Company: PAGP
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001581990-25-000006
Chunk: 141

Company: PLAINS GP HOLDINGS LP
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 141
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 in consolidation. Accounting for such impact, the remeasurement of our investment in Cactus II to fair value resulted in a gain of $370 million. This gain has been recognized in the line item “Gain on investments in unconsolidated entities, net” on our Consolidated Statement of Operations.In accordance with applicable accounting guidance, the fair value of Cactus II following the acquisition is utilized as the consideration transferred for the purchase price allocation. The consideration transferred of $1.556 billion excludes the value associated with the capacity lease agreements described above as such value is eliminated for our Consolidated Financial Statements.The determination of the fair value of the assets acquired and liabilities assumed was estimated in accordance with the applicable accounting guidance. The analysis was performed based on estimates that are reflective of market participant assumptions. The following table reflects our determination of the fair value of those assets and liabilities (in millions):Identifiable Assets Acquired and Liabilities Assumed:Estimated Useful Lives (in years)Recognized AmountProperty and equipment3-50$1,174 Intangible assets20428 Working capital and other assets and liabilitiesN/A(46)$1,556 The fair value of the tangible assets is a Level 3 measurement in the fair value hierarchy and was determined using a market approach for rights-of-way and a cost approach for other tangible assets, which were based on costs incurred on similar recent construction projects. The fair value of the intangible assets is also a Level 3 measurement in the fair value hierarchy and was determined by applying a discounted cash flow approach. Such approach utilized a discount rate of approximately 18%, based on our estimate of the risk that a theoretical market participant would assign to the respective intangible assets. The projection of future crude oil volumes transported and the estimated tariff rates for transportation were also key assumptions in the valuation of the intangible assets. Projected future volumes and estimated tariff rates were based on current contracts in place with assumptions for forecasted rate increases and contract renewals.The fair value of intangible assets is comprised of customer relationships that will be amortized over their useful lives, which have a remaining weighted average life of approximately 20 years. The value assigned to such intangible assets will be amortized to earnings under the declining balance method of amortization. Amortization expense was approximately $51 million, $61 million and $13 million during the years ended December 31, 2024, 2023 and 2022, respectively, and the future amortization expense through 2027 is