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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)—March 1, 2004

Plains All American Pipeline, L.P.
(Exact name of Registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)
  1-14569
(Commission File Number)
  76-0582150
(I.R.S. Employer
Identification No.)

333 Clay Street, Suite 1600
Houston, Texas 77002
(713) 646-4100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)





Item 5. Other Events

        On April 1, 2004, Plains All American Pipeline, L.P. ("PAA") acquired the North American crude oil and pipeline operations of Link Energy LLC. The total purchase price for the transaction was approximately $326 million, which included $268 million in cash and approximately $58 million of net liabilities assumed and acquisition related costs.

        On March 1, 2004, PAA acquired the interests in certain entities owned by Shell Pipeline Company LP, which owned interests in the Capline Pipe Line System, the Capwood Pipe Line System and the Patoka Pipe Line System. The purchase price of approximately $158.5 million includes transaction and closing costs.

        Certain financial statements, including the pro forma combined financial statements of PAA for the six months ended June 30, 2004 and for the year ended December 31, 2003 giving effect to both of the acquisitions described above, have not been publicly disclosed, and are attached to this Form 8-K as Exhibit 99.1.


Item 7. Financial Statements and Exhibits

    (c)
    Exhibits

    99.1
    Unaudited Pro Forma Combined Financial Statements of Plains All American Pipeline, L.P. for the six months ended June 30, 2004 and for the year ended December 31, 2003.


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: August 6, 2004

 

By:

Plains AAP, L.P., its general partner

 

 

By:

Plains All American GP LLC, its general partner

 

 

By:

/s/  
TINA L. VAL      
    Name: Tina L. Val
    Title: Vice President of Accounting and Chief Accounting Officer


Index to Exhibits

99.1   Unaudited Pro Forma Combined Financial Statements of Plains All American Pipeline, L.P. for the six months ended June 30, 2004 and for the year ended December 31, 2003.



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SIGNATURES
Index to Exhibits

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Exhibit 99.1


PLAINS ALL AMERICAN PIPELINE, L.P.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

        Plains All American Pipeline, L.P. ("PAA") is a publicly traded Delaware limited partnership engaged in interstate and intrastate crude oil transportation, and crude oil gathering, marketing, terminalling and storage, as well as the marketing and storage of liquefied petroleum gas and other petroleum products. The following unaudited pro forma financial statements are presented to give effect to the transactions described below:

      The acquisition of the North American crude oil and pipeline operations of Link Energy LLC, ("Link Energy" and the "Link acquisition"). The acquisition price of approximately $326 million includes the assumption of liabilities and net working capital items and transaction and other acquisition costs. The acquisition closed and was effective on April 1, 2004 and has been accounted for using the purchase method of accounting.

      The acquisition of Shell Pipeline Company LP's ("SPLC") interest in certain entities. The principal assets of the entities include interests in the Capline Pipe Line System, the Capwood Pipe Line System and the Patoka Pipe Line System (referred to in this report as "the SPLC acquisition"). The purchase price, including transaction and closing costs, was approximately $158.5 million. The acquisition closed and was effective on March 1, 2004. The acquisition has been accounted for using the purchase method of accounting.

        The transactions described above are included in PAA's historical unaudited consolidated balance sheet as of June 30, 2004. Accordingly, a pro forma balance sheet is not presented. The unaudited pro forma statements of operations for the six months ended June 30, 2004 and the year ended December 31, 2003 are based upon the following:

    1)
    the historical consolidated statements of operations of PAA for the six months ended June 30, 2004 and the year ended December 31, 2003;

    2)
    the historical consolidated statements of operations of Link Energy for the three months ended March 31, 2004 and the year ended December 31, 2003; and

    3)
    the historical combined statements of operations for the businesses acquired in the SPLC acquisition for the two months ended February 29, 2004 and the year ended December 31, 2003.

        The unaudited pro forma combined statements of operations are not necessarily indicative of the results of the actual or future operations that would have been achieved had the transactions occurred at the dates assumed (as noted below). The unaudited pro forma combined statements of operations should be read in conjunction with: i) the notes thereto; ii) the historical unaudited financial statements of PAA for the six months ended June 30, 2004; iii) the historical unaudited financial statements of Link Energy for the three months ended March 31, 2004; and iv) the audited financial statements of PAA for the year ended December 31, 2003, as well as those for Link Energy and the businesses acquired in the SPLC acquisition, for the same period.

        The following unaudited pro forma combined statements of operations for the six months ended June 30, 2004 and the year ended December 31, 2003 have been prepared as if the transactions described above had taken place at the beginning of the period presented.



PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2004
(in thousands, except per unit data)

 
  Plains All
American
Historical

  Link
Energy
Historical

  SPLC
Acquisition
Historical

  Pro Forma
Acquisition
Adjustments

  Plains All
American
Pro Forma

 
REVENUES   $ 8,936,379   $ 40,682   $ 7,416   $ (465 )(a) $ 8,984,012  

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Purchases and related costs     8,685,372     8,081         (465 )(a)   8,692,988  

Field operating costs (excluding LTIP charge)

 

 

96,851

 

 

20,725

 

 

2,023

 

 


 

 

119,599

 
LTIP charge—operations     567                 567  
General and administrative expenses (excluding LTIP charge)     35,081     18,514             53,595  
LTIP charge — general and administrative     3,661                 3,661  
Depreciation and amortization     29,118     5,060     874     (5,934
2,571
)(b)
  (c)
  31,689  
   
 
 
 
 
 
  Total costs and expenses     8,850,650     52,380     2,897     (3,828 )   8,902,099  
   
 
 
 
 
 
  Other, net         (20 )           (20 )
  Gains on sales of assets         730 (e)           730  
   
 
 
 
 
 
OPERATING INCOME     85,729     (10,988 )   4,519     3,363     82,623  

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Interest expense     (19,499 )   (11,531 )       (2,893 )(d)   (33,923 )

Interest and other income (expense), net

 

 

453

 

 

(24

)

 


 

 


 

 

429

 
   
 
 
 
 
 
Income from continuing operations before cumulative effect of change in accounting principle     66,683     (22,543 )   4,519     470     49,129  
Cumulative effect of change in accounting principle     (3,130 )               (3,130 )
   
 
 
 
 
 
NET INCOME (LOSS) FROM CONTINUING OPERATIONS   $ 63,553   $ (22,543 ) $ 4,519   $ 470   $ 45,999  
   
 
 
 
 
 
NET INCOME FROM CONTINUING OPERATIONS—LIMITED PARTNERS   $ 58,954                     $ 41,751  
   
                   
 
NET INCOME FROM CONTINUING OPERATIONS—GENERAL PARTNER   $ 4,599                     $ 4,248  
   
                   
 
BASIC AND DILUTED NET INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT                                
Income from continuing operations before cumulative effect of change in accounting principle   $ 1.03                     $ 0.75  
Cumulative effect of change in accounting principle     (0.05 )                     (0.05 )
   
                   
 
Net income from continuing operations   $ 0.98                     $ 0.70  
   
                   
 
BASIC AND DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING     59,985                       59,985  
   
                   
 

See notes to unaudited pro forma combined financial statements



PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Twelve Months Ended December 31, 2003
(in thousands, except per unit data)

 
   
  Link Energy Historical
   
   
   
 
 
   
  Successor
Company

  Predecessor
Company

   
   
   
 
 
  Plains All
American
Historical

  Ten Months
Ended
December 31,
2003

  Two Months
Ended
February 28,
2003

  SPLC
Acquisition
Historical

  Pro Forma
Acquisition
Adjustments

  Plains All
American
Pro Forma

 
REVENUES   $ 12,589,849   $ 153,033   $ 31,635   $ 35,855   $ (2,828 )(a) $ 12,807,544  

COSTS AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Purchases and related costs     12,232,536     23,863     4,521         (2,828 )(a)   12,258,092  

Field operating costs (excluding LTIP charge)

 

 

134,177

 

 

70,102

 

 

13,020

 

 

10,574

 

 


 

 

227,873

 
LTIP charge—operations     5,727                     5,727  
General and administrative expenses (excluding LTIP charge)     49,969     45,959     6,846     1,275         104,049  
LTIP charge—general and administrative     23,063                     23,063  
Depreciation and amortization     46,821     17,161     4,642     5,264     (27,067
11,607
)(b)
  (c)
  58,428  
   
 
 
 
 
 
 
  Total costs and expenses     12,492,293     157,085     29,029     17,113     (18,288 )   12,677,232  
   
 
 
 
 
 
 
  Other, net         1,982     8             1,990  
  Gains on sales of assets     648     11,885 (e)           (11,700 )(f)   833  
   
 
 
 
 
 
 
OPERATING INCOME     98,204     9,815     2,614     18,742     3,760     133,135  

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Interest expense     (35,226 )   (32,708 )   (5,645 )       (13,206 )(d)   (86,785 )

Interest and other income (expense), net

 

 

(3,530

)

 

192

 

 

156

 

 


 

 


 

 

(3,182

)
   
 
 
 
 
 
 
Income (Loss) from Continuing Operations Before Reorganization Items, Net Gain on Discharge of Debt and Fresh Start Adjustments     59,448     (22,701 )   (2,875 )   18,742     (9,446 )   43,168  

Reorganization Items

 

 


 

 


 

 

(7,330

)

 


 

 


 

 

(7,330

)
Net Gain on Discharge of Debt             131,560             131,560  
Fresh Start Adjustments             (56,771 )           (56,771 )
   
 
 
 
 
 
 
NET INCOME (LOSS) FROM CONTINUING OPERATIONS   $ 59,448   $ (22,701 ) $ 64,584   $ 18,742   $ (9,446 ) $ 110,627  
   
 
 
 
 
 
 
NET INCOME FROM CONTINUING OPERATIONS—LIMITED PARTNERS   $ 53,473                           $ 103,628  
   
                         
 
