Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
The following discussion is intended to provide investors with an understanding of our financial condition and results of our operations and should be read in conjunction with our historical Consolidated Financial Statements and accompanying notes.
Our discussion and analysis includes the following:
• Executive Summary
• Results of Operations
• Liquidity and Capital Resources
• Critical Accounting Policies and Estimates
• Recent Accounting Pronouncements
Table of Contents
Index to Financial Statements
A comparative discussion of our 2024 to 2023 operating results and performance measures can be found in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 28, 2025.
Executive Summary
Company Overview
Our 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 crude oil midstream service providers in North America, we own an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil producing basins (including the Permian Basin) and transportation corridors and at major market hubs in the United States and Canada. Our assets and the services we provide are primarily focused on crude oil and, to a lesser extent, NGL.
Pending Sale of Canadian NGL Business
On June 17, 2025, we entered into a definitive SPA with Keyera, pursuant to which Keyera agreed to acquire all of the issued and outstanding shares of PMC ULC, our wholly-owned subsidiary that owns substantially all of the Canadian NGL Business. This transaction supports our strategic objective to focus on our core midstream crude oil operations and to reduce exposure to commodity price fluctuations and seasonality. We will divest the Canadian NGL Business as part of the sale, which includes substantially all of our NGL assets; the assets that we will retain are located in the United States. This transaction is expected to close around the end of the first quarter of 2026, subject to the satisfaction or waiver of customary closing conditions, including receipt of regulatory approvals. We determined that in conjunction with entering into the SPA, the operations of the Canadian NGL Business meet the criteria for classification as held for sale and for discontinued operations reporting, as the sale will represent a strategic shift that will have a major effect on our operations and financial results. We have applied these changes retrospectively to all periods presented. See Note 1 and Note 3 to our Consolidated Financial Statements for additional information.
Unless otherwise indicated, the discussion below relates to our continuing operations and excludes amounts related to discontinued operations.
Table of Contents
Index to Financial Statements
Market Overview and Outlook
Crude oil and other petroleum liquids are supplied to the global market by producers around the world, with the majority coming from the Organization of Petroleum Exporting Countries (“OPEC”), North American producers and the Russian Federation, among others. The chart below depicts the relationship between global supply of crude oil and other petroleum liquids and demand since the beginning of 2021 and the U.S. Energy Information Administration’s (“EIA”) Short-Term Energy Outlook as of January 2026:
World Liquid Fuels Production and Consumption Balance (1)
(in millions of barrels per day)
(1) Barrels produced and consumed per quarter.
We believe that the combination of population growth and progressively improving living standards for non-OECD (Organization for Economic Cooperation and Development) countries underpins increasing energy demand globally for decades to come. We believe reliable, affordable, and responsible energy resources are all critical components to maintain energy security and global stability, requiring all sources of energy including both hydrocarbons and renewables.
As depicted in EIA’s Short-Term Energy Outlook (chart above), we expect crude oil demand to continue increasing, driven largely by our view that hydrocarbon-based fuels are the most efficient fuels for the transportation of people and goods, and hydrocarbon-based products provide the building blocks for modern civilization such as fertilizers, plastics and cement. While the market is well supplied near-term, we believe geopolitical risk and uncertainty around OPEC’s ability to continue increasing production may present a more constructive outlook for global supply/demand compared to the current EIA forecast into 2027.
North America has proven to be an essential and reliable source of crude oil and NGL production growth for the global market. This is driven by the lifting of the U.S. crude oil export ban, infrastructure debottlenecking in both the U.S. and Canada, and world-class geological formations unlocked through technological improvements and techniques.
The Permian Basin continues to be one of the most prolific basins in the world and was the predominant driver of U.S. production growth in 2025. We expect the Permian Basin to be a key contributor to global supply for years to come, based on strong economics and the recent wave of consolidation leading to more stable activity levels over a wide range of commodity price environments.
Table of Contents
Index to Financial Statements
It is against this macro energy market backdrop that we expect to generate significant positive free cash flow on a multi-year basis, supported by our existing asset base and integrated business model. Our financial strategy and long-term capital allocation framework is focused on generating meaningful multi-year free cash flow and improving shareholder returns by (i) increasing returns of capital to equity holders, primarily through increased distributions, (ii) making disciplined accretive investments and (iii) maintaining an investment grade credit profile and ensuring balance sheet flexibility.
Overview of Operating Results
We recognized net income attributable to PAA of $1.435 billion for the year ended December 31, 2025 compared to net income attributable to PAA of $772 million for the year ended December 31, 2024. See the “—Results of Operations” section below for discussion of significant drivers of our results from continuing operations.
Results of Operations
Consolidated Results
The following table sets forth an overview of our consolidated financial results calculated in accordance with GAAP (in millions, except per unit data):
Year Ended December 31,
Variance
Product sales revenues
Services revenues
Purchases and related costs
Field operating costs
General and administrative expenses
Depreciation and amortization
Gains/(losses) on asset sales, asset impairments and other, net
Equity earnings in unconsolidated entities
Gain on investments in unconsolidated entities, net
Interest expense, net (1)
Other income, net (1)
Income tax expense from continuing operations
Income from continuing operations, net of tax
Income from discontinued operations, net of tax (2)
Net income
Net income attributable to noncontrolling interests
Net income attributable to PAA
Basic and diluted net income per common unit:
Continuing operations
Discontinued operations
Basic and diluted net income per common unit
Basic and diluted weighted average common units outstanding
(1) “Interest expense, net” and “Other income, net” each include $87 million and $48 million for the years ended December 31, 2025 and 2024, respectively, related to interest on promissory notes by and among us and certain Plains entities.
(2) See Note 3 to our Consolidated Financial Statements for a reconciliation of the line items comprising income from discontinued operations, net of tax.
Table of Contents
Index to Financial Statements
Continuing Operations
The following discussion of our results of operations focuses on our continuing operations.
Revenues and Purchases
Fluctuations in our revenues and purchases and related costs are primarily associated with our merchant activities and are generally explained by changes in commodity prices and the impact of gains and losses related to derivative instruments used to manage our commodity price exposure. Because both product sales revenues and purchases and related costs are generally based off of the same pricing indices, the market price of the commodities will not necessarily have an impact on the absolute margins related to those sales and purchases.
A majority of our crude oil sales and purchases are indexed to the prompt month price of the NYMEX Light, Sweet crude oil futures contract (“NYMEX Price”). The following table presents the range of the NYMEX Price over the last two years (in dollars per barrel):
NYMEX Price
During the Year Ended December 31,
Low
High
Average
Product sales revenues (including the impact of derivative mark-to-market valuations) and purchases decreased for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to lower commodity prices in 2025, partially offset by higher crude oil sales volumes in 2025.
Revenues from services increased for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to higher pipeline volumes and tariff escalations, as well as the impact of recently completed acquisitions, partially offset by the impact from lower commodity prices in 2025 and the impact from certain Permian long-haul pipeline contract rates resetting to market in 2025.
See further discussion of net revenues (revenues less purchases and related costs) in the “—Analysis of Operating Segments” section below.
Field Operating Costs
See discussion of field operating costs in the “—Analysis of Operating Segments” section below.
General and Administrative Expenses
The increase in general and administrative expenses for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to transaction costs associated with our recent acquisitions, partially offset by lower information systems costs due to the completion of certain systems conversion and integration work.
Depreciation and Amortization
The increase in depreciation and amortization expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was largely driven by recently completed acquisitions. See Note 8 to our Consolidated Financial Statements for additional information regarding our acquisitions.
Gains/(Losses) on Asset Sales, Asset Impairments and Other, Net
The net gain on asset sales, asset impairments and other, net for the year ended December 31, 2025 was primarily due to gains recognized during the year on various asset divestitures. In addition, in connection with the pending sale of the Canadian NGL Business, we entered into a deal-contingent forward currency instrument to hedge the currency exchange risk associated with the sale in CAD. The year ended December 31, 2025 was impacted by the mark-to-market of this instrument. See Note 13 to our Consolidated Financial Statements for additional information regarding this instrument and our derivatives and hedging activities. See Note 1 to our Consolidated Financial Statements for additional information regarding the pending sale of the Canadian NGL Business.
