Environmental Remediation. We currently own or lease, and in the past have owned and leased, properties where hazardous liquids, including hydrocarbons, are or have been handled. These properties and the hazardous liquids or associated wastes disposed thereon may be subject to CERCLA, RCRA and state and Canadian federal and provincial laws and regulations. Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated wastes (including wastes disposed of or released by prior owners or operators) and to clean up contaminated property (including contaminated groundwater). We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In conjunction with our acquisitions, we make an assessment of potential environmental exposure and determine whether to negotiate an indemnity, what the terms of any indemnity should be and whether to obtain environmental risk insurance, if available. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, and have term and total dollar limits. For instance, in connection with the purchase of former Texas New Mexico (‘‘TNM’’) pipeline assets from Link in 2004, we identified a number of environmental liabilities for which we received a purchase price reduction from Link and recorded a total environmental reserve of $20 million, of which we agreed in an arrangement with TNM to bear the first $11 million in costs of pre-May 1999 environmental issues. TNM also agreed to pay all costs in excess of $20 million (excluding certain deductibles). TNM’s obligations are guaranteed by Shell Oil Products (‘‘SOP’’). As of December 31, 2008, we had incurred approximately $9 million of remediation costs associated with these sites, while SOP’s share is approximately $5 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 2008. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future likely will experience releases of crude oil into the environment from our pipeline and storage operations. We also may discover environmental impacts from past releases that were previously unidentified. See Note 11 for further environmental discussion. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all of our 100% owned subsidiaries have issued full, unconditional, and joint and several guarantees of our Senior Notes. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘Parent;’’ • the ‘‘Guarantor Subsidiaries’’ are all subsidiaries other than the Non-Guarantor subsidiaries defined below; and • ‘‘Non-Guarantor Subsidiaries’’ as of December 31, 2008 include: Pacific Pipeline System, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC and SLC Pipeline LLC. The changes in non-guarantor subsidiaries during the years ended December 31, 2008, 2007 and 2006 were immaterial. The following supplemental condensed consolidating financial information reflects the Parent’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Parent’s Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet As of December 31, 2008 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,698 $2,789 $ 110 $(3,001) $ 2,596 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 4,410 649 — 5,059 Investment in unconsolidated entities . . . . . . . . . . . . . . . 4,388 895 — (5,026) 257 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1,777 316 — 2,120 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $5,411 $ 246 $(3,001) $ 2,960 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257 2 — — 3,259 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 260 1 — 261 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,561 5,673 247 (3,001) 6,480 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552 4,198 828 (5,026) 3,552 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 As of December 31, 2007 Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets $2,277 $3,858 $ 91 $(2,553) $3,673 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 3,791 628 — 4,419 Investment in unconsolidated entities 3,881 863 — (4,529) 215 Other assets 22 1,259 318 — 1,599 Total assets $6,180 $9,771 $1,037 $(7,082) $9,906 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 $ 237 $(2,553) $3,729 Long-term debt 2,622 2 — — 2,624 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 — 129 Total liabilities 2,756 6,041 238 (2,553) 6,482 Partners’ Capital 3,424 3,730 799 (4,529) 3,424 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $(7,082) $9,906 Combined Combined Guarantor Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Condensed Consolidating Statements of Operations Year Ended December 31, 2008 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1) . . . . . . . . . . . . . . . . . . . . . . . $ — $1,469 $113 $ — $1,582 Field operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . — (575) (42) — (617) General and administrative expenses . . . . . . . . . . . . . . . . — (149) (11) — (160) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . (3) (187) (21) — (211)
Appears in 1 contract
Samples: Transportation Agreement
Environmental Remediation. We currently own or lease, and in the past have owned and leased, properties where hazardous liquids, including hydrocarbons, are or have been handled. These properties and the hazardous liquids or associated wastes disposed thereon may be subject to CERCLA, RCRA and state and Canadian federal and provincial laws and regulations. Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated wastes (including wastes disposed of or released by prior owners or operators) and to clean up contaminated property (including contaminated groundwater). We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In conjunction with our acquisitions, we typically make an assessment of potential environmental exposure and determine whether to negotiate an indemnity, what the terms of any indemnity should be and whether to obtain environmental risk insurance, if available. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, and have term and total dollar limits. For instance, in connection with the purchase of former Texas New Mexico (‘‘TNM’’) TNM pipeline assets from Link in 2004, we identified a number of environmental liabilities for which we received a purchase price reduction from Link and recorded a total environmental reserve of $20 million, of which we agreed in an arrangement with TNM to bear the first $11 million in costs of pre-May 1999 environmental issues. TNM also agreed to pay all costs in excess of $20 million (excluding certain deductibles). TNM’s obligations are guaranteed by Shell Oil Products (‘‘SOP’’). As of December 31, 20082010, we had incurred approximately $9 19 million of remediation costs associated with these sites, while SOP’s share is has been approximately $5 8 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 2008. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future likely will experience releases of crude oil into the environment from our pipeline and storage operations. We also may discover environmental impacts from past releases that were previously unidentified. See Note 11 for further environmental discussion. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all of our 100% owned subsidiaries have issued full, unconditional, unconditional and joint and several guarantees of our Senior Notes. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘“Parent;’’ ” • the ‘‘“Guarantor Subsidiaries’’ ” are all subsidiaries other than the Non-Guarantor subsidiaries Subsidiaries defined below; and • ‘‘The “Non-Guarantor Subsidiaries’’ ” as of December 31, 2008 include: Pacific Pipeline System2010 include two California Public Utilities Commission regulated entities, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC our natural gas storage subsidiaries and SLC Pipeline LLC. The changes in non-guarantor subsidiaries during the years ended December 31, 2008, 2007 and 2006 were immaterialother minor subsidiaries. The following supplemental condensed consolidating financial information reflects the Parent’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Parent’s Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet Sheets Combined Guarantor As of December 31, 2008 2010 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,698 $2,789 $ 110 $(3,001) $ 2,596 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 4,410 649 — 5,059 Investment in unconsolidated entities . . . . . . . . . . . . . . . 4,388 895 — (5,026) 257 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1,777 316 — 2,120 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $5,411 $ 246 $(3,001) $ 2,960 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257 2 — — 3,259 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 260 1 — 261 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,561 5,673 247 (3,001) 6,480 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552 4,198 828 (5,026) 3,552 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 As of December 31, 2007 Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets $2,277 $3,858 $ 91 $3,460 $ 4,394 $ 510 $ (2,5533,983) $3,673 $ 4,381 Property plant and equipment, net . . . . . . . . . . . . . . . . . 2 4,870 1,819 — 3,791 628 — 4,419 Investment 6,691 Investments in unconsolidated entities 3,881 863 6,302 2,173 — (4,5298,275) 215 200 Other assets 22 1,259 318 — 1,599 assets, net 28 1,976 553 (126) 2,431 Total assets $6,180 $9,771 $1,037 $$ 9,792 $ 13,413 $ 2,882 $ (7,08212,384) $9,906 $ 13,703 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 853 $ 237 $6,836 $ 509 $ (2,5533,983) $3,729 $ 4,215 Long-term debt 2,622 2 — — 2,624 4,366 5 386 (126) 4,631 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 270 14 — 129 284 Total liabilities 2,756 6,041 238 5,219 7,111 909 (2,5534,109) 6,482 9,130 Partners’ Capital 3,424 3,730 799 capital excluding noncontrolling interests 4,342 6,241 1,973 (4,5298,214) 3,424 4,342 Noncontrolling interests 231 61 — (61) 231 Total partners’ capital 4,573 6,302 1,973 (8,275) 4,573 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $$ 9,792 $ 13,413 $ 2,882 $ (7,08212,384) $9,906 Combined $ 13,703 Combined Guarantor As of December 31, 2009 Combined Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets $ 3,428 $ 3,831 $ 209 $ (Continued3,810) $ 3,658 Property and equipment, net — 4,606 1,734 — 6,340 Investments in unconsolidated entities 5,295 1,652 — (6,865) 82 Other assets, net 29 2,342 367 (460) 2,278 Total assets $ 8,752 $ 12,431 $ 2,310 $ (11,135) $ 12,358 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities $ 456 $ 6,849 $ 287 $ (3,810) $ 3,782 Long-term debt 4,137 15 450 (460) 4,142 Other long-term liabilities — 271 4 — 275 Total liabilities 4,593 7,135 741 (4,270) 8,199 Partners’ capital excluding noncontrolling interest 4,096 5,233 1,569 (6,802) 4,096 Noncontrolling interest 63 63 — (63) 63 Total partners’ capital 4,159 5,296 1,569 (6,865) 4,159 Total liabilities and partners’ capital $ 8,752 $ 12,431 $ 2,310 $ (11,135) $ 12,358 F-52 Condensed Consolidating Statements of Operations Year Ended December 31, 2008 Combined 2010 Parent Combined Guarantor Subsidiaries Combined Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1revenues (1) . . . . . . . . . . . . . . . . . . . . . . . $ — $$ 1,749 $ 223 $ — $ 1,972 Field operating costs — (632) (57) — (689) General and administrative expenses — (230) (30) — (260) Depreciation and amortization (4) (207) (45) — (256) Operating income/(loss) (4) 680 91 — 767 Equity earnings in unconsolidated entities 778 86 — (861) 3 Interest income/(expense) (254) 13 (7) — (248) Other income/(expense), net (6) (3) — — (9) Income tax benefit — 1 — — 1 Net income Less: Net income attributable to 514 777 84 (861) 514 noncontrolling interests (9) (2) — 2 (9) Net income attributable to Plains $ 505 $ 775 $ 84 $ (859) $ 505 Year Ended December 31, 2009 Parent Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net operating revenues (1) $ — $ 1,707 $ 157 $ — $ 1,864 Field operating costs — (589) (49) — (638) General and administrative expenses — (196) (15) — (211) Depreciation and amortization (4) (200) (32) — (236) Operating income/(loss) (4) 722 61 — 779 Equity earnings in unconsolidated entities 822 64 — (871) 15 Interest income/(expense) (234) 14 (4) — (224) Other income, net (4) 20 — — 16 Income tax expense — (6) — — (6) Net income Less: Net income attributable to 580 814 57 (871) $ 580 noncontrolling interest (1) (1) — 1 (1) Net income attributable to Plains $ 579 $ 813 $ 57 $ (870) $ 579 Year Ended December 31, 2008 Parent Combined Guarantor Subsidiaries Combined Non-Guarantor Subsidiaries Eliminations Consolidated Net operating revenues (1) $ — $ 1,469 $$ 113 $ — $$ 1,582 Field operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . — (575) (42) — (617) General and administrative expenses . . . . . . . . . . . . . . . . — (149) (11) — (160) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . (3) (187) (21) — (211)) Operating income/(loss) (3) 558 39 — 594 Equity earnings in unconsolidated entities 629 45 — (660) 14 Interest expense (195) (1) — — (196) Other income, net 6 26 1 — 33 Income tax expense — (8) — — (8) Net income $ 437 $ 620 $ 40 $ (660) $ 437
Appears in 1 contract
Samples: Waiver Agreement
Environmental Remediation. We currently own or lease, and in the past have owned and leased, lease properties where hazardous liquids, including hydrocarbons, are being or have been handled. These properties and the hazardous liquids or associated generated wastes disposed thereon may be subject to CERCLA, RCRA and analogous state and Canadian federal and provincial laws and regulationslaws. Under such laws and regulationslaws, we could be required to remove or remediate hazardous liquids or associated generated wastes (including wastes disposed of or released by prior owners or operators) and ), to clean up contaminated property (including contaminated groundwater)) or to perform remedial operations to prevent future contamination. We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In addition, we have entered into indemnification agreements with various counterparties in conjunction with several of our acquisitions. Allocation of environmental liability is an issue negotiated in connection with each of our acquisition transactions. In each case, we make an assessment of potential environmental exposure based on available information. Based on that assessment and relevant economic and risk factors, we determine whether to negotiate an indemnity, what the terms of any indemnity should be (for example, minimum thresholds or caps on exposure) and whether to obtain environmental risk insurance, if available. In some cases, we have received contractual protections in the form of environmental indemnifications from several predecessor operators for properties acquired by us that are contaminated as a result of historical operations. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, apply and have term and total dollar limits. The acquisitions we completed in 2005, 2004 and 2003 include a variety of provisions dealing with the allocation of responsibility for environmental costs that range from no or limited indemnities from the sellers to indemnification from sellers with defined limitations on their maximum exposure. We have not obtained insurance for any of the conditions related to our 2005 and 2003 acquisitions, and only in limited circumstances for our 2004 acquisitions. For instance, in connection with the purchase of former Texas New Mexico (‘‘TNM’’) pipeline assets from Link in 2004acquisition, we identified a number of environmental liabilities for which we received a purchase price reduction from Link Link. A substantial portion of these environmental liabilities are associated with the former Texas New Mexico (“TNM”) pipeline assets. On the effective date of the acquisition, we and recorded TNM entered into a total environmental reserve of $20 millioncost-sharing agreement whereby, of which on a tiered basis, we agreed in an arrangement with TNM to bear $11 million of the first $11 20 million in costs of pre-May 1999 environmental issues. We also agreed to bear the first $25,000 per site for new sites which were not identified at the time we entered into the agreement (capped at 100 sites). TNM also agreed to pay all costs in excess of $20 million (excluding certain deductiblesthe deductible for new sites). TNM’s obligations are guaranteed by Shell Oil Products (‘‘“SOP’’”). As We recorded a reserve for environmental liabilities of December 31, 2008, we had incurred approximately $9 20.0 million of remediation costs associated in connection with these sites, while SOP’s share is approximately $5 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 2008Link acquisition. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. SOP has made a claim against the policy; however, we do not believe that the claim substantially reduced our coverage under the policy. In connection with our 1999 acquisition of Xxxxxxxx Permian LLC from MAP, we were indemnified by MAP for any environmental liabilities attributable to Xxxxxxxx’x business or properties which occurred prior to the date of the closing of the acquisition. Other than with respect to liabilities associated with two Superfund sites at which it is alleged that Xxxxxxxx deposited waste oils, this indemnity has expired or was terminated by agreement. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future will likely will experience releases of crude oil into the environment from our pipeline and storage operations. We also may , or discover environmental impacts from past releases that were previously unidentified. See Note 11 for further Although we maintain a program designed to prevent and, as applicable, to detect and address such releases promptly, damages and liabilities incurred due to environmental discussionreleases from our assets may substantially affect our business. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all of our 100% owned subsidiaries have issued full, unconditional, and joint and several guarantees of our Senior Notes. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘Parent;’’ • the ‘‘Guarantor Subsidiaries’’ are all subsidiaries other than the Non-Guarantor subsidiaries defined below; and • ‘‘Non-Guarantor Subsidiaries’’ as of At December 31, 2008 include: Pacific Pipeline System2005, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC our reserve for environmental liabilities totaled approximately $22.4 million (approximately $14.6 million of this reserve is related to liabilities assumed as part of the Link acquisition). Approximately $14.4 million of our environmental reserve is classified as current and SLC Pipeline LLC$8 million is classified as long-term. The changes in non-guarantor subsidiaries during the years ended At December 31, 20082005, 2007 we have recorded receivables totaling approximately $14.2 million ($7.7 million related to estimated future remediation costs) for amounts recoverable under insurance and 2006 were immaterialfrom third parties under indemnification agreements. The following supplemental condensed consolidating financial information reflects the Parent’s separate accountsIn some cases, the combined accounts actual cash expenditures may not occur for three to five years. We believe that this reserve is adequate, and in conjunction with our indemnification arrangements, should prevent remediation costs from having a material adverse effect on our financial condition, results of operations, or cash flows. Our estimates used in these reserves are based on all known facts at the time and our assessment of the Guarantor Subsidiariesultimate outcome. Among the many uncertainties that impact our estimates are the necessary regulatory approvals for, and potential modification of, our remediation plans, the combined accounts limited amount of data available upon initial assessment of the Parent’s Non-Guarantor Subsidiariesimpact of soil or water contamination, the combined consolidating adjustments changes in costs associated with environmental remediation services and eliminations equipment and the Parent’s consolidated accounts for the dates and periods indicatedpossibility of existing legal claims giving rise to additional claims. For purposes Therefore, no assurances can be made that any costs incurred in excess of this reserve or outside of the following condensed consolidating informationindemnifications would not have a material adverse effect on our financial condition, the Parent’s investments in its subsidiaries and the Guarantor results of operations, or cash flows. Note 1312—Supplemental Condensed Consolidating Quarterly Financial Information Data (ContinuedUnaudited): First Second Third Fourth Quarter Quarter Quarter Quarter Total(1) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet As of December 31, 2008 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,698 $2,789 $ 110 $(3,0012005 Revenues(2) $ 2,596 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 4,410 649 — 5,059 Investment in unconsolidated entities . . . . . . . . . . . . . . . 4,388 895 — (5,026) 257 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1,777 316 — 2,120 Total assets . $6,638.5 (in millio $7,160.7 ns, except per $8,664.4 unit data) $8,713.7 $31,177.3 Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.4 102.2 111.4 95.8 378.8 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.3 76.0 84.9 67.4 275.6 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.8 62.3 69.0 53.7 217.8 Basic net income per limited partner unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.43 0.76 0.81 0.65 2.77 Diluted net income per limited partner unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.43 0.74 0.79 0.64 Cash distributions per common unit(3) . . . . . . . . . . $ 0.61 $ 0.63 $ 0.65 $ 0.67 2.72 $ 2004 Revenues(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,113 3,804.6 $9,871 5,131.7 $1,075 5,867.0 $(8,027) 6,172.1 $10,032 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $5,411 $ 246 $(3,001) $ 2,960 Long-term debt 20,975.5 Gross margin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257 2 — — 3,259 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 260 1 — 261 Total liabilities 59.6 64.9 74.5 63.7 262.7 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.5 45.2 55.1 39.2 180.0 Income before cumulative effect of change in accounting principle . 3,561 5,673 247 (3,001) 6,480 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . 31.0 35.7 41.7 24.7 133.1 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552 4,198 828 (5,026) 3,552 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 As 27.9 35.7 41.7 24.7 130.0 Basic and diluted income per limited partner unit before cumulative effect of December 31, 2007 Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets $2,277 $3,858 $ 91 $(2,553) $3,673 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 3,791 628 — 4,419 Investment change in unconsolidated entities 3,881 863 — (4,529) 215 Other assets 22 1,259 318 — 1,599 Total assets $6,180 $9,771 $1,037 $(7,082) $9,906 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 $ 237 $(2,553) $3,729 Long-term debt 2,622 2 — — 2,624 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 — 129 Total liabilities 2,756 6,041 238 (2,553) 6,482 Partners’ Capital 3,424 3,730 799 (4,529) 3,424 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $(7,082) $9,906 Combined Combined Guarantor Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Condensed Consolidating Statements of Operations Year Ended December 31, 2008 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1) . . . . . . . . . . . . . . . . . . . . . . . $ — $1,469 $113 $ — $1,582 Field operating costs accounting principle . . . . . . . . . . . . . . . . . . . . . . . . . . — (575) (42) — (617) General and administrative expenses . . . . . . . . . . . . . . . . — (149) (11) — (160) Depreciation 0.49 0.54 0.59 0.32 1.94 Basic and amortization diluted income per limited partner unit . . . . . . . . . . . . . . . . . . . . (3. . . . . . . . . . 0.44 0.54 0.59 0.32 1.89 Cash distributions per common unit(3) (187) (21) — (211). . . . . . . . . . $ 0.56 $ 0.56 $ 0.57 $ 0.60 $
Appears in 1 contract
Samples: Excess Voting Rights Agreement
Environmental Remediation. We currently own or lease, and in the past have owned and leased, lease properties where hazardous liquids, including hydrocarbons, are being or have been handled. These properties and the hazardous liquids or associated generated wastes disposed thereon may be subject to CERCLA, RCRA and analogous state and Canadian federal and provincial laws and regulations. Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated generated wastes (including wastes disposed of or released by prior owners or operators) and ), to clean up contaminated property (including contaminated groundwater)) or to perform remedial operations to prevent future contamination. We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In addition, we have entered into indemnification agreements with various counterparties in conjunction with several of our acquisitions. Allocation of environmental liability is an issue negotiated in connection with each of our acquisition transactions. In each case, we make an assessment of potential environmental exposure based on available information. Based on that assessment and relevant economic and risk factors, we determine whether to negotiate an indemnity, what the terms of any indemnity should be (for example, minimum thresholds or caps on exposure) and whether to obtain environmental risk insurance, if available. In some cases, we have received contractual protections in the form of environmental indemnifications from several predecessor operators for properties acquired by us that are contaminated as a result of historical operations. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, apply and have term and total dollar limits. For instance, in connection with the purchase of former Texas New Mexico (‘‘TNM’’) pipeline assets from Link in 2004, we identified a number of environmental liabilities for which we received a purchase price reduction from Link and recorded a total environmental reserve of $20 million. A substantial portion of these environmental liabilities are associated with the former Texas New Mexico (“TNM”) pipeline assets. On the effective date of the acquisition, of which we and TNM entered into a cost-sharing agreement whereby, on a tiered basis, we agreed in an arrangement with TNM to bear $11 million of the first $11 20 million in costs of pre-May 1999 environmental issues. We also agreed to bear the first $25,000 per site for new sites which were not identified at the time we entered into the agreement (capped at 100 sites). TNM also agreed to pay all costs in excess of $20 million (excluding certain deductiblesthe deductible for new sites). TNM’s obligations are guaranteed by Shell Oil Products (‘‘“SOP’’”). As of December 31, 20082006, we had incurred approximately $9 7 million of remediation costs associated with these sites, while ; SOP’s share is approximately $5 1.5 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 2008. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. SOP made a claim against the policy; however, we do not believe that the claim substantially reduced our coverage under the policy. In connection with our 1999 acquisition of Xxxxxxxx Permian LLC from MAP, we were indemnified by MAP for any environmental liabilities attributable to Xxxxxxxx’x business or properties that occurred prior to the date of the closing of the acquisition. Other than with respect to liabilities associated with two Superfund sites at which it is alleged that Xxxxxxxx deposited waste oils, this indemnity has expired or was terminated by agreement. F-50 As a result of our merger with Pacific, we have assumed liability for a number of ongoing remediation sites, associated with releases from pipeline or storage operations. These sites had been managed by Pacific prior to the merger, and in general there is no insurance or indemnification to cover ongoing costs to address these sites (with the exception of the Pyramid Lake crude oil release). We have evaluated each of the sites requiring remediation, through review of technical and regulatory documents, discussions with Pacific, and our experience at investigating and remediating releases from pipeline and storage operations. We have developed reserve estimates for the Pacific sites based on this evaluation, including determination of current and long-term reserve amounts, which total approximately $21.8 million. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future likely will experience releases of crude oil or petroleum products into the environment from our pipeline and storage operations. We also may discover environmental impacts from past releases that were previously unidentified. See Note 11 Although we maintain an inspection program designed to prevent and, as applicable, to detect and address such releases promptly, damages and liabilities incurred due to any such environmental releases from our assets may substantially affect our business. As we expand our pipeline assets through acquisitions, we typically improve on (decrease) the rate of releases from such assets as we implement our standards and procedures, remove selected assets from service and spend capital to upgrade the assets. In the immediate post-acquisition period, however, the inclusion of additional miles of pipe in our operation may result in an increase in the absolute number of releases company-wide compared to prior periods. We experienced such an increase in connection with the Pacific acquisition, which added approximately 5,000 miles of pipeline to our operations, and in connection with the Link acquisition, which added approximately 7,000 miles of pipeline to our operations. As a result, we have also received an increased number of requests for further environmental discussion. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all information from governmental agencies with respect to such releases of crude oil (such as EPA requests under CleanWater Act Section 308), commensurate with the scale and scope of our 100% owned subsidiaries have issued full, unconditional, and joint and several guarantees of our Senior Notespipeline operations. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘Parent;’’ • the ‘‘Guarantor Subsidiaries’’ are all subsidiaries other than the Non-Guarantor subsidiaries defined below; and • ‘‘Non-Guarantor Subsidiaries’’ as of At December 31, 2008 include: Pacific Pipeline System2006, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC and SLC Pipeline LLC. The changes in non-guarantor subsidiaries during the years ended December 31, 2008, 2007 and 2006 were immaterial. The following supplemental condensed consolidating financial information reflects the Parent’s separate accounts, the combined accounts our reserve for environmental liabilities totaled approximately $39.1 million (approximately $21.8 million of this reserve is related to liabilities assumed as part of the Guarantor SubsidiariesPacific merger, the combined accounts and $10.4 million is related to liabilities assumed as part of the Parent’s Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicatedLink acquisition). For purposes Approximately $19.5 million of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Guarantor Note 13—Supplemental Condensed Consolidating Financial Information our environmental reserve is classified as current (Continued) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet As of December 31, 2008 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,698 $2,789 $ 110 $(3,001) $ 2,596 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 4,410 649 — 5,059 Investment in unconsolidated entities . . . . . . . . . . . . . . . 4,388 895 — (5,026) 257 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1,777 316 — 2,120 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 LIABILITIES AND PARTNERS’ CAPITAL Total within other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 on our Consolidated Balance Sheets) and $5,411 $ 246 $(3,001) $ 2,960 Long19.6 million is classified as long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257 2 — — 3,259 (within Other long-term liabilities and deferred credits on our Consolidated Balance Sheets). . . . . . . . . . . . . . . . . . . . . . . — 260 1 — 261 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,561 5,673 247 (3,001) 6,480 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552 4,198 828 (5,026) 3,552 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 As of At December 31, 2007 Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets 2006, we have recorded receivables totaling approximately $2,277 $3,858 11.6 million for amounts recoverable under insurance and from third parties under indemnification agreements. In some cases, the actual cash expenditures may not occur for three to five years. Our estimates used in these reserves 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 remediation plans, the limited amount of data available upon initial assessment of the impact of soil or water contamination, changes in costs associated with environmental remediation services and equipment and the possibility of existing legal claims giving rise to additional claims. Therefore, although we believe that the reserve is adequate, no assurances can be made that any costs incurred in excess of this reserve or outside of the indemnifications would not have a material adverse effect on our financial condition, results of operations, or cash flows. Note 14 — Quarterly Financial Data (Unaudited): First Second Third Fourth Quarter Quarter Quarter Quarter Total(1) (In millions, except per unit data) 2006 Revenues(2) $ 91 $(2,553) $3,673 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 3,791 628 — 4,419 Investment 8,635.1 $ 4,891.9 $ 4,525.6 $ 4,391.8 $ 22,444.4 Gross margin 103.8 124.0 145.8 115.0 488.6 Operating income 72.0 96.6 112.8 73.3 354.7 Cumulative effect of change in unconsolidated entities 3,881 863 — (4,529) 215 Other assets 22 1,259 318 — 1,599 Total assets $6,180 $9,771 $1,037 $(7,082) $9,906 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 $ 237 $(2,553) $3,729 Long-term debt 2,622 2 accounting principle 6.3 — — 2,624 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 — 129 Total liabilities 2,756 6,041 238 (2,5536.3 Net income 63.4 80.3 95.4 46.0 285.1 Basic net income per limited partner unit 0.73 0.82 0.90 0.37 2.91 Diluted net income per limited partner unit 0.71 0.81 0.89 0.36 2.88 Cash distributions per common unit(3) 6,482 Partners’ Capital 3,424 3,730 799 (4,529$ 0.688 $ 0.708 $ 0.725 $ 0.750 $ 2.87 2005 Revenues(2) 3,424 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $(7,082$ 6,638.3 $ 7,160.6 $ 8,664.2 $ 8,713.4 $ 31,176.5 Gross margin 69.2 102.1 111.2 95.5 378.0 Operating income 47.1 75.9 84.7 67.1 274.8 Net income 32.8 62.3 69.0 53.7 217.8 Basic net income per limited partner unit 0.43 0.76 0.81 0.65 2.77 Diluted net income per limited partner unit 0.43 0.74 0.79 0.64 2.72 Cash distributions per common unit(3) $9,906 Combined Combined Guarantor Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Condensed Consolidating Statements of Operations Year Ended December 31, 2008 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1) . . . . . . . . . . . . . . . . . . . . . . . $ — $1,469 $113 0.613 $ — $1,582 Field operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . — (575) (42) — (617) General and administrative expenses . . . . . . . . . . . . . . . . — (149) (11) — (160) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . (3) (187) (21) — (211)0.638 $ 0.650 $ 0.675 $ 2.58
Appears in 1 contract
Samples: Transportation Agreement
Environmental Remediation. We currently own or lease, and in the past have owned and leased, properties where hazardous liquids, including hydrocarbons, are or have been handled. These properties and the hazardous liquids or associated wastes disposed thereon may be subject to CERCLA, RCRA and state and Canadian federal and provincial laws and regulations. Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated wastes (including wastes disposed of or released by prior owners or operators) and to clean up contaminated property (including contaminated groundwater). We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In conjunction with our acquisitions, we typically make an assessment of potential environmental exposure and determine whether to negotiate an indemnity, what the terms of any indemnity should be and whether to obtain environmental risk insurance, if available. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, and have term and total dollar limits. For instance, in connection with the purchase of former Texas New Mexico (‘‘“TNM’’”) pipeline assets from Link in 2004, we identified a number of environmental liabilities for which we received a purchase price reduction from Link and recorded a total environmental reserve of $20 million, of which we agreed in an arrangement with TNM to bear the first $11 million in costs of pre-May 1999 environmental issues. TNM also agreed to pay all costs in excess of $20 million (excluding certain deductibles). TNM’s obligations are guaranteed by Shell Oil Products (‘‘“SOP’’”). As of December 31, 20082009, we had incurred approximately $9 16 million of remediation costs associated with these sites, while SOP’s share is has been approximately $5 6 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 20082009. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future likely will experience releases of crude oil into the environment from our pipeline and storage operations. We also may discover environmental impacts from past releases that were previously unidentified. See Note 11 for further environmental discussion. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all of our 100% owned subsidiaries have issued full, unconditional, unconditional and joint and several guarantees of our Senior Notes. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘“Parent;’’ ” • the ‘‘“Guarantor Subsidiaries’’ ” are all subsidiaries other than the Non-Guarantor subsidiaries defined below; and • ‘‘The “Non-Guarantor Subsidiaries’’ ” as of December 31, 2008 include: Pacific Pipeline System2009 include two California Public Utilities Commission regulated entities, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC our natural gas storage subsidiaries and SLC Pipeline LLC. The changes in non-guarantor subsidiaries during the years ended December 31, 2008, 2007 and 2006 were immaterialother minor subsidiaries. The following supplemental condensed consolidating financial information reflects the Parent’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Parent’s Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet As of December 31, 2008 2009 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $..................................... $ 3,428 $ 3,831 $ 209 $ (3,810) $ 3,658 Property, plant and equipment, net ............. — 4,606 1,734 — 6,340 Investment in unconsolidated entities ......... 5,295 1,652 — (6,865) 82 Other assets ................................................. 29 2,342 367 (460) 2,278 Total assets ............................................. $ 8,752 $ 12,431 $ 2,310 $ (11,135) $ 12,358 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities ................................ $ 456 $ 6,849 $ 287 $ (3,810) $ 3,782 Long-term debt ........................................... 4,137 15 450 (460) 4,142 Other long-term liabilities ........................... — 271 4 — 275 Total liabilities ....................................... 4,593 7,135 741 (4,270) 8,199 Partners’ capital excluding noncontrolling interest ............................ 4,096 5,233 1,569 (6,802) 4,096 Noncontrolling interest ............................... 63 63 — (63) 63 Total partners’ capital ............................. 4,159 5,296 1,569 (6,865) 4,159 Total liabilities and partners’ capital ........... $ 8,752 $ 12,431 $ 2,310 $ (11,135) $ 12,358 As of December 31, 2008 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets ...................................... $ 2,698 $$ 2,789 $ 110 $$ (3,001) $ 2,596 Property Property, plant and equipment, net . . . . . . . . . . . . . . . . . .............. — 4,410 649 — 5,059 Investment in unconsolidated entities . . . . . . . . . . . . . . . .......... 4,388 895 — (5,026) 257 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . assets.................................................. 27 1,777 316 — 2,120 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $.............................................. $ 7,113 $$ 9,871 $$ 1,075 $$ (8,027) $$ 10,032 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . liabilities................................. $ 304 $$ 5,411 $ 246 $$ (3,001) $ 2,960 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................ 3,257 2 — — 3,259 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . liabilities............................ — 260 1 — 261 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................................... 3,561 5,673 247 (3,001) 6,480 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . capital excluding noncontrolling interest ............................. 3,552 4,198 828 (5,026) 3,552 Noncontrolling interest ................................ — — — — — Total partners’ capital .............................. 3,552 4,198 828 (5,026) 3,552 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $capital............ $ 7,113 $$ 9,871 $$ 1,075 $$ (8,027) $$ 10,032 As Condensed Consolidating Statements of Operations Twelve Months Ended December 31, 2007 Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets $2,277 $3,858 $ 91 $(2,553) $3,673 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 3,791 628 — 4,419 Investment in unconsolidated entities 3,881 863 — (4,529) 215 Other assets 22 1,259 318 — 1,599 Total assets $6,180 $9,771 $1,037 $(7,082) $9,906 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 $ 237 $(2,553) $3,729 Long-term debt 2,622 2 — — 2,624 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 — 129 Total liabilities 2,756 6,041 238 (2,553) 6,482 Partners’ Capital 3,424 3,730 799 (4,529) 3,424 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $(7,082) $9,906 2009 Combined Combined Guarantor Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1) ............................. $ — $ 1,707 $ 157 $ — $ 1,864 Field operating costs .................................... — (Continued589) Condensed Consolidating Statements of Operations (49) — (638) General and administrative expenses........... — (196) (15) — (211) Depreciation and amortization ..................... (4) (200) (32) — (236) Operating income/(loss)............................... (4) 722 61 — 779 Equity earnings in unconsolidated entities... 822 64 — (871) 15 Interest income (expense) ............................ (234) 14 (4) — (224) Other income, net......................................... (4) 20 — — 16 Income tax expense...................................... — (6) — — (6) Net income................................................... 580 814 57 (871) 580 Less: Net income attributable to noncontrolling interest ......................... (1) (1) — 1 (1) Net income attributable to Plains ................. $ 579 $ 813 $ 57 $ (870) $ 579 Year Ended December 31, 2008 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1revenues (1) . . . . . . . . . . . . . . . . . . . . . . . ............................. $ — $$ 1,469 $$ 113 $ — $$ 1,582 Field operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . ..................................... — (575) (42) — (617) General and administrative expenses . . . . . . . . . . . . . . . . expenses............ — (149) (11) — (160) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . ...................... (3) (187) (21) — (211) Operating income/(loss)................................ (3) 558 39 — 594 Equity earnings in unconsolidated entities.... 629 45 — (660) 14 Interest expense ............................................ (195) (1) — — (196) Other income, net.......................................... 6 26 1 — 33 Income tax expense....................................... — (8) — — (8) Net income.................................................... $ 437 $ 620 $ 40 $ (660) $ 437 Year Ended December 31, 2007 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues (1) ............................ $ — $ 1,271 $ 122 $ — $ 1,393 Field operating costs .................................... — (493) (38) — (531) General and administrative expenses........... — (161) (3) — (164) Depreciation and amortization ..................... (3) (157) (20) — (180) Operating income/(loss)............................... (3) 460 61 — 518 Equity earnings in unconsolidated entities...................................................... 524 66 — (575) 15 Interest expense ........................................... (161) (1) — — (162) Other income, net......................................... 5 5 — — 10 Income tax expense...................................... — (16) — — (16) Net income................................................... $ 365 $ 514 $ 61 $ (575) $ 365
Appears in 1 contract
Samples: Excess Voting Rights Agreement
Environmental Remediation. We currently own or lease, and in the past have owned and leased, properties where hazardous liquids, including hydrocarbons, are or have been handled. These properties and the hazardous liquids or associated wastes disposed thereon may be subject to CERCLA, RCRA and state and Canadian federal and provincial laws and regulations. Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated wastes (including wastes disposed of or released by prior owners or operators) and to clean up contaminated property (including contaminated groundwater). We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In conjunction with our acquisitions, we typically make an assessment of potential environmental exposure and determine whether to negotiate an indemnity, what the terms of any indemnity should be and whether to obtain environmental risk insurance, if available. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, and have term and total dollar limits. For instance, in connection with the purchase of former Texas New Mexico (‘‘“TNM’’”) pipeline assets from Link in 2004, we identified a number of environmental liabilities for which we received a purchase price reduction from Link and recorded a total environmental reserve of $20 million, of which we agreed in an arrangement with TNM to bear the first $11 million in costs of pre-May 1999 environmental issues. TNM also agreed to pay all costs in excess of $20 million (excluding certain deductibles). TNM’s obligations are guaranteed by Shell Oil Products (‘‘“SOP’’”). As of December 31, 20082009, we had incurred approximately $9 16 million of remediation costs associated with these sites, while SOP’s share is has been approximately $5 6 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 20082009. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future likely will experience releases of crude oil into the environment from our pipeline and storage operations. We also may discover environmental impacts from past releases that were previously unidentified. See Note 11 for further environmental discussion. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all of our 100% owned subsidiaries have issued full, unconditional, and joint and several guarantees of our Senior Notes. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘Parent;’’ • the ‘‘Guarantor Subsidiaries’’ are all subsidiaries other than the Non-Guarantor subsidiaries defined below; and • ‘‘Non-Guarantor Subsidiaries’’ as of December 31, 2008 include: Pacific Pipeline System, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC and SLC Pipeline LLC. The changes in non-guarantor subsidiaries during the years ended December 31, 2008, 2007 and 2006 were immaterial. The following supplemental condensed consolidating financial information reflects the Parent’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Parent’s Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet As of December 31, 2008 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,698 $2,789 $ 110 $(3,001) $ 2,596 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 4,410 649 — 5,059 Investment in unconsolidated entities . . . . . . . . . . . . . . . 4,388 895 — (5,026) 257 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1,777 316 — 2,120 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $5,411 $ 246 $(3,001) $ 2,960 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257 2 — — 3,259 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 260 1 — 261 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,561 5,673 247 (3,001) 6,480 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552 4,198 828 (5,026) 3,552 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $(8,027) $10,032 As of December 31, 2007 Parent Subsidiaries Subsidiaries Eliminations Consolidated ASSETS Total current assets $2,277 $3,858 $ 91 $(2,553) $3,673 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 3,791 628 — 4,419 Investment in unconsolidated entities 3,881 863 — (4,529) 215 Other assets 22 1,259 318 — 1,599 Total assets $6,180 $9,771 $1,037 $(7,082) $9,906 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 $ 237 $(2,553) $3,729 Long-term debt 2,622 2 — — 2,624 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 — 129 Total liabilities 2,756 6,041 238 (2,553) 6,482 Partners’ Capital 3,424 3,730 799 (4,529) 3,424 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $(7,082) $9,906 Combined Combined Guarantor Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Condensed Consolidating Statements of Operations Year Ended December 31, 2008 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1) . . . . . . . . . . . . . . . . . . . . . . . $ — $1,469 $113 $ — $1,582 Field operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . — (575) (42) — (617) General and administrative expenses . . . . . . . . . . . . . . . . — (149) (11) — (160) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . (3) (187) (21) — (211).
Appears in 1 contract
Samples: Excess Voting Rights Agreement
Environmental Remediation. We currently own or lease, and in the past have owned and leased, properties where hazardous liquids, including hydrocarbons, are or have been handled. These properties and the hazardous liquids or associated wastes disposed thereon may be subject to CERCLA, RCRA and state and Canadian federal and provincial laws and regulations. Under such laws and regulations, we could be required to remove or remediate hazardous liquids or associated wastes (including wastes disposed of or released by prior owners or operators) and to clean up contaminated property (including contaminated groundwater). We maintain insurance of various types with varying levels of coverage that we consider adequate under the circumstances to cover our operations and properties. The insurance policies are subject to deductibles and retention levels that we consider reasonable and not excessive. Consistent with insurance coverage generally available in the industry, in certain circumstances our insurance policies provide limited coverage for losses or liabilities relating to gradual pollution, with broader coverage for sudden and accidental occurrences. In conjunction with our acquisitions, we typically make an assessment of potential environmental exposure and determine whether to negotiate an indemnity, what the terms of any indemnity should be and whether to obtain environmental risk insurance, if available. These contractual indemnifications typically are subject to specific monetary requirements that must be satisfied before indemnification will apply, and have term and total dollar limits. For instance, in connection with the purchase of former Texas New Mexico (‘‘TNM’’) TNM pipeline assets from Link in 2004, we identified a number of environmental liabilities for which we received a purchase price reduction from Link and recorded a total environmental reserve of $20 million, of which we agreed in an arrangement with TNM to bear the first $11 million in costs of pre-May 1999 environmental issues. TNM also agreed to pay all costs in excess of $20 million (excluding certain deductibles). TNM’s obligations are guaranteed by Shell Oil Products (‘‘SOP’’). As of December 31, 20082010, we had incurred approximately $9 19 million of remediation costs associated with these sites, while SOP’s share is has been approximately $5 8 million. In another example, as a result of our merger with Pacific, we assumed liability for a number of ongoing remediation sites associated with releases from pipeline or storage operations. We have evaluated each of the sites Note 12—Environmental Remediation (Continued) requiring remediation and developed reserve estimates for the Pacific sites, which total approximately $18 million at December 31, 2008. In connection with the acquisition of certain crude oil transmission and gathering assets from SOP in 2002, SOP purchased an environmental insurance policy covering known and unknown environmental matters associated with operations prior to closing. We are a named beneficiary under the policy, which has a $100,000 deductible per site, an aggregate coverage limit of $70 million, and expires in 2012. Other assets we have acquired or will acquire in the future may have environmental remediation liabilities for which we are not indemnified. We have in the past experienced and in the future likely will experience releases of crude oil into the environment from our pipeline and storage operations. We also may discover environmental impacts from past releases that were previously unidentified. See Note 11 for further environmental discussion. Note 13—Supplemental Condensed Consolidating Financial Information Some but not all of our 100% owned subsidiaries have issued full, unconditional, unconditional and joint and several guarantees of our Senior Notes. Given that certain, but not all, subsidiaries are guarantors of our Senior Notes, we are required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote: • we are referred to as ‘‘“Parent;’’ ” • the ‘‘“Guarantor Subsidiaries’’ ” are all subsidiaries other than the Non-Guarantor subsidiaries Subsidiaries defined below; and • ‘‘The “Non-Guarantor Subsidiaries’’ ” as of December 31, 2008 include: Pacific Pipeline System2010 include two California Public Utilities Commission regulated entities, LLC, Pacific Terminals, LLC, Pacific Energy Management LLC, Pacific Energy GP LP, PEG Canada GP LLC our natural gas storage subsidiaries and SLC Pipeline LLC. The changes in non-guarantor subsidiaries during the years ended December 31, 2008, 2007 and 2006 were immaterialother minor subsidiaries. The following supplemental condensed consolidating financial information reflects the Parent’s separate accounts, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Parent’s Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) Subsidiaries’ investments in their subsidiaries are accounted for under the equity method of accounting (all amounts in millions): Condensed Consolidating Balance Sheet Sheets Parent Combined Guarantor Subsidiaries As of December 31, 2008 2010 Combined Combined Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,698 $2,789 $ 110 $3,460 $ 4,394 $ 510 $ (3,0013,983) $ 2,596 4,381 Property plant and equipment, net . . . . . . . . . . . . . . . . . 2 4,870 1,819 — 4,410 649 — 5,059 Investment 6,691 Investments in unconsolidated entities . . . . . . . . . . . . . . . 4,388 895 6,302 2,173 — (5,0268,275) 257 200 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1,777 316 — 2,120 assets, net 28 1,976 553 (126) 2,431 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $$ 9,792 $ 13,413 $ 2,882 $ (8,02712,384) $10,032 $ 13,703 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 304 $5,411 853 $ 246 $6,836 $ 509 $ (3,0013,983) $ 2,960 4,215 Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,257 2 — — 3,259 4,366 5 386 (126) 4,631 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 260 1 270 14 — 261 284 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,561 5,673 247 5,219 7,111 909 (3,0014,109) 6,480 9,130 Partners’ Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552 4,198 828 capital excluding noncontrolling interests 4,342 6,241 1,973 (5,0268,214) 3,552 4,342 Noncontrolling interests 231 61 — (61) 231 Total partners’ capital 4,573 6,302 1,973 (8,275) 4,573 Total liabilities and partners’ capital . . . . . . . . . . . . . . . . $7,113 $9,871 $1,075 $$ 9,792 $ 13,413 $ 2,882 $ (8,02712,384) $10,032 $ 13,703 Parent Combined Guarantor Subsidiaries As of December 31, 2007 Parent Subsidiaries 2009 Combined Non-Guarantor Subsidiaries Eliminations Consolidated ASSETS Total current assets $2,277 $3,858 $ 91 $3,428 $ 3,831 $ 209 $ (2,5533,810) $3,673 $ 3,658 Property plant and equipment, net . . . . . . . . . . . . . . . . . — 3,791 628 4,606 1,734 — 4,419 Investment 6,340 Investments in unconsolidated entities 3,881 863 5,295 1,652 — (4,5296,865) 215 82 Other assets 22 1,259 318 — 1,599 assets, net 29 2,342 367 (460) 2,278 Total assets $6,180 $9,771 $1,037 $$ 8,752 $ 12,431 $ 2,310 $ (7,08211,135) $9,906 $ 12,358 LIABILITIES AND PARTNERS’ CAPITAL Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . $ 134 $5,911 456 $ 237 $6,849 $ 287 $ (2,5533,810) $3,729 $ 3,782 Long-term debt 2,622 2 — — 2,624 4,137 15 450 (460) 4,142 Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . — 128 1 271 4 — 129 275 Total liabilities 2,756 6,041 238 4,593 7,135 741 (2,5534,270) 6,482 8,199 Partners’ Capital 3,424 3,730 799 capital excluding noncontrolling interest 4,096 5,233 1,569 (4,5296,802) 3,424 4,096 Noncontrolling interest 63 63 — (63) 63 Total partners’ capital 4,159 5,296 1,569 (6,865) 4,159 Total liabilities and partners’ capital $6,180 $9,771 $1,037 $$ 8,752 $ 12,431 $ 2,310 $ (7,08211,135) $9,906 Combined Combined Guarantor Non-Guarantor Note 13—Supplemental Condensed Consolidating Financial Information (Continued) $ 12,358 F-52 Condensed Consolidating Statements of Operations Parent Combined Guarantor Subsidiaries Year Ended December 31, 2008 2010 Combined Combined Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Eliminations Consolidated Net operating revenues(1revenues (1) . . . . . . . . . . . . . . . . . . . . . . . $ — $1,469 $113 $ 1,749 $ 223 $ — $1,582 $ 1,972 Field operating costs . . . . . . . . . . . . . . . . . . . . . . . . . . — (575632) (4257) — (617689) General and administrative expenses . . . . . . . . . . . . . . . . — (149230) (1130) — (160260) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . (4) (207) (45) — (256) Operating income/(loss) (4) 680 91 — 767 Equity earnings in unconsolidated entities 778 86 — (861) 3 Interest income/(expense) (254) 13 (7) — (248) Other income/(expense), net (6) (3) (187) (21) — — (2119) Income tax benefit — 1 — — 1 Less: Net income attributable to noncontrolling interests (9)
Appears in 1 contract
Samples: Waiver Agreement
