investors are best served by our distributing all of our available cash to our Class A shareholders as described below.

        Restrictions and Limitations on Our Cash Distribution Policy.    There is no guarantee that our Class A shareholders will receive quarterly distributions from us or that we will receive quarterly distributions from AAP. Neither we nor PAA have a legal obligation to pay distributions, except as provided in our partnership agreements.

        Our distribution policy and PAA's distribution policy are subject to certain restrictions and may be changed at any time. These restrictions include the following:

    PAA's cash distribution policy is subject to restrictions on distributions under its credit facilities, which prohibit distributions on, or purchases or redemptions of, units if any default or event of default is continuing. These credit facilities contain various covenants limiting PAA's ability to, among other things, incur indebtedness if certain financial ratios are not maintained, grant liens, engage in transactions with affiliates, enter into sale-leaseback transactions, and sell substantially all of its assets or enter into a merger or consolidation. In addition, these credit facilities treat a change of control or failure to maintain a certain debt coverage ratio as an event of default. PAA's senior notes do not restrict distributions to unitholders, but are subject to certain other restrictive covenants. A default under PAA's credit facilities will be treated as a default under its senior notes. These financial tests and covenants are described in this prospectus under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." Should PAA be unable to comply with the restrictions under its debt agreements, PAA would be prohibited from making cash distributions to AAP, which in turn would prevent AAP from making cash distributions to us.

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    The amount of cash we have available for distribution will be subject to restrictions on distributions under AAP's credit facility. Specifically, AAP's credit facility contains material financial tests and covenants that it must satisfy. Should AAP be unable to satisfy these restrictions under its credit facility, AAP would be prohibited from making cash distributions to us, and we would be prohibited from making cash distributions to you, notwithstanding our stated cash distribution policy.

    GP LLC has authority under PAA's partnership agreement to establish cash reserves that are necessary or appropriate in its reasonable discretion for the proper conduct of PAA's business, to comply with applicable law or any agreement binding on PAA and its subsidiaries and to provide for future cash distributions to PAA's unitholders. The establishment of those reserves could result in a reduction in cash distributions that AAP would otherwise receive from PAA, which in turn could result in a reduction in cash distributions to you from levels we currently anticipate pursuant to our stated cash distribution policy. Any determination to establish cash reserves made by GP LLC in its reasonable discretion will be binding on PAA's unitholders as well as the holders of its general partner interest and IDRs.

    Our general partner will have authority under our partnership agreement to establish cash reserves. The establishment of those reserves could result in a reduction in cash distributions to you from levels we currently anticipate pursuant to our stated cash distribution policy. Any determination to establish cash reserves made by our general partner in good faith will be binding on our shareholders. Our partnership agreement provides that in order for a determination by our general partner to be made in good faith, it must subjectively believe the determination is in, or not opposed to, our best interests.

    Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act, PAA may not make a distribution to AAP, AAP may not make a distribution to us and we may not make a distribution to you if such distribution would cause PAA's or AAP's or our liabilities to exceed the fair value of each party's respective assets, as applicable.

    We may lack sufficient cash to pay distributions to our Class A shareholders due to increases in our, AAP's or PAA's operating or general and administrative expenses, principal and interest payments on debt, working capital requirements, taxes and other anticipated cash needs.

        Our Cash Distribution Policy Limits Our Ability to Grow.    Because we distribute all of our available cash, our growth may not be as fast as the growth of businesses that reinvest their available cash to expand ongoing operations. In fact, because currently our only cash-generating assets are indirect partnership interests in PAA, our growth will be completely dependent upon PAA. The amount of cash distributions AAP receives from PAA is based on PAA's per unit distribution paid on each PAA common unit. Accordingly, the cash distribution received by AAP is derived from two factors: (i) PAA's per unit distribution level and (ii) the number of PAA common units outstanding. An increase in either factor (assuming the other factor remains constant or increases) will generally, absent additional IDR reductions, result in an increase in the amount of cash distributions AAP receives from PAA, a portion of which we, in turn, receive from AAP. Please read "Plains All American Pipeline, L.P.'s Cash Distribution Policy." If we issue additional shares or we were to incur debt or be required to pay taxes, the payment of distributions on those additional shares, interest on that debt or payment of such taxes could increase the risk that we will be unable to maintain or increase our cash distribution levels. There are no limitations in our partnership agreement on our ability to incur indebtedness or to issue additional shares, including shares ranking senior to our Class A shares.

        PAA's Ability to Grow is Dependent on its Ability to Access External Growth Capital.    Consistent with the terms of its partnership agreement, PAA distributes its available cash each quarter to its partners. In determining the amount of cash available for distribution, PAA sets aside cash reserves, which it uses, among other things, to fund a portion of its acquisitions and growth capital expenditures.

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Additionally, PAA has relied upon external financing sources, including commercial borrowings and other debt and equity issuances, to fund its acquisition and growth capital expenditures. Accordingly, to the extent PAA does not have sufficient cash reserves or is unable to finance growth externally, its ability to grow will likely be impaired. If PAA issues additional units, the payment of distributions on those additional units may increase the risk that PAA will be unable to maintain or increase its per unit distribution level, which in turn may impact the available cash AAP receives from PAA and we have to distribute to our Class A shareholders. There are no current limitations in PAA's partnership agreement on its ability to incur indebtedness or to issue additional units, including units ranking senior to its common units. The incurrence of additional debt by PAA to finance its growth strategy would result in increased interest expense to PAA, which in turn may reduce its cash distributions to AAP and reduce the available cash that we have to distribute to our Class A shareholders.

        The IDRs that AAP Owns May Be Limited or Modified Without Your Consent.    We own a        % limited partnership interest in AAP, which owns all of the IDRs, which entitle AAP to receive increasing percentages (up to a maximum of 48%, to the extent not modified) of any cash distributed by PAA in excess of $0.2250 per PAA unit in any quarter. The vast majority of the cash flow AAP receives from PAA is provided by these IDRs. For the twelve months ended March 31, 2013, approximately 96% of the pro forma cash that AAP would have received from PAA would have been attributable to its ownership of the IDRs.

        PAA, like other publicly traded partnerships, will generally only undertake an acquisition or expansion capital project if, after giving effect to related costs and expenses, the transaction would be expected to be accretive, meaning it would increase cash distributions per unit in future periods. Because AAP currently participates in the IDRs at the highest sharing level, it is harder for an acquisition or capital project to show accretion for the common unitholders of PAA than if the IDRs received less incremental cash flow. We therefore expect that AAP may determine, in certain cases, to propose a reduction to the IDRs to facilitate a particular acquisition or expansion capital project. Such a reduction may relate to all of the cash flow on the IDRs or only to the expected cash flow from the transaction and may be either temporary or permanent in nature. Any such reduction of the IDRs will reduce the amount of cash that would have otherwise been distributed by AAP to us, which will in turn reduce the cash distributions we would otherwise be able to pay to you.

        Although not required to do so, in response to past requests by PAA management in connection with PAA's acquisition activities, the Existing Owners have approved temporary and permanent reductions in IDR payments. Such modifications were implemented with a view toward enhancing PAA's competitiveness for such acquisitions and managing the overall cost of equity capital while achieving an appropriate balance between short-term and long-term accretion to PAA's limited partners and the holders of its general partner interest and IDRs. While these IDR reductions reduced the amount of cash that would otherwise have been distributed in respect of the IDRs, we believe they have contributed to long-term accretion in the amount of distributions paid with respect to the IDRs through participation in PAA growth opportunities that may not have been available in the absence of such reductions.

        The Existing Owners have approved IDR reductions in connection with the closing of four prior PAA acquisitions: the Pacific Energy Partners, L.P. acquisition in 2006, the Rainbow Pipeline Company acquisition in 2008, the Vulcan Gas Storage acquisition in 2009, and the BP NGL Acquisition in 2012. For the period from 2006 through the distribution date for the second quarter of 2013, these IDR reductions have totaled $105.5 million in the aggregate. Currently, the following IDR reductions are in place: $15.0 million in 2013 (of which $11.3 million will have been satisfied with the distribution with respect to the quarter ended June 30, 2013), $11.3 million in 2014, and $10.0 million per year thereafter. Our general partner may, in certain circumstances, similarly support PAA in the future by agreeing to waive, modify or otherwise adjust payments relating to PAA's IDRs.

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        Our general partner has the right to approve any waiver, reduction, limitation or modification to PAA's IDRs without the consent of our shareholders. In determining whether or not to approve any such modification, our general partner's board of directors or its conflicts committee may consider whatever information it subjectively believes is adequate in making such determination. Our general partner's board of directors or its conflicts committee must also subjectively believe that any such modification is fair and reasonable to us. Any determination with respect to such modification could include consideration of one or more financial cases based on a number of business, industry, economic, legal, regulatory and other assumptions applicable to the proposed transaction. The assumptions will generally involve current estimates of future conditions, which are difficult to predict and realization of many of the assumptions will be beyond our general partner's control. Moreover, the uncertainty and risk of inaccuracy associated with any financial projection will increase with the length of the forecasted period. To the extent such assumptions are not realized, the expected benefits from increases in distributions from PAA to AAP may not materialize, and our distributions to our Class A shareholders may be reduced.


AAP Management Units

        The amount of cash available for distribution from AAP will be reduced by amounts to which the AAP management units, each representing a profits interest in AAP, are entitled. In August 2007, the equity owners of AAP authorized the issuance of the AAP management units to certain senior members of PAA's management. The AAP management units are subject to restrictions on transfer and become earned in various increments upon the achievement of certain PAA distribution levels (or in some cases, within 180 days thereafter). As of the date of the distribution that will be paid with respect to the second quarter of 2013, approximately 97% of the outstanding AAP management units have been earned or will be earned within 180 days. When earned, the AAP management units are limited to proportionate participation in cash distributions paid by AAP above $11.0 million (as adjusted for debt service costs and excluding special distributions funded by debt) per quarter. As of the date hereof, up to 200,000 AAP management units have been authorized for issuance and 186,625 AAP management units are currently outstanding. Assuming all authorized AAP management units are issued, the maximum participation would be approximately 8% of the amount of distributed cash flow in excess of $11.0 million per quarter.

        Additionally, if the Class A shares are publicly traded at any time after December 31, 2015, a holder of vested AAP management units will be entitled to exchange his or her AAP management units for AAP units and a like number of Class B shares based on a conversion ratio calculated in accordance with the AAP limited partnership agreement (which conversion ratio will not be more than one-to-one and we anticipate will be approximately 0.89 AAP units for each AAP management unit as of the date of the distribution that will be paid with respect to the second quarter of 2013). Following any such exchange, the holder will have the Exchange Right for our Class A shares.

