Plains All American Pipeline, L.P. Reports Solid Third-Quarter 2008 Results

Plains All American Pipeline, L.P. (NYSE:PAA) today reported net income of $206 million, or $1.14 per diluted limited partner unit, for the third quarter of 2008 as compared to net income for the third quarter of 2007 of $98 million, or $0.66 per diluted limited partner unit. The Partnership reported earnings before interest, taxes, depreciation and amortization ("EBITDA”) of $310 million for the third quarter of 2008, compared with EBITDA of $183 million for the third quarter of 2007.

Reported results for the quarter ended September 30, 2008 were impacted by a larger than usual mark-to-market adjustment and an inventory valuation adjustment resulting from the significant decrease in crude oil and liquefied petroleum gas ("LPG”) prices during the period. Reported results include the impact of these adjustments and various other items that affect comparability between reporting periods. These items are excluded from adjusted results, as further described in the table below. Accordingly, the Partnership’s third-quarter 2008 adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA were $119 million, $0.70 and $223 million, respectively. The Partnership’s third-quarter 2007 adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA were $111 million, $0.77 and $196 million, respectively. (See the section of this release entitled "Non-GAAP Financial Measures” and the attached tables for discussion of EBITDA and other non-GAAP financial measures, and reconciliations of such measures to the comparable GAAP measures.)

"Plains All American delivered third-quarter results that were in line with guidance during a period marked by operational challenges related to Hurricanes Gustav and Ike,” stated Greg L. Armstrong, Chairman and CEO of Plains All American. "We continue to see strong demand for our assets and services within each of our three segments, and we are pleased with PAA’s positioning relative to the current state of the financial markets. We have a solid balance sheet, ample liquidity and are well positioned to execute our growth plans for the remainder of 2008 and the full year of 2009 without the need to access the capital markets.”

The Partnership’s third-quarter results were also impacted by items that have not been included as selected items impacting comparability between reporting periods. These items primarily include an estimated $10 million to $15 million negative impact related to Hurricanes Gustav and Ike, and an approximate $12 million gain on the sale of its shares in the New York Mercantile Exchange ("NYMEX”) in connection with the NYMEX’s August 2008 merger with the Chicago Mercantile Exchange. The hurricane impact includes an estimate of reduced revenues attributable to disruptions in crude transportation and marketing volumes, insurance deductibles associated with response and repair costs included in operating expenses and a $1 million contribution by the Partnership to a relief fund to assist employees sustaining hurricane damage.

For the first nine months of 2008, the Partnership reported net income of $339 million, or $2.12 per diluted limited partner unit, as compared to net income for the first nine months of 2007 of $288 million, or $2.05 per diluted limited partner unit. The Partnership reported EBITDA of $639 million for the first nine months of 2008, compared with EBITDA of $559 million for the first nine months of 2007. Adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA for the first nine months of 2008 were $352 million, $2.22 and $652 million, respectively. Adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA for the first nine months of 2007 were $352 million, $2.60 and $612 million, respectively.

The following table summarizes selected items that the Partnership believes impact comparability of financial results between reporting periods:

The Partnership indicated that its hedging activities conducted during the third quarter of 2008 were consistent with prior periods; however, the significant decreases in crude oil and LPG prices resulted in an inventory valuation adjustment and a larger than usual SFAS 133 mark-to-market adjustment for the quarter ended September 30, 2008. The inventory subject to the valuation adjustment was hedged with financial derivatives and the inventory valuation charge is offset by the SFAS mark-to-market gain, subject to normal hedge effectiveness. The Partnership expects that the effect of these adjustments will reverse in future periods as the offsetting physical transactions are settled.

The following tables present certain selected financial information by segment for the third quarter and first nine months (amounts in millions):

Adjusted segment profit from Transportation operations for the third quarter of 2008 increased 32% over corresponding third-quarter 2007 results due principally to contributions from the Partnership’s Rainbow Pipe Line acquisition which occurred in May 2008, higher average tariffs and an increase in pipeline loss allowance revenue. These contributions were partially offset by higher operating expenses and an estimated $3 million to $5 million negative impact primarily due to lost revenues associated with hurricane-related volume reductions on certain of the Partnership’s Gulf Coast area pipelines.

Adjusted segment profit from Facilities operations for the third quarter of 2008 increased 38% over corresponding third-quarter 2007 results due primarily to an approximate 16% capacity increase associated with expansions at the Cushing, St. James, and Martinez facilities as well as the Tirzah & Bumstead LPG facility acquisitions.

Adjusted segment profit from Marketing operations for the third quarter of 2008 was $49 million, representing a decrease of 36% from corresponding third-quarter 2007 results of $76 million. Third-quarter 2007 results benefited from contracts entered into during a contango market as well as the impacts of favorable differentials. The third-quarter 2008 results were negatively affected by increased operating and general and administrative expenses as well as an estimated $7 million to $10 million impact primarily due to lost revenues associated with volume disruptions resulting from Hurricanes Gustav and Ike.

