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| 8-K - 8-K - Tallgrass Energy, LP | tegp2015930earningsrelease.htm |
Exhibit 99.1
Tallgrass Energy Partners and Tallgrass Energy GP Report Strong Third Quarter 2015 Results
LEAWOOD, Kan.--(BUSINESS WIRE)--November 4, 2015--Tallgrass Energy Partners, LP (NYSE: TEP) ("TEP") and Tallgrass Energy GP, LP (NYSE: TEGP) ("TEGP") today reported financial and operating results for the third quarter of 2015. TEP and TEGP are collectively referred to as Tallgrass Energy.
“Tallgrass Energy delivered another solid performance for the third quarter of 2015,” said Tallgrass Energy President and CEO David G. Dehaemers Jr. “We increased distributions at both TEP and TEGP while maintaining a very strong balance sheet and healthy distribution coverage. Our low leverage and the relative strength of our equity provide us continued flexibility to fund future growth projects and dropdown transactions. We are especially proud of our performance and strength in the industry given that capital markets are painting all energy companies - particularly MLPs - with a broad negative brush.”
Third Quarter Distributions
Tallgrass Energy Partners, LP
As previously announced, the board of directors of TEP's general partner declared a quarterly cash distribution to partners of $0.60 per common unit for the third quarter of 2015. This quarterly distribution represents $2.40 on an annualized basis and an increase of 46.3 percent from the third quarter of 2014. The quarterly distribution will be paid on Friday, November 13, 2015, to unitholders of record as of the close of business on Friday, October 30, 2015.
Tallgrass Energy GP, LP
As previously announced, the board of directors of TEGP's general partner declared a quarterly cash distribution to Class A shareholders of $0.144 per Class A share for the third quarter of 2015. This quarterly distribution represents $0.576 per Class A share on an annualized basis. The quarterly distribution will be paid on Friday, November 13, 2015, to Class A shareholders of record as of the close of business on Friday, October 30, 2015.
Tallgrass Energy Partners, LP
The financial results for all periods presented in the table below include the applicable results of operations of Trailblazer Pipeline Company LLC, which was acquired by TEP effective April 1, 2014, and our 33.3 percent membership interest in Tallgrass Pony Express Pipeline, LLC (“Pony Express”), which was acquired by TEP effective September 1, 2014. The acquisition of an additional 33.3 percent membership interest in Pony Express effective March 1, 2015, is presented prospectively from the date of acquisition, and as a result, financial information for periods prior to March 1, 2015, have not been recast to reflect the additional 33.3 percent membership interest.
Summary Financial Information
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(in thousands, except coverage and per unit data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net income attributable to partners | $ | 42,679 | $ | 11,444 | $ | 119,897 | $ | 43,853 | |||||||
Add: | |||||||||||||||
Interest expense, net of noncontrolling interest | 3,872 | 1,414 | 11,205 | 4,848 | |||||||||||
Depreciation and amortization expense, net of noncontrolling interest | 18,826 | 9,568 | 57,661 | 26,246 | |||||||||||
Non-cash gain related to derivative instruments | (259 | ) | (395 | ) | (218 | ) | (140 | ) | |||||||
Non-cash compensation expense | 734 | 1,475 | 3,988 | 3,724 | |||||||||||
Non-cash loss from asset sales | — | — | 4,483 | — | |||||||||||
Distributions from unconsolidated investment | — | 184 | — | 1,464 | |||||||||||
Less: | |||||||||||||||
Equity in earnings of unconsolidated investment | — | — | — | (717 | ) | ||||||||||
Non-cash loss allocated to noncontrolling interest | — | — | (9,377 | ) | — | ||||||||||
Gain on remeasurement of unconsolidated investment | — | — | — | (9,388 | ) | ||||||||||
Adjusted EBITDA | $ | 65,852 | $ | 23,690 | $ | 187,639 | $ | 69,890 | |||||||
Add: | |||||||||||||||
Pony Express preferred distributions in excess of distributable cash flow attributable to Pony Express | — | 5,429 | — | 5,429 | |||||||||||
Pony Express deficiency payments received, net | 8,342 | — | 12,050 | — | |||||||||||
Less: | |||||||||||||||
Cash interest expense | (3,518 | ) | (1,008 | ) | (10,031 | ) | (3,875 | ) | |||||||
