Welcome to Plains All American Pipeline's Second Quarter 2007 Results Conference Call. During today's call, the participants will provide forward-looking comments on the partnership's outlook as well as review the results of the prior period. Accordingly in doing so, they will use words such as belief, estimate, expect, anticipate etc. The partnership intends to avail itself of Safe Harbor provisions that encourage companies to provide this information and directs you to the risks and warnings set forth in Plains All American Pipeline's most recently filed 10-K, 10-Q, 8-K, and other current and future filings with the Securities and Exchange Commission. In addition, the Partnership encourages you to visit its website at www.paalp.com, in particular, the section entitled non-GAAP reconciliation, which presents certain commonly used non-GAAP financial measures such as EBITDA or EBIT, which may be used here today in the prepared remarks or in measures such as... or the Q&A session. This section also presents a reconciliation of those non-GAAP financial measures to the most directly comparable GAAP financial measures that includes a table of selected items that impact comparability with respect to the Partnership's reported financial information. Any reference during today's call to adjusted EBITDA, adjusted net income, and the like, is referenced to the financial measures, including the effect of selected items impacting comparability. Today's conference call will be chaired by Greg L. Armstrong, Chairman and CEO of Plains All American Pipeline. Also participating in the call are Harry Pefanis, Plains All American's President and COO; and Phil Kramer, Plains All American's Executive Vice President and CFO. I will now like to turn the call over to Mr. Greg Armstrong.

Thank you Joe and good morning and welcome to every one. As a reminder, the slide presentation accompanying this call is available on our website at www.paalp.com. PAA generated strong operating financial results for the second quarter 2007. Highlights for the quarter are summarized on slide three. The partnership reported net income EBITDA and net income per diluted unit of $104.8 million, $210.2 million and $0.78 per unit representing percentage changes of 31%, 76% and negative 4% as compared to respective second quarter 2006 results of $80.3 million, $119.6 million and $0.81 per unit. Excluding selected items impacting comparability, second quarter adjusted EBITDA was $214.8 million and adjusted net income was $120.2 million or $0.91 per diluted unit representing percentage changes of 68%, 35% and negative 12% compared to corresponding results of for the second quarter of 2006 of $128.2 million, $88.9 million and a $1.3 per unit. As indicated in the press release we issued on May 29th, these adjusted results exceed the upper end of our guidance range we provided in our May 20007 conference call. The slide four shows, this marks the 22nd consecutive quarter that Plains All American has delivered results in line with or exceeding our guidance. As mentioned in last call, we completed the integration of Pacific early in the second quarter. Moreover, as reinforced by the partnership's strong first half operating performance and financial performance, and our increased guidance for the second half of 2007, we have achieved a combined run rate level of operating and commercial synergies that will exceed our target synergy objectives for 2007, subject to timing accelerations and delays as well as capital projects substitutions and modifications that are fairly routine for large multiyear project execution. We believe we are on track to achieve our Pacific-related financial targets for future periods as well. The remainder of today's call will be provided in three main costs. First, we will review; second quarter operating results, address major operational assumptions for third quarter guidance and provide an update on our expansion, capital projects and recent acquisitions. Next, we will discuss our capitalization, liquidity and the depletion finance activities as well as view updated financial guidance and on last, I will wrap the call with a few closing comments on our current performance versus our 2007 goals, provide some insight into our outlooks for the future and also address the recent market transition from contango to backwardation. At the conclusion of our prepared remarks, we will have a question-and-answer period, and shortly after the completion of the call, we will post a complete written transcript of the prepared comments as well as a downloadable audio version of the call. With that I now turn the call over to Harry.