Table of Contents
Index to Financial Statements
The net loss on asset sales, asset impairments and other, net for the year ended December 31, 2024 was primarily due to non-cash charges related to the write-down of certain of our long-lived U.S. terminal assets included in our NGL segment due to asset impairments and accelerated depreciation in the fourth quarter of 2024.
See Note 7 and Note 8 to our Consolidated Financial Statements for additional information regarding our asset sales and asset impairments.
Equity Earnings in Unconsolidated Entities
See discussion of equity earnings in unconsolidated entities in the “—Analysis of Operating Segments” section below.
Gain on Investments in Unconsolidated Entities, Net
In the first quarter of 2025, we recognized a gain of $31 million related to our acquisition of the remaining 50% interest in Cheyenne Pipeline LLC through a non-monetary transaction.
In the fourth quarter of 2024, we recognized a gain of $15 million related to our acquisition of the remaining 50% interest in Midway Pipeline LLC.
See Note 8 to our Consolidated Financial Statements for additional information regarding these transactions.
Interest Expense, Net and Other Income/(Expense), Net
For the years ended December 31, 2025 and 2024, “Interest expense, net” and “Other income, net” each include interest expense and interest income associated with promissory notes payable and receivable by and among us and certain Plains entities. These amounts are excluded from our non-GAAP performance measures Adjusted EBITDA and Implied DCF. As such, the interest expense and interest income associated with these notes is presented on a net basis in the reconciliation of these metrics to Net Income. See the “—Non-GAAP Financial Measures” section below. See Note 17 to our Consolidated Financial Statements for additional information on our related party notes.
See Note 11 to our Consolidated Financial Statements for additional information regarding our debt and related activities during the periods presented.
The following table summarizes the components impacting Interest expense, net (in millions):
Year Ended December 31,
Interest expense on third-party borrowings (1)
Interest expense on related party promissory notes (2)
Capitalized interest
(1) The increase in interest expense for the year ended December 31, 2025 compared to 2024 was primarily driven by (i) the issuance of an aggregate of $3.0 billion of senior notes during 2025 and (ii) higher commercial paper and term loan borrowings in 2025, primarily related to the funding of the EPIC acquisition, partially offset by (iii) the repayment of $1.0 billion of senior notes in October 2025. See Note 11 to our Consolidated Financial Statements for additional information regarding our debt and related activities during the periods presented. See Note 8 to our Consolidated Financial Statements for additional information regarding the EPIC acquisition.
(2) Represents interest expense associated with promissory notes by and among us and certain Plains entities, as described above.
Table of Contents
Index to Financial Statements
The following table summarizes the components impacting Other income, net (in millions):
Year Ended December 31,
Interest income on related party promissory notes (1)
Interest income from other sources
Net loss on foreign currency revaluation (2)
Other
(1) Represents interest income associated with promissory notes by and among us and certain Plains entities, as described above.
(2) The activity during the periods presented was primarily related to the impact from the change in the CAD to USD exchange rate on the portion of our intercompany net investment that is not long-term in nature.
Income Tax Expense from Continuing Operations
The net favorable income tax expense from continuing operations variance for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to higher income tax expense in 2024 associated with Canadian withholding tax on intercompany dividends from our Canadian entity driven by timing of dividend payments, including proceeds from asset divestitures.
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with GAAP, management uses additional measures known as “non-GAAP financial measures” in its evaluation of past performance and prospects for the future and to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. The primary additional measures used by management are Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied distributable cash flow (“DCF”), Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions.
Our definition and calculation of certain non-GAAP financial measures may not be comparable to similarly-titled measures of other companies. Adjusted EBITDA, Adjusted EBITDA attributable to PAA and Implied DCF are reconciled to Net Income, and Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions are reconciled to Net Cash Provided by Operating Activities, the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, our Consolidated Financial Statements and accompanying notes. See “—Liquidity and Capital Resources—Non-GAAP Financial Liquidity Measures” for additional information regarding Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions.
Table of Contents
Index to Financial Statements
Non-GAAP Financial Performance Measures
Adjusted EBITDA is defined as earnings from continuing operations and discontinued operations before (i) interest expense, (ii) income tax (expense)/benefit from continuing operations and discontinued operations, (iii) depreciation and amortization (including our proportionate share of depreciation and amortization, including write-downs related to cancelled projects and impairments, of unconsolidated entities) from continuing operations and discontinued operations, (iv) gains and losses on asset sales, asset impairments and other, net from continuing operations and discontinued operations, (v) gains on investments in unconsolidated entities, net and (vi) interest income on promissory notes by and among us and certain Plains entities, and (vii) adjusted for certain selected items impacting comparability. Adjusted EBITDA attributable to PAA excludes the portion of Adjusted EBITDA that is attributable to noncontrolling interests.
Management believes that the presentation of Adjusted EBITDA, Adjusted EBITDA attributable to PAA and Implied DCF provides useful information to investors regarding our performance and results of operations because these measures, when used to supplement related GAAP financial measures, (i) provide additional information about our operating performance and ability to fund distributions to our unitholders through cash generated by our operations, (ii) provide investors with the same financial analytical framework upon which management bases financial, operational, compensation and planning/budgeting decisions and (iii) present measures that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations. These non-GAAP financial performance measures may exclude, for example, (i) charges for obligations that are expected to be settled with the issuance of equity instruments, (ii) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (iii) long-term inventory costing adjustments, (iv) items that are not indicative of our operating results and/or (v) other items that we believe should be excluded in understanding our operating performance. These measures may further be adjusted to include amounts related to associated with minimum volume commitments whereby we have billed the counterparties for their obligation and such amounts are recognized as deferred revenue in “Other current liabilities” in our Consolidated Financial Statements. We also adjust for amounts billed by our equity method investees related to under minimum volume commitments. Such amounts are presented net of applicable amounts subsequently recognized into revenue. We have defined all such items as “selected items impacting comparability.” We do not necessarily consider all of our selected items impacting comparability to be non-recurring, infrequent or unusual, but we believe that an understanding of these selected items impacting comparability is material to the evaluation of our operating results and prospects.
Although we present selected items impacting comparability that management considers in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions, divestitures, investment capital projects and numerous other factors as discussed, as applicable, in “—Analysis of Operating Segments.”
Table of Contents
Index to Financial Statements
Discontinued Operations. Management believes that the presentation of certain Non-GAAP financial performance measures, such as Adjusted EBITDA, Adjusted EBITDA attributable to PAA, Implied DCF, and certain Non-GAAP financial liquidity measures, such as Adjusted Free Cash Flow and Adjusted Free Cash Flow (Excluding Changes in Assets & Liabilities), on a consolidated basis (e.g., the aggregate of continuing operations and discontinued operations) provides more relevant and useful information regarding our performance and results of operations than presenting such metrics only on a continuing operations or discontinued operations basis. In addition, as the potential sale of the Canadian NGL Business is not anticipated to close until around the end of the first quarter of 2026, management continues to view the Canadian NGL Business as a component of our overall company performance and ability to fund distributions to our unitholders in the near term.
The following tables set forth the reconciliation of the non-GAAP financial performance measures Adjusted EBITDA, Adjusted EBITDA attributable to PAA and Implied DCF from Net Income (in millions):
Year Ended December 31,
Variance
Net income (1)
Interest expense, net of certain items (2)
Income tax expense from continuing operations
Income tax expense from discontinued operations (3)
Depreciation and amortization from continuing operations
Depreciation and amortization from discontinued operations (3)
(Gains)/losses on asset sales, asset impairments and other, net from continuing operations
Losses on asset sales, asset impairments and other, net from discontinued operations (3)
Gain on investments in unconsolidated entities, net
Depreciation and amortization of unconsolidated entities (4)
Selected Items Impacting Comparability (1) :
Derivative activities and inventory valuation adjustments
Long-term inventory costing adjustments
Deficiencies under minimum volume commitments, net
Rail fleet amortization expense related to discontinued operations (5)
Equity-indexed compensation expense
Foreign currency revaluation
Line 901 incident
Transaction-related expenses
Selected Items Impacting Comparability - Segment Adjusted EBITDA (1) (6)
Foreign currency revaluation (7)
Selected Items Impacting Comparability - Adjusted EBITDA (1) (8)
Adjusted EBITDA (1) (8)
Adjusted EBITDA attributable to noncontrolling interests (9)
Adjusted EBITDA attributable to PAA (1)
Table of Contents
Index to Financial Statements
Year Ended December 31,
Variance
Adjusted EBITDA (1) (8) (10)
Interest expense, net of certain non-cash and other items (11)
Maintenance capital from continuing operations (12)
Maintenance capital from discontinued operations (12)
Investment capital of noncontrolling interests (13)
Current income tax expense from continuing operations
Current income tax expense from discontinued operations (3)
Distributions from unconsolidated entities in excess of/(less than) adjusted equity earnings (14)
Distributions to noncontrolling interests (15)
Implied DCF (1)
Preferred unit distributions (15)
Implied DCF Available to Common Unitholders (1)
Common unit cash distributions (15)
Implied DCF Excess (1) (16)
** Indicates that variance as a percentage is not meaningful.
(1) Includes results from continuing operations and discontinued operations.
(2) Represents “Interest expense, net” as reported on our Consolidated Statements of Operations, net of interest income associated with promissory notes by and among us and certain Plains entities.
(3) See Note 3 to our Consolidated Financial Statements for additional information.
(4) We exclude our proportionate share of the depreciation and amortization expense (including write-downs related to cancelled projects and impairments) of unconsolidated entities when reviewing Adjusted EBITDA, similar to our consolidated assets.
(5) Depreciation and amortization on the long-lived assets of the Canadian NGL Business disposal group ceased upon meeting the criteria to be classified as assets held for sale. Management believes that the presentation of Adjusted EBITDA and Implied DCF on a consolidated basis (e.g., the aggregate of continuing operations and discontinued operations) provides more relevant and useful information regarding our performance and results of operations than presenting such metrics only on a continuing operations or discontinued operations basis. We therefore include an adjustment for the impact of amortization of the rail fleet associated with the Canadian NGL Business in our calculation of Adjusted EBITDA. See Note 1 to our Consolidated Financial Statements for additional information regarding the pending sale of the Canadian NGL Business. Also see the “—Non-GAAP Financial Measures” section above.
(6) For a more detailed discussion of these selected items impacting comparability, see the footnotes to the segment financial data tables in Note 20 to our Consolidated Financial Statements.
(7) During the periods presented, there were fluctuations in the value of CAD to USD, resulting in the realization of foreign exchange gains and losses on the settlement of foreign currency transactions as well as the revaluation of monetary assets and liabilities denominated in a foreign currency. The associated gains and losses are not integral to our results and were thus classified as a selected item impacting comparability.
(8) “Other income, net” on our Consolidated Statements of Operations, excluding interest income associated with promissory notes by and among us and certain Plains entities, adjusted for selected items impacting comparability (“Adjusted other income, net”) is included in Adjusted EBITDA and excluded from Segment Adjusted EBITDA.
(9) Reflects amounts attributable to noncontrolling interests in the Permian JV, Cactus II and Red River.
(10) See the table above for a reconciliation from Net Income to Adjusted EBITDA.
(11) Amount excludes certain non-cash items impacting interest expense such as amortization of debt issuance costs and terminated interest rate swaps and is net of interest income associated with promissory notes by and among us and certain Plains entities.
Table of Contents
Index to Financial Statements
(12) Maintenance capital expenditures are defined as capital expenditures for the replacement and/or refurbishment of partially or fully depreciated assets in order to maintain the operating and/or earnings capacity of our existing assets.
(13) Investment capital expenditures attributable to noncontrolling interests that reduce Implied DCF available to PAA common unitholders.
(14) Comprised of cash distributions received from unconsolidated entities less equity earnings in unconsolidated entities (adjusted for our proportionate share of depreciation and amortization, including write-downs related to cancelled projects, and selected items impacting comparability of unconsolidated entities).
(15) Cash distributions paid during the period presented.
(16) Excess DCF is retained to establish reserves for debt repayment, future distributions, common equity repurchases, capital expenditures and other partnership purposes.
Analysis of Operating Segments
We manage our operations through two operating segments: Crude Oil and NGL. Our Chief Operating Decision Maker (“CODM”) (our Chief Executive Officer) evaluates segment performance based on measures including Segment Adjusted EBITDA.
We define Segment Adjusted EBITDA as revenues and equity earnings in unconsolidated entities less (a) significant segment expenses including: (i) purchases and related costs, (ii) field operating costs and (iii) segment general and administrative expenses, plus (b) our proportionate share of the depreciation and amortization expense (including write-downs related to cancelled projects and impairments) of unconsolidated entities, further adjusted (c) for certain selected items including (i) gains and losses on derivative instruments that are related to underlying activities in another period (or the reversal of such adjustments from a prior period), gains and losses on derivatives that are either related to investing activities (such as the purchase of linefill) or purchases of long-term inventory, and inventory valuation adjustments, as applicable, (ii) long-term inventory costing adjustments, (iii) charges for obligations that are expected to be settled with the issuance of equity instruments, (iv) amounts related to deficiencies associated with minimum volume commitments, net of the applicable amounts subsequently recognized into revenue and (v) other items that our CODM believes are integral to understanding our core segment operating performance and (d) to exclude the portion of all preceding items that is attributable to noncontrolling interests (“Segment amounts attributable to noncontrolling interests”). See Note 20 to our Consolidated Financial Statements for a reconciliation of Segment Adjusted EBITDA to Income from Continuing Operations, Net of Tax.
In connection with our merchant activities, our Crude Oil and NGL segments may enter into intersegment transactions for the purchase or sale of products, along with services such as the transportation, terminalling or storage of products. Intersegment transactions are conducted at rates similar to those charged to third parties or rates that we believe approximate market. Intersegment activities are eliminated in consolidation and we believe that the estimates with respect to these rates are reasonable. Also, our segment operating and general and administrative expenses reflect direct costs attributable to each segment; however, we also allocate certain operating expenses and general and administrative overhead expenses between segments based on management’s assessment of the business activities for the period. The proportional allocations by segment require judgment by management and may be adjusted in the future based on the business activities that exist during each period. We believe that the estimates with respect to these allocations are reasonable.
Revenues and expenses from our Canadian based subsidiaries, which use CAD as their functional currency, are translated at the prevailing average exchange rates for the month.
Crude Oil Segment
Our Crude Oil segment operations generally consist of gathering and transporting crude oil using pipelines (including gathering systems), trucks and, at times, on barges or railcars, in addition to providing terminalling, storage and other related services utilizing our integrated assets across the United States and Canada. Our assets provide services to third parties as well as to our merchant activities. Our merchant activities include the purchase of crude oil supply and the movement of this supply on our assets or third-party assets to sales locations, including our terminals, third-party connecting carriers, regional hubs or to refineries. Our merchant activities are governed by our risk management policies.
Table of Contents
Index to Financial Statements
Our Crude Oil segment generates revenue through a combination of tariffs, pipeline capacity agreements and other transportation fees, month-to-month and multi-year storage and terminalling agreements and the sale of gathered and bulk-purchased crude oil. Tariffs and other fees on our pipeline systems are typically based on volumes transported and vary by receipt point and delivery point. Fees for our terminalling and storage services are based on capacity leases and throughput volumes. Generally, results from our merchant activities are impacted by (i) increases or decreases in our lease gathering crude oil purchases volumes and (ii) volatility in commodity price differentials, particularly grade and location differentials, as well as time spreads. The segment results also include the direct fixed and variable field costs of operating the crude oil assets, as well as an allocation of indirect operating and general and administrative costs.
The following tables set forth our operating results from our Crude Oil segment:
Operating Results (1)
(in millions)
Year Ended December 31,
Variance
Revenues
Purchases and related costs (2)
Field operating costs (2)
Segment general and administrative expenses (2) (3)
Equity earnings in unconsolidated entities
Other segment items (4) :
Depreciation and amortization of unconsolidated entities
Derivative activities and inventory valuation adjustments
Long-term inventory costing adjustments
Deficiencies under minimum volume commitments, net
Equity-indexed compensation expense
Foreign currency revaluation
Line 901 incident
Transaction-related expenses
Segment amounts attributable to noncontrolling interests
Segment Adjusted EBITDA
Maintenance capital expenditures
Average Volumes
Year Ended December 31,
Variance
Volumes
Crude oil pipeline tariff (by region) (5) (6)
Permian Basin
South Texas / Eagle Ford
Mid-Continent
Other
Total crude oil pipeline tariff
** Indicates that variance as a percentage is not meaningful.
(1) Revenues and costs and expenses include intersegment amounts.
(2) Represents components of significant segment expenses.
(3) Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.
Table of Contents
Index to Financial Statements
(4) Represents adjustments included in the performance measure utilized by our CODM in the evaluation of segment results. See Note 20 to our Consolidated Financial Statements for additional discussion of such adjustments.
(5) Average daily volumes in thousands of barrels per day calculated as the total volumes (attributable to our interest for assets owned by unconsolidated entities or through UJIs) for the year divided by the number of days in the year. Volumes associated with acquisitions represent total volumes for the number of days we actually owned the assets divided by the number of days in the period.
(6) Includes volumes (attributable to our interest) from assets owned by unconsolidated entities.
Segment Adjusted EBITDA
Crude Oil Segment Adjusted EBITDA increased for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to higher tariff volumes on our pipelines, contributions from acquisitions and the benefit of tariff escalations, partially offset by fewer market-based opportunities and the impact from certain contract rates resetting to market.
The following is a more detailed discussion of the significant factors impacting Segment Adjusted EBITDA for the periods indicated.
Net Revenues and Equity Earnings. Our results increased for the year ended December 31, 2025 compared to the year ended December 31, 2024. Favorable results from (i) volume growth across our pipeline systems largely driven by increased production in the Permian Basin region, (ii) contributions from recently completed acquisitions in the Permian Basin and South Texas regions, including our Cactus III pipeline acquisition, and (iii) the benefit of tariff escalations were partially offset by (iv) fewer market-based opportunities, (v) lower commodity prices, which resulted in lower revenues from pipeline loss allowance in the 2025 periods, and (vi) the impact from certain Permian long-haul contract rates resetting to market in 2025.
In addition, equity earnings in the 2024 period includes the benefit of the recognition of deferred revenue associated with certain of our joint venture pipelines, a majority of which is excluded from Segment Adjusted EBITDA in “Other segment items” in the table above.
Field Operating Costs. The decrease in field operating costs for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the recognition in 2024 of costs associated with settlements related to the Line 901 incident that occurred in May 2015 (which impact field operating costs, but are excluded from Segment Adjusted EBITDA, and thus are reflected in “Other segment items” in the table above). This was partially offset by higher expenses in the 2025 period resulting from (i) acquisitions, (ii) higher volumes and (iii) property taxes.
Maintenance Capital
Maintenance capital consists of capital expenditures for the replacement and/or refurbishment of partially or fully depreciated assets in order to maintain the operating and/or earnings capacity of our existing assets. The decrease in maintenance capital spending for the year ended December 31, 2025 compared to the same period in 2024 was primarily due to lower costs resulting from timing of certain pipeline integrity activities.
Table of Contents
Index to Financial Statements
NGL Segment
Our NGL segment operations involve NGL storage and terminalling from our NGL assets primarily located in the Southwestern United States. Our NGL segment revenues are primarily derived from (i) providing storage and/or terminalling services at these facilities to third-party customers for a fee and (ii) the transport, storage and sale of specification NGL products. The segment results also include the direct fixed and variable field costs of operating our four NGL facilities, as well as an allocation of indirect operating costs and general and administrative expenses.
The following table sets forth our operating results from our NGL segment:
Operating Results (1)
(in millions)
Year Ended December 31,
Variance
Revenues
Purchases and related costs (2)
Field operating costs (2) (3)
Segment general and administrative expenses (2) (3) (4)
Segment Adjusted EBITDA
Maintenance capital expenditures
(1) Revenues and costs and expenses include intersegment amounts.
(2) Represents components of significant segment expenses.
(3) Field operating costs and segment general and administrative expenses include certain costs that are part of the overhead of continuing operations.
(4) Segment general and administrative expenses reflect direct costs attributable to each segment and an allocation of other expenses to the segments. The proportional allocations by segment require judgment by management and are based on the business activities that exist during each period.
Segment Adjusted EBITDA
NGL Segment Adjusted EBITDA loss for the years ended December 31, 2025 and 2024 was largely driven by costs that are part of the overhead of our NGL activities and are included in continuing operations as they are not related to contracts or arrangements that will be included in the sale of the Canadian NGL Business. These costs include information technology, insurance and other shared services costs.
Liquidity and Capital Resources
General
Our primary sources of liquidity are (i) cash flow from operating activities and (ii) borrowings under our credit facilities or commercial paper program. In addition, we may supplement these primary sources of liquidity with proceeds from asset sales, and in the past have utilized funds received from sales of equity and debt securities. Our primary cash requirements include, but are not limited to, (i) ordinary course of business uses, such as the payment of amounts related to the purchase of crude oil, NGL and other products, payment of other expenses and interest payments on outstanding debt, (ii) investment and maintenance capital activities, (iii) acquisitions of assets or businesses, (iv) repayment of principal on our long-term debt and (v) distributions to our unitholders and noncontrolling interests. In addition, we may use cash for repurchases of common equity. We generally expect to fund our short-term cash requirements through cash flow generated from operating activities and/or borrowings under our credit facilities or commercial paper program. In addition, we generally expect to fund our long-term needs, such as those resulting from investment capital activities, acquisitions or refinancing our long-term debt, through a variety of sources, which may include any or a combination of the sources listed above.
Table of Contents
Index to Financial Statements
As of December 31, 2025, although we had a working capital deficit of $198 million, we had over $2.0 billion of liquidity available to meet our ongoing operating, investing and financing needs, subject to continued covenant compliance, as noted below (in millions):
December 31, 2025
Availability under senior unsecured revolving credit facility (1) (2)
Availability under senior secured hedged inventory facility (1) (2)
Amounts outstanding under commercial paper program
Subtotal
Cash and cash equivalents
Total
(1) Represents availability prior to giving effect to borrowings outstanding under our commercial paper program, which reduce available capacity under the facilities.
(2) Available capacity under our senior unsecured revolving credit facility and senior secured hedged inventory facility was reduced by outstanding letters of credit issued under these facilities of less than $1 million and $52 million, respectively.
Usage of our credit facilities, which provide the financial backstop for our commercial paper program, is subject to ongoing compliance with covenants, as discussed further below. Our borrowing capacity and borrowing costs are also impacted by our credit rating. See Item 1A. “Risk Factors—Risks Related to Our Business—Loss of our investment grade credit rating or the ability to receive open credit could negatively affect our borrowing costs, ability to purchase crude oil, NGL and natural gas supplies or to capitalize on market opportunities.”
We believe that we have, and will continue to have, the ability to access our commercial paper program and credit facilities, which we use to meet our short-term cash needs. We believe that our financial position remains strong and we have sufficient liquid assets, cash flow from operating activities and borrowing capacity under our credit agreements to meet our financial commitments, debt service obligations, contingencies and anticipated capital expenditures. We are, however, subject to business and operational risks that could adversely affect our cash flow, including extended disruptions in the financial markets and/or energy price volatility resulting from current macroeconomic and geopolitical conditions, including actions by OPEC. A prolonged material decrease in our cash flows would likely produce an adverse effect on our borrowing capacity and cost of borrowing. See Item 1A. “Risk Factors” for further discussion regarding risks that may impact our liquidity and capital resources.
