Partners’ Capital and Distributions

Exchange Rights

Holders of AAP units and their permitted transferees each have the right to exchange all or a portion of their AAP units for Class A shares at an exchange ratio of one Class A share for each AAP unit exchanged (referred to herein as the “Exchange Right”). This Exchange Right may be exercised only if, simultaneously therewith, an equal number of Class B shares and general partner units are transferred by the exercising party to us. Additionally, a holder of vested AAP Management Units is entitled to convert his or her AAP Management Units into AAP units and a like number of our Class B shares based on a conversion ratio of 0.941 AAP units for each AAP Management Unit. Following any such conversion, the holder will have the Exchange Right for our Class A shares. Holders of AAP Management Units who convert such units into AAP units and our Class B shares will not receive general partner units and thus will not need to include any general partner units in a transfer or the exercise of their Exchange Right. See Note 15 to our Consolidated Financial Statements included in Part IV of our 2015 Annual Report on Form 10-K for more information regarding AAP Management Units.

During the nine months ended September 30, 2016, certain holders of AAP units and their permitted transferees exercised their Exchange Right, which resulted in the exchange of AAP units, general partner units and our Class B shares for our Class A shares. Additionally, during the nine months ended September 30, 2016, certain holders of AAP Management Units converted an aggregate of 38,446,238 AAP Management Units into AAP units and our Class B shares based on the conversion ratio in effect at the time of each conversion. Certain of those unitholders subsequently exercised their Exchange Right for our Class A shares. The impact on our Class A shares and Class B shares outstanding of the AAP Management Unit conversions and Exchange Right exercises that occurred during the nine months ended September 30, 2016 is reflected in the table below.

Shares Outstanding

The following tables present the activity for our Class A shares and Class B shares:



	Class B Shares		Class A Shares
Outstanding at December 31, 2015	376,771,593		229,278,980
Shares issued in connection with conversion of AAP Management Units	36,130,927		—
Shares (exchanged)/issued in connection with Exchange Right exercises	(39,052,628	)	39,052,628
Shares issued in connection with PAGP LTIP award vestings	—		20,800
Outstanding at September 30, 2016	373,849,892		268,352,408



	Class B Shares		Class A Shares
Outstanding at December 31, 2014	399,096,499		206,933,274
Shares (exchanged)/issued in connection with Exchange Right exercises	(20,250,884	)	20,250,884
Shares issued in connection with PAGP LTIP award vestings	—		20,800
Outstanding at September 30, 2015	378,845,615		227,204,958

Distributions

The following table details the distributions paid to our Class A shareholders during or pertaining to the first nine months of 2016 (in millions, except per share data):



Distribution Date	Distributions to Class A Shareholders		Distributions per Class A Share
November 14, 2016 ⁽¹⁾	$	55	$	0.2065
August 12, 2016	$	62	$	0.2310
May 13, 2016	$	62	$	0.2310
February 12, 2016	$	55	$	0.2310

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⁽¹⁾	Payable to shareholders of record at the close of business on October 31, 2016 for the period July 1, 2016 through September 30, 2016.

Consolidated Subsidiaries

Noncontrolling Interests in Subsidiaries

As of September 30, 2016, noncontrolling interests in our subsidiaries consisted of (i) a 98% limited partner interest in PAA, (ii) an approximate 58% limited partner interest in AAP that consists of Class A units and AAP Management Units (a profits interest) and (iii) a 25% interest in SLC Pipeline LLC.

Subsidiary Equity Offerings

PAA Preferred Unit Offering. On January 28, 2016 (the "Issuance Date"), PAA completed the private placement of approximately 61.0 million Series A preferred units representing limited partner interests in PAA, for a cash purchase price of $26.25 per unit.

The PAA Series A preferred units are a new class of equity security in PAA that ranks senior to all classes or series of equity securities in PAA with respect to distribution rights and rights upon liquidation. The holders of the PAA Series A preferred units receive cumulative quarterly distributions, subject to customary antidilution adjustments, equal to $0.525 per unit ($2.10 per unit annualized). With respect to any quarter ending on or prior to December 31, 2017 (the “Initial Distribution Period”), PAA may elect to pay distributions on the PAA Series A preferred units in additional preferred units, in cash or a combination of both. With respect to any quarter ending after the Initial Distribution Period, PAA must pay distributions on the PAA Series A preferred units in cash.

