Plains All American To Acquire Shell's West Texas Pipeline Assets

Plains All American Pipeline has reached a definitive agreement to acquire certain crude oil pipeline assets from Shell Pipeline Company LP (f.k.a. Equilon Pipeline Company LLC) and Equilon Enterprises LLC (d.b.a. Shell Oil Products US). The transaction is subject to the performance of customary due diligence and receipt of regulatory approvals and is expected to close within the next ninety (90) days.

Primary assets included in the transaction are interests in: (i) the Basin Pipeline System, (ii) the Rancho Pipeline System, and (iii) the Permian Basin Gathering System. Total consideration for the assets is approximately $315 million.

"The acquisition of Shell's West Texas pipeline assets is a seminal event for PAA," said Greg Armstrong, Chairman and Chief Executive Officer of the Partnership. "These assets significantly improve our ability to service the needs of West Texas producers and Midwest refiners as they provide us direct access to the prolific West Texas crude oil producing region as well as to foreign crude oil imports that are brought up from the Gulf Coast and moved into Cushing on the Basin system. Furthermore, the Basin system provides a direct trunk line connection to Cushing, Oklahoma, where we own significant crude oil storage capacity."

Historical operating and financial results are in the process of being audited, but unaudited information preliminarily indicates that the package of assets the Partnership is acquiring generated approximately $30 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") during 2001 (estimated by the Partnership using unaudited historical data conformed to the Partnership's measurement of EBITDA from its existing assets).

Under the terms of the agreement, PAA will acquire from Shell for approximately $315 million cash (i) 100% of the outstanding partnership interests in Basin Pipeline Holdings LP, (ii) 100% of the outstanding partnership interests in Rancho Pipeline Holdings LP, (iii) the Permian Basin Gathering System and associated facilities, and (iv) other small gathering assets.

The Partnership presently intends to fund the transaction using existing availability under its revolving credit facility. In order to position Plains All American to be able to quickly capitalize on future opportunities, the Partnership intends to closely monitor both the equity and debt markets for desirable refinancing alternatives, both to increase the equity underpinning the Partnership and to add length to its debt maturities.