Credit Agreements, Commercial Paper Program, Term Loan and Indentures
We have three primary credit arrangements, which we use to meet our short-term cash needs. These include our $1.35 billion senior unsecured revolving credit facility maturing in 2029 (excluding a commitment of $64 million, which matures in 2027), $1.35 billion senior secured hedged inventory facility maturing in 2027 (excluding a commitment of $64 million, which matures in 2026) and $2.7 billion unsecured commercial paper program that is backstopped by our revolving credit facility and our hedged inventory facility. The credit agreements for our revolving credit facilities (which impact our ability to access our commercial paper program because they provide the financial backstop that supports our short-term credit ratings), the term loan and the indentures governing our senior notes contain cross-default provisions. A default under our credit agreements, term loan or indentures would permit the lenders to accelerate the maturity of the outstanding debt. As long as we are in compliance with the provisions in our credit agreements and term loan agreement, our ability to make distributions of available cash is not restricted. We were in compliance with the covenants contained in our credit agreements, term loan and indentures as of December 31, 2025.
Table of Contents
Index to Financial Statements
Non-GAAP Financial Liquidity Measures
Management uses the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions to assess the amount of cash that is available for distributions, debt repayments, common equity repurchases and other general partnership purposes. Adjusted Free Cash Flow is defined as Net cash provided by operating activities, less Net cash provided by/(used in) investing activities, which primarily includes acquisition, investment and maintenance capital expenditures, investments in unconsolidated entities and related party notes and the net impact from the purchase and sale of linefill, net of proceeds from the sales of assets and further impacted by distributions to and contributions from noncontrolling interests and proceeds from the issuance of related party notes. Adjusted Free Cash Flow is further reduced by cash distributions paid to our preferred and common unitholders to arrive at Adjusted Free Cash Flow after Distributions.
The following table sets forth the reconciliation of the non-GAAP financial liquidity measures Adjusted Free Cash Flow and Adjusted Free Cash Flow after Distributions from Net Cash Provided by Operating Activities and includes results from continuing operations and discontinued operations for all periods presented (in millions):
Year Ended December 31,
Net cash provided by operating activities
Adjustments to reconcile net cash provided by operating activities to adjusted free cash flow:
Net cash used in investing activities (1)
Cash contributions from noncontrolling interests
Cash distributions paid to noncontrolling interests (2)
Proceeds from the issuance of related party notes (1)
Adjusted Free Cash Flow
Cash distributions (3)
Adjusted Free Cash Flow after Distributions (4)
(1) Certain Plains entities have issued promissory notes by and among such entities to facilitate financing. “Proceeds from the issuance of related party notes” has an equal and offsetting cash outflow associated with our investment in related party notes, which is included as a component of “Net cash used in investing activities.” See Note 17 to our Consolidated Financial Statements for additional information on our related party notes.
(2) Cash distributions paid during the period presented.
(3) Cash distributions paid to our preferred and common unitholders during the period presented.
(4) Excess Adjusted Free Cash Flow after Distributions is retained to establish reserves for future distributions, capital expenditures, debt reduction and other partnership purposes. Adjusted Free Cash Flow after Distributions shortages, if any, may be funded from previously established reserves, cash on hand or from borrowings under our credit facilities or commercial paper program.
Cash Flow from Operating Activities
The primary drivers of cash flow from operating activities are (i) the collection of amounts related to the sale of crude oil, NGL and other products, the transportation of crude oil and other products for a fee, and the provision of storage and terminalling services for a fee and (ii) the payment of amounts related to the purchase of crude oil, NGL and other products and other expenses, principally field operating costs, general and administrative expenses and interest expense.
Cash flow from operating activities can be materially impacted by the storage of crude oil in periods of a contango market, when the price of crude oil for future deliveries is higher than current prices. In the month we pay for the stored crude oil, we borrow under our credit facilities or commercial paper program (or use cash on hand) to pay for the crude oil, which negatively impacts operating cash flow. Conversely, cash flow from operating activities increases during the period in which we collect the cash from the sale of the stored crude oil. Similarly, the level of NGL and other product inventory stored and held for resale at period end affects our cash flow from operating activities.
Table of Contents
Index to Financial Statements
In periods when the market is not in contango, we typically sell our crude oil during the same month in which we purchase it and we do not rely on borrowings under our credit facilities or commercial paper program to pay for the crude oil. During such market conditions, our accounts payable and accounts receivable generally move in tandem as we make payments and receive payments for the purchase and sale of crude oil in the same month, which is the month following such activity. In periods during which we build inventory, regardless of market structure, we may rely on our credit facilities or commercial paper program to pay for the inventory. In addition, we use derivative instruments to manage the risks associated with the purchase and sale of our commodities. Therefore, our cash flow from operating activities may be impacted by the margin deposit requirements related to our derivative activities. See Note 13 to our Consolidated Financial Statements for a discussion regarding our derivatives and risk management activities.
Net cash provided by operating activities from continuing operations for the years ended December 31, 2025 and 2024 was approximately $2.5 billion and $2.2 billion, respectively, and primarily resulted from earnings from our operations.
Investing Activities
Capital Expenditures
In addition to our operating needs, we also use cash for our investment capital projects, maintenance capital activities and acquisition activities. We fund these expenditures with cash generated by operating activities, financing activities and/or proceeds from asset sales. In the near term, we do not plan to issue common equity to fund such expenditures. The following table summarizes our investment, maintenance and acquisition capital expenditures related to continuing operations and discontinued operations (in millions):
Net to PAA (1) (2)
Consolidated (2)
Continuing Operations
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
Capital Expenditures (3) (4)
Crude Oil:
Investment capital
Maintenance capital
Acquisition capital (5)
NGL:
Investment capital
Maintenance capital
Total:
Investment capital
Maintenance capital
Acquisition capital (5)
(1) Excludes expenditures attributable to noncontrolling interests, which primarily relate to the Permian JV. Includes results from continuing operations and discontinued operations for all periods presented.
(2) Includes results from continuing operations and discontinued operations for all periods presented. Capital expenditures related to discontinued operations were $99 million and $70 million for investment and maintenance capital for the year ended December 31, 2025, respectively. Capital expenditures for investment and maintenance capital related to discontinued operations were $115 million and $74 million for the year ended December 31, 2024, respectively. There was no acquisition capital related to discontinued operations for any period presented.
(3) Capital expenditures made to expand the existing operating and/or earnings capacity of our assets are classified as “Investment capital.” Capital expenditures made to replace and/or refurbish partially or fully depreciated assets in order to maintain the operating and/or earnings capacity of our existing assets are classified as “Maintenance capital.”
Table of Contents
Index to Financial Statements
(4) Contributions to unconsolidated entities, accounted for under the equity method of accounting, that are related to investment capital projects by such entities are recognized in “Investment capital.” Acquisitions of initial investments or additional interests in unconsolidated entities are included in “Acquisition capital.”
(5) Acquisition capital for 2025 primarily includes the acquisitions of (i) EPIC (Cactus III), (ii) Ironwood Midstream, (iii) EMG Medallion 2 Holdings, LLC and its subsidiaries by the Permian JV, (iv) Black Knight Midstream, LLC by the Permian JV, (v) the remaining 50% interest in Cheyenne Pipeline LLC through a non-cash transaction, and (vi) an additional 20% interest in BridgeTex Pipeline. Acquisition capital for 2024 primarily includes the acquisitions of additional ownership interests in equity method investees. See Note 8 and Note 9 to our Consolidated Financial Statements for additional information.
