================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) - June 22, 2001 PLAINS ALL AMERICAN PIPELINE, L.P. (Name of Registrant as specified in its charter)
ITEM 5. OTHER EVENTS This Form 8-K/A amends the Form 8-K dated June 22, 2001 and filed on June 25, 2001 by Plains All American Pipeline, L.P. (the "Partnership") that included (i) audited historical financial statements related to the acquisition of certain assets from Murphy Oil Company, Ltd. ("Murphy") and (ii) unaudited pro forma financial statements for the Partnership that reflected a number of adjustments, including the proposed private placement of $350 million in senior notes. This Form 8-K/A is being filed to include the audit report and consent of PricewaterhouseCoopers, L.L.P. with respect to the audited historical financial statements for Murphy. The pro forma financial statements have been deleted as a result of the Partnership's election to defer the private placement of senior notes. The financial statements filed with this Form 8-K/A supercede the financial statements filed with the initial Form 8-K on June 25, 2001. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Murphy Oil Company Ltd. Supply and Transportation Business Unaudited Interim Financial Statements. 99.2 Murphy Oil Company Ltd. Supply and Transportation Business Financial Statements. 99.3 Consent of PricewaterhouseCoopers LLP.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PLAINS ALL AMERICAN PIPELINE, L.P. Date: October 25, 2001 By: Plains AAP, L.P., its general partner By: Plains All American GP LLC, its general partner By: /s/ Tim Moore -------------------------------------- Name: Tim Moore Title: Vice President
INDEX TO EXHIBITS 99.1 Murphy Oil Company Ltd. Supply and Transportation Business Unaudited Interim Financial Statements. 99.2 Murphy Oil Company Ltd. Supply and Transportation Business Financial Statements. 99.3 Consent of PricewaterhouseCoopers LLP.
EXHIBIT 99.1 MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Balance Sheet AS AT MARCH 31, 2001 -------------------------------------------------------------------------------- (expressed in thousands of U.S. dollars) 2001 ASSETS CURRENT ASSETS Cash $ 3,782 Accounts receivable Trade 58,173 Related parties 2,861 Inventory 3,751 Deferred income tax 1,660 -------- 70,227 PROPERTY AND EQUIPMENT - net 52,298 -------- $122,525 ======== LIABILITIES AND OWNERS' NET INVESTMENT CURRENT LIABILITIES Accounts payable and other accrued liabilities Trade $ 40,125 Related parties 16,116 -------- 56,241 DEFERRED INCOME TAXES 2,872 -------- 59,113 OWNERS' NET INVESTMENT 63,412 -------- $122,525 ======== COMMITMENTS AND CONTINGENCIES (Note 2) See notes to the financial statements.
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Statement of Operations and Net Investment FOR THE PERIOD ENDED MARCH 31, 2001 -------------------------------------------------------------------------------- (expressed in thousands of U.S. dollars) 2001 REVENUES Crude oil and condensate sales $129,937 Crude oil and condensate sales - related parties 24,768 Pipeline tariffs 2,227 Trucking 3,799 Trucking - related parties 534 -------- 161,265 -------- COSTS AND EXPENSES Cost of crude oil and condensate sales 104,468 Cost of crude oil and condensate sales - related parties 42,711 Pipeline tariff expense 801 Operating costs 6,807 General and administrative 493 Depreciation and amortization 700 -------- 155,980 -------- INCOME BEFORE INCOME TAXES 5,285 -------- INCOME TAX EXPENSE Current 2,180 Deferred 147 -------- 2,327 -------- NET INCOME FOR THE YEAR 2,958 OWNERS' NET INVESTMENT - BEGINNING OF PERIOD 60,454 -------- OWNERS' NET INVESTMENT - END OF PERIOD $ 63,412 ======== See notes to the financial statements.
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Statement of Cash Flows FOR THE PERIOD ENDED MARCH 31, 2001 -------------------------------------------------------------------------------- (expressed in thousands of U.S. dollars) 2001 CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Net income for the year $ 2,958 Items not affecting cash Depreciation and amortization 700 Deferred income tax 147 -------- 3,805 -------- Net change in non-cash working capital items Accounts receivable Trade 5,217 Related party 11,675 Inventory 1,148 Accounts payable and other accrued liabilities Trade (10,282) Related party (7,767) -------- (9) -------- 3,796 -------- INVESTING ACTIVITIES Capital expenditures (14) -------- INCREASE IN CASH FOR THE PERIOD -- CASH - BEGINNING OF PERIOD -- -------- CASH - END OF PERIOD $ 3,782 -------- See notes to the financial statements.