Thanks Greg. Each of our segments performed above the second quarter guidance, we provided on May 2, this year. As shown on slide five, adjusted segment profit for our Transportation segment was $89.4 million or $.34 per barrel, and it was approximately $10.4 million above the midpoint of our guidance range. Transportation volumes were approximately 2.9 million barrels per day; that included pipeline volumes of approximately 2.8 million barrels per day. Our pipeline volumes exceeded our guidance by about 102,000 barrels per day. Although, there were several ups and downs, most of the volume increase was attributable to the Basin Pipeline System. I'd also point out that increased revenues from our Canadian trucking operations and from our pipeline loss-allowance barrels contributed to the over-performance in this segment. Adjusted segment profit for the Facilities segment was $4.3 million above the midpoint of our guidance range at $31.8 million, or $0.27 per barrel, with volumes of 38.8 million barrels per month. Strong segment results were mostly attributable to the stronger than expected gas storage earnings from our 50% ownership interest in the PAA/Vulcan Gas Storage joint venture. Adjusted segment profit for the Marketing segment was $92.9 million or $1.21 per barrel, which exceeded the midpoint of our guidance range by $26.9 million. Volumes were 843,000 barrels a day and overall were in line with our guidance. Our marketing results benefited from the combination of favorable market conditions, improved margins in our gathering and marketing business, net improved margins on our truck gathered volumes and a stronger than forecasted foreign exchange associated with our Canadian activities. In a moment Phil will discuss our 2007 guidance. This guidance assumes third quarter volumes in the Transportation segment of approximately 2.8 million barrels a day. Estimated volumes for each of our larger systems are shown on…

Thanks Harry. During my portion of the call, I will review our capitalization and liquidity at the end of the second quarter, discuss our recent financing activity, share a few comments about our accounting activity that did impact our second-quarter results and then walk through the third quarter guidance and the updated guidance for the full year 2007. Given all the attention on both the weakness in debt capital markets and the very recent weakness in MLP equity capital markets, I am very pleased to report that PAA is extremely well positioned in both regards as we ended the second quarter with a strong credit profile and capital structure and excellent liquidity. As summarized on slide 10, at June 30th, PAA's long-term debt outstanding was approximately $2.6 billion, while book equity was approximately $3.4 billion and, as a result, our long-term debt-to-total capitalization percentage was approximately 44%. Our second quarter adjusted EBITDA-to-interest coverage ratio was approximately 5.2 times, and using the midpoint of our 2007 adjusted EBITDA range, our long-term debt-to-adjusted EBITDA ratio is approximately 3.4 times. In addition, our long-term debt has an average tenor of approximately 14.4 years, and we have no maturities of long-term debt until mid-2009, when we have a relatively small, $175 million tranche maturing. We also have excellent liquidity and we recently extended the maturity of our committed $1.6 billion revolver and increased the size of our uncommitted contango facility from $1 billion to $1.2 billion. At June 30th, we had approximately $1.5 billion of undrawn committed capacity available to meet our working capital needs and to fund future acquisitions. As shown on slide 11, even with over $5.2 billion in cumulative acquisitions and expansion capital investment since the fourth quarter of 2001, we have been within our targeted 50% of long-term debt-to-total cap…

Thanks Phil. We are very pleased with the second quarter results and look forward to the rest of 2007. First, as shown on slide 14, we are well positioned to achieve the five goals for 2007 that we established at the beginning of the year. Second, we believe PAA is well positioned for the future. Specifically, as illustrated by the montage on slide 15, we believe that the combination of our base level cash flow, incremental contributions from our organic growth projects and future distributions from our gas storage joint venture underpin our ability to grow PAA's distribution at an average rate of 7% to 9% per year over the next several years. We also believe that any major future acquisitions will likely extend the period of visibility for continuing that growth trend or serve to offset unforeseen challenges or delays in our capital projects. Third, as illustrated by the montage on slide 16, we have a disciplined financial growth strategy and as a result of consistently executing that strategy, we have a strong capital structure and excellent liquidity position that will facilitate the financing of future capital projects and acquisitions. Before we open the call up for questions, I wanted to spend a few minutes addressing the anticipated impact on PAA associated with a rapid transition in July from a steep contango market to a backwardated market. First, let me provide a little bit of background. Throughout most of the time period from early 2005 through the end of June 2007, we have experienced favorable contango market conditions. A contango market is favorable to our commercial strategies that are associated with storage tankage, as it allows us to simultaneously purchase production at current prices for storage and sell at higher prices for future delivery. As Harry mentioned earlier, in…

Thank you. [Operator Instructions]. Our first question is from Ross Payne with Wachovia Capital. Please take your question.

Greg, can you talk to how much of your storage is to third parties versus your account.

Ross it varies really by location and it's pretty dynamic changing number right now in... we haven't published that information.

Okay. Because... I would assume the man for storages is going to be less under this market condition to two third parties, but do you assume that that's goanna be made up in you normal business on a backwardated basis?

Yes while you were... we were conversation here offline, I can't give you the aggregate number. I just don't give it my location but it's in the 55% to 60% range, the tankage is two third parties.

Okay

And to answer your question, to kind of clarify perhaps what I was trying to get earlier, what we call base level results, not the base line plus but what we call base level results which is what we try and manage the business on over to an extended period of time, we do think that there will be offsets to the countercyclical balance. What we are really trying to say is the significant access profits that we get called sandbagger store because clearly the market has been very favorable for about 2.5 years. We are not saying the market won't come back in the more favorable conditions but that's not how we manage the business. We really take that as something that's incremental to the baseline, not a part of the baseline.

Okay, so you will still be able to achieve your results without that?

Hey Ross this is Harry Pefanis. A lot of the people that lease-take they are leasing it operationally, they are leasing it we have not leased, for most leased I can people do the same contango trades. So we don't expect that business to go away just because of the long-term contracts that are operational nature.

Okay. Any idea on what the average size on those contracts is?

Again it's going to vary by location but we wouldn't expect that mix to per party tankage. It's the change a whole lot over the expanded credit time. We have some contracts that are short term that have been well for many, many, many years throughout all kinds of markets.

Okay alright. One another question for you Greg. What kind of target do you have for your debt-to-EBITDA looks like your leverage is moving down nicely post the PTX acquisition, but what do you target from a long-term debt-to-EBITDA level?

Ross, several years ago when a bigger portion of our earnings and cash flow was coming from non-fee base, we have picked a target of what we call debt-to-EBITDA 3.5 or less. When we a couple of years ago started expanding quite aggressively into the pipeline sector, we kind of move it up to go to equal to approximately 3.5 to 1. Today we are a little more comfortable with that number moving up, probably in the 3.5 to 3.8 but it still has a 3 in front of it. I will tell you what you see today is capacity we've raised excess equity, to be able to position for the opportunity that may exist when there is... it's difficult for others to get to the capital markets and we have already in fact pre-funded as Bill mentioned. So I wouldn't take the 3.3 as an indication that we are migrating there. We think in that 3.5 to 3.8 range, we are consistent with our BBB, BBB+ target especially, if we are seeing a higher percentage of our business competency-based activities.

Very good. Thank you guys.

The next question is from Sam Arnold with Credit Suisse. Please go ahead with your question.

Hi good morning guys. Congratulations on the quarter, a very strong marketing and I was wondering if you could talk a little bit about that. How much of the results could you breakdown were attributable to kind of the issue that you are seeing at Cushing versus St.James. I mean it seems like you guys will probably be able to make a quite a bit of money of that arbitrage that was going on and just trying to find out how sustainable that portion is?

It was totally different markets.

Right.

You were asking was there an arbitrage to be captured between the $5 or $6 discount in --

Right. Just as basin volumes were up quite a bit and then with cap line you think there will be a lot of more import volumes coming into St.James and things of nature. So I am just wondering if you guys had a quantity to that because Cushing prices were so much lower than St.James because of all the stuff that was going with McKee and some other refineries downstream at Cushing.

McKee definitely helps basin volumes. Even though you have higher prices at St.James basin was still, I mean cap on was still at very high levels and continuously cap line operated at high levels and just for clarification, all that goes into the Transportation segment not Auto nor Marketing segment.

Okay. So you don't iterating on that?

Yeah, I think that this assumption Sam may be that the barrels are completely tangible and that they... I mean they physically in order to take advantage of those arbitrages that you'll see on the screen, they have to have transportation packet in there as well as the forward curve and the delays associated with the bases differential. So it's probably easier for some traders to create value on the screen than it is in reality and I guess what we are saying is those markets are directly linked. It's not that natural gas towards which is completely tangible and if it's in a pipeline you can back transport it so to speak. You can get it to that operable market and then in this it's more logistical nightmare if you will, which is what makes it very complicated with 50 different grades and varieties of crude.

Right, okay, so it really wasn't a big increase in cap line volumes because of what was going on the Cushing is just more import?

More imports and then clearly there were some very attractive Contango levels during the second quarter factors that I lined out, I think toward the end of the first quarter, first part of second quarter quite a bit. One thing..