Investment Capital Projects
Our investment capital programs consist of investments in midstream infrastructure projects that build upon our core assets and operations. The majority of this investment capital consists of highly-contracted projects that complement our broader system capabilities and support the long-term needs of the upstream and downstream sectors of the industry value chain. The following table summarizes our investment in capital projects related to continuing operations and discontinued operations (in millions):
Year Ended December 31,
Projects
Complementary Permian Basin Projects (1)
Permian Basin Takeaway Pipeline Projects
NGL Projects
Other Projects
Total
(1) Includes projects associated with assets included in the Permian JV.
Projected 2026 Capital Expenditures. Total investment capital for the year ending December 31, 2026 is currently projected to be approximately $440 million ($350 million net to our interest), which includes approximately $15 million related to discontinued operations. Approximately half of our projected investment capital expenditures are expected to be invested in the Permian JV assets. Additionally, maintenance capital for 2026 is currently projected to be approximately $185 million ($165 million net to our interest), which includes approximately $15 million related to discontinued operations. We expect to fund our 2026 investment and maintenance capital expenditures primarily with retained cash flow. Note that potential variation to current capital cost estimates may result from (i) changes to project design, (ii) final cost of materials and labor, (iii) timing of incurrence of costs due to uncontrollable factors such as receipt of permits or regulatory approvals and weather and (iv) timely closing of the Canadian NGL Business divestiture.
Ongoing Activities Related to Strategic Transactions
We are continuously engaged in the evaluation of potential transactions that support our current business strategy. In the past, such transactions have included the acquisition of assets that complement our existing footprint, the sale of non-core assets, the sale of partial interests in assets to strategic joint venture partners, and large investment capital projects. With respect to a potential acquisition or divestiture, we may conduct an auction process or participate in an auction process conducted by a third party or we may negotiate a transaction with one or a limited number of potential sellers (in the case of an acquisition) or buyers (in the case of a divestiture). Such transactions could have a material effect on our financial condition and results of operations.
We typically do not announce a transaction until after we have executed a definitive agreement. In certain cases, in order to protect our business interests or for other reasons, we may defer public announcement of a transaction until closing or a later date. Past experience has demonstrated that discussions and negotiations regarding a potential transaction can advance or terminate in a short period of time. Moreover, the closing of any transaction for which we have entered into a definitive agreement may be subject to customary and other closing conditions, which may not ultimately be satisfied or waived. Accordingly, we can give no assurance that our current or future efforts with respect to any such transactions will be successful, and we can provide no assurance that our financial expectations with respect to such transactions will ultimately be realized. See Item 1A. “Risk Factors—Risks Related to Our Business—Acquisitions and divestitures involve risks that may adversely affect our business.”
Table of Contents
Index to Financial Statements
Related Party Promissory Notes
In February 2025 and July 2024, promissory notes with a face value of CAD$473 million (approximately $330 million) and CAD$865 million (approximately $629 million), respectively, were issued by and among us and certain Plains entities. The cash outflow associated with our investment in promissory notes issued by PAGP to us has an equal and offsetting cash inflow associated with proceeds from the issuance by our consolidated subsidiary of promissory notes to PAGP for the same face value amount, which is included as a component of financing activities. See Note 17 to our Consolidated Financial Statements for additional information on our related party promissory notes.
Pending Sale of Canadian NGL Business
On June 17, 2025, we entered into a definitive SPA with Keyera, pursuant to which Keyera agreed to acquire all of the issued and outstanding shares of PMC ULC, our wholly-owned subsidiary that owns substantially all of the Canadian NGL Business. This transaction is expected to close around the end of the first quarter of 2026, subject to the satisfaction or waiver of customary closing conditions, including receipt of regulatory approvals. We expect to receive net proceeds from the sale of approximately $3.2 billion, after taxes, expenses and a potential special one-time distribution that is subject to approval by the board of directors of PAGP GP. Any proceeds from the pending sale of the Canadian NGL Business will be used to reduce leverage. See Note 1 to our Consolidated Financial Statements for additional information regarding the pending sale of the Canadian NGL Business.
Financing Activities
Our financing activities primarily relate to funding investment capital projects, acquisitions and refinancing of our debt maturities, as well as short-term working capital (including borrowings for NYMEX and ICE margin deposits) and hedged inventory borrowings related to our NGL business and contango market activities, and the payment of distributions to our unitholders and noncontrolling interests.
Borrowings and Repayments Under Credit Agreements and Term Loans
During the year ended December 31, 2025, we had net borrowings under our commercial paper program of $577 million. The net borrowings resulted primarily from funding needs for EPIC acquisition. See Note 8 to our Consolidated Financial Statements for additional information regarding this acquisition.
During the year ended December 31, 2024, we had net repayments under our commercial paper program of $40 million. The net repayments resulted primarily from cash flow from operating activities and proceeds from the issuance of $650 million, 5.70% senior notes in June 2024, which offset borrowings during the year related to funding needs for capital investments, inventory purchases, repayment of $750 million, 3.60% senior notes due November 2024, and other general partnership purposes.
In connection with the EPIC acquisition completed in November 2025, we assumed the EPIC credit agreement, which provided for a $1.2 billion term loan (the “EPIC term loan”) and a $125 million revolving credit facility. In November 2025, we entered into a term loan agreement that provides for a $1.1 billion senior unsecured term loan. On December 1, 2025, we used the proceeds from this term loan to repay the $1.1 billion of borrowings outstanding under the EPIC term loan and terminated the EPIC credit agreement. The closing of the Canadian NGL Business divestiture will trigger mandatory prepayment of all amounts outstanding under the term loan agreement within seven business days of the closing of such divestiture. We intend to use a portion of the proceeds from the pending sale of the Canadian NGL Business to repay the borrowings outstanding under the term loan. See Note 11 for additional information regarding the EPIC credit agreement and the term loan agreement.
Table of Contents
Index to Financial Statements
Senior Notes
Issuances of Senior Notes. During 2025 and 2024, we issued senior unsecured notes as summarized in the table below (in millions):
Issuance Date
Description
Maturity
Face Value
Gross
Proceeds (1)
Net
Proceeds (2)
November 14, 2025
4.70% senior notes issued at 99.872%
of face value
January 2031
November 14, 2025
5.60% senior notes issued at 100.518%
of face value
January 2036
September 8, 2025
4.70% senior notes issued at 99.865%
of face value
January 2031
September 8, 2025
5.60% senior notes issued at 99.798%
of face value
January 2036
January 15, 2025
5.95% senior notes issued at 99.761%
of face value
June 2035
June 27, 2024
5.70% senior notes issued at 99.953%
of face value
September 2034
(1) Face value of notes less the applicable premium or discount (before deducting for initial purchaser discounts, commissions and offering expenses).
(2) Face value of notes less the applicable premium or discount, initial purchaser discounts, commissions and offering expenses.
(3) We used the net proceeds from these offerings for general partnership purposes.
(4) We used the net proceeds from these offerings to (i) redeem on October 3, 2025 the principal amount of our $1.0 billion, 4.65% senior notes due October 2025 and (ii) fund a portion of the purchase price for the EPIC Pipeline acquisition. See Note 8 to our Consolidated Financial Statements for additional information regarding this acquisition.
(5) We used the net proceeds from this offering to (i) fund the acquisitions completed during the first quarter of 2025, (ii) fund the repurchase in January 2025 of 12.7 million Series A preferred units, including accrued and unpaid distributions and (iii) repay outstanding borrowings under our credit facilities and commercial paper program, and, pending such uses, for general partnership purposes. See Note 8 and Note 12 to our Consolidated Financial Statements for additional information regarding our recently completed acquisitions and our Series A preferred units, respectively.
(6) We used the net proceeds from the offering, along with other cash on hand, to repay on November 1, 2024 the principal amount of our $750 million, 3.60% senior notes due November 2024. Prior to such repayment, we used a portion of the net proceeds from the offering to repay outstanding borrowings under our commercial paper program and for general partnership purposes.
Repayments of Senior Notes. During 2025 and 2024, we repaid the following senior unsecured notes in full (in millions):
Repayment Date
Description
Maturity
October 3, 2025
$1,000 million 4.65% senior notes
October 2025
November 1, 2024
$750 million 3.60% senior notes
November 2024
(1) We repaid these senior notes with a combination of proceeds from our senior notes issued in September 2025, cash on hand and borrowings under our commercial paper program.
(2) We repaid these senior notes with a combination of proceeds from our senior notes issued in June 2024, cash on hand and borrowings under our commercial paper program.
Table of Contents
Index to Financial Statements
Registration Statements
We periodically access the capital markets for both equity and debt financing. We have filed with the SEC a universal shelf registration statement that, subject to effectiveness at the time of use, allows us to issue up to a specified amount of debt or equity securities (“Traditional Shelf”), under which we had approximately $1.1 billion of unsold securities available at December 31, 2025. We did not conduct any offerings under our Traditional Shelf during the year 2025. We also have access to a universal shelf registration statement (“WKSI Shelf”), which provides us with the ability to offer and sell an unlimited amount of debt and equity securities, subject to market conditions and our capital needs. The offerings of our senior notes during 2025 were conducted under our WKSI Shelf.
Common Equity Repurchase Program
In November 2020, the board of directors of PAGP GP approved a $500 million common equity repurchase program (the “Program”) to be utilized as an additional method of returning capital to investors. The Program authorizes the repurchase from time to time of up to $500 million of our common units and/or PAGP Class A shares via open market purchases or negotiated transactions conducted in accordance with applicable regulatory requirements. Ultimately, the amount, timing and pace of potential repurchase activity will be determined by a number of factors, including market conditions, our financial performance and flexibility, actual and expected free cash flow after distributions, the absolute and relative equity prices of our common units and PAGP Class A shares, and the extent to which we are positioned to achieve and maintain our targeted leverage ratio. No time limit has been set for completion of the Program, and the Program may be suspended or discontinued at any time. The Program does not obligate us or PAGP to acquire a particular number of common units or PAGP Class A shares. Any common units or PAGP Class A shares that are repurchased will be canceled.
We repurchased approximately 0.5 million common units under the Program during the year ended December 31, 2025 for a total purchase price of $8 million, including commissions and fees. There were no repurchases under the Program during the year ended December 31, 2024. The remaining available capacity under the Program as of December 31, 2025 was $190 million.
Preferred Unit Repurchase
On January 31, 2025, we repurchased approximately 12.7 million units, or 18%, of our outstanding Series A preferred units at the issue price of $26.25 per unit for a purchase price of approximately $333 million, plus accrued and unpaid distributions through January 30, 2025 of approximately $10 million. We used a portion of the net proceeds from our January 2025 senior notes offering to fund this repurchase. See Note 12 to our Consolidated Financial Statements for more information regarding our Series A preferred units.
Distributions to Our Unitholders
In accordance with our partnership agreement, after making distributions to holders of our outstanding preferred units, we distribute the remainder of our available cash to our common unitholders of record within 45 days following the end of each quarter. Available cash is generally defined as all of our cash and cash equivalents on hand at the end of each quarter less reserves established in the discretion of our general partner for future requirements. Our levels of financial reserves are established by our general partner and include reserves for the proper conduct of our business (including future capital expenditures and anticipated credit needs), compliance with legal or contractual obligations and funding of future distributions to our Series A and Series B preferred unitholders. Our available cash also includes cash on hand resulting from borrowings made after the end of the quarter. See Item 5. “Market for Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities—Cash Distribution Policy” for additional discussion regarding distributions.
Distributions to our Series A preferred unitholders. Holders of our Series A preferred units are entitled to receive quarterly distributions, subject to customary anti-dilution adjustments, of $0.615 per unit ($2.46 per unit annualized).
Distributions to our Series B preferred unitholders. Holders of our Series B preferred units are entitled to receive, when, as and if declared by our general partner out of legally available funds for such purpose, cumulative cash distributions, as applicable. Distributions on the Series B preferred units accumulate based on the applicable three-month SOFR, plus a credit spread adjustment of 0.26161%, plus 4.11% per annum. The distribution rate for the quarterly distribution paid on February 17, 2026 was 8.22342% per annum ($21.02 per Series B preferred unit).
Table of Contents
Index to Financial Statements
Distributions to our common unitholders. On February 13, 2026, we paid a quarterly distribution of $0.4175 per common unit ($1.67 per common unit on an annualized basis). The total distribution of $295 million was paid to common unitholders of record as of January 30, 2026, with respect to the quarter ended December 31, 2025.
See Note 12 to our Consolidated Financial Statements for details of distributions paid during the three years ended December 31, 2025.
Distributions to Noncontrolling Interests
Distributions to noncontrolling interests represent amounts paid on interests in consolidated entities that are not owned by us. As of December 31, 2025, noncontrolling interests in our subsidiaries consisted of (i) a 35% interest in the Permian JV, (ii) a 30% interest in Cactus II and (iii) a 33% interest in Red River. See Note 12 to our Consolidated Financial Statements for details of distributions paid to noncontrolling interests during the three years ended December 31, 2025.
Related Party Promissory Notes
In February 2025 and July 2024, promissory notes with a face value of CAD$473 million (approximately $330 million) and CAD$865 million (approximately $629 million), respectively, were issued by and among us and certain Plains entities. The cash inflow associated with proceeds from the issuance by our consolidated subsidiary of promissory notes to PAGP has an equal and offsetting cash outflow associated with our investment in promissory notes issued by PAGP to us for the same face value amount, which is included as a component of investing activities. See Note 17 to our Consolidated Financial Statements for additional information on our related party promissory notes.
Contingencies
For a discussion of contingencies that may impact us, see Note 19 to our Consolidated Financial Statements.
Commitments
See Note 11 to our Consolidated Financial Statements for information regarding our debt obligations and Note 19 for information regarding our leases and other commitments.
Purchase Obligations
In the ordinary course of doing business, we purchase crude oil from third parties under contracts, the majority of which range in term from thirty-day evergreen to five years, with a limited number of contracts with remaining terms extending up to 10 years. We establish a margin for these purchases by entering into various types of physical and financial sale and exchange transactions through which we seek to maintain a position that is substantially balanced between purchases on the one hand and sales and future delivery obligations on the other. We do not expect to use a significant amount of internal capital to meet these obligations, as the obligations will be funded by corresponding sales to entities that we deem creditworthy or who have provided credit support we consider adequate.
The following table includes our best estimate of the amount and timing of these payments as of December 31, 2025 (in millions):
2031 and Thereafter
Total
Crude oil and other purchases (1)
(1) Amounts are primarily based on estimated volumes and market prices based on average activity during December 2025. The actual physical volume purchased and actual settlement prices will vary from the assumptions used in the table. Uncertainties involved in these estimates include levels of production at the wellhead, weather conditions, changes in market prices and other conditions beyond our control.
Table of Contents
Index to Financial Statements
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, NGL and natural gas. Our liabilities with respect to these purchase obligations are recorded in accounts payable on our balance sheet in the month the product is purchased. Generally, these letters of credit are issued for periods of up to seventy days and are terminated upon completion of each transaction. Additionally, we issue letters of credit to support insurance programs, derivative transactions, including hedging-related margin obligations, and construction activities. At December 31, 2025 and 2024, we had outstanding letters of credit of approximately $95 million and $90 million, respectively.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as defined by Item 303 of Regulation S-K.
Investments in Unconsolidated Entities
We have invested in entities that are not consolidated in our financial statements. None of these entities had debt outstanding as of December 31, 2025. We may elect at any time to make additional capital contributions to any of these entities. The following table sets forth selected information regarding these entities as of December 31, 2025 (unaudited, dollars in millions):
Entity
Type of Operation
Our
Ownership
Interest
Total
Entity
Assets
Total Cash
and
Restricted
Cash
BridgeTex Pipeline Company, LLC
Crude Oil Pipeline
Capline Pipeline Company LLC
Crude Oil Pipeline
Diamond Pipeline LLC
Crude Oil Pipeline (1)
Eagle Ford Pipeline LLC
Crude Oil Pipeline (1)
Eagle Ford Terminals Corpus Christi LLC
Crude Oil Terminal and Dock (1)
Saddlehorn Pipeline Company, LLC
Crude Oil Pipeline
White Cliffs Pipeline, L.L.C.
Crude Oil Pipeline
Wink to Webster Pipeline LLC
Crude Oil Pipeline
Other investments
(1) We serve as operator of the asset.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with GAAP and rules and regulations of the 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. Although we believe these estimates are reasonable, actual results could differ from these estimates. On a regular basis, we evaluate our assumptions, judgments and estimates. We also discuss our critical accounting policies and estimates with the Audit Committee of the Board of Directors.
We believe that the assumptions, judgments and estimates involved in the accounting for our (i) estimated fair value of assets and liabilities acquired and identification of associated goodwill and intangible assets, (ii) fair value of derivatives, (iii) accruals and contingent liabilities, (iv) property and equipment, depreciation and amortization expense and asset retirement obligations, (v) impairment assessments of property and equipment, investments in unconsolidated entities and intangible assets and (vi) inventory valuations 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. Therefore, we consider these to be our critical accounting policies and estimates, which are discussed below. For further information on all of our significant accounting policies, see Note 2 to our Consolidated Financial Statements.
Table of Contents
Index to Financial Statements
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, we allocate the cost of the acquired entity to the assets acquired 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. We also expense the transaction costs as incurred in connection with each acquisition, except for acquisitions of equity method investments. In addition, we are required to recognize intangible assets separately from goodwill.
Determining the fair value of assets and liabilities acquired, as well as intangible assets that relate to such items as customer relationships, acreage dedications and other contracts, involves professional judgment and is ultimately based on acquisition models and management’s assessment of the value of the assets acquired and, to the extent available, third-party assessments.
Through two separate transactions completed in the fourth quarter of 2025, we acquired 100% of the entity that owns EPIC Crude Oil Pipeline for aggregate consideration of approximately $2.9 billion, inclusive of approximately $1.1 billion of debt assumed. We also agreed to aggregate potential earnout payments of up to approximately $350 million.
On January 31, 2025, we acquired Ironwood Midstream Energy Partners II, LLC (“Ironwood Midstream”), which owns a gathering system in the Eagle Ford Basin, for approximately $481 million in cash.
See Note 8 to our Consolidated Financial Statements for discussion of the methods, assumptions and estimates used in the determination of the fair value of the assets and liabilities acquired and identification of associated intangible assets for these transactions.
Fair Value of Derivatives. 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 gain or loss at the conclusion of a transaction. We reflect estimates for these items based on our internal records and information from third parties. We have commodity, interest rate and foreign currency derivatives that are accounted for as assets and liabilities at fair value on our Consolidated Balance Sheets. The valuations of our derivatives that are exchange traded are based on market prices on the applicable exchange on the last day of the period. 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 the uncertainties involved in these estimates 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. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk and Note 13 to our Consolidated Financial Statements for a discussion regarding our derivatives and risk management activities.
Accruals and Contingent Liabilities. We record accruals or liabilities for, among other things, environmental remediation, potential legal claims or settlements and fees for legal services associated with loss contingencies, and bonuses. Accruals are made when our assessment indicates that it is probable that a liability has occurred and the amount of liability can be reasonably estimated. Our estimates are based on all known facts at the time and our assessment of the ultimate outcome. Among the many uncertainties that impact our estimates are the necessary regulatory approvals for, and potential modification of, our 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, the duration of the natural resource damage assessment and the ultimate amount of damages determined, the determination and calculation of fines and penalties, the possibility of existing legal claims giving rise to additional claims and the nature, extent and cost of legal services that will be required in connection with lawsuits, and other matters. Our estimates for contingent liability accruals are increased or decreased as additional information is obtained or resolution is . A hypothetical variance of 5% in our aggregate estimate for the accruals and contingent liabilities discussed above would have an impact on earnings of up to approximately $9 million. 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.
Table of Contents
Index to Financial Statements
Property and Equipment, Depreciation and Amortization Expense and Asset Retirement Obligations. We compute depreciation and amortization based on estimated useful lives. These estimates are based on various factors 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, we make estimates with respect to useful lives and salvage values that we believe are reasonable. However, subsequent events could cause us to change our estimates, thus impacting the future calculation of depreciation and amortization.
We record retirement obligations associated with tangible long-lived assets based on estimates related to the costs associated with cleaning, purging and, in some cases, completely removing the assets and returning the land to its original state. In addition, our estimates include a determination of the settlement date or dates for the potential obligation, which may or may not be determinable. Uncertainties that impact these estimates include the costs associated with these activities and the timing of incurring such costs. A hypothetical variance of 5% in our aggregate estimate for the retirement obligations discussed above would have an impact on earnings of up to approximately $6 million. 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.
See Note 7 and Note 10 to our Consolidated Financial Statements for additional information on our property and equipment, intangible assets and depreciation and amortization expense. See Note 2 to our Consolidated Financial Statements for additional information on our asset retirement obligations.
Impairment Assessments of Property and Equipment, Investments in Unconsolidated Entities and Intangible Assets. We periodically evaluate 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. We consider 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, we make 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.
In addition, when we evaluate property and equipment and other long-lived assets for recoverability, it may also be necessary to review related depreciation estimates and methods.
Investments in unconsolidated entities accounted for under the equity method of accounting are assessed for impairment when events or circumstances suggest that a decline in value may be other than temporary. Examples of such events or circumstances include continuing operating losses of the entity and/or long-term negative changes in the entity’s core business. When it is determined that an indicated impairment is other than temporary, a charge is recognized for the difference between the investment’s carrying amount and its estimated fair value. We consider the fair value estimate used to calculate the impairment of investments in unconsolidated entities a critical accounting estimate. In determining the existence of an other-than-temporary impairment of carrying value, we make a number of subjective assumptions as to:
• whether there is an event or circumstance that may be indicative of a decline in value of the investment;
• whether the decline in value is other than temporary; and
• the fair value of the investment.
Table of Contents
Index to Financial Statements
Intangible assets with indefinite lives are not amortized but are instead periodically assessed for impairment. Intangible assets with finite lives are amortized over their estimated useful life as determined by management. Impairment testing entails estimating future net cash flows relating to the business, based on the grouping of assets and management’s estimate of future revenues, future cash flows and market conditions including pricing, demand, competition, operating costs and other factors. 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. In addition, changes in our weighted average cost of capital from our estimates could have a significant impact on fair value. We cannot provide assurance that actual amounts will not vary significantly from estimated amounts. Resolutions of these uncertainties have resulted, and in the future may result, in impairments that impact our results of operations and financial condition.
A change in our outlook or use could result in impairments that may be material to our results of operations or financial condition. See “—Executive Summary— Market Overview and Outlook” and Note 7, Note 9 and Note 10 to our Consolidated Financial Statements for additional information.
Inventory Valuations. Inventory, including long-term inventory, primarily consists of crude oil and NGL and is valued at the lower of cost or net realizable value, with cost determined using an average cost method within specific inventory pools. At the end of each reporting period, we assess the carrying value of our inventory and use estimates and judgment when making any adjustments necessary to reduce the carrying value to net realizable value. Among the uncertainties that impact our estimates are the applicable quality and location differentials to include in our net realizable value analysis. Additionally, we estimate the upcoming liquidation timing of the inventory. Changes in assumptions made as to the timing of a sale can materially impact net realizable value. During the years ended December 31, 2025, 2024 and 2023, we did not record any charges related to the valuation adjustment of our inventory. See Note 6 to our Consolidated Financial Statements for further discussion regarding inventory.
Recent Accounting Pronouncements
See Note 2 to our Consolidated Financial Statements for information regarding the effect of recent accounting pronouncements on our Consolidated Financial Statements.