        As provided in AAP's partnership agreement, holders of AAP management units that are earned or vested will be obligated to fund a portion of AAP's obligation to contribute additional capital to PAA in the event of an equity issuance by PAA in order to maintain AAP's indirect 2% general partner interest in PAA.

        For more detail about the AAP management units, including the ability of AAP to call the AAP management units under certain circumstances, please read "Management—AAP Management Units."


Our Initial Distribution Rate

        Our Cash Distribution Policy.    Upon the closing of this offering, we expect to pay an initial quarterly distribution of $        per Class A share, or $        per Class A share on an annualized basis. This equates to an aggregate cash distribution of approximately $         million per quarter, or approximately $         million per year. If the underwriters exercise their option to purchase additional Class A shares, we intend to use the proceeds from any such exercise to acquire an equivalent number of Class B shares and AAP units from the Existing Owners in addition to a proportionate percentage of the membership interests in our general partner. Upon such acquisition, such Class B shares will be cancelled and the associated AAP units and membership interests will thereafter be owned by us. As a result, the exercise of the underwriters' option to purchase additional Class A shares is expected to have no impact on the expected per share distributions to be received by holders of Class A shares.

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        Our ability to make cash distributions at the initial distribution rate will be subject to the factors described above under the caption "—Restrictions and Limitations on Our Cash Distribution Policy." We cannot assure you that any distributions will be declared or paid by us. Please read "Risk Factors—Risks Inherent in an Investment in Us—Our cash flow will be entirely dependent upon the ability of PAA to make cash distributions to AAP, and the ability of AAP to make cash distributions to us."

        We will pay our cash distributions within 55 days after the end of each fiscal quarter to holders of record on or about the first of the month in which the distribution is paid. If the distribution date does not fall on a business day, we will make the distribution on the business day immediately following the indicated distribution date. We will pay you a prorated cash distribution for the first quarter that we are a publicly traded partnership. This prorated cash distribution will be paid for the period beginning on the closing date of this offering and ending on the last day of that fiscal quarter. Any distributions received by AAP from PAA related to periods prior to the closing of this offering will be distributed to the Existing Owners. We expect to pay this cash distribution in                        2014.

        The following table sets forth the estimated aggregate distribution amounts payable on our Class A shares during the year following the closing of this offering at our initial distribution rate of $        per Class A share per quarter (or $        per Class A share on an annualized basis).

 
  No Exercise of the Underwriters'
Over-Allotment Option
  Full Exercise of the Underwriters'
Over-Allotment Option
 
 
   
  Initial Quarterly
Distribution
   
  Initial Quarterly
Distribution
 
 
  Number of
Shares
  One
Quarter
  Four
Quarters
  Number of
Shares
  One
Quarter
  Four
Quarters
 

Distributions to Class A shareholders

                                                                               

        Our cash distributions will not be cumulative. Consequently, if we do not pay distributions on our Class A shares with respect to any fiscal quarter at the anticipated initial quarterly distribution, our Class A shareholders will not be entitled to receive that fiscal quarter's payment in the future.

        Our cash distribution policy is consistent with the terms of our partnership agreement. Under our partnership agreement, available cash is defined to mean generally, for each fiscal quarter, all cash on hand at the date of determination of available cash in respect of such quarter (including expected distributions from AAP in respect of such quarter), less the amount of cash reserves established by our general partner to:

    comply with applicable law;

    comply with any agreement binding upon us or our subsidiaries (exclusive of PAA and its subsidiaries);

    provide for future capital expenditures, debt service and other credit needs as well as any federal, state, provincial or other income tax that may affect us in the future;

    permit us to pay a ratable amount to AAP as necessary to permit AAP to make required capital contributions to PAA to maintain PAA GP's 2% general partner interest upon the issuance of additional partnership securities by PAA; or

    otherwise provide for the proper conduct of our business, including with respect to the matters described under "Description of Our Partnership Agreement—Purpose."

        Our available cash will also include cash on hand resulting from borrowings made after the end of the quarter.

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        Our partnership agreement provides that any determination made by our general partner in its capacity as our general partner, including a determination with respect to establishing cash reserves, must be made in "good faith" and that any such determination will not be the subject of any other standard imposed by our partnership agreement, the Delaware limited partnership statute or any other law, rule or regulation or at equity. Our partnership agreement also provides that, in order for a determination by our general partner to be made in "good faith," our general partner must subjectively believe that the determination is in, or not opposed to, our best interests.

        PAA's Cash Distribution Policy.    Like us, PAA is required pursuant to its partnership agreement to distribute its available cash to its partners on a quarterly basis. Under PAA's partnership agreement, available cash is defined to generally mean, for each fiscal quarter, cash generated from PAA's business in excess of the amount GP LLC determines is necessary or appropriate to provide for the proper conduct of its business, to comply with applicable law or any agreement binding on PAA and its subsidiaries and to provide for future distributions to PAA's unitholders for any one or more of the upcoming four quarters. GP LLC's determination of available cash takes into account the possibility of establishing cash reserves in some quarterly periods that it may use to pay cash distributions in other quarterly periods, thereby enabling it to maintain relatively consistent cash distribution levels even if PAA's business experiences fluctuations in its cash from operations due to seasonal and cyclical factors. GP LLC's determination of available cash also allows PAA to maintain reserves to provide funding for its growth opportunities, and it has been a historical practice of PAA to reserve some of its available cash to fund growth projects. PAA makes its quarterly distributions from cash generated from its operations, and those distributions have grown over time as its business has grown, primarily as a result of numerous acquisitions and organic expansion projects that have been funded through external financing sources and cash from operations.

        The following table sets forth, for the periods indicated, the amount of quarterly cash distributions PAA paid for each of its partnership interests, including the 2% general partner interest and the IDRs, with respect to the quarter indicated. The actual cash distributions paid by PAA to its partners occur within 45 days after the end of each quarter. Since May 2004, on a split adjusted basis, PAA has increased its quarterly cash distribution by approximately 109% from $0.28125 per common unit, or $1.125 on an annualized basis, to $0.5875 per common unit, or $2.35 on an annualized basis, for the

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quarter ended June 30, 2013. Such increase equates to a compounded annual growth rate in PAA distributions of 8.3%.

 
  PAA's Cash Distribution History(1)(2)  
 
  Cash
Distribution
Per Limited
Partner Unit
  PAA Limited
Partner Units
Outstanding(3)
  Total PAA Cash
Distributions
  Distributions
on General
Partner Interest
  Distributions
on Incentive
Distribution
Rights(4)
  Pro Forma
Distributions
to Plains GP
Holdings, L.P.(5)
 
 
  (in millions, except cash distribution per limited partner unit)
 

2009

                                     

First Quarter

  $ 0.4525     257.3   $ 151   $ 2   $ 32   $    

Second Quarter

  $ 0.4525     257.9   $ 151   $ 2   $ 32        

Third Quarter

  $ 0.4600     272.3   $ 163   $ 3   $ 35        

Fourth Quarter

  $ 0.4638     272.3   $ 166   $ 3   $ 37        

2010

                                     

First Quarter

  $ 0.4675     272.3   $ 169   $ 3   $ 40   $    

Second Quarter

  $ 0.4713     272.8   $ 172   $ 3   $ 41        

Third Quarter

  $ 0.4750     272.8   $ 174   $ 3   $ 42        

Fourth Quarter

  $ 0.4788     282.4   $ 184   $ 3   $ 46        

2011

                                     

First Quarter

  $ 0.4850     298.3   $ 198   $ 3   $ 51   $    

Second Quarter

  $ 0.4913     298.7   $ 202   $ 3   $ 52        

Third Quarter

  $ 0.4975     298.8   $ 207   $ 3   $ 55        

Fourth Quarter

  $ 0.5125     310.8   $ 226   $ 3   $ 63        

2012

                                     

First Quarter

  $ 0.5225     322.6   $ 237   $ 3   $ 65   $    

Second Quarter

  $ 0.5325     327.8   $ 247   $ 4   $ 69        

Third Quarter

  $ 0.5425     334.0   $ 259   $ 4   $ 74        

Fourth Quarter

  $ 0.5625     336.2   $ 274   $ 4   $ 81        

2013

                                     

First Quarter

  $ 0.5750     339.1   $ 285   $ 4   $ 86   $    

Second Quarter(6)

  $ 0.5875     342.7   $ 296   $ 4   $ 91        

(1)
Amounts may not recalculate due to rounding. Gives effect to two-for-one unit split effected by PAA on October 1, 2012.

(2)
Reflects cash distributions earned in each quarter indicated, but paid within 45 days of the end of each quarter.

(3)
Represents units outstanding as of the record date for each quarterly distribution.

(4)
Amounts reflect reductions in the IDRs related to certain acquisitions.

(5)
These amounts represent the pro forma aggregate distribution associated with the indirect partnership interests in PAA that AAP owns. The amounts include distributions on the 2% general partner interest and the IDRs, net of the impact of IDR reductions and payments made in respect of the AAP management units.

(6)
Distributions with respect to the second quarter of 2013 were announced on July 8, 2013 and will be payable on August 14, 2013 to holders of record of such units at the close of business on August 2, 2013.

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Overview of Presentation

        In the sections that follow, we present the basis for our belief that we will be able to pay our initial quarterly distribution of $        per Class A share for each quarter during the twelve months ending September 30, 2014. In those sections, we present:

    our "Unaudited Pro Forma Available Cash to Pay Distributions for the Year Ended December 31, 2012 and the Twelve Months Ended March 31, 2013," in which we present the amount of available cash we would have had available for distribution to our Class A shareholders on a pro forma basis for the year ended December 31, 2012 and for the twelve months ended March 31, 2013; and

    our "Estimated Minimum Cash Available for Distribution Based upon Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P." in which we present our estimate of the minimum amount of PAA Adjusted EBITDA necessary for PAA to pay distributions to its partners, including AAP, which would enable us to have sufficient available cash to pay our aggregate annualized initial quarterly distribution during the twelve months ending September 30, 2014 on all of the Class A shares expected to be outstanding upon completion of this offering.

        References to pro forma financial statements refer to the pro forma financial statements included elsewhere in this prospectus.


Unaudited Pro Forma Available Cash to Pay Distributions for the Year Ended December 31, 2012 and the Twelve Months Ended March 31, 2013

        Our pro forma available cash for each of the year ended December 31, 2012 and the twelve months ended March 31, 2013 would have been approximately $         million and $         million, respectively. This amount would have been sufficient for us to pay our aggregate annualized initial quarterly distribution of $         million on all of our Class A shares for each such period.

        Pro forma cash available for distribution includes the annual fee we will pay GP LLC for general and administrative services, which we expect will initially be $             million per year, and estimated direct annual expenses of approximately $             million per year for recurring costs associated with becoming a separate publicly traded entity, including expenses associated with (i) compensation for new directors, (ii) incremental director and officer liability insurance, (iii) listing on the NYSE, (iv) investor relations, (v) legal, (vi) tax and (vii) accounting. All of these anticipated expenses, other than income taxes payable by us, will be borne by AAP. Please read "Certain Relationships and Related Party Transactions—Administrative Agreement."

        The pro forma estimated amounts, upon which pro forma cash available for distribution is based, were derived from the audited and unaudited financial statements and pro forma financial statements included elsewhere in this prospectus. However, cash available for distribution is generally a cash accounting concept, while our pro forma financial statements have been prepared on an accrual basis. We derived the amounts of pro forma cash available for distribution in the manner described in the table below.

        The following table illustrates, on a pro forma basis, for the year ended December 31, 2012 and for the twelve months ended March 31, 2013, the amount of cash that would have been available for distributions to our Class A shareholders. Certain of the pro forma adjustments presented below are explained in the accompanying footnotes.

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Plains GP Holdings, L.P.
Unaudited Pro Forma Available Cash

 
  Year Ended
December 31,
2012
  Twelve Months
Ended
March 31, 2013
 
 
  (in millions, except share
or per share amounts)

 

Plains All American Pipeline, L.P.

             

Net Income

  $ 1,127   $ 1,425  

Plus:

             

Income tax expense—current and deferred

    54     87  

Interest expense, net of capitalized interest and interest income

    288     300  

Depreciation and amortization expense

    482     504  
           

PAA EBITDA(1)

    1,951     2,316  

Adjustments:

             

(Gains)/losses from derivative activities net of inventory valuation adjustments(2)

    74     (9 )

Equity-indexed compensation expense(3)

    59     58  

Significant acquisition related expenses

    14     10  

Net (gain)/loss on foreign currency revaluation(4)

    7     (2 )

Other selected items impacting comparability

    2     (1 )
           

PAA Adjusted EBITDA

    2,107     2,372  

Less:

             

Undistributed equity earnings from unconsolidated affiliates

    2     3  

Interest expense, net

    (288 )   (300 )

Current income tax expense

    (53 )   (83 )

Maintenance capital expenditures

    (170 )   (179 )

Distributions to noncontrolling interests

    (48 )   (48 )
           

Available cash for distribution by PAA

  $ 1,550   $ 1,765  
           

Pro forma cash distributed by PAA(5):

             

Distributions to AAP:

             

2% general partner interest

  $ 16   $ 16  

IDRs

    364     364  
           

Total distributions to AAP

    380     380  

Distributions to PAA public unitholders

    805     805  
           

Total pro forma cash distributions by PAA

  $ 1,185   $ 1,185  
           

PAA's Excess(6)

  $ 365   $ 580  

Debt Coverage Ratio(7)

             

Long-Term Debt-to-EBITDA

    3.0x     2.7x  

Plains AAP, L.P.

             

Pro forma cash distributions received by AAP from PAA(5)

  $ 380   $ 380  

Less:

             

Debt service and other(8)

    (4 )   (4 )

General and administrative expenses(9)

             

Cash reserves

         
           

Pro forma cash available for distribution by AAP

  $     $    
           

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  Year Ended
December 31,
2012
  Twelve Months
Ended
March 31, 2013
 
 
  (in millions, except share
or per share amounts)

 

Pro forma cash distributed by AAP:

             

Pro forma distribution to Existing Owners

             

Pro forma distribution to AAP management units

             

Pro forma distribution to us

             
           

Total pro forma cash distributions by AAP

  $     $    
           

Plains GP Holdings, L.P.

             

Pro forma cash distributions received from AAP

             

Less:

             

Income taxes

         

Cash reserves

         
           

Pro forma cash available for distribution to Class A shareholders

  $     $    
           

Expected distribution per share (            Class A shares)

  $     $    
           

Distributions to Class A shareholders

  $     $    
           

(1)
We have reconciled PAA's net income to PAA's EBITDA in the table above. The table below reconciles PAA's net cash flow provided by operating activities to PAA's EBITDA.

 
  Year Ended
December 31,
2012
  Twelve Months
Ended
March 31, 2013
 

Net cash provided by operating activities

  $ 1,240   $ 1,903  

Net change in assets and liabilities, net of acquisitions

    471     142  

Other items not affecting cash flows from operating activities:

             

Equity-indexed compensation expense

    (101 )   (112 )

Current income tax expense

    53     83  

Interest expense

    288     300  
           

PAA EBITDA

  $ 1,951   $ 2,316  
           
(2)
Includes mark-to-market gains and losses resulting from derivative instruments that are related to underlying activities in future periods or the reversal of mark-to-market gains and losses from the prior period, net of inventory valuation adjustments. In addition, these amounts are excluded in calculating Adjusted EBITDA as they generally will not impact PAA's ability to generate cash in the covered periods, but may impact future periods.

(3)
Includes equity-indexed compensation expense associated with awards that will or may be settled in units. The awards that will or may be settled in units are included in PAA's diluted earnings per unit calculation when the applicable performance criteria have been met. We present the compensation expense associated with these awards as an adjustment to EBITDA in the table above, as the dilutive impact of the outstanding awards is included in PAA's diluted earnings per unit calculation and the majority of the awards are expected to be settled in units. The portion of compensation expense associated with awards that are certain to be settled in cash are not considered an adjustment to EBITDA in calculating Adjusted EBITDA in the table above.

(4)
During each of the year ended December 31, 2012 and the twelve months ended March 31, 2013, there were fluctuations in the value of the Canadian dollar to the U.S. dollar, resulting in gains and losses that were not related to PAA's core operating results for the period.

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(5)
Reflects pro forma distributions for the periods shown. These amounts assume 342,735,916 PAA common units were outstanding at December 31, 2012 and March 31, 2013, respectively, and PAA's current quarterly distribution rate of $0.5875 per unit, or $2.35 per unit on an annualized basis. Amounts include the current impact of the IDR reduction in connection with the BP NGL Acquisition of $3.75 million per quarter through the February 2014 distribution and $2.5 million per quarter thereafter.

(6)
Assumes such amount is reserved by PAA GP.

(7)
PAA and its subsidiaries are parties to various credit agreements that require PAA to maintain certain financial ratios. The PAA senior unsecured revolving credit facility and the PAA senior secured hedged inventory facility require PAA to maintain a debt-to-EBITDA coverage ratio of not greater than 5.00 to 1.00 or 5.50 to 1.00 on all outstanding debt during an acquisition period (generally, the period consisting of three fiscal quarters following an acquisition greater than $150 million). As indicated by the table, PAA's pro forma EBITDA amounts would have been sufficient to satisfy the ratios. The debt coverage ratios reflected in this table are calculated by dividing the long-term debt (reflecting consolidated funded debt as defined in the credit agreement) outstanding at December 31, 2012 and March 31, 2013 by the pro forma "PAA Adjusted EBITDA" included in the table.

(8)
Reflects cash interest expense related to borrowings under AAP's senior secured revolving credit facility and term loan facility.

(9)
Reflects estimated cash expenses associated with being a publicly traded company. We expect to incur incremental general and administrative expenses of $             million on an annual basis. This amount includes an annual fee for general and administrative services that we will pay to GP LLC. The fee will initially be $             million per year and will be subject to adjustment on an annual basis based on the Consumer Price Index and for certain other events. In addition to this fee, we expect to incur direct annual expenses of approximately $             million for costs associated with becoming a publicly traded entity, including expenses associated with (i) compensation for new directors, (ii) incremental director and officer liability insurance, (iii) listing on the NYSE, (iv) investor relations, (v) legal, (vi) tax and (vii) accounting. All of these anticipated expenses will be borne by AAP. Please read "Certain Relationships and Related Party Transactions—Administrative Agent."


Estimated Minimum Cash Available for Distribution Based upon Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P.

        In the table below, we estimate that in order for us to receive from AAP the $         million necessary for us to pay the initial quarterly distribution of $        per share on all our Class A shares for each quarter in the twelve months ending September 30, 2014, PAA's Adjusted EBITDA for that period will have to be at least $1,819 million.

        PAA's estimated minimum Adjusted EBITDA of $1,819 million for the twelve months ending September 30, 2014 disclosed in the table is only intended to be an indicator or benchmark of the amount management considers to be the lowest amount of PAA Adjusted EBITDA needed to generate sufficient available cash to make cash distributions to our Class A shareholders at our initial distribution rate of $        per Class A share per quarter (or $        per Class A share on an annualized basis). This estimate of PAA's Adjusted EBITDA should not be viewed as management's projection of PAA's expected operating results or cash generation for the period. Similarly, such estimate is not intended to modify or replace the guidance that PAA provides on a quarterly basis. Management of PAA believes that PAA's Adjusted EBITDA for the twelve months ending September 30, 2014 will exceed the amount presented below. For comparison, PAA's actual Adjusted EBITDA for the twelve months ended March 31, 2013 was $2,372 million.

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        Please read "—Assumptions and Considerations Related to the Estimated Minimum Cash Available for Distribution Based upon Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P." for a discussion of the material assumptions underlying our belief that PAA will be able to generate sufficient Adjusted EBITDA to provide us with the estimated minimum cash distributions. Although we believe that these assumptions are reasonable in light of our current expectations regarding future events, the assumptions underlying the estimated minimum cash distributions to be received from PAA are inherently uncertain and are subject to significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those we anticipate. If the estimated minimum Adjusted EBITDA of PAA is not achieved, we may not be able to pay the initial quarterly distribution on all of our Class A shares. Consequently, the statement that we believe that cash distributions from PAA will be sufficient to allow us to pay the initial quarterly distribution on all of our Class A shares for the four consecutive quarters ending September 30, 2014 should not be regarded as a representation by us or the underwriters or any other person that we will declare and make such distributions.

        The accompanying prospective information was prepared in accordance with PAA's and our accounting policies; however, it was not prepared with a view toward compliance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. In the view of our management, the prospective financial information has been prepared on a reasonable basis, reflects the best currently available estimates and judgments, and presents, to the best of management's knowledge and belief, the assumptions on which we base our belief that we can generate the estimated minimum Adjusted EBITDA necessary for us to have sufficient cash available for distributions to pay the initial quarterly distribution to all of our Class A shareholders. This information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this prospectus are cautioned not to place undue reliance on the prospective financial information.