Right. But isn't the Contango because of what was going on in Cushing?

Partly; I mean the key refinery probably extended the period of Contango but ultimately those markets always remedy themselves. So there has been a big pull down in crude barrels as what one would probably conclude and they are like in can tail over that in the old daily article that what came out today. There's just one thing I would probably just want to make sure by takes away from this is if you recall, even when we had a real strong first quarter when we announced we were updating our guidance for the second quarter, we didn't change the second half of the year. For our respected the market is doing pretty much what we would have thought it would be doing, maybe a little bit faster, but overall, we are only managing for our baseline; when you compare third quarter and fourth quarter, we are actually showing the flat down tick in fourth quarter; that's because some of the Contango activities that transitioned in July; it doesn't really affect you till August in terms of the actual... when you report earnings because you report the value when you have the sale in the quarter, not when you have the Contango spread show up.

Okay great. Thanks for the clarification; I appreciate that.

Thank you.

Your next question is from Gilbert Alexander with Delta Associates [ph]. Please state your question.

Good morning. Sorry to ask this, but I didn't hear although properly. You mentioned you might be going... you will be going to a 350 dividend rate. Do you have target date for that or when it might happen?

Well actually just to be clear, what we for accounting purposes we require at the end of each quarter we are making assessment of probability and the definition of probability is probably not the same as the layman's definition but it's when we get to the point where it's I think a fair terminology is profound more likely than not and once we get there, it just simply requires us to make an accrual for any equity incentives associated with that level. So now we haven't picked a day that actually got in there. All we are saying is that in for accounting purposes we have reached that threshold. Clearly 350 falls within the fairway of our targeted guidance over time of 7% to 9% but we haven't given any guidance just to try and pick a date for that.

Thank you very much.

Thank you.

[Operator Instructions]. Your next question is from John Edwards with Morgan Keegan. Please go ahead with your question.

Yes, good morning. Greg could you just expand a little bit further on you were talking about how things have transitioned from the contango or the backwardated market and as far as what the contribution to the business has been from contango versus backwardated I mean you did talk about that but trying to get a sense here of you are trying to I guess guide us I think you are saying there is no change to the base outlook when you go to backwardated but I am just... what's the relative contribution to the business when you are contango versus backwardated maybe you can talk about it that way.

Yes I think we are really trying to say is and again it's for many, many quarter we outperformed and I going to use that term sandbaggers affectionately. What I guess, what I am trying to say is the guidance that we were providing at the beginning of the year for the year end and even in the future periods extend we were talking about projecting base levels for the Pacific rate assets. In all cases we were really looking at more of a balanced market, not a extreme contango and extreme backwardation. We certainly weren't looking at a flat margin because that's our worst situation where the price of the crude oil is the same in every signal month. Generally that when those happen they are in transition, it won't stay very long. So I guess what I am really trying to get. If you look at our fourth quarter that's where run rate that's a pure forecast based upon what we have seen in terms of the slight backwardated, market not an extreme backwardated, not certainly amount of extreme contango and what we have been experiencing over the last several quarter is one that's both good volatility as good contango. We really can't spike out the amount that we may... and what you might call a pure contago arbitrage because there are several other things that go on intramonth. In some cases we actually, if we get a call from refiners, we need to borrow some of your stories because we got things coming in. We are developing a long-term relationship, we not may not make as much as those paint barrels as we could have that we simply wanted to if you will be mercenary and so its really difficult for anybody from the outside to calculate…

Okay great and then just housekeeping items. What's the maintenance CapEx outlook at this point?

The total for this year, we started off with $45 million a current estimate is $52 million. That's within a range of probably $40 million to $60 million. It's probably the number unless we add more assets means. I mean what happens is John, last year I think we were understand as what we have targeted. We had some carryover part of it as a function whether were are certainly forecasting for the second half of the year since its been so late as in the first half that we got to have the opportunity to catch up out some projects.

Okay, great. Thanks a lot.

Thank you

At this time there are no further questions in queue. I'd like to turn back the call over to management.

Again thanks to everyone for attending and for supporting PAA as it continues its growth path and we look forward to giving you an update on the end of the third quarter. Thank you Joe.

Thank you. Ladies and gentlemen this does concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.