Maintenance capital expenditures | (4,659 | ) | (4,182 | ) | (9,237 | ) | (7,654 | ) | |||||||
Distributions to noncontrolling interest in excess of earnings | (11,520 | ) | — | (22,517 | ) | — | |||||||||
Cash flow attributable to predecessor operations | — | 966 | — | (3,086 | ) | ||||||||||
Distributable cash flow (DCF) | 54,497 | 24,895 | 157,904 | 60,704 | |||||||||||
Less: | |||||||||||||||
Distributions | (48,574 | ) | (21,663 | ) | (133,540 | ) | (55,035 | ) | |||||||
Amounts in excess of distributions | $ | 5,923 | $ | 3,232 | $ | 24,364 | $ | 5,669 | |||||||
Distribution coverage(1) | 1.12 | x | 1.15 | x | 1.18 | x | 1.10 | x | |||||||
Common and subordinated units outstanding(2) | 60,578 | 49,005 | 60,578 | 49,005 | |||||||||||
Distribution per common unit | $ | 0.6000 | $ | 0.4100 | $ | 1.7000 | $ | 1.1150 | |||||||
(1) | Distribution coverage for the nine months ended September 30, 2014, includes the impact of the distributions paid on the 8.05 million units issued on July 25, 2014. Excluding the impact of the distributions paid on the 8.05 million units, coverage would have been 1.17x for the nine months ended September 30, 2014. |
(2) | Common and subordinated units outstanding represent the number of units as of the date of record for the third quarter distributions in both 2014 and 2015. All subordinated units converted into common units on February 17, 2015. |
Segment Overview
The third quarter 2015 results by segment are summarized below:
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in thousands) | |||||||||||||||
Natural Gas Transportation & Logistics | |||||||||||||||
Operating income | $ | 10,499 | $ | 10,791 | $ | 32,989 | $ | 32,075 | |||||||
Add: | |||||||||||||||
Depreciation and amortization expense | 5,241 | 6,025 | 17,066 | 17,745 | |||||||||||
Non-cash gain related to derivative instruments | (259 | ) | (395 | ) | (218 | ) | (140 | ) | |||||||
Other income, net | 502 | 731 | 1,983 | 2,400 | |||||||||||
Segment Adjusted EBITDA | $ | 15,983 | $ | 17,152 | $ | 51,820 | $ | 52,080 | |||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Crude Oil Transportation & Logistics | (in thousands) | ||||||||||||||
Operating income (loss) | $ | 44,069 | $ | (822 | ) | $ | 103,857 | $ | (2,336 | ) | |||||
Add: | |||||||||||||||
Depreciation and amortization expense, net of noncontrolling interest | 10,323 | 253 | 30,752 | 757 | |||||||||||
Adjusted EBITDA attributable to noncontrolling interests | (6,866 | ) | 547 | (5,880 | ) | 1,557 | |||||||||
Less: | |||||||||||||||
Non-cash loss allocated to noncontrolling interest | — | — | (9,377 | ) | — | ||||||||||
Segment Adjusted EBITDA | $ | 47,526 | $ | (22 | ) | $ | 119,352 | $ | (22 | ) | |||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Processing & Logistics | (in thousands) | ||||||||||||||
Operating (loss) income | $ | (212 | ) | $ | 5,141 | $ | 4,508 | $ | 14,459 | ||||||
Add: | |||||||||||||||
Depreciation and amortization expense, net of noncontrolling interest | 3,262 | 3,290 | 9,843 | 7,744 | |||||||||||
Non-cash loss from asset sales | — | — | 4,483 | ||||||||||||
Distributions from unconsolidated investment | — | 184 | — | 1,464 | |||||||||||
Adjusted EBITDA attributable to noncontrolling interests | (4 | ) | — | 7 | 55 | ||||||||||
Segment Adjusted EBITDA | $ | 3,046 | $ | 8,615 | $ | 18,841 | $ | 23,722 | |||||||
The segment reporting in the table above does not include corporate general and administrative costs or intersegment eliminations. The Crude Oil Transportation & Logistics segment includes figures for 2014 although Pony Express Pipeline did not generate revenue during the three or nine month periods ending September 30, 2014.
Adjusted EBITDA in the Natural Gas Transportation & Logistics segment for the third quarter of 2015 was $16.0 million, representing a decrease of $1.2 million as compared to the third quarter of 2014 primarily due to higher operating costs. Firm contracted transportation capacity of 1,506 MMcf/d for the third quarter of 2015 was comparable to the 1,497 MMcf/d for the third quarter of 2014. When comparing the Natural Gas Transportation & Logistics segment's Adjusted EBITDA for the third quarter of 2015 to its $16.6 million of Adjusted EBITDA for the second quarter of 2015, the decrease of $0.6 million is primarily attributable to higher operating costs.
The Crude Oil Transportation & Logistics segment Adjusted EBITDA was $47.5 million for the third quarter of 2015, representing the operating results of the Pony Express mainline and the lateral in Northeast Colorado, which were placed into commercial service in October 2014 and April 2015, respectively. There were no operating results for the third quarter of 2014 as Pony Express had not yet commenced commercial operations, but distributable cash flow for the third quarter of 2014 includes approximately $5.4 million of preferred distributions received by TEP from Pony Express. When comparing the Crude Oil Transportation & Logistics segment's Adjusted EBITDA for the third quarter of 2015 of $47.5 million to the $46.3 million of Adjusted EBITDA for the second quarter of 2015, the increase of $1.2 million is primarily attributable to increased transportation services revenue due to the lateral in Northeast Colorado being in-service during the entire third quarter of 2015 and the commencement of service for an incremental 10,000 barrels of firm expansion capacity. TEP received distributable cash flow from Pony Express of $43.7 million for its 66.7 percent membership interest for the third quarter of 2015 which is greater than the minimum quarterly preference payment of $36.7 million.
The Processing & Logistics segment generated Adjusted EBITDA of $3.0 million for the third quarter of 2015, representing a decrease of $5.6 million as compared to the third quarter of 2014 and a decrease of $4.1 million as compared to the Adjusted EBITDA of $7.1 million for the second quarter of 2015. The decrease was primarily due to higher costs associated with planned plant downtime for annual maintenance during the third quarter of 2015, lower commodity prices and lower average inlet volumes. Approximate average inlet volumes at the processing facilities were 110 MMcf/day for the third quarter of 2015 as compared to 153 MMcf/day for the third quarter of 2014. A portion of the decrease is attributable to the plant downtime in the third quarter of 2015 which in the previous year occurred in the second quarter.
Tallgrass Energy GP, LP
TEGP's sole cash-generating asset is an approximate 30.35 percent controlling interest in Tallgrass Equity, LLC ("Tallgrass Equity"). Tallgrass Equity's sole cash-generating assets consist of direct and indirect partnership interests in Tallgrass Energy Partners, LP ("TEP"), described below:
• | 100 percent of the outstanding membership interests in Tallgrass MLP GP, LLC ("TEP GP"), which owns the general partner interest in TEP as well as all of the TEP incentive distribution rights ("IDRs"). The general partner interest in TEP is represented by 834,391 general partner units, representing a 1.36 percent general partner interest in TEP at September 30, 2015. |
• | 20,000,000 common units of TEP, representing an approximately 32.57 percent limited partner interest in TEP at September 30, 2015. |
Information on distributions to Tallgrass Equity, TEGP and TEGP's Class A shareholders is shown below (in thousands, except coverage and per share data):
Three Months Ended | |||
September 30, 2015 | |||
TEP distributions to Tallgrass Equity(1) | |||
General partner interest | $ | 660 | |
IDRs | 11,567 | ||
TEP common units owned by Tallgrass Equity | 12,000 | ||
Total TEP distributions to Tallgrass Equity | $ | 24,227 | |
Less: | |||
Cash interest expense attributable to Tallgrass Equity | (1,020 | ) | |
Cash General and administrative expenses attributable to Tallgrass Equity | (500 | ) | |
Cash available for distribution by Tallgrass Equity | $ | 22,707 | |
Distributions to TEGP (Class A) | 6,872 | ||
Distributions to noncontrolling interests (Class B) | 15,769 | ||
Total cash distributions by Tallgrass Equity | 22,641 | ||
TEGP | |||
Distributions from Tallgrass Equity | 6,872 | ||
Less: | |||
Distributions to Class A shareholders | (6,872 | ) | |
Amounts in excess of distributions | $ | — | |
Distribution coverage | 1.00 | ||
Class A shares outstanding | 47,725 | ||
Distribution per Class A share | $ | 0.1440 | |
(1) | Represents distributions expected to be received by Tallgrass Equity from TEP on or about November 13, 2015 in connection with TEP's distribution for the quarter ended September 30, 2015. |
Conference Call
Please join Tallgrass Energy for a conference call and webcast to discuss third quarter 2015 results at 4 p.m. Central Time on Wednesday, November 4, 2015. Interested parties may listen via a link posted on the Investor Relations section of our website and the replay will be available on our website for at least seven days following the live call.
About Tallgrass Energy Partners, LP
Tallgrass Energy Partners, LP (NYSE: TEP) is a publicly traded, growth-oriented limited partnership formed to own, operate, acquire and develop midstream energy assets in North America. TEP currently provides natural gas transportation and storage services for customers in the Rocky Mountain and Midwest regions of the United States through its Tallgrass Interstate Gas Transmission and Trailblazer Pipeline systems. It provides crude oil transportation to customers in Wyoming, Colorado and the surrounding regions through its membership interest in Tallgrass Pony Express Pipeline. TEP also provides services for customers in Wyoming through Tallgrass Midstream at its Casper and Douglas natural gas processing and its West Frenchie Draw natural gas treating facilities and provides water business services to customers in Colorado and Texas through BNN Water Solutions. TEP’s operations are strategically located in and provide services to certain key United States hydrocarbon basins, including the Denver-Julesburg, Powder River, Wind River, Permian and Hugoton-Anadarko Basins and the Niobrara, Mississippi Lime, Eagle Ford and Bakken shale formations.
About Tallgrass Energy GP, LP
Tallgrass Energy GP, LP (NYSE: TEGP) is a limited partnership that has elected to be treated as a corporation for U.S. federal income tax purposes. TEGP owns a controlling membership interest in Tallgrass Equity, LLC through its role as the sole managing member. Tallgrass Equity, LLC owns, both directly and through its ownership of the general partner of TEP, all of TEP's incentive distribution rights, 100 percent of the general partner interest in TEP and 20,000,000 TEP Common Units.
To learn more, please visit our website at www.tallgrassenergy.com.
TEP's Non-GAAP Measures
Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that TEP management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:
• | our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods; |
• | the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; |
• | our ability to incur and service debt and fund capital expenditures; and |
• | the viability of acquisitions and other capital expenditure projects and the returns on investment of various expansion and growth opportunities. |
We believe that the presentation of Adjusted EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP, nor should Adjusted EBITDA and distributable cash flow be considered alternatives to available cash, operating surplus, distributions of available cash from operating surplus or other definitions in our partnership agreement. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. Additionally, because Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
We define Adjusted EBITDA as net income excluding the impact of interest, income taxes, depreciation and amortization, non-cash income or loss related to derivative instruments, non-cash long-term compensation expense, impairment losses, gains or losses on asset or business disposals or acquisitions, gains or losses on the repurchase, redemption or early retirement of debt, and earnings from unconsolidated investments, but including the impact of distributions from unconsolidated investments. We define distributable cash flow as Adjusted EBITDA, plus preferred distributions received from Pony Express in excess of its distributable cash flow attributable to our net interest and adjusted for deficiency payments received from or utilized by Pony Express shippers, less cash interest expense, maintenance capital expenditures, and distributions to noncontrolling interests in excess of earnings allocated to noncontrolling interests. For a reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, please see "Summary Financial Information" above.
Cautionary Note Concerning Forward-Looking Statements
Disclosures in this press release contain “forward-looking statements.” All statements, other than statements of historical facts, included in this press release that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the funding of future growth projects and dropdown transactions. Forward looking statements may also include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of TEP, TEGP and their subsidiaries, including: the ability to pursue expansions and other opportunities for incremental volumes; natural gas and crude oil production growth in TEP's operating areas; expected future benefits of acquisitions or expansion projects; timing of anticipated spending on planned expenses and maintenance capital projects; and distribution rate and growth, including variability of quarterly distribution coverage. These statements are based on certain assumptions made by TEP and TEGP based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of TEP and TEGP, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to TEP and TEGP’s financial performance and results, availability of sufficient cash flow to pay distributions and execute their business plans, the demand for natural gas storage, processing and transportation services and for crude oil transportation services, operating hazards, the effects of government regulation, tax position and other risks incidental to transporting, storing and processing natural gas or transporting crude oil and other important factors that could cause actual results to differ materially from those projected, including those set forth in reports filed by TEP and TEGP with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and TEP and TEGP do not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
Tallgrass Energy Partners, LP Financial Statements
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2015 | December 31, 2014 | ||||||
(in thousands) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 18,705 | $ | 867 | |||
Accounts receivable, net | 52,926 | 39,768 | |||||
Receivable from related party | — | 73,393 | |||||
Gas imbalances | 862 | 2,442 | |||||
Inventories | 14,132 | 13,045 | |||||
Derivative assets at fair value | 218 | — | |||||
Prepayments and other current assets | 3,678 | 2,766 | |||||
Total Current Assets | 90,521 | 132,281 | |||||
Property, plant and equipment, net | 1,948,821 | 1,853,081 | |||||
Goodwill | 343,288 | 343,288 | |||||
Intangible asset, net | 98,502 | 104,538 | |||||
Deferred financing costs, net | 4,496 | 5,528 | |||||
Deferred charges and other assets | 15,649 | 18,481 | |||||
Total Assets | $ | 2,501,277 | $ | 2,457,197 | |||
LIABILITIES AND PARTNERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 19,627 | $ | 62,329 | |||
Accounts payable to related parties | 3,672 | 3,915 | |||||
Gas imbalances | 2,629 | 3,611 | |||||
Accrued taxes | 16,624 | 3,989 | |||||
Accrued liabilities | 8,736 | 9,384 | |||||
Deferred revenue | 19,786 | 5,468 | |||||
Other current liabilities | 3,664 | 7,872 | |||||
Total Current Liabilities | 74,738 | 96,568 | |||||
Long-term debt | 696,000 | 559,000 | |||||
Other long-term liabilities and deferred credits | 5,461 | 6,478 | |||||
Total Long-term Liabilities | 701,461 | 565,478 | |||||
Commitments and Contingencies | |||||||
Equity: | |||||||
Common unitholders (60,576,357 and 32,834,105 units issued and outstanding at September 30, 2015 and December 31, 2014, respectively) | 1,625,516 | 800,333 | |||||
Subordinated unitholder (0 and 16,200,000 units issued and outstanding at September 30, 2015 and December 31, 2014, respectively) | — | 274,133 | |||||
General partner (834,391 units issued and outstanding at September 30, 2015 and December 31, 2014) | (352,478 | ) | (35,743 | ) | |||
Total Partners’ Equity | 1,273,038 | 1,038,723 | |||||
Noncontrolling interests | $ | 452,040 | $ | 756,428 | |||
Total Equity | $ | 1,725,078 | $ | 1,795,151 | |||
Total Liabilities and Equity | $ | 2,501,277 | $ | 2,457,197 | |||
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(in thousands, except per unit amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Sales of natural gas, NGLs, and crude oil | $ | 20,252 | $ | 49,130 | $ | 62,132 | $ | 141,887 | |||||||
Natural gas transportation services | 29,431 | 30,745 | 90,620 | 95,418 | |||||||||||
Crude oil transportation services | 81,928 | — | 206,331 | — | |||||||||||
Processing and other revenues | 6,557 | 10,078 | 26,730 | 24,747 | |||||||||||
Total Revenues | 138,168 | 89,953 | 385,813 | 262,052 | |||||||||||
Operating Costs and Expenses: | |||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 18,186 | 45,767 | 54,959 | 131,187 | |||||||||||
Cost of transportation services (exclusive of depreciation and amortization shown below) | 14,862 | 3,329 | 39,069 | 13,734 | |||||||||||
Operations and maintenance | 14,071 | 9,961 | 36,054 | 28,029 | |||||||||||
Depreciation and amortization | 20,802 | 10,071 | 61,762 | 27,905 | |||||||||||
General and administrative | 11,807 | 7,448 | 37,947 | 21,221 | |||||||||||
Taxes, other than income taxes | 5,521 | 1,797 | 16,547 | 5,392 | |||||||||||
Loss on sale of assets | — | — | 4,483 | — | |||||||||||
Total Operating Costs and Expenses | 85,249 | 78,373 | 250,821 | 227,468 | |||||||||||
Operating Income | 52,919 | 11,580 | 134,992 | 34,584 | |||||||||||
Other (Expense) Income: | |||||||||||||||
Interest expense, net | (3,871 | ) | (1,058 | ) | (11,204 | ) | (4,492 | ) | |||||||
Gain on remeasurement of unconsolidated investment | — | — | — | 9,388 | |||||||||||
Equity in earnings of unconsolidated investment | — | — | — | 717 | |||||||||||
Other income, net | 502 | 731 | 1,983 | 2,400 | |||||||||||
Total Other (Expense) Income | (3,369 | ) | (327 | ) | (9,221 | ) | 8,013 | ||||||||
Net income | 49,550 | 11,253 | 125,771 | 42,597 | |||||||||||
Net (income) loss attributable to noncontrolling interests | (6,871 | ) | 191 | (5,874 | ) | 1,256 | |||||||||
Net income attributable to partners | $ | 42,679 | $ | 11,444 | $ | 119,897 | $ | 43,853 | |||||||
Allocation of income to the limited partners: | |||||||||||||||
Net income attributable to partners | $ | 42,679 | $ | 11,444 | $ | 119,897 | $ | 43,853 | |||||||
Predecessor operations interest in net loss (income) | — | 1,134 | — | (1,508 | ) | ||||||||||
General partner interest in net income | (12,146 | ) | (1,435 | ) | (30,614 | ) | (2,912 | ) | |||||||
Common and subordinated unitholders' interest in net income | 30,533 | 11,143 | 89,283 | 39,433 | |||||||||||
Basic net income per common and subordinated unit | $ | 0.50 | $ | 0.24 | $ | 1.54 | $ | 0.92 | |||||||
Diluted net income per common and subordinated unit | $ | 0.50 | $ | 0.23 | $ | 1.52 | $ | 0.90 | |||||||
Basic average number of common and subordinated units outstanding | 60,576 | 46,855 | 57,917 | 42,770 | |||||||||||
Diluted average number of common and subordinated units outstanding | 61,536 | 47,948 | 58,884 | 43,771 | |||||||||||
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
(in thousands) | |||||||
Cash Flows from Operating Activities: | |||||||
Net income | $ | 125,771 | $ | 42,597 | |||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
Depreciation and amortization | 64,624 | 28,946 | |||||
Gain on remeasurement of unconsolidated investment | — | (9,388 | ) | ||||
Noncash compensation expense | 3,988 | 3,724 | |||||
Loss on sale of assets | 4,483 | — | |||||
Changes in components of working capital: | |||||||
Accounts receivable and other | (11,538 | ) | 2,592 | ||||
Gas imbalances | 388 | 1,392 | |||||
Inventories | (5,265 | ) | (4,661 | ) | |||
Accounts payable and accrued liabilities | 6,786 | (14,990 | ) | ||||
Deferred revenue | 13,995 | 1,459 | |||||
Other operating, net | (5,748 | ) | (4,427 | ) | |||
Net Cash Provided by Operating Activities | 197,484 | 47,244 | |||||
Cash Flows from Investing Activities: | |||||||
Capital expenditures | (65,146 | ) | (642,216 | ) | |||
Acquisition of Pony Express membership interest | (700,000 | ) | (27,000 | ) | |||
Acquisition of Trailblazer | — | (150,000 | ) | ||||
Acquisition of additional equity interests in Water Solutions | — | (7,600 | ) | ||||
Issuance of related party loan | — | (270,000 | ) | ||||
Other investing, net | (4,625 | ) | (2,268 | ) | |||
Net Cash Used in Investing Activities | (769,771 | ) | (1,099,084 | ) | |||
Cash Flows from Financing Activities: | |||||||
Proceeds from public offering, net of offering costs | 551,243 | 319,588 | |||||
Borrowings under revolving credit facility, net | 137,000 | 433,000 | |||||
Contributions from Predecessor Entities, net | — | 312,125 | |||||
Distributions to unitholders | (113,260 | ) | (46,454 | ) | |||
Contribution from Tallgrass Development, LP | — | 27,488 | |||||
Contributions from noncontrolling interests | 19,303 | 5,429 | |||||
Other financing, net | (4,161 | ) | 1,549 | ||||
Net Cash Provided by Financing Activities | 590,125 | 1,052,725 | |||||
Net Change in Cash and Cash Equivalents | 17,838 | 885 | |||||
Cash and Cash Equivalents, beginning of period | 867 | — | |||||
Cash and Cash Equivalents, end of period | $ | 18,705 | $ | 885 | |||
Tallgrass Energy GP, LP Financial Statements
TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 2015 | December 31, 2014 | ||||||||||||||||||||||
TEP | Consolidating Adjustments (1) | TEGP | TEP | Consolidating Adjustments (1) | TEGP | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current Assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 18,705 | $ | 304 | $ | 19,009 | $ | 867 | $ | — | $ | 867 | |||||||||||
Accounts receivable, net | 52,926 | — | 52,926 | 39,768 | — | 39,768 | |||||||||||||||||
Receivable from related party | — | — | — | 73,393 | — | 73,393 | |||||||||||||||||
Gas imbalances | 862 | — | 862 | 2,442 | — | 2,442 | |||||||||||||||||
Inventories | 14,132 | — | 14,132 | 13,045 | — | 13,045 | |||||||||||||||||
Derivative assets at fair value | 218 | — | 218 | — | — | — | |||||||||||||||||
Prepayments and other current assets | 3,678 | — | 3,678 | 2,766 | — | 2,766 | |||||||||||||||||
Total Current Assets | 90,521 | 304 | 90,825 | 132,281 | — | 132,281 | |||||||||||||||||
Property, plant and equipment, net | 1,948,821 | — | 1,948,821 | 1,853,081 | — | 1,853,081 | |||||||||||||||||
Goodwill | 343,288 | — | 343,288 | 343,288 | — | 343,288 | |||||||||||||||||
Intangible asset, net | 98,502 | — | 98,502 | 104,538 | — | 104,538 | |||||||||||||||||
