UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________________

FORM 10-Q

________________________________________________________________________________________________________________________________

☑      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

or

☐      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-36132

________________________________________________________________

PLAINS GP HOLDINGS, L.P.

(Exact name of registrant as specified in its charter)

Delaware	90-1005472
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

333 Clay Street, Suite 1600

Houston, Texas 77002

(Address of principal executive offices) (Zip code)

(713) 646-4100

(Registrant’s telephone number, including area code)

________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Shares	PAGP	Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☑ Yes  ☐ No

 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  ☑ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes  ☑ No

As of July 31, 2023, there were 195,961,642 Class A Shares outstanding.

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets: As of June 30, 2023 and December 31, 2022	3
Condensed Consolidated Statements of Operations: For the three and six months ended June 30, 2023 and 2022	4
Condensed Consolidated Statements of Comprehensive Income/(Loss): For the three and six months ended June 30, 2023 and 2022	5
Condensed Consolidated Statements of Changes in Accumulated Other Comprehensive Income/(Loss): For the three and six months ended June 30, 2023 and 2022	5
Condensed Consolidated Statements of Cash Flows: For the six months ended June 30, 2023 and 2022	6
Condensed Consolidated Statements of Changes in Partners’ Capital: For the three and six months ended June 30, 2023 and 2022	7
Notes to the Condensed Consolidated Financial Statements:
1. Organization and Basis of Consolidation and Presentation	8
2. Revenues and Accounts Receivable	11
3. Net Income Per Class A Share	14
4. Inventory, Linefill and Long-term Inventory	15
5. Debt	16
6. Partners’ Capital and Distributions	17
7. Derivatives and Risk Management Activities	20
8. Related Party Transactions	24
9. Commitments and Contingencies	25
10. Segment Information	30
11. Acquisitions and Divestitures	33
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	51
Item 4. CONTROLS AND PROCEDURES	53
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS	53
Item 1A. RISK FACTORS	53
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	54
Item 3. DEFAULTS UPON SENIOR SECURITIES	54
Item 4. MINE SAFETY DISCLOSURES	54
Item 5. OTHER INFORMATION	54
Item 6. EXHIBITS	55
SIGNATURES	58

2

PART I. FINANCIAL INFORMATION

Item 1.    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

	June 30, 2023		December 31, 2022
	(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	936	$	404
Trade accounts receivable and other receivables, net	3,220		3,907
Inventory	367		729
Other current assets	137		318
Total current assets	4,660		5,358
PROPERTY AND EQUIPMENT	20,397		20,055
Accumulated depreciation	(5,175)		(4,802)
Property and equipment, net	15,222		15,253
OTHER ASSETS
Investments in unconsolidated entities	3,062		3,084
Intangible assets, net	1,999		2,145
Deferred tax asset	1,263		1,309
Linefill	966		961
Long-term operating lease right-of-use assets, net	339		349
Long-term inventory	270		284
Other long-term assets, net	386		464
Total assets	$	28,167	$	29,207
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES
Trade accounts payable	$	3,296	$	4,045
Short-term debt	709		1,159
Other current liabilities	649		689
Total current liabilities	4,654		5,893
LONG-TERM LIABILITIES
Senior notes, net	7,239		7,237
Other long-term debt, net	49		50
Long-term operating lease liabilities	299		308
Other long-term liabilities and deferred credits	1,059		1,081
Total long-term liabilities	8,646		8,676
COMMITMENTS AND CONTINGENCIES (NOTE 9)
PARTNERS’ CAPITAL
Class A shareholders (195,961,642 and 194,407,642 shares outstanding, respectively)	1,568		1,524
Noncontrolling interests	13,299		13,114
Total partners’ capital	14,867		14,638
Total liabilities and partners’ capital	$	28,167	$	29,207

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(unaudited)				(unaudited)
REVENUES
Product sales revenues	$	11,201	$	16,007	$	23,145	$	29,388
Services revenues	401		352		798		665
Total revenues	11,602		16,359		23,943		30,053
COSTS AND EXPENSES
Purchases and related costs	10,544		15,324		21,867		28,109
Field operating costs	333		307		690		653
General and administrative expenses	87		80		174		163
Depreciation and amortization	260		243		517		475
(Gains)/losses on asset sales and asset impairments, net	3		(3)		(150)		(46)
Total costs and expenses	11,227		15,951		23,098		29,354
OPERATING INCOME	375		408		845		699
OTHER INCOME/(EXPENSE)
Equity earnings in unconsolidated entities	89		104		178		201
Interest expense (net of capitalized interest of $3, $1, $5, and $2, respectively)	(95)		(99)		(193)		(206)
Other income/(expense), net	20		(118)		85		(155)
INCOME BEFORE TAX	389		295		915		539
Current income tax expense	(20)		(30)		(81)		(48)
Deferred income tax expense	(36)		(26)		(58)		(43)
NET INCOME	333		239		776		448
Net income attributable to noncontrolling interests	(285)		(208)		(659)		(395)
NET INCOME ATTRIBUTABLE TO PAGP	$	48	$	31	$	117	$	53
Basic and diluted weighted average Class A shares outstanding	195		194		195		194
Basic and diluted net income per Class A share	$	0.25	$	0.16	$	0.60	$	0.27

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(in millions)

 

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(unaudited)				(unaudited)
Net income	$	333	$	239	$	776	$	448
Other comprehensive income/(loss)	85		(52)		85		22
Comprehensive income	418		187		861		470
Comprehensive income attributable to noncontrolling interests	(346)		(170)		(720)		(411)
Comprehensive income attributable to PAGP	$	72	$	17	$	141	$	59

The accompanying notes are an integral part of these condensed consolidated financial statements.

