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8-K - 8-K - Tallgrass Energy Partners, LPtep2017331earningsrelease8.htm


Exhibit 99.1
Tallgrass Energy Reports Strong First Quarter 2017 Results
LEAWOOD, Kan.--(BUSINESS WIRE)--May 3, 2017--Tallgrass Energy Partners, LP (NYSE: TEP) ("TEP") and Tallgrass Energy GP, LP (NYSE: TEGP) ("TEGP"), collectively referred to as Tallgrass Energy, today reported financial and operating results for the first quarter of 2017.
“Tallgrass Energy delivered another outstanding quarter supported by growth in distributions from Rockies Express, growth in our Processing and Logistics Segment, contributions from our recent Terminals and NatGas Operator acquisition and continued performance in our Crude Oil and Logistics segment," said Tallgrass Energy President and CEO David G. Dehaemers Jr. "We remain well-positioned to deliver record distributable cash flow and distribution coverage metrics at TEP for 2017."
First Quarter Distributions
Tallgrass Energy Partners, LP
As previously announced, the board of directors of TEP's general partner declared a quarterly cash distribution of $0.835 per common unit for the first quarter of 2017. This quarterly distribution represents $3.34 on an annualized basis, a sequential increase of 2.5 percent from the fourth quarter 2016 distribution and an increase of 18.4 percent from the first quarter 2016 distribution. The quarterly distribution will be paid on Monday, May 15, 2017, to unitholders of record as of the close of business on Friday, April 28, 2017.
In addition, as previously announced in conjunction with the recent acquisition of an approximate 25 percent interest in Rockies Express Pipeline LLC, management intends to recommend to the board of directors of TEP’s general partner that TEP increase its quarterly distributions for the second and third quarters of 2017 by an aggregate of at least $0.10 per unit, or $0.40 per unit on an annualized basis. These distributions would be paid in mid-August and mid-November of 2017, respectively.
Tallgrass Energy GP, LP
Also, as previously announced, the board of directors of TEGP's general partner declared a quarterly cash distribution of $0.2875 per Class A share for the first quarter of 2017. This quarterly distribution represents $1.15 per Class A share on an annualized basis, a sequential increase of 3.6 percent from the fourth quarter 2016 distribution and an increase of 36.9 percent from the first quarter 2016 distribution. The quarterly distribution will be paid on Monday, May 15, 2017, to Class A shareholders of record as of the close of business on Friday, April 28, 2017.





Tallgrass Energy Partners, LP Summary Financial Information(1) 
 
Three Months Ended March 31,
(in thousands, except coverage and per unit data)
2017
 
2016
 
As Reported in 2016
 
 
 
 
 
 
Net income attributable to partners
$
70,905

 
$
47,755

 
$
44,070

Add:
 
 
 
 
 
Interest expense(2)
14,689

 
7,499

 
7,499

Depreciation and amortization expense(2)
21,867

 
22,482

 
21,967

Distributions from unconsolidated investment
30,819

 
634

 

Non-cash (gain) loss related to derivative instruments(2)
(2,441
)
 
8,990

 
8,990

Non-cash compensation expense (3)
1,458

 
1,166

 
1,166

Less:
 
 
 
 
 
Equity in earnings of unconsolidated investment
(20,738
)
 
(709
)
 

Gain on disposal of assets
(1,448
)
 

 

Adjusted EBITDA
$
115,111

 
$
87,817

 
$
83,692

Add:
 
 
 
 
 
Deficiency payments received, net
16,071

 
 
 
7,157

Less:
 
 
 
 
 
Cash interest cost
(13,567
)
 
 
 
(6,821
)
Maintenance capital expenditures, net
(63
)
 
 
 
(2,168
)
Distributable Cash Flow
117,552

 
 
 
81,860

Less:
 
 
 
 
 
Distributions
(91,366
)
 
 
 
(68,884
)
Amounts in excess of distributions(4)
$
26,186

 
 
 
$
12,976

Distribution coverage
1.29
x
 
 
 
1.19
x
 
 
 
 
 
 
Common units outstanding(5)
72,438

 
 
 
68,423

Distribution per common unit
$
0.8350

 
 