        The prospective financial information included in this prospectus has been prepared by, and is the responsibility of, our management. PricewaterhouseCoopers LLP has neither examined nor compiled the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report included in this prospectus relates only to GP LLC's historical information. Such report does not extend to the prospective financial information and should not be read to do so.

        When reading these sections, you should keep in mind the risk factors and other cautionary statements under "Risk Factors" in this prospectus. Any of these factors or the other risks discussed in this prospectus could cause our financial condition and consolidated results of operations to vary significantly from those set forth below.

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        We do not undertake any obligation to release publicly the results of any future revisions we may make to the estimated cash available for distribution or to update our estimate to reflect events or circumstances after the date of this prospectus.


Plains GP Holdings, L.P.
Estimated Minimum Cash Available for Distribution
Based on Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P.
(Unaudited)

 
  Twelve
Months
Ending
September 30,
2014
 
 
  (in millions,
except share
and per share
amounts)
 

Plains All American Pipeline, L.P.

       

Net revenues(1) (including equity in earnings)

  $ 3,409  

Less:

       

Field operating costs

    1,312  

General and administrative expenses

    278  
       

Adjusted segment profit

    1,819  

Less:

       

Depreciation and amortization expense

    350  

Interest expense, net

    340  

Income tax expense—current and deferred

    67  
       

Adjusted net income

    1,062  

Plus:

       

Depreciation and amortization expense

    350  

Interest expense, net

    340  

Income tax expense—current and deferred

    67  
       

Estimated minimum Adjusted EBITDA

    1,819  
       

Adjustments:

       

Undistributed equity earnings from unconsolidated affiliates

     

Interest expense, net

    (340 )

Current income tax expense

    (48 )

Expansion capital expenditures(2)

    (1,100 )

Debt financing for expansion capital expenditures(2)

    1,100  

Maintenance capital expenditures

    (195 )

Distributions to non-controlling interests

    (51 )
       

Estimated minimum cash available for distribution by PAA(3)

  $ 1,185  
       

Debt Coverage Ratio

       

Long-Term Debt-to-EBITDA(2)

    4.0x  

Estimated minimum cash distributions by PAA:(4)

       

Estimated Minimum Cash Distributions to AAP

       

2% general partner interest

  $ 16  

IDRs

    364  
       

Total estimated minimum cash distributions to AAP

    380  

Estimated minimum cash distributions to PAA's public unitholders

    805  
       

Total estimated minimum cash distributions by PAA

  $ 1,185  
       

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  Twelve
Months
Ending
September 30,
2014
 
 
  (in millions,
except share
and per share
amounts)
 

AAP

       

Estimated minimum cash distributions received by AAP from PAA(2)

  $ 380  

Less:

       

Debt service and other

    (4 )

General and administrative expenses

       

Cash reserves

     
       

Estimated minimum cash available for distribution by AAP

  $    
       

Estimated minimum cash distributed by AAP:

       

Estimated minimum cash distributions to Existing Owners

       

Estimated minimum cash distributions to AAP management units

       

Estimated minimum cash distributions to us

       
       

Total estimated minimum cash distributions by AAP

  $    
       

Plains GP Holdings, L.P.

       

Pro forma cash distributions received from AAP

       

Less:

       

Income taxes

     

Cash reserves

     
       

Estimated minimum cash available for distribution to Class A shareholders

  $    
       

Expected distribution per share (            Class A shares)

  $    
       

Distributions to Class A shareholders

  $    
       

(1)
Represents revenues less cost of sales and includes equity earnings from unconsolidated entities.

(2)
A portion of expansion capital expenditures includes the amount remaining to be spent on major capital projects that are part of PAA's 2013 capital plan. PAA expects to invest in other expansion capital projects in 2014, but has not yet finalized its 2014 capital plan. PAA typically finances its expansion capital expenditures with a combination of equity, excess cash flow and debt. Although some expenditures are initially funded entirely with borrowings, portions of these borrowings are typically repaid with equity proceeds consistent with PAA's stated intention to fund expansion capital expenditures with approximately 55% equity and excess cash flow.

(3)
Assumes no reserves are established by our general partner.

(4)
Reflects pro forma distributions for the period shown. These amounts assume 342,735,916 PAA common units were outstanding and PAA's current quarterly distribution rate of $0.5875 per unit, or $2.35 per unit on an annualized basis. Amounts include the current impact of the IDR reduction in connection with the BP NGL Acquisition of $3.75 million per quarter through the February 2014 distribution and $2.5 million per quarter thereafter.


Assumptions and Considerations Related to the Estimated Minimum Cash Available for Distribution Based upon Estimated Minimum Adjusted EBITDA of Plains All American Pipeline, L.P.

        Our belief that PAA will generate at least the estimated minimum Adjusted EBITDA of $1,819 million for the twelve months ending September 30, 2014 and that we will have at least $       million of available cash to pay our initial quarterly distribution on all of our Class A shares for

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the four quarters ending September 30, 2014 is based on the following assumptions about PAA's operating performance. PAA's estimated minimum Adjusted EBITDA should not be viewed as management's projection of actual operating earnings or cash generation of PAA. Management of PAA believes that PAA's Adjusted EBITDA for the twelve months ending September 30, 2014 will exceed $1,819 million. We believe the operating metrics for the twelve months ended March 31, 2013 are the most comparable metrics for comparative purposes.

        The following table compares the historical adjusted segment profit for the twelve months ended March 31, 2013 to the forecasted segment profit for the twelve months ending September 30, 2014. Historical segment profit is adjusted to eliminate the impact of selected items which are not necessarily indicative of future segment profit.

 
  Adjusted
Historical
  Estimated
Minimum
 
 
  Twelve
Months
Ended
March 31,
2013
  Twelve
Months
Ending
September 30,
2014
 

Segment Profit

             

Transportation

  $ 743   $ 818  

Facilities

    558     546  

Supply & Logistics

    1,064     455  

Other

    7      
           

Total

  $ 2,372   $ 1,819  
           

Transportation Segment

        PAA's Transportation segment operations generally consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. PAA generates revenue through a combination of tariffs, third-party leases of pipeline capacity and other transportation fees. PAA's transportation segment also includes equity earnings from its investments in Settoon Towing and the White Cliffs, Butte, Frontier and Eagle Ford pipeline systems, in which it owns non-controlling interests.

        Pipeline volume estimates are based on historical trends, anticipated future operating performance and assumed completion of internal growth projects. Actual volumes will be influenced by maintenance schedules at refineries, production trends, weather and other natural occurrences including hurricanes, changes in the quantity of inventory held in tanks, and other external factors beyond PAA's control. Adjusted segment profit is forecasted using the volume assumptions in the table below, priced at forecasted tariff rates, less estimated field operating costs and G&A expenses. Field operating costs do not include depreciation. Actual segment profit could vary materially depending on the level and mix of volumes transported or expenses incurred during the period.

        Assumptions.    Average segment profit per barrel is estimated to be $0.62 for the twelve months ending September 30, 2014. This estimate approximately corresponds to PAA's actual adjusted segment profit per barrel of $0.57 for the twelve months ended March 31, 2013. Transportation volumes for the twelve months ending September 30, 2014 are based on historical trends and PAA's anticipated future operating performance. Actual volumes will be influenced by maintenance schedules at refineries, production trends, weather and other natural occurrences including hurricanes, changes in the quantity of inventory held in tanks, and other external factors beyond PAA's control. Estimated segment profit for this segment was calculated by applying the estimated average segment profit per barrel to an estimated number of barrels to be transported per day during the twelve months ending September 30,

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2014. The following table summarizes our estimate of the average segment profit per barrel and estimated throughput volumes for the twelve months ending September 30, 2014 compared to PAA's adjusted historical results for the twelve months ended March 31, 2013, respectively.

Adjusted Historical   Estimated Minimum  
Twelve Months Ended March 31, 2013   Twelve Months Ending September 30, 2014  
Volume (Thousand barrels
per day)
  Adjusted Segment
Profit/Barrel
  Volume (Thousand barrels
per day)
  Adjusted Segment
Profit/Barrel
 
  3,597   $ 0.57     3,597   $ 0.62  

Facilities Segment

        PAA's Facilities segment operations generally consist of fee-based activities associated with providing storage, terminalling and throughput services for crude oil, refined products, NGL and natural gas, NGL fractionation and isomerization services and natural gas and condensate processing services. PAA generates revenue through a combination of month-to-month and multi-year leases and processing arrangements.

        Revenues generated in this segment include (i) storage fees that are generated when PAA leases storage capacity, (ii) terminal throughput fees that are generated when PAA receives crude oil, refined products or NGL from one connecting source and redelivers the applicable product to another connecting carrier, (iii) loading and unloading fees at PAA's rail terminals, (iv) hub service fees associated with natural gas park and loan activities, interruptible storage services and wheeling and balancing services, (v) revenues from the sale of natural gas, (vi) fees from NGL fractionation and isomerization and (vii) fees from gas and condensate processing services.

        Assumptions.    Average segment profit per barrel is estimated to be $0.38 for the twelve months ending September 30, 2014. This estimate corresponds to PAA's actual adjusted segment profit per barrel of $0.41 for the twelve months ended March 31, 2013. Volumes for the twelve months ending September 30, 2014 are expected to be higher than volumes for the twelve months ended March 31, 2013 as a result of a rail facility acquisition that closed in December 2012. Estimated segment profit for this segment was calculated by applying this average segment profit per barrel to an estimated amount of available storage, processing capacity and rail loading and unloading capacity per day during the twelve months ending September 30, 2014. The following table summarizes our estimate of the average segment profit per barrel and estimated monthly volumes for the twelve months ending September 30, 2014 compared to PAA's adjusted historical results for the twelve months ended March 31, 2013, respectively.

Adjusted Historical   Estimated Minimum  
Twelve Months Ended March 31, 2013   Twelve Months Ending September 30, 2014  
Capacity (Million barrels
per Month)
  Adjusted Segment
Profit/Barrel
  Capacity (Million barrels
per Month)
  Adjusted Segment
Profit/Barrel
 
  113   $ 0.41     119   $ 0.38  

Supply & Logistics Segment

        PAA's Supply & Logistics segment consists of the following merchant-related activities:

    the purchase of U.S. and Canadian crude oil at the wellhead, the bulk purchase of crude oil at pipeline, terminal and rail facilities, and the purchase of cargos at their load port and various other locations in transit;

    the storage of inventory during contango market conditions and the seasonal storage of NGL;

    the purchase of NGL from producers, refiners, processors and other marketers;

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    the resale or exchange of crude oil and NGL at various points along the distribution chain to refiners or other resellers to maximize profits; and

    the transportation of crude oil and NGL on trucks, barges, railcars, pipelines and ocean-going vessels from various receipt points to market hub locations or directly to end users such as refineries, processors and fractionation facilities.

        PAA characterizes a substantial portion of its baseline profit generated by the Supply and Logistics segment as fee equivalent. This portion of the segment profit is generated by the purchase and resale of crude oil on an index-related basis, which results in PAA generating a gross margin for such activities. This gross margin is reduced by the transportation, facilities and other logistical costs associated with delivering the crude oil to market as well as any operating and general and administrative expenses. The level of profit associated with a portion of the other activities PAA conducts in the Supply and Logistics segment is influenced by overall market structure and the degree of volatility in the crude oil market, as well as variable operating expenses. Forecasted operating results for the twelve-month period ending September 30, 2014 reflect an expectation of less favorable market conditions than the twelve-month period ending March 31, 2013. Variations in weather, market structure or volatility could cause actual results to differ materially from forecasted results.

        Assumptions.    Average segment profit per barrel is estimated to be $1.18 for the twelve months ending September 30, 2014. Due to the market conditions described below, this estimate is less than the adjusted historical segment profit per barrel of $2.76 for the twelve months ended March 31, 2013. Estimated segment profit for this segment was calculated by applying this average segment profit per barrel to an estimated amount of volumes per day during the twelve months ending September 30, 2014. The following table summarizes our estimate of the average segment profit per barrel and estimated volumes for the twelve months ending September 30, 2014 compared to PAA's adjusted historical results for the twelve months ended March 31, 2013, respectively.

Adjusted Historical   Estimated Minimum  
Twelve Months Ended March 31, 2013   Twelve Months Ending September 30, 2014  
Volume (Thousand barrels
per day)
  Adjusted Segment
Profit/Barrel
  Volume (Thousand barrels
per day)
  Adjusted Segment
Profit/Barrel
 
  1,056   $ 2.76     1,056   $ 1.18  

        Recent Changes in Market Structure.    Results from PAA's Supply and Logistics segment are influenced by the overall market environment for crude oil. Over the last two years, as a result of growing North American crude oil production and the lack of sufficient takeaway capacity in the areas of growth the overall crude oil market environment was favorable for PAA's Supply & Logistics business. Certain key crude oil location differentials experienced all-time highs and as a result of PAA's asset base and business model it was able to generate above-normal profit margins.

        While PAA believes that the counter-cyclical balance provided by its asset base and business model will enable it to continue to generate a solid base level of cash flow in any market environment, adjusted segment profit per barrel for the Supply & Logistics segment for the twelve months ending September 30, 2014 is expected to decrease from results generated during the twelve months ended March 31, 2013 as crude oil market conditions are assumed to be less favorable.

        We have taken into consideration the impacts of these recent changes in the market in preparing the foregoing estimate of minimum Adjusted EBITDA of PAA, however there can be no assurance that market conditions will not be more punitive than the conditions we have assumed.

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Other Assumptions

    Depreciation and Amortization.  PAA's depreciation and amortization expense is estimated to be $350 million for the twelve months ending September 30, 2014, as compared to $503 million for the twelve months ended March 31, 2013. Depreciation and amortization for the twelve months ended March 31, 2013 was impacted by several one-time asset impairment charges. Adjusted for these one-time items, the depreciation and amortization expense for the twelve months ended March 31, 2013 was $338 million.

    PAA Interest Expense.  PAA's interest expense is estimated to be $340 million for the twelve months ending September 30, 2014, as compared to $300 million for the twelve months ended March 31, 2013. This amount assumes an average long-term debt balance of approximately $7.2 billion during the period. Borrowings under PAA's revolving credit facilities are assumed to bear interest at approximately 2%, which is based on the current forward curve for applicable interest rates. Included in interest expense are commitment fees, amortization of long-term debt discounts or premiums, and deferred amounts associated with terminated interest-rate hedges. Interest expense is net of amounts capitalized for major expansion projects and does not include interest on borrowings for hedged inventory.

    PAA Income Tax Expense.  PAA's income tax expense is estimated to be $67 million for the twelve months ending September 30, 2014. Income tax expense was $87 million for the twelve months ended March 31, 2013.

    AAP Interest Expense.  AAP's interest expense is expected to be $4 million for the twelve months ending September 30, 2014, which is the same amount charged during the twelve months ended March 31, 2013. This amount assumes an average long-term debt balance of approximately $200 million during the period. Borrowings under AAP's credit facility are assumed to bear interest at approximately 2%.

    Other Income Tax Expense.  Our initial acquisition of interests in AAP will result in deductions that we anticipate will offset a substantial portion of our taxable income for an extended period of time following closing, including the twelve months ending September 30, 2014. As a result, we have assumed that we will incur no income tax expense during this period.

    Maintenance Capital Expenditures.  PAA's maintenance capital expenditures are estimated to be approximately $195 million for the twelve months ending September 30, 2014. This assumption compares to $179 million for the twelve months ended March 31, 2013.

    Expansion Capital Expenditures.  Certain of the major projects in PAA's 2013 capital plan will continue into 2014. We estimate that PAA will invest approximately $1,100 million on expansion capital projects during the twelve months ending September 30, 2014. This assumption compares to $1,307 million for the twelve months ended March 31, 2013.

    Compliance with Credit Agreements.  PAA and AAP will remain in compliance with the restrictive financial covenants in their existing and future debt agreements such that our ability to pay distributions to our Class A shareholders will not be encumbered.

    Incremental General and Administrative Expenses.  We have assumed that our incremental general and administrative expenses will be approximately $         million for the twelve months ending September 30, 2014. All of these anticipated expenses will be borne by AAP. Please read "Certain Relationships and Related Party Transactions—Administrative Agreement."

    Regulatory and Other.  We have assumed that there will not be any new federal, state or local regulation of portions of the energy industry in which we and PAA operate, or a new interpretation of existing regulation, that will be materially adverse to our or PAA's business and market, regulatory, insurance and overall economic conditions will not change substantially.

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HOW WE MAKE CASH DISTRIBUTIONS

        Set forth below is a summary of the significant provisions of our partnership agreement that relate to cash distributions.


General

        Our partnership agreement requires that, within 55 days after the end of each quarter beginning with the quarter ending December 31, 2013, we distribute all of our available cash to Class A shareholders of record on the applicable record date. We will pro rate the initial quarterly distribution based on the number of days in the period from the closing of the offering through December 31, 2013.


Definition of Available Cash

        Available cash is defined in our partnership agreement and generally means, with respect to any calendar quarter, all cash on hand at the date of determination of available cash for the distribution in respect of such quarter (including expected distributions from AAP in respect of such quarter), less the amount of cash reserves established by our general partner to:

    comply with applicable law;

    comply with any agreement binding upon us or our subsidiaries (exclusive of PAA and its subsidiaries);

    provide for future capital expenditures, debt service and other credit needs as well as any federal, state, provincial or other income tax that may affect us in the future;

    permit us to pay a ratable amount to AAP as necessary to permit AAP to make required capital contributions to PAA to maintain PAA GP's 2% general partner interest upon the issuance of additional partnership securities by PAA; or

    otherwise provide for the proper conduct of our business, including with respect to the matters described under "Description of Our Partnership Agreement—Purpose."

        Our available cash will also include cash on hand resulting from borrowings made after the end of the quarter.


Our Sources of Available Cash

        Our only cash-generating assets consist of our indirect partnership interests in PAA through our       % limited partnership interest in AAP. Therefore, our cash flow and resulting ability to make distributions will be completely dependent upon the ability of PAA to make distributions in respect of those partnership interests. The actual amount of cash that PAA, and correspondingly AAP, will have available for distribution will primarily depend on the amount of cash PAA generates from its operations. For a description of factors that may impact our results and PAA's results, please read "Forward-Looking Statements."

        In addition, the actual amount of cash that PAA and AAP will have available for distribution will depend on other factors, some of which are beyond PAA's or our control, including:

    the level of revenue PAA and AAP are able to generate from their respective businesses;

    the level of capital expenditures PAA or AAP makes;

    the level of PAA's and AAP's operating, maintenance and general and administrative expenses or related obligations;

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    the cost of acquisitions, if any;

    PAA's and AAP's debt service requirements and other liabilities;

    PAA's and AAP's working capital needs;

    restrictions on distributions contained in PAA's or AAP's debt agreements and any future debt agreements;

    PAA's and AAP's ability to borrow under their respective revolving credit agreements to make distributions; and

    the amount, if any, of cash reserves established by each of PAA GP and our general partner, in their sole discretion, for the proper conduct of PAA's and our business.


Shares

        As of the closing of this offering, we will have                Class A shares and            Class B shares outstanding. Only our Class A shares will be entitled to receive distributions. For additional information regarding our Class A and Class B shares, please read "Description of Our Shares."


General Partner Interest

        Our general partner owns a non-economic general partner interest in us, which does not entitle it to receive cash distributions. We will own a portion of the membership interest in our general partner following this offering. Please read "Organizational Structure—Recapitalization."


Distributions of Cash Upon Liquidation

        If we dissolve in accordance with the partnership agreement, we will sell or otherwise dispose of our assets in a process called a liquidation. We will first apply the proceeds of liquidation to the payment of our creditors and, thereafter, holders of our Class A shares would be entitled to share ratably in the distribution of any remaining proceeds.

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SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

        We were formed in July 2013 and, therefore, do not have historical financial statements. Upon completion of this offering we will own and control GP LLC and will own an approximate      % limited partner interest in AAP. Accordingly, the historical consolidated financial data below are of GP LLC. We have no separate operating activities apart from those conducted by PAA, and our cash flows will consist solely of distributions from AAP related to its direct and indirect ownership of partnership interests in PAA.

        The selected historical statements of operations and cash flow data for the years ended December 31, 2010, 2011 and 2012 and the balance sheet data as of December 31, 2011 and 2012 are derived from the audited financial statements of GP LLC included elsewhere in this prospectus. The selected historical statements of operations and cash flow data for the three months ended March 31, 2012 and 2013 and the balance sheet data as of March 31, 2013 are derived from the unaudited financial statements of GP LLC included elsewhere in this prospectus. The selected historical statements of operations and cash flow data for the years ended December 31, 2008 and 2009 and the balance sheet data as of December 31, 2008, 2009 and 2010 and March 31, 2012 are derived from the unaudited financial statements of GP LLC that are not included elsewhere in this prospectus.

        The selected pro forma financial data presented for the year ended December 31, 2012 and as of and for the three months ended March 31, 2013 reflects our historical operating results as adjusted to give pro forma effect to the following transactions, as if such transactions had occurred on January 1, 2012:

    completion of the BP NGL Acquisition and certain other acquisitions during the year ended December 31, 2012;

    the transactions contemplated by the contribution agreement described in this prospectus under the caption "Organizational Structure—Recapitalization" and "Certain Relationships and Related Party Transactions—Contribution Agreement"; and

    the sale of                Class A shares in this offering and application of the net proceeds from this offering as described in "Use of Proceeds" and "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters—Ownership of General Partner Entities."

        We derived the data in the following table from, and it should be read together with and is qualified in its entirety by reference to, the historical financial statements referenced above and our pro forma financial statements and the accompanying notes included elsewhere in this prospectus. The table should also be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations."

        For a description of all of the assumptions used in preparing the unaudited pro forma financial statements, you should read the notes to the pro forma financial statements. The pro forma financial

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data should not be considered as indicative of the historical results we would have had or the results that we will have after this offering.

 
  Consolidated Historical for Plains All American GP LLC   Pro Forma for Plains GP
Holdings, L.P.
 
 
   
   
   
   
   
  Three Months
Ended
March 31,
   
   
 
 
  Year Ended December 31,    
  Three Months
Ended
March 31,
2013
 
 
  Year Ended
December 31,
2012
 
 
  2008   2009   2010   2011   2012   2012   2013  
 
  (in millions, except per share amounts)
 

Statement of operations data:

                                                       

Total revenues

  $ 30,061   $ 18,520   $ 25,893   $ 34,275   $ 37,797   $ 9,218   $ 10,620              

Net income

  $ 428   $ 568   $ 501   $ 987   $ 1,118   $ 234   $ 535              

Net income attributable to the parent

  $ 1   $ 1   $ 2   $ 2   $ 3   $   $ 1              

Pro forma per share data:

                                                       

Pro forma basic net income per Class A Share

                                                       

Pro forma diluted net income per Class A Share

                                                       

Balance sheet data (at end of period):

                                                       

Total assets

  $ 10,062   $ 12,388   $ 13,734   $ 15,414   $ 19,259   $ 17,115   $ 19,466              

Long-term debt

  $ 3,459   $ 4,342   $ 4,831   $ 4,720   $ 6,520   $ 5,994   $ 6,531              

Total debt

  $ 4,487   $ 5,416   $ 6,161   $ 5,406   $ 7,606   $ 6,760   $ 7,222              

Members' Equity/Partners' Capital:

                                                       

Members' Equity/ Partners' Capital (excluding noncontrolling interests)

  $ (1 ) $   $   $   $   $   $              

Noncontrolling interests

    3,364     3,977     4,391     5,794     6,968     6,332     7,311              
                                           

Total Members' Equity/ Partners' Capital

  $ 3,363   $ 3,977   $ 4,391   $ 5,794   $ 6,968   $ 6,332   $ 7,311              
                                           

Other data:

                                                       

Net cash provided by operating activities

  $ 849   $ 357   $ 248   $ 2,357   $ 1,232   $ 315   $ 978              

Net cash used in investing activities

  $ (1,339 ) $ (686 ) $ (851 ) $ (2,020 ) $ (3,392 ) $ (1,890 ) $ (444 )            

Net cash provided by/(used in) financing activities

  $ 473   $ 348   $ 613   $ (337 ) $ 2,159   $ 1,563   $ (533 )            

Capital expenditures:

                                                       

Acquisitions

  $ 735   $ 393   $ 407   $ 1,404   $ 2,286   $ 21   $ 1              

Internal growth projects

  $ 528   $ 379   $ 355   $ 531   $ 1,185   $ 236   $ 358              

Maintenance

  $ 81   $ 81   $ 93   $ 120   $ 170   $ 35   $ 44              

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion of our financial condition and results of operations in conjunction with the historical consolidated financial statements of GP LLC and the unaudited pro forma condensed consolidated financial statements of Plains GP Holdings, L.P. included elsewhere in this prospectus. Among other things, those historical and pro forma financial statements include more detailed information regarding the basis of presentation for the following discussion. In addition, you should read "Forward-Looking Statements" and "Risk Factors" for information regarding certain risks inherent in our and PAA's business.


Overview

Introduction

        We are a recently formed Delaware limited partnership that will elect to be treated as a corporation for U.S. federal income tax purposes. Our only cash-generating assets at the closing of this offering will consist of                AAP units, which represent a        % limited partner interest in AAP. AAP currently owns all of the IDRs and an indirect 2% general partner interest in PAA.

        PAA is a publicly traded limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil and refined products, as well as in the processing, transportation, fractionation, storage and marketing of NGL. The term NGL includes ethane and natural gasoline products, as well as propane and butane products, which are also commonly referred to as liquefied petroleum gas ("LPG"). Where used in this prospectus, NGL refers to all NGL products including LPG. PAA was formed in 1998, and its operations are conducted directly and indirectly through its operating subsidiaries and are managed through three operating segments: (i) Transportation, (ii) Facilities and (iii) Supply and Logistics. Please read "—Results of Operations—Analysis of Operating Segments" for further discussion. PAA is one of the largest publicly traded partnerships with an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. As of March 31, 2013, the market capitalization of PAA's common units totaled approximately $19 billion, and on an average daily basis, PAA transported over 3.5 million barrels of crude oil and NGL.

        PAA's principal business strategy is to provide competitive and efficient midstream transportation, terminalling, storage, processing, fractionation and supply and logistics services to producers, refiners and other customers. Toward this end, PAA endeavors to address regional supply and demand imbalances for crude oil and NGL in the United States and Canada by combining the strategic location and capabilities of its transportation, terminalling, storage, processing and fractionation assets with its extensive supply, logistics and distribution expertise. To a lesser extent, PAA also engages in similar activities for natural gas and refined products.

        Based on PAA's cash distribution declared for the quarter ended June 30, 2013, we expect our initial quarterly cash distribution to be $        per Class A share, or $        per Class A share on an annualized basis. In general, distributions on the Class A shares will be treated as distributions on corporate stock for federal income tax purposes. No Schedule K-1s will be issued with respect to the Class A shares, but instead holders of Class A shares will receive a Form 1099 from us with respect to distributions received on the Class A shares. We anticipate that available deductions will offset our taxable income for an extended period of time following the closing of this offering. During this period, which we estimate will include, at a minimum, each of the periods ending December 31, 2014, 2015 and 2016, none of the distributions paid to you should be treated as taxable dividend income under current existing federal tax regulations, but instead will be treated as a return of capital.

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        Our primary business objective is to increase our cash available for distribution to our Class A shareholders through the execution by PAA of its business strategy. In addition, we may facilitate PAA's growth activities through various means, including, but not limited to, modifying PAA's IDRs, making loans, purchasing equity interests or providing other forms of financial support to PAA.

        Unless we directly acquire and hold assets or businesses in the future, our cash flows will be generated solely from the cash distributions we receive from AAP. AAP currently receives all of its cash flows from distributions on its direct and indirect interests in PAA. As required by its partnership agreement, PAA has historically distributed all of its available cash (net of reserves established by GP LLC) within 45 days of the end of each quarter. AAP's ownership of PAA's IDRs, together with its indirect ownership of the 2% general partner interest, entitles it to receive, without duplication:

    15% of all cash distributed in a quarter after $0.2250 has been distributed in respect of each common unit of PAA for that quarter;

    25% of all cash distributed in a quarter after $0.2475 has been distributed in respect of each common unit of PAA for that quarter; and

    50% of all cash distributed in a quarter after $0.3375 has been distributed in respect of each common unit of PAA for that quarter.

        Although not required to do so, in response to past requests by PAA management in connection with PAA's acquisition activities, the Existing Owners have approved temporary and permanent reductions in IDR payments. Such modifications were implemented with a view toward enhancing PAA's competitiveness for such acquisitions and managing the overall cost of equity capital while achieving an appropriate balance between short-term and long-term accretion to PAA's limited partners and the holders of its general partner interest and IDRs. While these IDR reductions reduced the amount of cash that would otherwise have been distributed in respect of the IDRs, we believe they have contributed to long-term accretion in the amount of distributions paid with respect to the IDRs through participation in PAA growth opportunities that may not have been available in the absence of such reductions.

        The Existing Owners have approved IDR reductions in connection with the closing of four prior PAA acquisitions: the Pacific Energy Partners, L.P. acquisition in 2006, the Rainbow Pipeline Company acquisition in 2008, the Vulcan Gas Storage acquisition in 2009, and the BP NGL Acquisition in 2012. For the period from 2006 through the distribution date for the second quarter of 2013, these IDR reductions have totaled $105.5 million in the aggregate. Currently, the following IDR reductions are in place: $15.0 million in 2013 (of which $11.3 million will have been satisfied in connection with the distribution with respect to the quarter ended June 30, 2013), $11.3 million in 2014, and $10.0 million per year thereafter. Our general partner may, in certain circumstances, similarly support PAA in the future by agreeing to waive, modify or otherwise adjust payments relating to PAA's IDRs. Any such waiver, modification or other adjustment to the IDRs will require the consent of our general partner, but not our shareholders.

        We, the Existing Owners and the members of PAA management who hold AAP management units will each receive our proportionate share of the distributions received by AAP from PAA, after deducting certain general, administrative and other similar expenses, our public company expenses, payments of principal and interest on AAP's outstanding indebtedness, taxes and any capital contributed (or retained for future contribution) by AAP to maintain its indirect 2% general partner interest in PAA upon the issuance of additional PAA common units, except to the extent funded by debt. We intend to pay to our Class A shareholders, on a quarterly basis, distributions equal to the cash AAP distributes to us, less income taxes and any reserves established by our general partner.

        The cash distributions AAP receives from PAA are tied to (i) PAA's per unit distribution level and (ii) the number of PAA common units outstanding. An increase in either factor (assuming the other

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factor remains constant or increases) will generally, absent additional IDR reductions, result in an increase in the amount of cash distributions AAP receives from PAA, a portion of which we, in turn, receive from AAP. Because the IDRs currently participate at the maximum target cash distribution level, future growth in distributions we receive from PAA will not result from an increase in the target cash distribution level associated with the IDRs. Since its initial public offering, the growth of PAA's business has resulted in significant increases in both its per unit distribution level and outstanding equity capitalization. Since May 2004, on a split-adjusted basis, PAA has increased its quarterly cash distribution by approximately 109% from $0.28125 per common unit, or $1.125 on an annualized basis, to $0.5875 per common unit, or $2.35 on an annualized basis, for the quarter ended June 30, 2013. During the same period, PAA issued a total of approximately 218 million common units, representing an increase of approximately 175% of total common units outstanding.