1 ORGANIZATION AND BASIS OF PRESENTATION The Supply and Transportation business is involved in the pipeline transport of crude oil and condensates, including associated services of trucking and terminalling, and marketing of crude oil in Western Canada. The accompanying financial statements present, in conformity with accounting principles generally accepted in the United States of America the assets, liabilities, revenues and expenses related to the historical operations of the Canadian supply and transportation ("S&T") business of the Murphy Oil Company Ltd. ("Murphy"). These financial statements should be read in conjunction with the Murphy S&T financial statements for the year ended December 31, 2000. The interim financial statements as of March 31, 2001 and for the three months ended March 31, 2001 is unaudited; however, in the opinion of the S&T Business, the interim statements includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim period. The accompanying financial statements have been prepared from Murphy's historical accounting records and are presented on a carve-out basis to include the historical operations applicable to the S&T business. All assets and liabilities specifically identified with the S&T business have been presented in the balance sheet. The owner's net investment ("Owner's net investment") in the S&T business has been presented in lieu of stockholder's equity in the financial statements. The financial information included herein includes certain allocations based on historical activity levels to reflect the financial statements in accordance with U.S. generally accepted accounting principles and may not necessarily reflect the financial position or results of operations of the S&T business in the future or had it existed as a separate, stand-alone business during the period presented. The allocations consist of general and administrative expenses incurred on behalf of the S&T business by Murphy. This allocation has been made on a reasonable basis. No amount in respect of interest has been allocated to this business. 2 COMMITMENTS AND CONTINGENCIES PURCHASE AND SALES AGREEMENTS The S&T business has entered into evergreen purchase and sales agreements, cancellable with thirty days notice, for crude oil and condensates. At March 31, 2001, the S&T business had evergreen contracts for purchases of 427,000 m3 and sales of 304,000 m3 of crude oil and condensates at market related prices. ENVIRONMENTAL MATTERS The parent, Murphy is liable for the reclamation costs associated with a condensate spill on the Dulwich pipeline. The amount of reclamation costs is dependent upon the method selected under current environmental laws but has been estimated by management to be in the range of $67,000 to $1,901,000. An accrual for these clean up costs has not been provided for in these financial statements.
3 SEGMENT INFORMATION The S&T division's reportable segments are organized into three major types of business activities all operating within one geographic area, Western Canada. The pipeline segment derives tariff revenue primarily from the transportation of crude oil, the crude oil trading segment derives revenue from the purchase and sale of crude oil and the trucking segment derives revenue from the use of tractor trailers in hauling petroleum products and water. Information about business segments is reported on the following tables. Corporate and other activities are shown in the tables to reconcile the business segments to the financial statement totals.
EXHIBIT 99.2 [PRICEWATERHOUSECOOPERS LOGO] -------------------------------------------------------------------------------- INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS OF PLAINS ALL AMERICAN PIPELINE L.P. We have audited the balance sheet of MURPHY OIL COMPANY LTD.'S Canadian Supply and Transportation ("S&T") business as at December 31, 2000 and the statements of operations and owners' net investment and cash flows for the year ended December 31, 2000. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of Murphy Oil Company Ltd.'s S&T business as at December 31, 2000 and the results of its operations and its cash flows for the year ended December 31, 2000 in accordance with accounting principles generally accepted in the United States of America. PriceWaterhouseCoopers L.L.P. March 30, 2001 Calgary, Alberta
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Balance Sheet AS AT DECEMBER 31, 2000 -------------------------------------------------------------------------------- (expressed in thousands of U.S. dollars)
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Statement of Cash Flows FOR THE YEAR ENDED DECEMBER 31, 2000 ----------------------------------------------------------------------------- (expressed in thousands of U.S. dollars)
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- 1 ORGANIZATION AND BASIS OF PRESENTATION The Supply and Transportation business is involved in the pipeline transport of crude oil and condensates, including associated services of trucking and terminalling, and marketing of crude oil in Western Canada. The accompanying financial statements present, in conformity with accounting principles generally accepted in the United States of America the assets, liabilities, revenues and expenses related to the historical operations of the Canadian supply and transportation ("S&T") business of the Murphy Oil Company Ltd. ("Murphy"). The accompanying financial statements have been prepared from Murphy's historical accounting records and are presented on a carve-out basis to include the historical operations applicable to the S&T business. All assets and liabilities specifically identified with the S&T business have been presented in the balance sheet. The owner's net investment ("Owner's net investment") in the S&T business has been presented in lieu of stockholder's equity in the financial statements. The financial information included herein includes certain allocations based on historical activity levels to reflect the financial statements in accordance with U.S. generally accepted accounting principles and may not necessarily reflect the financial position, results of operations of cash flows of the S&T business in the future or had it existed as a separate, stand-alone business during the period presented. The allocations consist of general and administrative expenses incurred on behalf of the S&T business by Murphy. This allocation has been made on a reasonable basis. No amount in respect of interest has been allocated to this business. 2 SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Significant estimates made by management include depreciation, impairment of long-lived assets, salvage values and income taxes and related deferred tax valuation allowance. Although management believes these estimates are reasonable, actual results could differ from those estimates. REVENUE RECOGNITION Gathering and marketing revenues are accrued at the time title to the product sold transfers to the purchaser, which occurs upon receipt of the product by the purchaser, and purchases are accrued at the time title to the product purchased transfers to the S&T business, which occurs upon receipt of the product. Terminalling and storage revenues are recognized at the time service is performed. Revenues for the transportation of crude are recognized based upon regulated and non-regulated tariff rates and the related transportation volumes. Trucking revenue is recognized when the transportation services have been rendered. (1)
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- FOREIGN CURRENCY TRANSLATION The functional currency of the S&T business is Canadian dollars. The translation of these financial statements into United States of America dollars (U.S. dollars) have been recorded using the exchange rate at the balance sheet date for assets and liabilities and the exchange rate applicable at the date of transaction for the revenues, expenses and cash flows. The effect of translating the S&T business into U.S. dollars is included in owners' net investment. PIPELINE TARIFF EXPENSE Pipeline tariff expense represents amounts paid to third parties to transport crude oil and condensates. These costs are expensed on an accrual basis. PROPERTY AND EQUIPMENT Crude oil pipeline, gathering and terminal assets are carried at cost. Costs subject to depreciation are net of expected salvage values and deprecation is calculated on a straight-line basis over the estimated useful lives of the respective assets as follows: o Crude oil pipelines - 10 to 35 years; o Crude oil pipeline operation facilities - 10 years; o Crude oil terminal, storage facilities and communication equipment - 10 years; o Trucking equipment - 10 years. Acquisitions and improvements are capitalized; maintenance and repairs are expensed as incurred. Pipeline linefill is recorded at cost and consists of oil linefill used to pack a pipeline such that when an incremental barrel enters a pipeline it forces a barrel out of another location. Net gains or losses on property and equipment disposed of are reflected in the statement of operations and net investment when incurred. IMPAIRMENT OF LONG-LIVED ASSETS The carrying values of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of any asset may not be recoverable. Recoverability of the carrying value of an asset is assessed by reference to an estimate of the asset's undiscounted future net cash flows. Measurement of any impairment would include a comparison of discounted estimated future net cash flows to the net carrying value of the related assets. (2)
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 -------------------------------------------------------------------------------- INVENTORIES Inventories of crude oil and condensates are valued at the lower of cost, calculated on a last in first out (LIFO) basis, or market value. At December 31, 2000 the replacement cost of crude oil and condensate inventory was $9,304,435. ENVIRONMENTAL LIABILITIES A provision for environmental obligations is charged to expense when the S&T business' liability for an environmental assessment and/or clean up is probable and the cost can be reasonably estimated. Related expenditures are charged against the reserve. Environmental remediation liabilities have not been discounted for the time value of future expected payments. INCOME TAXES The S&T business accounts for income taxes using the asset and liability method in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Under this method, income taxes are provided for amounts currently payable, and for amounts deferred as tax assets and liabilities based on differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Deferred income taxes are measured using enacted tax rates that are assumed to be in effect when the differences reverse. Income taxes have been calculated as if the S&T business had filed a separate return for the year ended December 31, 2000. FAIR VALUE OF FINANCIAL INSTRUMENTS Pursuant to Statement of Financial Accounting Standards No. 107, Disclosure About Fair Value of Financial Instruments, the S&T business has estimated fair value of its accounts receivables, due from related party and accounts payable and accrued liabilities to approximate the carrying values due to the short term to maturity of these instruments. (3)
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). SFAS 133, as amended by SFAS 138, requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of the hedge transaction and, if so, the type of hedge transaction. For fair value hedge transactions in which the S&T business is hedging changes in an asset's, liability's, or firm commitment's fair value, changes in the fair value of the derivative instrument will generally be offset in the income statement by changes in the hedged item's fair value. For cash flows related to a variable rate asset, liability, or a forecasted transaction, changes in the fair value of the derivative instrument will be reported in other comprehensive income. The gains and losses on the derivative instrument that are reported in other comprehensive income will be reclassified as earnings in the periods in which earnings are affected by the variability of the cash flows of the hedged item. The S&T business is required to adopt this statement beginning in fiscal 2001. Management has determined that there is no effect on the financial statements of the adoption of SFAS 133. 3 PROPERTY AND EQUIPMENT
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- 4 RELATED PARTY TRANSACTIONS AND BALANCES During the year ended December 31, 2000, the S&T business has entered into transactions with other divisions of Murphy and affiliated companies. All transactions were entered into in the ordinary course of business at market prices. The aggregate amounts of related party transactions were as follows:
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- 5 INCOME TAXES Deferred income taxes are provided for the temporary differences between the book and tax bases of the S&T business's assets and liabilities. Significant components of deferred tax assets and liabilities as of December 31, 2000 are as follows:
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- 7 COMMITMENTS AND CONTINGENCIES PURCHASE AND SALES AGREEMENTS The S&T business has entered into evergreen purchase and sales agreements, cancellable with thirty days notice, for crude oil and condensates. As at December 31, 2000, the S&T business had evergreen contracts for purchases of 444,000 m3 and sales of 298,000 m3 of crude oil and condensates at market related prices. ENVIRONMENTAL MATTERS The parent, Murphy is liable for the reclamation costs associated with a condensate spill on the Dulwich pipeline. The amount of reclamation costs is dependent upon the method selected under current environmental laws but has been estimated by management to be in the range of $67,000 to $1,901,000. An accrual for these clean up costs has not been provided for in these financial statements. 8 EMPLOYEE AND RETIREE BENEFIT PLANS Murphy provides pension plans to its employees, including persons employed in the S&T business. Murphy has a defined benefit and defined contribution pension plan covering all the S&T employees. The defined benefit pension plan provides a pension based on a formula of best average earnings and years of credited service. The plan is non-contributory however, an optional ancillary contribution account to provide ancillary benefits or enhancements to the defined benefit pension is contributory. The net pension credit recognized in the S&T business earnings under the defined benefit pension plan for the year ended December 31, 2000 was $583,000. The defined contribution plan provides benefits based on the accumulated balance in an employees account. The plan is non-contributory, however, employees may contribute up to 2% of their earnings as an optional contribution which is matched by Murphy dollar for dollar. The amount charged to the S&T business earnings under the defined contribution pension plan for the year ended December 31, 2000 was $61,000. (7)
MURPHY OIL COMPANY LTD. SUPPLY & TRANSPORTATION BUSINESS Notes to Financial Statements DECEMBER 31, 2000 ------------------------------------------------------------------------------- 9 SEGMENT INFORMATION The S&T division's reportable segments are organized into three major types of business activities all operating within one geographic area, Western Canada. The pipeline segment derives tariff revenue primarily from the transportation of crude oil, the crude oil trading segment derives revenue from the purchase and sale of crude oil and the trucking segment derives revenue from the use of tractor trailers in hauling petroleum products and water. Information about business segments is reported on the following tables. Corporate and other activities are shown in the tables to reconcile the business segments to the financial statement totals.
EXHIBIT 99.3 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-68446) and on Form S-8 (File Nos. 333-91141 and 333-54118) of Plains All American Pipeline, L.P of our report dated March 30, 2001, relating to the financial statements of Murphy Oil Ltd. Supply and Transportation Business, which appears in the Current Report on Form 8-K/A of Plains All American Pipeline, L.P. dated October 25, 2001. We also consent to the references to us under the headings "Experts" in such Registration Statements. PricewaterhouseCoopers L.L.P. October 25, 2001 Calgary, Alberta