After two years, the preferred units are convertible at the purchasers’ option into common units on a one-for-one basis, subject to certain conditions, and are convertible at PAA’s option in certain circumstances after three years.

For a period of 30 days following (a) the fifth anniversary of the Issuance Date of the PAA Series A preferred units and (b) each subsequent anniversary of the Issuance Date, the holders of the PAA Series A preferred units, acting by majority vote, may make a one-time election to reset the distribution rate to equal the then applicable rate of the ten-year U.S. Treasury plus 5.85% (the “Preferred Distribution Rate Reset Option”). The Preferred Distribution Rate Reset Option is accounted for as an embedded derivative. See Note 9 for additional information.

PAA Continuous Offering Program. During the nine months ended September 30, 2016, PAA issued an aggregate of approximately 9.9 million common units under its continuous offering program, generating proceeds of $283 million, net of $2 million of commissions paid to sales agents.

Subsidiary Distributions

PAA Cash Distributions. The following table details the distributions to PAA’s partners paid in cash during or pertaining to the first nine months of 2016, net of reductions in AAP’s incentive distributions (in millions, except per unit data):



	Distributions						Distributions per common unit
Distribution Date	Common Unitholders		AAP		Total		Distributions per common unit
November 14, 2016 ⁽¹⁾	$	227	$	101	$	328	$	0.55
August 12, 2016	$	278	$	155	$	433	$	0.70
May 13, 2016	$	278	$	155	$	433	$	0.70
February 12, 2016	$	278	$	155	$	433	$	0.70

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⁽¹⁾	Payable to unitholders of record at the close of business on October 31, 2016 for the period July 1, 2016 through September 30, 2016.

PAA In-Kind Distributions. On May 13, 2016, PAA issued 858,439 additional Series A preferred units in lieu of a cash distribution of $23 million. Such distribution was issued to PAA’s Series A preferred unitholders of record as of April 29, 2016 and was prorated for the period beginning on January 28, 2016, the issuance date of the PAA Series A preferred units, through March 31, 2016. On August 12, 2016, PAA issued 1,237,765 additional Series A preferred units in lieu of a cash distribution of $33 million. On November 14, 2016, PAA will issue 1,262,522 additional Series A preferred units in lieu of a cash distribution of $33 million.

AAP Distributions. The following table details the distributions paid to AAP’s partners during or pertaining to the first nine months of 2016 from distributions received from PAA (in millions):



								Distributions to AAP’s Partners
Distribution Date	Available Cash Before Reserves			Cash Reserves				Total		Noncontrolling Interests		PAGP
November 14, 2016 ⁽¹⁾	$	134	⁽²⁾	$	—		⁽³⁾	$	134	$	79	$	55
August 12, 2016	$	155		$	(4	)		$	151	$	89	$	62
May 13, 2016	$	155		$	(5	)		$	150	$	89	$	61
February 12, 2016	$	155		$	(4	)		$	151	$	96	$	55

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⁽¹⁾	Payable to unitholders of record at the close of business on October 31, 2016 for the period July 1, 2016 through September 30, 2016.

⁽²⁾

Includes $33 million that will be borrowed under the AAP senior secured revolving credit facility. AAP agreed to borrow funds under its credit agreement as necessary to make a special true-up distribution to its partners that, when added to the distributions to be paid to AAP in respect of its 2% general partner interest in PAA and the IDRs, equals the total distribution its partners would have received if the closing of the Simplification Transactions had occurred immediately prior to the record date for the third quarter distribution.


⁽³⁾	The amount of the distribution to be paid to AAP's partners assumes that the Simplification Transactions had closed as of the date of record for the third quarter distribution. As part of the Simplification Transactions, AAP's expenses will be paid by PAA. Therefore, no cash will be reserved from this distribution for future expenses of AAP.

Other Distributions. During the nine months ended September 30, 2016, distributions of $3 million were paid to noncontrolling interests in SLC Pipeline LLC.