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

(in millions)

 

	Derivative Instruments		Translation Adjustments		Other		Total
	(unaudited)
Balance at December 31, 2022	$	(107)	$	(846)	$	(1)	$	(954)
Reclassification adjustments	5		—		—		5
Unrealized gain on hedges	2		—		—		2
Currency translation adjustments	—		77		—		77
Other	—		—		1		1
Total period activity	7		77		1		85
Balance at June 30, 2023	$	(100)	$	(769)	$	—	$	(869)

	Derivative Instruments		Translation Adjustments		Other		Total
	(unaudited)
Balance at December 31, 2021	$	(208)	$	(642)	$	(3)	$	(853)
Reclassification adjustments	6		—		—		6
Unrealized gain on hedges	68		—		—		68
Currency translation adjustments	—		(50)		—		(50)
Other	—		—		(2)		(2)
Total period activity	74		(50)		(2)		22
Balance at June 30, 2022	$	(134)	$	(692)	$	(5)	$	(831)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Six Months Ended June 30,
	2023		2022
	(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	776	$	448
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	517		475
Gains on asset sales and asset impairments, net	(150)		(46)
Deferred income tax expense	58		43
Gains on sales of linefill	(2)		(30)
Loss on foreign currency revaluation	1		10
Settlement of terminated interest rate hedging instruments (Note 7)	80		—
Change in fair value of Preferred Distribution Rate Reset Option (Note 7)	(58)		147
Equity earnings in unconsolidated entities	(178)		(201)
Distributions on earnings from unconsolidated entities	219		224
Other	37		27
Changes in assets and liabilities, net of acquisitions	329		32
Net cash provided by operating activities	1,629		1,129
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in unconsolidated entities	(19)		(4)
Additions to property, equipment and other	(267)		(190)
Cash paid for purchases of linefill	(14)		(60)
Proceeds from sales of assets	284		57
Cash received from sales of linefill	9		61
Other investing activities	1		13
Net cash used in investing activities	(6)		(123)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under PAA commercial paper program (Note 5)	—		115
Repayments of PAA senior notes (Note 5)	(400)		(750)
Repurchase of common units by a subsidiary	—		(74)
Distributions paid to Class A shareholders (Note 6)	(104)		(77)
Distributions paid to noncontrolling interests (Note 6)	(536)		(423)
Other financing activities	(59)		16
Net cash used in financing activities	(1,099)		(1,193)
Effect of translation adjustment	8		1
Net increase/(decrease) in cash and cash equivalents and restricted cash	532		(186)
Cash and cash equivalents and restricted cash, beginning of period	404		456
Cash and cash equivalents and restricted cash, end of period	$	936	$	270
Cash paid for:
Interest, net of amounts capitalized	$	188	$	201
Income taxes, net of amounts refunded	$	8	$	39

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(in millions)

	Class A Shareholders		Noncontrolling Interests		Total Partners’ Capital
	(unaudited)
Balance at December 31, 2022	$	1,524	$	13,114	$	14,638
Net income	117		659		776
Distributions (Note 6)	(104)		(542)		(646)
Other comprehensive income	24		61		85
Other	7		7		14
Balance at June 30, 2023	$	1,568	$	13,299	$	14,867
	Class A Shareholders		Noncontrolling Interests		Total Partners’ Capital
	(unaudited)
Balance at March 31, 2023	$	1,544	$	13,220	$	14,764
Net income	48		285		333
Distributions (Note 6)	(52)		(270)		(322)
Other comprehensive income	24		61		85
Other	4		3		7
Balance at June 30, 2023	$	1,568	$	13,299	$	14,867

	Class A Shareholders		Noncontrolling Interests		Total Partners’ Capital
	(unaudited)
Balance at December 31, 2021	$	1,533	$	12,644	$	14,177
Net income	53		395		448
Distributions	(77)		(423)		(500)
Other comprehensive income	6		16		22
Repurchase of common units by a subsidiary	2		(76)		(74)
Other	—		(14)		(14)
Balance at June 30, 2022	$	1,517	$	12,542	$	14,059
	Class A Shareholders		Noncontrolling Interests		Total Partners’ Capital
	(unaudited)
Balance at March 31, 2022	$	1,540	$	12,661	$	14,201
Net income	31		208		239
Distributions	(42)		(222)		(264)
Other comprehensive loss	(14)		(38)		(52)
Repurchase of common units by a subsidiary	1		(50)		(49)
Other	1		(17)		(16)
Balance at June 30, 2022	$	1,517	$	12,542	$	14,059

 The accompanying notes are an integral part of these condensed consolidated financial statements.