Deferred tax asset | — | 441,528 | 441,528 | — | — | — | |||||||||||||||||
Deferred financing costs, net | 4,496 | 1,618 | 6,114 | 5,528 | — | 5,528 | |||||||||||||||||
Deferred charges and other assets | 15,649 | — | 15,649 | 18,481 | — | 18,481 | |||||||||||||||||
Total Assets | $ | 2,501,277 | $ | 443,450 | $ | 2,944,727 | $ | 2,457,197 | $ | — | $ | 2,457,197 | |||||||||||
LIABILITIES AND PARTNERS’ EQUITY | |||||||||||||||||||||||
Current Liabilities: | |||||||||||||||||||||||
Accounts payable | $ | 19,627 | $ | — | $ | 19,627 | $ | 62,329 | $ | — | $ | 62,329 | |||||||||||
Accounts payable to related parties | 3,672 | (91 | ) | 3,581 | 3,915 | — | 3,915 | ||||||||||||||||
Gas imbalances | 2,629 | — | 2,629 | 3,611 | — | 3,611 | |||||||||||||||||
Accrued taxes | 16,624 | — | 16,624 | 3,989 | — | 3,989 | |||||||||||||||||
Accrued liabilities | 8,736 | 188 | 8,924 | 9,384 | — | 9,384 | |||||||||||||||||
Deferred revenue | 19,786 | — | 19,786 | 5,468 | — | 5,468 | |||||||||||||||||
Other current liabilities | 3,664 | — | 3,664 | 7,872 | — | 7,872 | |||||||||||||||||
Total Current Liabilities | 74,738 | 97 | 74,835 | 96,568 | — | 96,568 | |||||||||||||||||
Long-term debt | 696,000 | 148,000 | 844,000 | 559,000 | — | 559,000 | |||||||||||||||||
Other long-term liabilities and deferred credits | 5,461 | — | 5,461 | 6,478 | — | 6,478 | |||||||||||||||||
Total Long-term Liabilities | 701,461 | 148,000 | 849,461 | 565,478 | — | 565,478 | |||||||||||||||||
Equity: | |||||||||||||||||||||||
Total Partners' Capital | 1,273,038 | (862,132 | ) | 410,906 | 1,038,723 | (891,857 | ) | 146,866 | |||||||||||||||
Noncontrolling interests | 452,040 | 1,157,485 | 1,609,525 | 756,428 | 891,857 | 1,648,285 | |||||||||||||||||
Total Equity | $ | 1,725,078 | $ | 295,353 | $ | 2,020,431 | $ | 1,795,151 | $ | — | $ | 1,795,151 | |||||||||||
Total Liabilities and Equity | $ | 2,501,277 | $ | 443,450 | $ | 2,944,727 | $ | 2,457,197 | $ | — | $ | 2,457,197 | |||||||||||
(1) | Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for TEGP. |
TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
Three Months Ended September 30, 2015 | Three Months Ended September 30, 2014 | ||||||||||||||||||||||
TEP | Consolidating Adjustments (1) | TEGP | TEP | Consolidating Adjustments (1) | TEGP | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Sales of natural gas, NGLs, and crude oil | $ | 20,252 | $ | — | $ | 20,252 | $ | 49,130 | $ | — | $ | 49,130 | |||||||||||
Natural gas transportation services | 29,431 | — | 29,431 | 30,745 | — | 30,745 | |||||||||||||||||
Crude oil transportation services | 81,928 | — | 81,928 | — | — | — | |||||||||||||||||
Processing and other revenues | 6,557 | — | 6,557 | 10,078 | — | 10,078 | |||||||||||||||||
Total Revenues | 138,168 | — | 138,168 | 89,953 | — | 89,953 | |||||||||||||||||
Operating Costs and Expenses: | |||||||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 18,186 | — | 18,186 | 45,767 | — | 45,767 | |||||||||||||||||
Cost of transportation services (exclusive of depreciation and amortization shown below) | 14,862 | — | 14,862 | 3,329 | — | 3,329 | |||||||||||||||||
Operations and maintenance | 14,071 | — | 14,071 | 9,961 | — | 9,961 | |||||||||||||||||
Depreciation and amortization | 20,802 | — | 20,802 | 10,071 | — | 10,071 | |||||||||||||||||
General and administrative | 11,807 | 514 | 12,321 | 7,448 | — | 7,448 | |||||||||||||||||
Taxes, other than income taxes | 5,521 | — | 5,521 | 1,797 | — | 1,797 | |||||||||||||||||
Loss on sale of assets | — | — | — | — | — | — | |||||||||||||||||
Total Operating Costs and Expenses | 85,249 | 514 | 85,763 | 78,373 | — | 78,373 | |||||||||||||||||
Operating Income | 52,919 | (514 | ) | 52,405 | 11,580 | — | 11,580 | ||||||||||||||||
Other (Expense) Income: | |||||||||||||||||||||||
Interest expense, net | (3,871 | ) | (1,111 | ) | (4,982 | ) | (1,058 | ) | — | (1,058 | ) | ||||||||||||
Other income, net | 502 | — | 502 | 731 | — | 731 | |||||||||||||||||
Total Other (Expense) Income | (3,369 | ) | (1,111 | ) | (4,480 | ) | (327 | ) | — | (327 | ) | ||||||||||||
Net income before tax | 49,550 | (1,625 | ) | 47,925 | 11,253 | — | 11,253 | ||||||||||||||||
Deferred income tax expense | — | (1,828 | ) | (1,828 | ) | — | — | — | |||||||||||||||
Net income | 49,550 | (3,453 | ) | 46,097 | 11,253 | — | 11,253 | ||||||||||||||||