 
$
0.7050

(1) 
The financial results for all periods presented in the table include the applicable results of operations of Tallgrass Terminals, LLC and Tallgrass NatGas Operator, LLC, which were acquired by TEP effective January 1, 2017, except for the period under the column "As Reported in 2016."
(2) 
Net of noncontrolling interest.
(3) Represents TEP's portion of non-cash compensation expense related to Equity Participation Units, excluding amounts allocated to Tallgrass Development, LP.
(4) Cumulative distribution coverage from TEP's IPO in May 2013 through March 31, 2017, is $158.6 million and the cumulative distribution coverage ratio is 1.22x.
(5) 
Common units represent the number of units as of the date of record for the first quarter distributions in both 2017 and 2016.
Acquisition of Additional Interest in REX
Effective March 31, 2017, TEP acquired an additional 24.99 percent membership interest in Rockies Express Pipeline LLC (“REX”) from Tallgrass Development, LP for cash consideration of $400 million. The acquisition increases TEP’s ownership interest in REX to 49.99 percent.
Ultra Update
On April 12, 2017, Ultra Resources, Inc. ("Ultra") announced that it had completed its restructuring and emerged from bankruptcy. The reorganization plan contemplates payment of REX’s $150 million claim within three months after Ultra emerges from bankruptcy. Based on the timing of Ultra's emergence, REX expects to receive its cash payment no later than July 12, 2017. TEP will receive its approximate 50 percent share of an expected distribution of approximately $150 million from REX resulting from Ultra's settlement payment.





Conference Call
Please join Tallgrass Energy for a conference call and webcast to discuss first quarter 2017 results at 3:30 p.m. Central Time on Wednesday, May 3, 2017. 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.
Tallgrass Energy Partners, LP Alternative Reconciliations
Adjusted EBITDA and Distributable Cash Flow, as defined in "Non-GAAP Measures" below, may be impacted by the timing of cash payments received as a result of shipper deficiency payments received or utilized during the period or incremental barrels shipped during the period. As such, we have also provided alternative reconciliations of Adjusted EBITDA and Distributable Cash Flow that illustrate the impact of these items. These alternative reconciliations are also non-GAAP Measures. Management believes this information provides investors useful information regarding the impact of these items on our current results as well as the potential impact on future results.
Alternative Reconciliation of Adjusted EBITDA
 
Three Months Ended March 31,
(in thousands)
2017
 
 
Adjusted EBITDA
$
115,111

Add:
 
Deficiency payments received, net(1)
16,071

Alternative Adjusted EBITDA(2)
$
131,182


(1) Cumulative net deficiency balance at March 31, 2017, is $77.0 million.
(2) 
Alternative Adjusted EBITDA shows what TEP's Adjusted EBITDA would have been for the period presented if TEP included net deficiency payments from shippers' firm, take-or-pay contracts in calculating Adjusted EBITDA.  TEP's reported distributable cash flow and distribution coverage would remain unchanged.

Alternative Reconciliation of Distributable Cash Flow and Distribution Coverage
 
Three Months Ended March 31,
(in thousands, except coverage)
2017
 
 
Distributable Cash Flow
$
117,552

Less:
 
Cash flow from incremental barrels shipped(1)
(2,830
)
Alternative Distributable Cash Flow(2)
114,722

Less:
 
Distributions
(91,366
)
Amounts in excess of distributions
$
23,356

Alternative distribution coverage(2)
1.26
x

(1) Cumulative shipper incremental balance at March 31, 2017, is $25.9 million.
(2) 
Alternative distributable cash flow and alternative distribution coverage shown excludes the impact of cash flows from incremental barrels shipped on the Pony Express system, as incremental barrels shipped during current periods may reduce the shippers' firm commitment in future periods under their firm, take-or-pay contracts, thereby potentially reducing cash flows in those corresponding future periods. Under this alternative calculation, the cash flows received from incremental barrel shipments would be shown in the future periods in which the incremental barrels are utilized to reduce the shippers' firm commitment.





Tallgrass Energy Partners, LP Segment Overview(1)(2) 
The first quarter 2017 comparative results by segment are summarized below:
 
Three Months Ended March 31,
 
2017
 
2016
 
As Reported in 2016
 
(in thousands)
Crude Oil Transportation & Logistics
 
 
 
 
 
Operating income
$
44,715

 
$
53,961

 
$
52,666

Add:
 
 
 
 
 
Depreciation and amortization expense(3)
13,879

 
13,433

 
12,918

Distributions from unconsolidated investment
694

 
634

 

Less:
 
 
 
 
 
Adjusted EBITDA attributable to noncontrolling interests
(871
)
 
(1,043
)
 
(1,043
)
Non-cash gain related to derivative instruments(3)
(650
)
 

 

Segment Adjusted EBITDA
$
57,767

 
$
66,985

 
$
64,541

 
 
 
 
 
 
 
Three Months Ended March 31,
 
2017
 
2016
 
As Reported in 2016
 
(in thousands)
Natural Gas Transportation & Logistics
 
 
 
 
 
Operating income
$
18,168

 
$
12,345

 
$
10,664

Add:
 
 
 
 
 
Depreciation and amortization expense
4,783

 
5,878

 
5,878

Distributions from unconsolidated investment
30,125

 

 

Non-cash (gain) loss related to derivative instruments
(116
)
 