7

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Organization and Basis of Consolidation and Presentation

Organization

Plains GP Holdings, L.P. (“PAGP”) is a Delaware limited partnership formed in 2013 that has elected to be taxed as a corporation for United States federal income tax purposes. PAGP does not directly own any operating assets; as of June 30, 2023, its principal source of cash flow is derived from an indirect investment in Plains All American Pipeline, L.P. (“PAA”), a publicly traded Delaware limited partnership. As used in this Form 10-Q and unless the context indicates otherwise (taking into account the fact that PAGP has no operating activities apart from those conducted by PAA and its subsidiaries), the terms “Partnership,” “we,” “us,” “our,” “ours” and similar terms refer to PAGP and its subsidiaries.

As of June 30, 2023, we owned an approximate 81% limited partner interest in Plains AAP L.P. (“AAP”) through our ownership of approximately 196.0 million Class A units of AAP (“AAP Units”). We also own a 100% managing member interest in Plains All American GP LLC (“GP LLC”), a Delaware limited liability company that holds the non-economic general partner interest in AAP. AAP is a Delaware limited partnership that, as of June 30, 2023, directly owned a limited partner interest in PAA through its ownership of approximately 240.8 million PAA common units (approximately 31% of PAA’s total outstanding common units and Series A preferred units combined). AAP is the sole member of PAA GP LLC (“PAA GP”), a Delaware limited liability company that directly holds the non-economic general partner interest in PAA.

PAA’s business model integrates large-scale supply aggregation capabilities with the ownership and operation of critical midstream infrastructure systems that connect major producing regions to key demand centers and export terminals. As one of the largest midstream service providers in North America, PAA owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and natural gas liquids (“NGL”) producing basins (including the Permian Basin) and transportation corridors and at major market hubs in the United States and Canada. PAA’s assets and the services it provides are primarily focused on and conducted through two operating segments: Crude Oil and NGL. See Note 10 for further discussion of our operating segments.

PAA GP Holdings LLC, a Delaware limited liability company, is our general partner. Our general partner manages our operations and activities and is responsible for exercising on our behalf any rights we have as the sole and managing member of GP LLC, including responsibility for conducting the business and managing the operations of AAP and PAA. GP LLC employs our domestic officers and personnel involved in the operation and management of AAP and PAA. PAA’s Canadian officers and personnel are employed by our subsidiary, Plains Midstream Canada ULC.

References to the “Plains Entities” include us, our general partner, GP LLC, AAP, PAA GP and PAA and its subsidiaries.

8

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Definitions

Additional defined terms are used in this Form 10-Q and shall have the meanings indicated below:

AOCI	=	Accumulated other comprehensive income/(loss)
ASC	=	Accounting Standards Codification
ASU	=	Accounting Standards Update
Bcf	=	Billion cubic feet
Btu	=	British thermal unit
CAD	=	Canadian dollar
CODM	=	Chief Operating Decision Maker
EBITDA	=	Earnings before interest, taxes, depreciation and amortization
EPA	=	United States Environmental Protection Agency
FASB	=	Financial Accounting Standards Board
GAAP	=	Generally accepted accounting principles in the United States
ICE	=	Intercontinental Exchange
ISDA	=	International Swaps and Derivatives Association
LTIP	=	Long-term incentive plan
Mcf	=	Thousand cubic feet
MMbls	=	Million barrels
NGL	=	Natural gas liquids, including ethane, propane and butane
NYMEX	=	New York Mercantile Exchange
SEC	=	United States Securities and Exchange Commission
SOFR	=	Secured Overnight Financing Rate
TWh	=	Terawatt hour
USD	=	United States dollar
WTI	=	West Texas Intermediate

Basis of Consolidation and Presentation

The accompanying unaudited condensed consolidated interim financial statements and related notes thereto should be read in conjunction with our 2022 Annual Report on Form 10-K. The accompanying condensed consolidated financial statements include the accounts of PAGP and all of its wholly owned subsidiaries and those entities that it controls. Investments in entities over which we have significant influence but not control are accounted for by the equity method. We apply proportionate consolidation for pipelines and other assets in which we own undivided joint interests. The financial statements have been prepared in accordance with the instructions for interim reporting as set forth by the SEC. The condensed consolidated balance sheet data as of December 31, 2022 was derived from audited financial statements, but does not include all disclosures required by GAAP. The results of operations for the three and six months ended June 30, 2023 should not be taken as indicative of results to be expected for the entire year. All adjustments (consisting only of normal recurring adjustments) that in the opinion of management were necessary for a fair statement of the results for the interim periods have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation, and certain reclassifications have been made to information from previous years to conform to the current presentation.

Management judgment is required to evaluate whether PAGP controls an entity. Key areas of that evaluation include (i) determining whether an entity is a variable interest entity (“VIE”); (ii) determining whether PAGP is the primary beneficiary of a VIE, including evaluating which activities of the VIE most significantly impact its economic performance and the degree of power that PAGP and its related parties have over those activities through variable interests; and (iii) identifying events that require reconsideration of whether an entity is a VIE and continuously evaluating whether PAGP is a VIE’s primary beneficiary.