The Partnership’s basic weighted average units outstanding for the third quarter of 2008 totaled 123 million (124 million diluted) as compared to 116 million (117 million diluted) in last year’s third quarter. At September 30, 2008, the Partnership had approximately 123 million units outstanding, long-term debt of approximately $3.2 billion and a long-term debt-to-total capitalization ratio of 47%.

On October 22, 2008, the Partnership declared a quarterly distribution of $0.8925 per unit ($3.57 per unit on an annualized basis) on its outstanding limited partner units. The distribution is payable on November 14, 2008, to holders of record of such units on November 4, 2008. This distribution payment represents increases of approximately 6.3% and 0.6%, respectively, over the quarterly distributions paid in November 2007 and August 2008. This distribution constitutes the 18th consecutive increase in quarterly distributions for the Partnership and the 25th increase in the last thirty-one quarters.

Prior to its conference call on November 6, 2008, the Partnership will furnish a current report on Form 8-K, which will include material in this press release and financial and operational guidance for the fourth quarter of 2008. A copy of the Form 8-K will be available on the Partnership’s website at www.paalp.com.

Non-GAAP Financial Measures

In this release, the Partnership’s EBITDA disclosure is not presented in accordance with generally accepted accounting principles and is not intended to be used in lieu of GAAP presentations of net income or cash flows from operating activities. EBITDA is presented because we believe it provides additional information with respect to both the performance of our fundamental business activities as well as our ability to meet our future debt service, capital expenditures and working capital requirements. We also believe that debt holders commonly use EBITDA to analyze Partnership performance. In addition, we present selected items that impact the comparability of our operating results as additional information that may be helpful to your understanding of our financial results. We consider an understanding of these selected items impacting comparability to be material to our evaluation of our operating results and prospects. Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management’s discussion and analysis of operating results in our Quarterly Report on Form 10-Q.

A reconciliation of EBITDA to net income and cash flows from operating activities for the periods presented is included in the tables attached to this release. In addition, the Partnership maintains on its website (www.paalp.com) a reconciliation of all non-GAAP financial information, such as EBITDA, to the most comparable GAAP measures. To access the information, investors should click on the "Investor Relations” link on the Partnership’s home page and then the "Non-GAAP Reconciliation” link on the Investor Relations page.

Conference Call

The Partnership will host a conference call on Thursday, November 6, 2008 to discuss the following items:

The call will begin at 11:00 AM (Eastern). To participate in the call, please dial 877-709-8150, or, for international callers, 201-689-8354, at approximately 10:55 AM (Eastern). No password or reservation number is required.

Webcast Instructions

To access the Internet webcast, please go to the Partnership’s website at www.paalp.com, choose "Investor Relations,” and then choose "Conference Calls.” Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnership’s website.

Telephonic Replay Instructions

To listen to a telephonic replay of the conference call, please dial 877-660-6853, or, for international callers, 201-612-7415, and enter account number 232 and replay ID number 298261. The replay will be available beginning Thursday, November 6, 2008, at approximately 1:00 PM (Eastern) and continue until 11:59 PM (Eastern) Saturday, December 6, 2008.

Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. Through its 50% ownership in PAA/Vulcan Gas Storage LLC, the partnership is also engaged in the development and operation of natural gas storage facilities. The Partnership is headquartered in Houston, Texas.

Forward Looking Statements

Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward-looking statements. These risks and uncertainties include, among other things: failure to implement or capitalize on planned internal growth projects; maintenance of our credit rating and ability to receive open credit from our suppliers and trade counterparties; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; the success of our risk management activities; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; abrupt or severe declines or interruptions in outer continental shelf production located offshore California and transported on our pipeline system; shortages or cost increases of power supplies, materials or labor; the availability of adequate third-party production volumes for transportation and marketing in the areas in which we operate and other factors that could cause declines in volumes shipped on our pipelines by us and third-party shippers, such as declines in production from existing oil and gas reserves or failure to develop additional oil and gas reserves; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil, refined products and natural gas and resulting changes in pricing conditions or transportation throughput requirements; the availability of, and our ability to consummate, acquisition or combination opportunities; our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the successful integration and future performance of acquired assets and businesses and the risks associated with operating in lines of business that are distinct and separate from our historical operations; unanticipated changes in crude oil market structure and volatility (or lack thereof); the impact of current and future laws, rulings, governmental regulations and interpretations; the effects of competition; interruptions in service and fluctuations in tariffs or volumes on third-party pipelines; increased costs or lack of availability of insurance; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plans; the currency exchange rate of the Canadian dollar; weather interference with business operations or project construction; risks related to the development and operation of natural gas storage facilities; future developments and circumstances at the time distributions are declared; general economic, market or business conditions; and other factors and uncertainties inherent in the transportation, storage, terminalling, and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products discussed in the Partnership's filings with the Securities and Exchange Commission.