Financial Presentation

        We are the managing member of and control GP LLC, which in turn effectively controls PAA. Therefore, under generally accepted accounting principles, we reflect our ownership in PAA, as well as its subsidiaries, on a consolidated basis. Accordingly, our financial results are combined with those of GP LLC and PAA as well as with their subsidiaries. As such, our results of operations do not differ materially from the results of operations of PAA. The most noteworthy reconciling items between GP LLC's consolidated financial statements and those of PAA primarily relate to (i) the inclusion of the AAP credit agreement and (ii) the presentation of noncontrolling interests in AAP and PAA as well as their subsidiaries that are not owned by us. The interest in AAP and PAA that are not owned by us are reflected as being attributable to noncontrolling interests in our statement of financial position and results of operations.

        In addition, our historical results of operations do not reflect the annual fee we will pay GP LLC for general and administrative services, which will initially be $             million per year, and direct annual expenses of approximately $             million per year for recurring costs associated with becoming a separate publicly traded entity, including expenses associated with (i) compensation for new directors, (ii) incremental director and officer liability insurance, (iii) listing on the NYSE, (iv) investor relations, (v) legal, (vi) tax and (vii) accounting.


Overview of Operating Results, Capital Investments and Significant Activities

        During the first three months of 2013, we recognized net income of approximately $535 million, as compared to net income of approximately $234 million recognized during the first three months of 2012. Major items impacting the favorable performance between these periods include significantly stronger unit margins in PAA's Supply and Logistics segment, contributions from PAA's BP NGL Acquisition and its acquisition of crude oil rail terminals from U.S. Development Group (the "USD Rail Terminal Acquisition"), which were completed in April 2012 and December 2012, respectively, and a favorable period-over-period impact from the mark-to-market of derivative instruments. The stronger unit margins in its Supply and Logistics segment, including the benefit from favorable location and quality differentials, were associated with the increased production from the development of North American crude oil and liquids-rich resource plays. As the midstream infrastructure in these producing regions continues to be developed, PAA believes a normalization of margins will occur as the logistics challenges are addressed. Supply and Logistics margins also benefitted from increased NGL sales margins due to improved market conditions, as well as additional volumes related to the BP NGL Acquisition noted above.

        During the year ended December 31, 2012, we recognized net income of approximately $1.118 billion, as compared to net income of approximately $987 million recognized during the year ended December 31, 2011. The major items impacting the favorable performance between these periods include PAA's increased utilization of certain existing transportation assets, incremental

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fee-based contributions associated with acquisition and expansion capital invested in its Transportation and Facilities segments and increased lease-gathering volumes and improved unit margins in its 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 location and quality differentials also contributed substantially to margins in PAA's Supply and Logistics segment. These favorable contributions to its Supply and Logistics segment were partially offset by lower margins on its NGL sales due to lower NGL prices and less favorable market conditions, as well as the mark-to-market impact for derivative instruments.

        Other significant items during the year ended December 31, 2012 were:

    PAA's completion of the BP NGL Acquisition for total consideration of approximately $1.68 billion, as well as several additional acquisitions completed throughout 2012 for aggregate consideration of approximately $653 million (please read Note 3 to GP LLC's Consolidated Financial Statements for further discussion of acquisitions);

    The receipt of net proceeds of approximately $2.96 billion from (i) PAA's issuance of senior notes, (ii) the sale of 11.5 million common units through PAA's March equity offering and (iii) the sale of approximately 12.0 million common units under PAA's continuous offering programs;

    Increased depreciation and amortization expense resulting from (i) impairment losses of approximately $168 million, primarily related to PAA's Pier 400 terminal project and the anticipated sale of certain refined products pipeline systems and related assets and (ii) PAA's growth through internal growth projects and acquisitions completed throughout 2012, including the recognition of accelerated amortization related to certain intangible assets associated with PAA's BP NGL Acquisition; and

    Increased interest expense primarily resulting from PAA's issuance of senior notes during 2012 and increased income tax expense during 2012, primarily due to higher earnings subject to Canadian federal and provincial taxes.


Acquisitions and Internal Growth Projects

        PAA completed a number of acquisitions and capital expansion projects in the years ended December 31, 2012, 2011 and 2010 and the three months ended March 31, 2013 that have impacted its results of operations. The following table summarizes PAA's capital expenditures for acquisitions, internal growth projects and maintenance capital for the periods indicated (in millions):

 
  For the
Three Months
Ended
March 31,
  For the Year Ended
December 31,
 
 
  2013   2012   2012   2011   2010  

Acquisition capital

  $ 1   $ 21   $ 2,286   $ 1,404   $ 407  

Internal growth projects

    358     236     1,185     531     355  

Maintenance capital

    44     35     170     120     93  
                       

  $ 403   $ 292   $ 3,641   $ 2,055   $ 855  
                       

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Acquisitions

        Acquisitions are financed using a combination of equity and debt, including borrowings under PAA's credit facilities and the issuance of senior notes. Businesses acquired impact PAA's results of operations commencing on the closing date of each acquisition. PAA's acquisition and capital expansion activities are discussed further in "—Liquidity and Capital Resources" and in Note 3 to GP LLC's Consolidated Financial Statements. Information regarding acquisitions completed in 2012, 2011 and 2010 is set forth in the table below (in millions):

Acquisition
  Effective
Date
  Acquisition
Price
  Operating Segment

BP NGL Acquisition(1)

  04/01/2012   $ 1,633   Transportation, Facilities and Supply & Logistics

US Development Group Crude Oil Rail Terminals

  12/13/2012     503   Facilities

Other

  Various     150   Transportation, Facilities and Supply & Logistics
             

2012 Total

      $ 2,286    
             

Southern Pines Gas Storage

  02/09/2011   $ 765   Facilities

Gardendale Gathering System

  11/29/2011     349   Transportation

Western Pipeline and Storage Assets

  12/29/2011     220   Facilities and Transportation

Other

  Various     70   Transportation, Facilities and Supply & Logistics
             

2011 Total

      $ 1,404    
             

Nexen Gathering and Transportation Assets

  12/30/2010   $ 229   Supply & Logistics and Transportation

Other

  Various     178   Transportation and Facilities
             

2010 Total

      $ 407    
             

(1)
Total BP NGL Acquisition purchase price was approximately $1.683 billion. A cash deposit of $50 million was paid during 2011 and is reflected in 'Other' in the 2011 Total in the table above.

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Internal Growth Projects

        PAA's 2012 projects included the construction and expansion of pipeline systems and storage and terminal facilities. The following table summarizes PAA's 2012, 2011 and 2010 projects (in millions):

Projects
  2012   2011   2010  

Eagle Ford JV Project(1)(2)

  $ 132   $ 18   $  

Spraberry Area Pipeline Projects(2)

    91          

Eagle Ford Area Pipeline Projects(2)(3)

    88     2      

Rainbow II Pipeline(2)

    79     44     3  

PAA Natural Gas Storage (multiple projects)(2)

    61     89     85  

Mississippian Lime Pipeline(2)

    54          

Bakken North Pipeline

    48     7      

St. James Expansions(2)

    46     4     21  

Ross Rail Project

    41     27      

Yorktown Terminal Projects(2)

    39          

Cushing Terminal Expansions(2)

    31     41     46  

Patoka Terminal Expansions

    24     15     20  

Shafter Expansion(2)

    21     2      

Gulf Coast Pipeline(2)

    13          

Other projects(4)

    417     282     180  
               

Total

  $ 1,185   $ 531   $ 355  
               

(1)
Includes net expenditures associated with the formation of Eagle Ford Pipeline LLC, as well as subsequent contributions related to PAA's 50% interest.

(2)
These projects are continuing in 2013. Please read "—Liquidity and Capital Resources—Acquisitions, Capital Expenditures and Distributions Paid—2013 Capital Expansion Projects."

(3)
Includes pipeline, tankage and condensate stabilization.

(4)
Primarily consists of multiple, smaller projects comprised of pipeline connections, upgrades and truck stations and new tank construction and refurbishing.


Critical Accounting Policies and Estimates

Critical Accounting Policies

        We have adopted various accounting policies to prepare our consolidated financial statements in accordance with GAAP. These critical accounting policies are discussed in Note 2 to GP LLC's Consolidated Financial Statements.

Critical Accounting Estimates

        The preparation of financial statements in conformity with GAAP and rules and regulations of the United States Securities and Exchange Commission ("SEC") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities, at the date of the financial statements. Such estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Substantially all of our critical accounting estimates are related to PAA's assets and liabilities. Although we believe these estimates are reasonable, actual results could differ from these estimates. On a regular basis, we

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evaluate our assumptions, judgments and estimates, and PAA also discusses its critical accounting policies and estimates with the Audit Committee of its Board of Directors.

        We believe that the assumptions, judgments and estimates involved in the accounting for (i) purchase and sales accruals, (ii) fair value of assets and liabilities acquired and identification of associated goodwill and intangible assets, (iii) fair value of derivatives, (iv) accruals and contingent liabilities, including its equity-indexed compensation plan accruals, (v) property and equipment and depreciation expense and (vi) allowance for doubtful accounts have the greatest potential impact on our consolidated financial statements. These areas are key components of our results of operations and are based on complex rules which require us to make judgments and estimates, so we consider these to be our critical accounting estimates. Such critical accounting estimates are discussed further as follows:

        Purchase and Sales Accruals.    PAA routinely makes accruals based on estimates for certain components of its revenues and cost of sales due to the timing of compiling billing information, receiving third-party information and reconciling its records with those of third parties. Where applicable, these accruals are based on nominated volumes expected to be purchased, transported and subsequently sold. Uncertainties involved in these estimates include levels of production at the wellhead, access to certain qualities of crude oil, pipeline capacities and delivery times, utilization of truck fleets to transport volumes to their destinations, weather, market conditions and other forces beyond PAA's control. These estimates are generally associated with a portion of the last month of each reporting period. For the year ended December 31, 2012, PAA estimates that approximately 2% of both annual revenues and cost of sales were recorded using purchase and sales estimates. Accordingly, a hypothetical variance of 10% from both of these estimates, either up or down in tandem, would impact annual revenues, cost of sales, operating income and net income attributable to PAA by approximately 1% or less on an annual basis. Although the resolution of these uncertainties has not historically had a material impact on PAA's reported results of operations or financial condition, because of the high volume, low margin nature of its business, PAA cannot provide assurance that actual amounts will not vary significantly from estimated amounts. Variances from estimates are reflected in the period actual results become known, typically in the month following the estimate.

        Fair Value of Assets and Liabilities Acquired and Identification of Associated Goodwill and Intangible Assets.    In accordance with Financial Accounting Standards Board ("FASB") guidance regarding business combinations, with each acquisition, PAA allocates the cost of the acquired entity to the assets and liabilities assumed based on their estimated fair values at the date of acquisition. If the initial accounting for the business combination is incomplete when the combination occurs, an estimate will be recorded. Any subsequent adjustments to this estimate, if material, will be recognized retroactive to the date of acquisition. With exception to PAA's equity method investments, it also expenses the transaction costs as incurred in connection with each acquisition. In addition, PAA is required to recognize intangible assets separately from goodwill. Intangible assets with finite lives are amortized over their estimated useful life as determined by PAA management. Goodwill and intangible assets with indefinite lives are not amortized but instead are periodically assessed for impairment.

        Impairment testing entails estimating future net cash flows relating to the asset, based on PAA management's estimate of future revenues, future cash flows and market conditions including pricing, demand, competition, operating costs and other factors. Determining the fair value of assets and liabilities acquired, as well as intangible assets that relate to such items as customer relationships, contracts and industry expertise, involves professional judgment and is ultimately based on acquisition models and PAA management's assessment of the value of the assets acquired and, to the extent available, third-party assessments. Uncertainties associated with these estimates include changes in production decline rates, production interruptions, fluctuations in refinery capacity or product slates, economic obsolescence factors in the area and potential future sources of cash flow. Although the resolution of these uncertainties has not historically had a material impact on PAA's results of operations or financial condition, PAA cannot provide assurance that actual amounts will not vary

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significantly from estimated amounts. PAA performs its goodwill impairment test annually (as of June 30) and when events or changes in circumstances indicate that the carrying value may not be recoverable. PAA did not have any material goodwill impairments in 2012, 2011 or 2010. Please read Note 7 to GP LLC's Consolidated Financial Statements for a further discussion of goodwill.

        Fair Value of Derivatives.    Our derivatives are reported at fair value as either assets or liabilities with changes in fair value recognized in either earnings or accumulated other comprehensive income ("AOCI"). The fair value of a derivative at a particular period end does not reflect the end results of a particular transaction, and will most likely not reflect the realized gain or loss at the conclusion of a transaction. We reflect estimates for these items based on internal records and information from third parties. For our derivatives that are not exchange traded, the estimates we use are based on indicative broker quotations or an internal valuation model. Our valuation models utilize market observable inputs such as price, volatility, correlation and other factors and may not be reflective of the price at which they can be settled due to the lack of a liquid market. Less than 1% of total annual revenues are based on estimates derived from internal valuation models. Although the resolution of these uncertainties has not historically had a material impact on our results of operations or financial condition, we cannot provide assurance that actual amounts will not vary significantly from estimated amounts.

        Accruals and Contingent Liabilities.    PAA records accruals or liabilities including, but not limited to, environmental remediation and governmental penalties, asset retirement obligations, equity compensation plan accruals (as further discussed below) and potential legal claims. Accruals are made when PAA's assessment indicates that it is probable that a liability has occurred and the amount of liability can be reasonably estimated. PAA's estimates are based on all known facts at the time and its assessment of the ultimate outcome. Among the many uncertainties that impact its estimates are the necessary regulatory approvals for, and potential modification of, its environmental remediation plans, the limited amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims. PAA's estimates for contingent liability accruals are increased or decreased as additional information is obtained or resolution is achieved. A hypothetical variance of 5% in PAA's aggregate estimate for the accruals and contingent liabilities discussed above would have an impact on PAA's earnings of up to approximately $17 million. Although the resolution of these uncertainties has not historically had a material impact on its results of operations or financial condition, PAA cannot provide assurance that actual amounts will not vary significantly from estimated amounts.

        Equity Compensation Plan Accruals.    PAA accrues compensation expense (referred to herein as equity-indexed compensation expense) for outstanding equity compensation awards. Under GAAP, it is required to estimate the fair value of its outstanding equity awards and recognize that fair value as compensation expense over the service period. For equity awards that contain a performance condition, the fair value of the equity award is recognized as compensation expense only if the attainment of the performance condition is considered probable. Uncertainties involved in this estimate include the actual unit price at time of vesting, whether or not a performance condition will be attained and the continued employment of personnel with outstanding equity awards.

        PAA recognized total compensation expense of approximately $101 million, $110 million and $98 million in 2012, 2011 and 2010, respectively, related to equity awards granted under its various equity compensation plans. PAA cannot provide assurance that the actual fair value of its equity compensation awards will not vary significantly from estimated amounts. Please read Note 14 to GP LLC's Consolidated Financial Statements.

        Property and Equipment and Depreciation Expense.    PAA computes depreciation using the straight-line method based on estimated useful lives. These estimates are based on various factors

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including condition, manufacturing specifications, technological advances and historical data concerning useful lives of similar assets. Uncertainties that impact these estimates include changes in laws and regulations relating to restoration and abandonment requirements, economic conditions and supply and demand in the area. When assets are put into service, PAA makes estimates with respect to useful lives and salvage values that it believes are reasonable. However, subsequent events could cause PAA to change its estimates, thus impacting the future calculation of depreciation and amortization. During 2010 and 2011, PAA conducted a review to assess the useful lives of its property and equipment. Please read Note 5 to GP LLC's Consolidated Financial Statements.

        PAA periodically evaluates property and equipment for impairment when events or circumstances indicate that the carrying value of these assets may not be recoverable. Any evaluation is highly dependent on the underlying assumptions of related cash flows. PAA considers the fair value estimate used to calculate impairment of property and equipment a critical accounting estimate. In determining the existence of an impairment of carrying value, PAA makes a number of subjective assumptions as to:

    whether there is an event or circumstance that may be indicative of an impairment;

    the grouping of assets;

    the intention of "holding", "abandoning" or "selling" an asset;

    the forecast of undiscounted expected future cash flow over the asset's estimated useful life; and

    if an impairment exists, the fair value of the asset or asset group.

        During 2012, PAA recognized losses on impairments of long-lived assets of approximately $168 million, primarily related to its Pier 400 terminal project and the anticipated sale of certain refined products pipeline systems and related assets. Impairments of approximately $5 million and $13 million were recognized during 2011 and 2010, respectively, and were predominantly related to assets that were taken out of service. These assets did not support spending the capital necessary to continue service and, in most instances, PAA utilized other assets to handle these activities. Please read Note 5 to GP LLC's Consolidated Financial Statements for further discussion regarding impairments.

        Allowance for Doubtful Accounts.    PAA performs credit evaluations of its customers and grants credit based on past payment history, financial conditions and anticipated industry conditions. Customer payments are regularly monitored and a provision for doubtful accounts is established based on specific situations and overall industry conditions. PAA's history of bad debt losses has been minimal and generally limited to specific customer circumstances; however, credit risks can change suddenly and without notice. Please read Note 2 to GP LLC's Consolidated Financial Statements for additional discussion.


Recent Accounting Pronouncements

        Please read Note 2 to GP LLC's Consolidated Financial Statements for information regarding the effect of recent accounting pronouncements on our consolidated financial statements.


Results of Operations

Analysis of Operating Segments

        PAA manages its operations through three operating segments: (i) Transportation, (ii) Facilities and (iii) Supply and Logistics. PAA's Chief Operating Decision Maker (its Chief Executive Officer) evaluates such segment performance based on a variety of measures, including segment profit, segment volumes, segment profit per barrel and maintenance capital investment. Please read Note 17 to GP LLC's Consolidated Financial Statements for a definition of segment profit (including an

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explanation of why this is a performance measure) and a reconciliation of segment profit to net income attributable to GP LLC.

        PAA's segment analysis involves an element of judgment relating to the allocations between segments. In connection with its operations, the Supply and Logistics segment secures transportation and facilities services from PAA's other two segments as well as third-party service providers under month-to-month and multi-year arrangements. Intersegment transportation service rates are conducted at posted tariff rates, rates similar to those charged to third parties or rates that PAA believes approximates the market. Facilities segment services are also obtained at rates generally consistent with rates charged to third parties for similar services; however, certain terminalling and storage rates are discounted to PAA's Supply and Logistics segment to reflect the fact that these services may be canceled on short notice to enable the Facilities segment to provide services to third parties. Intersegment activities are eliminated in consolidation and PAA believes that the estimates with respect to these rates are reasonable. Also, PAA's segment operating and general and administrative expenses reflect direct costs attributable to each segment; however, it also allocates certain operating expense and general and administrative overhead expenses between segments based on PAA management's assessment of the business activities for the period. The proportional allocations by segment require judgment by PAA management and may be adjusted in the future based on the business activities that exist during each period. PAA believes that the estimates with respect to these allocations are reasonable.

        The following table sets forth an overview of our consolidated financial results calculated in accordance with GAAP (in millions, except for per unit amounts):

 
  For the
Three
Months
Ended
March 31,
   
   
   
   
  Favorable/(Unfavorable)  
 
  For the Twelve Months
Ended December 31,
   
  March 31,
2013 - 2012
  2012 - 2011   2011 - 2010  
 
  2013   2012   2012   2011   2010    
  $   %   $   %   $   %  
 
   
 

Transportation segment profit

  $ 164   $ 162   $ 710   $ 555   $ 516       $ 2     1 % $ 155     28 % $ 39     8 %

Facilities segment profit

    150     90     482     358     270         60     67 %   124     35 %   88     33 %

Supply and Logistics segment profit

    434     128     753     647     240         306     239 %   106     16 %   407     170 %
                                                   

Total segment profit

    748     380     1,945     1,560     1,026         368     97 %   385     25 %   534     52 %

Depreciation and amortization

    (82 )   (60 )   (483 )   (250 )   (257 )       (22 )   (37 )%   (233 )   (93 )%   7     3 %

Interest expense

    (78 )   (67 )   (295 )   (259 )   (258 )       (11 )   (16 )%   (36 )   (14 )%   (1 )   %

Other income/(expense), net

        2     6     (19 )   (9 )       (2 )   (100 )%   25     132 %   (10 )   (111 )%

Income tax expense

    (53 )   (21 )   (55 )   (45 )   (1 )       (32 )   (152 )%   (10 )   (22 )%   (44 )   (4,400 )%

Net income

    535     234     1,118     987     501         301     129 %   131     13 %   486     97 %

Net income attributable to noncontrolling interests

    (534 )   (234 )   (1,115 )   (985 )   (499 )       (300 )   (128 )%   (130 )   (13 )%   (486 )   (97 )%
         </