Plains GP Holdings (PAGP) risk factors, FY2024 10-K

Risks Related to PAA’s Business

1. 01Index to Financial Statements
2. 28PAA’s profitability depends on the volume of crude oil, natural gas and NGL shipped, processed, purchased, stored, fractionated and/or gathered at or through the use of its pipelines and facilities, which can be negatively impacted by a variety of factors outside of its control
3. 29PAA’s profitability can be negatively affected by a variety of factors stemming from competition in its industry, including recontracting and other risks associated with the general capacity overbuild of midstream energy infrastructure in some of the areas where it operates
4. 30Changes in supply and demand for the products PAA handles, which can be caused by a variety of factors outside of its control, can negatively affect its operating results
5. 31PAA’s and its customers’ operations are subject to various risks arising out of the threat of climate change
6. 32PAA may face opposition from various groups to the development or operation of its pipelines and facilities and PAA’s business may be subject to societal and political pressures
7. 33PAA is subject to scrutiny by financial stakeholders with respect to the perceived social and environmental cost of its industry and its governance structure, which may adversely impact its ability to raise capital from such investors
8. 34PAA’s crude oil and NGL merchant activities are influenced by the overall forward market for crude oil and NGL, and certain market structures, the absence of pricing volatility and other market factors may adversely impact its results
9. 35Joint ventures, joint ownership arrangements and other capital projects pose unique challenges and PAA may not be able to fully implement or realize synergies, expected returns or other anticipated benefits associated with such projects
10. 36Acquisitions and divestitures involve risks that may adversely affect PAA’s business
11. 37Any of these factors could adversely affect PAA’s ability to achieve anticipated levels of cash flows or other benefits from its acquisitions, pay distributions to its partners or meet its debt service requirements
12. 38PAA is exposed to the credit risk of its customers and other counterparties it transacts with in the ordinary course of its business activities
13. 39Tightened capital markets or other factors that increase PAA’s cost of capital or otherwise limit its access to capital could impair its ability to achieve its strategic objectives
14. 40PAA’s risk policies cannot eliminate all risks and the insufficiency of, or non-compliance with its risk policies could result in significant financial losses
15. 41PAA’s insurance coverage may not fully cover its losses and it may in the future encounter increased costs related to, and lack of availability of, insurance
16. 42Trade tariffs, duties, quotas, inflation, supply disruptions or other factors affecting the commodities and materials PAA uses in its business could have a material and adverse impact on its results of operations, financial condition and cash flows
17. 43PAA’s business also depends on having access to significant amounts of electricity and other commodities. If PAA is unable to obtain commodities sufficient to operate and maintain its assets, or only able to do so at commercially unreasonable prices, it could materially and adversely affect PAA’s business
18. 44PAA’s business, results of operations, financial condition, cash flows and unit price can be adversely affected by pandemics, epidemics or other public health events
19. 45Loss of PAA’s investment grade credit rating or the ability to receive open credit could negatively affect its borrowing costs, ability to purchase crude oil, NGL and natural gas supplies or to capitalize on market opportunities
20. 46The terms of PAA’s indebtedness may limit its ability to borrow additional funds or capitalize on business opportunities. In addition, PAA’s current or future debt levels, or inability to borrow additional funds or capitalize on business opportunities, may limit its future financial and operating flexibility
21. 47Increases in interest rates could adversely affect PAA’s business and the trading price of its units
22. 48Changes in currency exchange rates could adversely affect PAA’s operating results
23. 49PAA’s business requires the retention and recruitment of a skilled workforce, and difficulties retaining and recruiting its workforce could result in a failure to implement PAA’s business plans
24. 50An impairment of long-term assets could reduce PAA’s earnings
25. 51PAA is dependent on the use or availability of third-party assets for certain of its operations
26. 52Significant under-utilization of certain assets could significantly reduce PAA’s profitability due to fixed costs incurred to obtain the right to use such assets
27. 53Many of PAA’s assets have been in service for many years and require significant expenditures to maintain them or remove them from service. As a result, its maintenance, repair or asset retirement costs may increase in the future
28. 54PAA does not own all of the land on which its pipelines and facilities are located, which could result in disruptions to its operations
29. 55The pace of development of natural gas infrastructure could have an adverse impact on expected crude oil production growth in the Permian Basin