less: Net income attributable to noncontrolling interests | (6,871 | ) | (34,803 | ) | (41,674 | ) | 191 | (9,814 | ) | (9,623 | ) | ||||||||||||
Net income attributable to TEGP | $ | 42,679 | $ | (38,256 | ) | $ | 4,423 | $ | 11,444 | $ | (9,814 | ) | $ | 1,630 | |||||||||
Basic net income per Class A share | $ | 0.09 | |||||||||||||||||||||
Diluted net income per Class A share | $ | 0.09 | |||||||||||||||||||||
Basic average number of Class A shares outstanding | 47,725 | ||||||||||||||||||||||
Diluted average number of Class A shares outstanding | 47,808 | ||||||||||||||||||||||
(1) | Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for TEGP. |
Nine Months Ended September 30, 2015 | Nine Months Ended September 30, 2014 | ||||||||||||||||||||||
TEP | Consolidating Adjustments (1) | TEGP | TEP | Consolidating Adjustments (1) | TEGP | ||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Sales of natural gas, NGLs, and crude oil | $ | 62,132 | $ | — | $ | 62,132 | $ | 141,887 | $ | — | $ | 141,887 | |||||||||||
Natural gas transportation services | 90,620 | — | 90,620 | 95,418 | — | 95,418 | |||||||||||||||||
Crude oil transportation services | 206,331 | — | 206,331 | — | — | — | |||||||||||||||||
Processing and other revenues | 26,730 | — | 26,730 | 24,747 | — | 24,747 | |||||||||||||||||
Total Revenues | 385,813 | — | 385,813 | 262,052 | — | 262,052 | |||||||||||||||||
Operating Costs and Expenses: | |||||||||||||||||||||||
Cost of sales (exclusive of depreciation and amortization shown below) | 54,959 | — | 54,959 | 131,187 | — | 131,187 | |||||||||||||||||
Cost of transportation services (exclusive of depreciation and amortization shown below) | 39,069 | — | 39,069 | 13,734 | — | 13,734 | |||||||||||||||||
Operations and maintenance | 36,054 | — | 36,054 | 28,029 | — | 28,029 | |||||||||||||||||
Depreciation and amortization | 61,762 | — | 61,762 | 27,905 | — | 27,905 | |||||||||||||||||
General and administrative | 37,947 | 764 | 38,711 | 21,221 | — | 21,221 | |||||||||||||||||
Taxes, other than income taxes | 16,547 | — | 16,547 | 5,392 | — | 5,392 | |||||||||||||||||
Loss on sale of assets | 4,483 | — | 4,483 | — | — | — | |||||||||||||||||
Total Operating Costs and Expenses | 250,821 | 764 | 251,585 | 227,468 | — | 227,468 | |||||||||||||||||
Operating Income | 134,992 | (764 | ) | 134,228 | 34,584 | — | 34,584 | ||||||||||||||||
Other (Expense) Income: | |||||||||||||||||||||||
Interest expense, net | (11,204 | ) | (1,697 | ) | (12,901 | ) | (4,492 | ) | — | (4,492 | ) | ||||||||||||
Gain on remeasurement of unconsolidated investment | — | — | — | 9,388 | — | 9,388 | |||||||||||||||||
Equity in earnings of unconsolidated investment | — | — | — | 717 | — | 717 | |||||||||||||||||
Other income, net | 1,983 | — | 1,983 | 2,400 | — | 2,400 | |||||||||||||||||
Total Other (Expense) Income | (9,221 | ) | (1,697 | ) | (10,918 | ) | 8,013 | — | 8,013 | ||||||||||||||
Net income before tax | 125,771 | (2,461 | ) | 123,310 | 42,597 | — | 42,597 | ||||||||||||||||
Deferred income tax expense | — | (3,600 | ) | (3,600 | ) | — | — | — | |||||||||||||||
Net income | 125,771 | (6,061 | ) | 119,710 | 42,597 | — | 42,597 | ||||||||||||||||
less: Net income attributable to noncontrolling interests | (5,874 | ) | (99,557 | ) | (105,431 | ) | 1,256 | (37,153 | ) | (35,897 | ) | ||||||||||||
Net income attributable to TEGP | $ | 119,897 | $ | (105,618 | ) | $ | 14,279 | $ | 43,853 | $ | (37,153 | ) | $ | 6,700 | |||||||||
Allocation of income for the six months ended September 30, 2015: | |||||||||||||||||||||||
Net income attributable to TEGP from the beginning of the period to May 11, 2015 | $ | 7,393 | |||||||||||||||||||||
Net income attributable to TEGP from May 12, 2015 to September 30, 2015 | 6,886 | ||||||||||||||||||||||
Basic net income per Class A share | $ | 0.14 | |||||||||||||||||||||
Diluted net income per Class A share | $ | 0.14 | |||||||||||||||||||||
Basic average number of Class A shares outstanding | 47,725 | ||||||||||||||||||||||
Diluted average number of Class A shares outstanding | 47,812 | ||||||||||||||||||||||
(1) | Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for TEGP. |
CONTACT:
Investor and Financial Inquiries
Nate Lien
(913) 928-6012
investor.relations@tallgrassenergylp.com
Media and Trade Inquiries
Phyllis Hammond
(913) 928-6014
media.relations@tallgrassenergylp.com