9

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We have determined that our subsidiaries, PAA and AAP, are VIEs and should be consolidated by PAGP because:

•The limited partners of PAA and AAP lack (i) substantive “kick-out rights” (i.e., the right to remove the general partner) based on a simple majority or lower vote and (ii) substantive participation rights and thus lack the ability to block actions of the general partner that most significantly impact the economic performance of PAA and AAP, respectively.

•AAP is the primary beneficiary of PAA because it has the power to direct the activities that most significantly impact PAA’s performance and the right to receive benefits, and obligation to absorb losses, that could be significant to PAA.

•PAGP is the primary beneficiary of AAP because it has the power to direct the activities that most significantly impact AAP’s performance and the right to receive benefits, and obligation to absorb losses, that could be significant to AAP.

With the exception of a deferred tax asset of $1.263 billion and $1.309 billion as of June 30, 2023 and December 31, 2022, respectively, substantially all assets and liabilities presented on PAGP’s Condensed Consolidated Balance Sheets are those of PAA. Only the assets of each respective VIE can be used to settle the obligations of that individual VIE, and the creditors of each/either of those VIEs do not have recourse against the general credit of PAGP. PAGP did not provide any financial support to PAA or AAP during the six months ended June 30, 2023 or the year ended December 31, 2022. See Note 17 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding the Omnibus Agreement entered into by the Plains Entities on November 15, 2016.

Subsequent Events

Subsequent events have been evaluated through the financial statements issuance date and have been included in the following footnotes where applicable. 

Recent Accounting Pronouncements

Except as discussed in our 2022 Annual Report on Form 10-K, there have been no new accounting pronouncements that have become effective or have been issued during the six months ended June 30, 2023 that are of significance or potential significance to us.

10

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 2—Revenues and Accounts Receivable

Revenue Recognition

We disaggregate our revenues by segment and type of activity. See Note 3 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for additional information regarding our types of revenues and policies for revenue recognition.

Revenues from Contracts with Customers. The following tables present our revenues from contracts with customers disaggregated by segment and type of activity (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Crude Oil segment revenues from contracts with customers
Sales	$	10,937	$	15,576	$	22,318	$	28,433
Transportation	255		175		505		330
Terminalling, Storage and Other	94		90		185		180
Total Crude Oil segment revenues from contracts with customers	$	11,286	$	15,841	$	23,008	$	28,943

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
NGL segment revenues from contracts with customers
Sales	$	232	$	499	$	885	$	1,344
Transportation	8		7		15		16
Terminalling, Storage and Other	23		20		52		45
Total NGL segment revenues from contracts with customers	$	263	$	526	$	952	$	1,405

Reconciliation to Total Revenues of Reportable Segments. The following disclosures only include information regarding revenues associated with consolidated entities; revenues from entities accounted for by the equity method are not included. The following tables present the reconciliation of our revenues from contracts with customers to total revenues of reportable segments and total revenues as disclosed in our Condensed Consolidated Statements of Operations (in millions):

Three Months Ended June 30, 2023	Crude Oil		NGL		Total
Revenues from contracts with customers	$	11,286	$	263	$	11,549
Other revenues	9		118		127
Total revenues of reportable segments	$	11,295	$	381	$	11,676
Intersegment revenues elimination					(74)
Total revenues					$	11,602
Three Months Ended June 30, 2022	Crude Oil		NGL		Total
Revenues from contracts with customers	$	15,841	$	526	$	16,367
Other revenues	99		44		143
Total revenues of reportable segments	$	15,940	$	570	$	16,510
Intersegment revenues elimination					(151)
Total revenues					$	16,359

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30, 2023	Crude Oil		NGL		Total
Revenues from contracts with customers	$	23,008	$	952	$	23,960
Other items in revenues	45		119		164
Total revenues of reportable segments	$	23,053	$	1,071	$	24,124
Intersegment revenues					(181)
Total revenues					$	23,943
Six Months Ended June 30, 2022	Crude Oil		NGL		Total
Revenues from contracts with customers	$	28,943	$	1,405	$	30,348
Other items in revenues	76		(101)		(25)
Total revenues of reportable segments	$	29,019	$	1,304	$	30,323
Intersegment revenues					(270)
Total revenues					$	30,053

Minimum Volume Commitments. We have certain agreements that require counterparties to transport or throughput a minimum volume over an agreed upon period. The following table presents counterparty deficiencies associated with contracts with customers and buy/sell arrangements that include minimum volume commitments for which we had remaining performance obligations and the customers still had the ability to meet their obligations (in millions):

Counterparty Deficiencies	Financial Statement Classification	June 30, 2023		December 31, 2022
Billed and collected	Other current liabilities	$	79	$	104
Unbilled (1)	N/A	1		1
Total		$	80	$	105

(1)Amounts were related to deficiencies for which the counterparties had not met their contractual minimum commitments and are not reflected in our Condensed Consolidated Financial Statements as we had not yet billed or collected such amounts.

Contract Balances. Our contract balances consist of amounts received associated with services or sales for which we have not yet completed the related performance obligation. The following table presents the changes in the liability balance associated with contracts with customers (in millions):

	Contract Liabilities
Balance at December 31, 2022	$	229
Amounts recognized as revenue	(35)
Additions	20
Other	2
Balance at June 30, 2023	$	216

12

PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Remaining Performance Obligations. The information below includes the amount of consideration allocated to partially and wholly unsatisfied remaining performance obligations under contracts that existed as of the end of the periods and the timing of revenue recognition of those remaining performance obligations. Certain contracts meet the requirements for the presentation as remaining performance obligations. These contracts include a fixed minimum level of service, typically a set volume of service, and do not contain any variability other than expected timing within a limited range. The following table presents the amount of consideration associated with remaining performance obligations for the population of contracts with external customers meeting the presentation requirements as of June 30, 2023 (in millions):

	Remainder of 2023		2024		2025		2026		2027		2028 and Thereafter
Pipeline revenues supported by minimum volume commitments and capacity agreements (1)	$	182	$	360	$	391	$	140	$	101	$	240
Terminalling, storage and other agreement revenues	137		217		134		106		96		771
Total	$	319	$	577	$	525	$	246	$	197	$	1,011

(1)Calculated as volumes committed under contracts multiplied by the current applicable tariff rate.

The presentation above does not include (i) expected revenues from legacy shippers not underpinned by minimum volume commitments, including pipelines where there are no or limited alternative pipeline transportation options, (ii) intersegment revenues and (iii) the amount of consideration associated with certain income generating contracts, which include a fixed minimum level of service, that are either not within the scope of ASC 606 or do not meet the requirements for presentation as remaining performance obligations. The following are examples of contracts that are not included in the table above because they are not within the scope of ASC 606 or do not meet the requirements for presentation:

•Minimum volume commitments on certain of our joint venture pipeline systems;

•Acreage dedications;

•Buy/sell arrangements with future committed volumes;

•Short-term contracts and those with variable consideration, due to the election of practical expedients;

•Contracts within the scope of ASC Topic 842, Leases; and

•Contracts within the scope of ASC Topic 815, Derivatives and Hedging.

Trade Accounts Receivable and Other Receivables, Net

Our accounts receivable are primarily from purchasers and shippers of crude oil and, to a lesser extent, purchasers of NGL. These purchasers include, but are not limited to, refiners, producers, marketing and trading companies and financial institutions. The majority of our accounts receivable relate to our crude oil merchant activities that can generally be described as high volume and low margin activities, in many cases involving exchanges of crude oil volumes.

To mitigate credit risk related to our accounts receivable, we utilize a rigorous credit review process. We closely monitor market conditions and perform credit reviews of each customer to make a determination with respect to the amount, if any, of open credit to be extended to any given customer and the form and amount of financial performance assurances we require. Such financial assurances are commonly provided to us in the form of advance cash payments, standby letters of credit, credit insurance or parental guarantees. Additionally, in an effort to mitigate credit risk, a significant portion of our transactions with counterparties are settled on a net-cash basis. For a majority of these net-cash arrangements, we also enter into netting agreements (contractual agreements that allow us to offset receivables and payables with those counterparties against each other on our balance sheet).

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable from the sale of crude oil are generally settled with counterparties on the industry settlement date, which is typically in the month following the month in which the title transfers. Otherwise, we generally invoice customers within 30 days of when the products or services were provided and generally require payment within 30 days of the invoice date. We review all outstanding accounts receivable balances on a monthly basis and record our receivables net of expected credit losses. We do not write-off accounts receivable balances until we have exhausted substantially all collection efforts. At June 30, 2023 and December 31, 2022, substantially all of our trade accounts receivable were less than 30 days past their invoice date. Our expected credit losses are immaterial. Although we consider our credit procedures to be adequate to mitigate any significant credit losses, the actual amount of current and future credit losses could vary significantly from estimated amounts.

The following is a reconciliation of trade accounts receivable from revenues from contracts with customers to total Trade accounts receivable and other receivables, net as presented on our Condensed Consolidated Balance Sheets (in millions):

	June 30, 2023		December 31, 2022
Trade accounts receivable arising from revenues from contracts with customers	$	3,607	$	4,141
Other trade accounts receivables and other receivables (1)	5,926		7,216
Impact due to contractual rights of offset with counterparties	(6,313)		(7,450)
Trade accounts receivable and other receivables, net	$	3,220	$	3,907

(1)The balance is comprised primarily of accounts receivable associated with buy/sell arrangements that are not within the scope of ASC 606.

Note 3—Net Income Per Class A Share

Basic net income per Class A share is determined by dividing net income attributable to PAGP by the weighted average number of Class A shares outstanding during the period. Our Class B and Class C shares do not share in the earnings of the Partnership; accordingly, basic and diluted net income per Class B and Class C share has not been presented.

Diluted net income per Class A share is determined by dividing net income attributable to PAGP by the diluted weighted average number of Class A shares outstanding during the period. For purposes of calculating diluted net income per Class A share, both the net income attributable to PAGP and the diluted weighted average number of Class A shares outstanding consider the impact of possible future exchanges of AAP units and the associated Class B shares into our Class A shares. In addition, the calculation of the diluted weighted average number of Class A shares outstanding considers the effect of potentially dilutive awards under the Plains GP Holdings, L.P. Long-Term Incentive Plan (the “PAGP LTIP”).

Exchanges of potentially dilutive AAP units are assumed to have occurred at the beginning of the period and the incremental income attributable to PAGP resulting from the assumed exchanges is representative of the incremental income that would have been attributable to PAGP if the assumed exchanges occurred on that date. See Note 12 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding exchanges of AAP units. PAGP LTIP awards that are deemed to be dilutive are reduced by a hypothetical share repurchase based on the remaining unamortized fair value, as prescribed by the treasury stock method in guidance issued by the FASB. See Note 18 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding PAGP LTIP awards.

On a weighted-average basis, for each of the three and six months ended June 30, 2023, the possible exchange of 46 million AAP units would not have had a dilutive effect on basic net income per Class A share. On a weighted-average basis, for each of the three and six months ended June 30, 2022, the possible exchange of 47 million AAP units, would not have had a dilutive effect on basic net income per Class A share. For each of the three and six months ended June 30, 2023 and 2022, our PAGP LTIP awards were dilutive; however, this did not change the presentation of diluted weighted average Class A shares outstanding or diluted net income per Class A share.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the computation of basic and diluted net income per Class A share (in millions, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Basic and Diluted Net Income per Class A Share
Net income attributable to PAGP	$	48	$	31	$	117	$	53
Basic and diluted weighted average Class A shares outstanding	195		194		195		194
Basic and diluted net income per Class A share	$	0.25	$	0.16	$	0.60	$	0.27

Note 4—Inventory, Linefill and Long-term Inventory

Inventory, linefill and long-term inventory consisted of the following (barrels in thousands and carrying value in millions):

	June 30, 2023						December 31, 2022
	Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)		Volumes	Unit of Measure	Carrying Value		Price/ Unit (1)
Inventory
Crude oil	3,150	barrels	$	213	$	67.62	6,713	barrels	$	452	$	67.33
NGL	5,084	barrels	144		$	28.32	7,285	barrels	270		$	37.06
Other	N/A		10		N/A		N/A		7		N/A
Inventory subtotal			367						729
Linefill
Crude oil	15,226	barrels	898		$	58.98	15,480	barrels	906		$	58.53
NGL	2,168	barrels	68		$	31.37	1,876	barrels	55		$	29.32
Linefill subtotal			966						961
Long-term inventory
Crude oil	3,254	barrels	224		$	68.84	3,102	barrels	246		$	79.30
NGL	1,327	barrels	46		$	34.66	1,066	barrels	38		$	35.65
Long-term inventory subtotal			270						284
Total			$	1,603					$	1,974

(1)Price per unit of measure is comprised of a weighted average associated with various grades, qualities and locations. Accordingly, these prices may not coincide with any published benchmarks for such products.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 5—Debt

Debt consisted of the following (in millions):

	June 30, 2023		December 31, 2022
SHORT-TERM DEBT
PAA senior notes:
2.85% senior notes due January 2023 (1)	$	—	$	400
3.85% senior notes due October 2023	700		700
Other	9		59
Total short-term debt	709		1,159
LONG-TERM DEBT
PAA senior notes, net of unamortized discounts and debt issuance costs of $44 and $46, respectively	7,239		7,237
Other	49		50
Total long-term debt	7,288		7,287
Total debt (2)	$	7,997	$	8,446

(1)These senior notes were redeemed on January 31, 2023.

(2)PAA’s fixed-rate senior notes had a face value of approximately $8.0 billion and $8.4 billion as of June 30, 2023 and December 31, 2022, respectively. We estimated the aggregate fair value of these notes as of June 30, 2023 and December 31, 2022 to be approximately $7.3 billion and $7.6 billion, respectively. PAA’s fixed-rate senior notes are traded among institutions, and these trades are routinely published by a reporting service. Our determination of fair value is based on reported trading activity near the end of the reporting period. The fair value estimate for PAA’s senior notes is based upon observable market data and is classified in Level 2 of the fair value hierarchy.

Borrowings and Repayments

Total borrowings under the PAA credit facilities and commercial paper program for the six months ended June 30, 2023 and 2022 were approximately $1.5 billion and $16.4 billion, respectively. Total repayments under the PAA credit facilities and commercial paper program were approximately $1.5 billion and $16.3 billion for the six months ended June 30, 2023 and 2022, respectively. The variance in total gross borrowings and repayments is impacted by various business and financial factors including, but not limited to, the timing, average term and method of general partnership borrowing activities.

On January 31, 2023, PAA redeemed its 2.85%, $400 million senior notes due January 2023.

Letters of Credit

In connection with our merchant activities, we provide certain suppliers with irrevocable standby letters of credit to secure our obligation for the purchase and transportation of crude oil and NGL. Additionally, we issue letters of credit to support insurance programs, derivative transactions, including hedging-related margin obligations, and construction activities. At June 30, 2023 and December 31, 2022, we had outstanding letters of credit of $127 million and $102 million, respectively.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 6—Partners’ Capital and Distributions

Shares Outstanding

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

	Class A Shares	Class B Shares	Class C Shares
Outstanding at December 31, 2022	194,407,642	46,205,947	528,442,538
Conversion of AAP Management Units (1) (2)	—	388,839	—
Redemption Right exercises (1)	—	(181,916)	181,916
Other	—	—	35,508
Outstanding at March 31, 2023	194,407,642	46,412,870	528,659,962
Exchange Right exercises (1)	1,554,000	(1,554,000)	—
Redemption Right exercises (1)	—	(60,354)	60,354
Outstanding at June 30, 2023	195,961,642	44,798,516	528,720,316

 

	Class A Shares	Class B Shares	Class C Shares
Outstanding at December 31, 2021	194,192,777	46,645,514	534,596,831
Conversion of AAP Management Units (1)	—	205,024	—
Exchange Right exercises (1)	35,700	(35,700)	—
Redemption Right exercises (1)	—	(11,957)	11,957
Repurchase and cancellation of common units by a subsidiary under the Common Equity Repurchase Program	—	—	(2,375,299)
Other	—	—	51,937
Outstanding at March 31, 2022	194,228,477	46,802,881	532,285,426
Conversion of AAP Management Units (1)	—	53,023	—
Repurchase and cancellation of common units by a subsidiary under the Common Equity Repurchase Program	—	—	(4,876,062)
Other	—	—	147,830
Outstanding at June 30, 2022	194,228,477	46,855,904	527,557,194

(1)See Note 12 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for information regarding conversions of AAP Management Units, Exchange Rights and Redemption Rights.

(2)Following this conversion, no AAP Management Units remain outstanding.

Distributions

The following table details distributions to our Class A shareholders paid during or pertaining to the first six months of 2023 (in millions, except per share data):

Distribution Payment Date	Distributions to Class A Shareholders		Distributions per Class A Share
August 14, 2023 (1)	$	52	$	0.2675
May 15, 2023	$	52	$	0.2675
February 14, 2023	$	52	$	0.2675

(1)Payable to shareholders of record at the close of business on July 31, 2023 for the period from April 1, 2023 through June 30, 2023.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Subsidiaries

Noncontrolling Interests in Subsidiaries

As of June 30, 2023, noncontrolling interests in our subsidiaries consisted of (i) limited partner interests in PAA including a 69% interest in PAA’s common units and PAA’s Series A preferred units combined and 100% of PAA’s Series B preferred units, (ii) an approximate 19% limited partner interest in AAP, (iii) a 35% interest in Plains Oryx Permian Basin LLC (the “Permian JV”), (iv) a 30% interest in Cactus II Pipeline LLC (“Cactus II”) and (v) a 33% interest in Red River Pipeline Company LLC (“Red River”).

Subsidiary Distributions

PAA Series A Preferred Unit Distributions. After the fifth anniversary of the January 28, 2016 issuance date of PAA’s Series A preferred units, the holders of PAA’s Series A preferred units, acting by majority vote, had the option to make a one-time election to reset the Series A preferred unit distribution rate to equal the then applicable rate of ten-year U.S. Treasury Securities plus 5.85% (the “Preferred Distribution Rate Reset Option”). In January 2023, the Series A preferred unitholders elected the Preferred Distribution Rate Reset Option which resulted in an increase in the quarterly distribution rate to approximately $0.615 per unit. This new distribution rate was effective on January 31, 2023. The quarterly distribution paid in May 2023 reflected a pro-rated amount of approximately $0.585 per unit. The following table details distributions to PAA’s Series A preferred unitholders paid during or pertaining to the first six months of 2023 (in millions, except per unit data):

	Series A Preferred Unitholders
Distribution Payment Date	Cash Distribution		Distribution per Unit
August 14, 2023 (1)	$	44	$	0.615
May 15, 2023	$	42	$	0.585
February 14, 2023	$	37	$	0.525

(1)Payable to unitholders of record at the close of business on July 31, 2023 for the period from April 1, 2023 through June 30, 2023. At June 30, 2023, such amount was accrued as distributions payable in “Other current liabilities” on our Condensed Consolidated Balance Sheet.

PAA Series B Preferred Unit Distributions. Distributions on PAA’s Series B preferred units accumulate and are payable quarterly in arrears on the 15th day of February, May, August and November. The following table details distributions paid or to be paid to PAA’s Series B preferred unitholders (in millions, except per unit data):

	Series B Preferred Unitholders
Distribution Payment Date	Cash Distribution		Distribution per Unit
August 15, 2023 (1)	$	19	$	24.10
May 15, 2023	$	18	$	22.18
February 15, 2023	$	18	$	22.27

(1)Payable to unitholders of record at the close of business on August 1, 2023 for the period from May 15, 2023 through August 14, 2023. At June 30, 2023, approximately $10 million of accrued distributions payable to PAA’s Series B preferred unitholders was included in “Other current liabilities” on our Condensed Consolidated Balance Sheet.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PAA Common Unit Distributions. The following table details distributions to PAA’s common unitholders paid during or pertaining to the first six months of 2023 (in millions, except per unit data):

	Distributions						Cash Distribution per Common Unit
	Common Unitholders				Total Cash Distribution
Distribution Payment Date	Public		AAP
August 14, 2023 (1)	$	123	$	64	$	187	$	0.2675
May 15, 2023	$	122	$	65	$	187	$	0.2675
February 14, 2023	$	122	$	65	$	187	$	0.2675

(1)Payable to unitholders of record at the close of business on July 31, 2023 for the period from April 1, 2023 through June 30, 2023.

AAP Distributions. The following table details the distributions to AAP’s partners paid during or pertaining to the first six months of 2023 from distributions received from PAA (in millions):

	Distributions to AAP’s Partners
Distribution Payment Date	Noncontrolling Interests		PAGP		Total Cash Distribution
August 14, 2023 (1)	$	12	$	52	$	64
May 15, 2023	$	13	$	52	$	65
February 14, 2023	$	13	$	52	$	65

(1)Payable to unitholders of record at the close of business on July 31, 2023 for the period from April 1, 2023 through June 30, 2023.

Consolidated Joint Venture Distributions. The following table details distributions paid to noncontrolling interests in consolidated joint ventures during the periods presented (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Permian JV	$	53	$	58	$	111	$	112
Cactus II (1)	15		—		29		—
Red River	5		4		11		9
	$	73	$	62	$	151	$	121

(1)In November 2022, we acquired an additional interest in Cactus II which, combined with changes in the governance of this entity, resulted in our obtaining control of the entity. Subsequent to this transaction, we reflect Cactus II as a consolidated subsidiary. See Note 7 to our Consolidated Financial Statements included in Part IV of our 2022 Annual Report on Form 10-K for additional information on the Cactus II transaction.

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PLAINS GP HOLDINGS, L.P. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 7—Derivatives and Risk Management Activities

We identify the risks that underlie our core business activities and use risk management strategies to mitigate those risks when we determine that there is value in doing so. We use various derivative instruments to optimize our profits while managing our exposure to commodity price risk and interest rate risk. Our commodity price risk management policies and procedures are designed to help ensure that our hedging activities address our risks by monitoring our derivative positions, as well as physical volumes, grades, locations, delivery schedules and storage capacity. Our interest rate risk management policies and procedures are designed to monitor our derivative positions and ensure that those positions are consistent with our objectives and approved strategies. Our policy is to use derivative instruments for risk management purposes and not for the purpose of speculating on changes in commodity prices or interest rates. When we apply hedge accounting, our policy is to formally document all relationships between hedging instruments and hedged items, as well as our risk management objectives for undertaking the hedge. This process includes specific identification of the hedging instrument and the hedged transaction, the nature of the risk being hedged and how the hedging instrument’s effectiveness will be assessed. At the inception of the hedging relationship, we assess whether the derivatives employed are highly effective in offsetting changes in cash flows of anticipated hedged transactions. Throughout the hedging relationship, retrospective and prospective hedge effectiveness is assessed on a qualitative basis.

We record all open derivatives on the balance sheet as either assets or liabilities measured at fair value. Changes in the fair value of derivatives are recognized currently in earnings unless specific hedge accounting criteria are met. For derivatives designated as cash flow hedges, changes in fair value are deferred in AOCI and recognized in earnings in the periods during which the underlying hedged transactions are recognized in earnings. Derivatives that are not designated in a hedging relationship for accounting purposes are recognized in earnings each period. Cash settlements associated with our derivative activities are classified within the same category as the related hedged item in our Condensed Consolidated Statements of Cash Flows.

Our financial derivatives, used for hedging risk, are governed through ISDA master agreements and clearing brokerage agreements. These agreements include stipulations regarding the right of set off in the event that we or our counterparty default on performance obligations. If a default were to occur, both parties have the right to net amounts payable and receivable into a single net settlement between parties.

At June 30, 2023 and December 31, 2022, none of our outstanding derivatives contained credit-risk related contingent features that would result in a material adverse impact to us upon any change in our credit ratings. Although we may be required to post margin on our exchange-traded derivatives transacted through a clearing brokerage account, as described below, we do not require our non-cleared derivative counterparties to post collateral with us.

Commodity Price Risk Hedging

Our core business activities involve certain commodity price-related risks that we manage in various ways, including through the use of derivative instruments. Our policy is to (i) only purchase inventory for which we have a sales market, (ii) structure our sales contracts so that price fluctuations do not materially affect our operating income and (iii) not acquire and hold material physical inventory or derivatives for the purpose of speculating on commodity price changes. The material commodity-related risks inherent in our business activities are described below.

In the normal course of our operations, we purchase and sell commodities. We use derivatives to manage the associated risks and to optimize profits. As of June 30, 2023, net derivative positions related to these activities included:

•A net long position of 5.0 million barrels associated with our crude oil purchases, which was unwound ratably during July 2023 to match monthly average pricing.

•A net short time spread position of 6.1 million barrels, which hedges a portion of our anticipated crude oil lease gathering purchases through October 2024.

•