Risks Related to Laws and Regulations Impacting PAA’s Business

1. 02Risks Inherent in an Investment in PAA
2. 56Index to Financial Statements
3. 57Some of PAA’s operations cross the U.S./Canada border and are subject to cross-border regulation
4. 58PAA’s purchases and sales of crude oil, natural gas and NGL, and hedging activities, expose it to potential regulatory risks
5. 59The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) established federal oversight and regulation of derivative markets and entities, such as PAA, that participate in those markets. The CFTC has promulgated implementing regulations with respect to the Dodd-Frank Act
6. 60Legislation, executive orders and regulatory initiatives relating to climate change could have a material adverse effect on PAA’s business, demand for its services, financial condition, results of operations and cash flows
7. 61Legislation, executive orders and regulatory initiatives relating to hydraulic fracturing or other hydrocarbon development activities could reduce domestic production of crude oil and natural gas
8. 62Cost reimbursements due to PAA’s general partner may be substantial and will reduce PAA’s cash available for distribution to its unitholders
9. 63Cash distributions are not guaranteed and may fluctuate with PAA’s performance and the establishment of financial reserves
10. 64PAA’s preferred units have rights, preferences and privileges that are not the same as, and are preferential to, the rights of holders of PAA’s common units

Tax Risks

1. 03Our cash flow will be entirely dependent upon the ability of PAA to make cash distributions to AAP, and the ability of AAP to make cash distributions to us
2. 04The distributions AAP is entitled to receive may fluctuate, which may reduce cash distributions to our Class A shareholders
3. 05If distributions on our Class A shares are not paid with respect to any fiscal quarter, our Class A shareholders will not be entitled to receive that quarter’s payments in the future
4. 06The amount of cash that we and PAA distribute each quarter may limit our ability to grow
5. 07Restrictions in PAA’s credit facilities could limit AAP’s ability to make distributions to us, thereby limiting our ability to make distributions to our Class A shareholders
6. 08The Class B shareholders own a significant number of shares, which may make the removal of our general partner difficult
7. 09Our general partner may cause us to issue additional Class A shares or other equity securities, including equity securities that are senior to our Class A shares, or cause AAP to issue additional securities, in each case without shareholder approval, which may adversely affect our shareholders
8. 10If PAA’s unitholders remove PAA GP as PAA”s general partner, AAP may be required to sell or exchange its indirect general partner interest and we may lose our ability to manage and control PAA
9. 11Shareholders may not have limited liability if a court finds that shareholder action constitutes control of our business
10. 12If in the future we cease to manage and control PAA, we may be deemed to be an investment company under the Investment Company Act of 1940
11. 13Our partnership agreement restricts the rights of shareholders owning 20% or more of our shares
12. 14If PAA’s general partner, which is owned by AAP, is not fully reimbursed or indemnified for obligations and liabilities it incurs in managing the business and affairs of PAA, its value, and, therefore, the value of our Class A shares, could decline
13. 15The price of our Class A shares may be volatile, and holders of our Class A shares could lose a significant portion of their investments
14. 16An increase in interest rates may cause the market price of our shares to decline
15. 17Future sales of our Class A shares in the public market could reduce our Class A share price, and any additional capital raised by us through the sale of equity or convertible securities may have a dilutive effect on our shareholders
16. 18The Legacy Owners hold a meaningful portion of the combined voting power of our Class A and Class B shares
17. 19A valuation allowance on our deferred tax asset could reduce our earnings
18. 20We may incur liability as a result of our ownership of our and PAA’s general partner
19. 65As our only cash-generating assets consist of our partnership interest in AAP and its related direct and indirect interests in PAA, our tax risks are primarily derivative of the tax risks associated with an investment in PAA
20. 66The tax treatment of publicly traded partnerships or an investment in PAA common units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis
21. 67Taxable gain or loss on the sale of our Class A shares could be more or less than expected
22. 68Our current tax treatment may change, which could affect the value of our Class A shares or reduce our cash available for distribution
23. 69Any decrease in our Class A share price could adversely affect our amount of cash available for distribution

Risks Related to Conflicts of Interest

1. 21Our existing organizational structure and the current and future relationships among us, PAA, our respective general partners, the Legacy Owners and affiliated entities present the potential for conflicts of interest
2. 22Conflicts of interest may arise as a result of our organizational structure and the current and future relationships among us, PAA, our respective general partners, the Legacy Owners and affiliated entities
3. 23Our partnership agreement defines our general partner’s duties to us and contains provisions that reduce the remedies available to our shareholders for actions that might otherwise be challenged as breaches of fiduciary or other duties under state law
4. 24The Legacy Owners may have interests that conflict with holders of our Class A shares
5. 25If we are presented with business opportunities, PAA has the first right to pursue such opportunities
6. 26Our general partner’s affiliates and the Legacy Owners may compete with us
7. 27Our general partner has a call right that may require our shareholders to sell their Class A shares at an undesirable time or price