Plains All American Pipeline, L.P. has executed definitive agreements to acquire Pacific Energy Partners, L.P. The total value of the transaction is approximately $2.4 billion, including the assumption of debt and estimated transaction costs, and is expected to close near the end of 2006.

The boards of directors of Plains All American Pipeline and Pacific Energy Partners have each approved the terms of the proposed transaction. The completion of the acquisition is subject to the approval of the unitholders of Plains All American and Pacific Energy as well as customary regulatory approvals, including reviews under the Hart-Scott-Rodino Antitrust Improvements Act, and the approvals of certain state utility commissions and Canadian regulatory agencies.

Under the terms of the agreements, Plains All American will acquire from LB Pacific, LP and its affiliates ("LB Pacific") the general partner interest and incentive distribution rights of Pacific Energy as well as 2.6 million common units and 7.8 million subordinated units for a total of $700 million in cash. In addition, Plains All American will acquire the balance of Pacific Energy's equity through a tax-free unit-for-unit merger in which each other unitholder of Pacific Energy will receive 0.77 newly issued Plains All American common units for each Pacific Energy common unit.

Under the terms of the contemplated transaction, the general partner and limited partner interests in Pacific Energy will be extinguished and Pacific Energy will be merged into Plains All American. Pacific Energy's operating subsidiaries will be directly or indirectly owned by Plains All American. Plains All American's management team and board of directors will continue in their current roles and manage the combined company.

"The PAA board of directors and executive team see great merit in this combination with Pacific Energy. In addition to being a synergistic, accretive and strategic business combination, we view this as a transforming transaction – one that we believe positions PAA for long-term stability and growth," said Greg L. Armstrong, Chairman and Chief Executive Officer of Plains All American. "From an industrial logic and strategic perspective, it is hard to imagine any two MLPs that fit better together than Plains and Pacific." Armstrong noted that Plains All American expects to realize near-term synergies of approximately $30 million on an annualized basis, increasing to approximately $55 million over the next few years, and further increasing to over $70 million in the outer years.

"Combining our respective businesses will provide meaningful cost reduction and revenue enhancement opportunities as well as complementary vertical integration opportunities that will enable us to better serve our producer and refiner customers. The transaction also has significant upside potential in that it will allow PAA to extend its proven business model over a broader suite of crude oil assets and operations and also extend this business model into the refined products business," said Armstrong.

"Based upon the enhanced and extended visibility for continued cash flow growth and accretion provided by this transaction, effective with the first quarterly distribution declared after closing the merger, we intend to recommend to our board of directors an increase in our annualized distribution level to $3.20 per unit. This represents an increase of 13% over our current annualized distribution rate of $2.83 per unit. We believe that we will be able to build off of this elevated distribution level and continue to target seven to nine percent annual distribution growth over the next several years," said Armstrong.

Irv Toole, President and Chief Executive Officer of Pacific Energy, commented, "I am very pleased to move forward with this transaction, which I believe will be extremely attractive to Pacific Energy unitholders. Based on the 0.77 exchange ratio and the closing unit prices of the respective partnerships on June 9, 2006, Pacific Energy unitholders are receiving a market premium of approximately 10.6%. Based on the 20-day average closing prices of the respective partnerships, Pacific Energy's unitholders are receiving a market premium of approximately 14.3%. In addition, based on an annualized distribution for Plains All American of $3.20 per unit after the transaction closes, Pacific Energy unitholders will receive an equivalent distribution of $2.464 per unit, which represents an increase in their annualized distribution of 8.5% over the current level of $2.27 per unit. When these two components are combined, Pacific Energy unitholders are receiving a total near-term premium in the range of approximately 19.1% to 22.8%, assuming a constant unit price-to-distribution yield."