NET INCOME FROM CONTINUING OPERATIONS—GENERAL PARTNER   $ 5,975                           $ 6,999  
   
                         
 
BASIC NET INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT   $ 1.01                           $ 1.96  
   
                         
 
DILUTED NET INCOME FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT   $ 1.00                           $ 1.94  
   
                         
 
BASIC WEIGHTED AVERAGE UNITS OUTSTANDING     52,743                             52,743  
   
                         
 
DILUTED WEIGHTED AVERAGE UNITS OUTSTANDING     53,400                             53,400  
   
                         
 

See notes to unaudited pro forma combined financial statements



PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Note 1—Acquisitions

Link Acquisition

        The Link acquisition presented in these pro forma statements has been accounted for using the purchase method of accounting and the purchase price has been allocated in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations". The acquisition consists of the North American crude oil and pipeline operations of Link Energy. The purchase price of approximately $326 million includes cash paid of approximately $268 million and approximately $58 million of net liabilities assumed and acquisition related costs. The acquisition closed and was effective on April 1, 2004. The total purchase price and the related allocation are preliminary as we are in the process of evaluating certain estimates. The purchase price allocation is set forth in the table below (in millions):

Fair value of assets acquired:        
Property and equipment   $ 256.3  
Inventory     1.1  
Linefill     48.4  
Inventory in third party assets     15.1  
Goodwill     5.0  
Other long term assets     0.2  
   
 
  Subtotal     326.1  

Accounts receivable

 

 

405.4

 
Other current assets     1.8  
   
 
  Subtotal     407.2  
 
Total assets acquired

 

 

733.3

 

Fair value of liabilities assumed:

 

 

 

 
Accounts payable and accrued liabilities     (448.9 )
Other current liabilities     (8.5 )
Other long-term liabilities     (7.4 )
   
 
  Total liabilities assumed     (464.8 )

Cash paid for acquisition

 

$

268.5

(1)
   
 

(1)
Cash paid is net of $5.5 million subsequently returned to us from an indemnity escrow account and does not include the subsequent payment of various transaction and other acquisition related costs.

SPLC Acquisition

        The SPLC acquisition presented in these pro forma statements has been accounted for using the purchase method of accounting and the purchase price has been allocated in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations." The purchase consists of the acquisition of Shell Pipeline Company LP's ("SPLC") interest in certain entities. The principal assets of the entities include interests in certain businesses from Shell Pipeline Company, including its interests in the Capline Pipe Line System, the Capwood Pipe Line System and the Patoka Pipe Line System. The purchase price of approximately $158.5 million includes transaction and closing costs. The



acquisition closed and was effective on March 1, 2004. The purchase price allocation is as follows (in millions):

Crude oil pipelines and facilities   $ 151.4
Crude oil storage and terminal facilities     5.7
Land     1.3
Office equipment and other     0.1
   
Total   $ 158.5
   

Note 2—Pro Forma Adjustments

        The pro forma adjustments are as follows:

    a.
    Elimination of purchases and sales related to transactions between PAA and Link Energy.

    b.
    Reversal of historical depreciation in the amounts of $5.1 million and $0.9 million in the six-month period ended June 30, 2004 as recorded by Link Energy and SPLC for the three months and two months prior to acquisition, respectively and $21.8 million and $5.3 million for the year ended December 31, 2003 as recorded by Link Energy and SPLC, respectively.

    c.
    Recording of depreciation based on the straight-line method over average useful lives ranging from 5 to 50 years in the amounts of $1.9 million and $0.7 million in the six-month period ended June 30, 2004 for the assets acquired from Link Energy and SPLC, respectively and $7.6 million and $4.0 million for the year ended December 31, 2003 for the assets acquired from Link Energy and SPLC, respectively.

    d.
    Adjustment to interest expense for the increase in long-term debt from draws on our revolving credit facilities to finance the acquisitions using an average interest rate of 3.1% for both periods presented. The increase in long-term debt of $268 million for the Link acquisition resulted in incremental interest expense on a pro forma basis of $2.1 million in the six-month period ended June 30, 2004 and $8.3 million for the year ended December 31, 2003. The increase in long-term debt of $158.5 million for the SPLC acquisition resulted in incremental interest expense on a pro forma basis of $0.8 million in the six-month period ended June 30, 2004 and $4.9 million for the year ended December 31, 2003. The impact to interest expense of a 1/8% change in interest rates would be approximately $0.5 million per year.

    e.
    Reclassification of gain on sale of assets from Other (Income) Expense as shown in Link Energy's historical financial statements to conform to PAA's presentation.

    f.
    Elimination of the gain on sale of assets in October 2003 resulting from Link Energy's sale of the ArkLaTex assets to PAA, which is included in Link Energy's historical financial statements.



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PLAINS ALL AMERICAN PIPELINE, L.P. UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS For the Six Months Ended June 30, 2004 (in thousands, except per unit data)
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS For the Twelve Months Ended December 31, 2003 (in thousands, except per unit data)
PLAINS ALL AMERICAN PIPELINE, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS