Form 4: Plains All American Pipeline L.P. Repurchases Series A Convertible Preferred Units from EnCap Flatrock Midstream Fund III, L.P.

Gary R. Petersen, a director at Plains All American Pipeline L.P., reports a change in beneficial ownership due to an internal reorganization within EnCap Partners, LLC, impacting his control over securities held by EnCap Flatrock Midstream Fund III, L.P. and EnCap Energy Capital Fund X, L.P.

Summary

• On January 7, 2025, Plains All American Pipeline L.P. (PAA) entered into a Unit Repurchase Agreement with EnCap Flatrock Midstream Fund III, L.P. (EFM III) to repurchase 12,678,560 Series A Convertible Preferred Units.
• The repurchase price is $26.25 per unit, totaling $332,812,200, plus $10,400,476 in accrued unpaid distributions, resulting in a total consideration of $343,212,676.
• The transaction is expected to close by the end of January 2025.
• Gary R. Petersen, a director, previously had beneficial ownership of these units through his affiliation with EnCap Partners, LLC, which indirectly controlled EFM III and EnCap Energy Capital Fund X, L.P.
• Due to an internal reorganization, Mr. Petersen no longer has the power to direct the voting or disposition of these securities and disclaims beneficial ownership.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive. The unit repurchase is a positive sign, but the change in beneficial ownership is a neutral event.

Positives

• The repurchase agreement allows Plains All American Pipeline L.P. to reduce its outstanding preferred equity.

Future Outlook

The transaction is expected to close by the end of January 2025.

Industry Context

Unit repurchases are a common method for companies to return capital to investors and streamline their capital structure. This transaction reflects Plains All American Pipeline's strategy in managing its equity.

Comparison to Industry Standards

• Other midstream companies, such as Enterprise Products Partners (EPD) and Kinder Morgan (KMI), have also engaged in unit repurchase programs to enhance shareholder value.
• The repurchase price of $26.25 per unit is consistent with market valuations for similar preferred equity instruments in the midstream sector.

Related Party Transactions

• The Unit Repurchase Agreement with EnCap Flatrock Midstream Fund III, L.P. is a related party transaction due to previous affiliations of Gary R. Petersen.

Stakeholder Impact

• Shareholders may view the unit repurchase positively as it can increase earnings per unit.
• The transaction reduces the outstanding preferred equity, potentially simplifying the company's capital structure.

Next Steps

• The transaction is expected to close by the end of January 2025.

Key Dates