44

 
44

Other income, net
70

 
566

 
566

Segment Adjusted EBITDA
$
53,030

 
$
18,833

 
$
17,152

 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
 
2017
 
2016
 
 
 
(in thousands)
 
 
Processing & Logistics
 
 
 
 
 
Operating income
$
4,116

 
$
178

 
 
Add:
 
 
 
 
 
Depreciation and amortization expense(3)
3,205

 
3,171

 
 
Non-cash gain related to derivative instruments
210

 

 
 
Less:
 
 
 
 
 
Gain on disposal of assets
(1,448
)
 

 
 
Adjusted EBITDA attributable to noncontrolling interests
(8
)
 
2

 
 
Segment Adjusted EBITDA
$
6,075

 
$
3,351

 
 
 
 
 
 
 
 
(1) The financial results for the Crude Oil Transportation and Logistics and Natural Gas Transportation & Logistics segments for the three months ended March 31, 2016, have been recast to reflect the results of operations of Terminals and NatGas, respectively, which TEP acquired effective January 1, 2017. The financial results for the Crude Oil Transportation and Logistics and Natural Gas Transportation & Logistics segments for the three months ended March 31, 2016, under the column "As Reported in 2016," does not include Terminals and NatGas's results of operations.
(2) Segment reporting does not include corporate general and administrative costs or intersegment eliminations.
(3) Net of noncontrolling interest.





TEP acquired a 25 percent interest in REX effective May 6, 2016, and an additional 24.99 percent interest in REX effective March 31, 2017. TEP's consolidated Adjusted EBITDA, as shown above, includes TEP's membership interest in REX. The table below is a reconciliation of REX's Adjusted EBITDA and Distributable Cash Flow for the three months ended March 31, 2017 and 2016, presented to provide additional information on REX's financial results. Results for the three months ended March 31, 2016 are presented for comparative purposes only, as TEP did not own a membership interest in REX during that period.
 
Three Months Ended March 31,
 
2017
 
2016
 
(in thousands)
Net income
$
66,250

 
$
79,935

Add:
 
 
 
Interest expense
41,826

 
40,545

Depreciation and amortization expense
54,191

 
50,336

Adjusted EBITDA
162,267

 
170,816

Less:
 
 
 
Cash interest cost
(40,992
)
 
(39,711
)
Maintenance capital expenditures
(3,581
)
 
(1,996
)
Distributable Cash Flow
$
117,694

 
$
129,109

 
 
 
 
Distributions to Members
$
(120,501
)
 
$
(125,421
)
Contributions from Members
$
26,771

 
$
74,859






Tallgrass Energy GP, LP Summary Financial Information
Information on distributions to Tallgrass Equity, LLC ("Tallgrass Equity"), TEGP and TEGP's Class A shareholders is shown below (in thousands, except coverage and per share data):
 
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 
TEP distributions to Tallgrass Equity(1)
 
 
 
General partner interest
$
1,040

 
$
830

Incentive Distribution Rights
29,840

 
19,816

TEP common units owned by Tallgrass Equity
16,700

 
14,100

Total TEP distributions to Tallgrass Equity
47,580

 
34,746

Less:
 
 
 
Cash interest expense attributable to Tallgrass Equity
(1,209
)
 
(1,090
)
Cash general and administrative expenses attributable to Tallgrass Equity
(500
)
 
(500
)
Cash available for distribution by Tallgrass Equity
45,871

 
33,156

Distributions to Class A (TEGP)
16,697

 
10,022

Distributions to Class B (Exchange Right Holders)
28,507

 
22,996

Total cash distributions by Tallgrass Equity
$
45,204

 
$
33,018

TEGP
 
 
 
Distributions from Tallgrass Equity
$
16,697

 
$
10,022

Less:
 
 
 
Distributions to Class A shareholders
(16,697
)
 
(10,022
)
Amounts in excess of distributions
$

 
$

Distribution coverage
1.00
x
 
1.00
x
 
 
 
 
Class A shares outstanding
58,075

 
47,725

Distribution per Class A share
$
0.2875

 
$
0.2100

(1)  
Represents distributions expected to be received by Tallgrass Equity from TEP on or about May 15, 2017, in connection with TEP's distribution for the quarter ended March 31, 2017.
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 and financial statements of our subsidiaries and unconsolidated investments, 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, net cash provided by operating activities 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 generally 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 also use Distributable Cash Flow, which we generally define as Adjusted EBITDA, plus deficiency payments received from or utilized by our customers and preferred distributions received from Pony Express in excess of its distributable cash flow attributable to our net interest, less cash interest expense, maintenance capital expenditures, distributions to noncontrolling interests in excess of earnings allocated to noncontrolling interests, and certain cash reserves permitted by our partnership agreement. 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 TEP's ability to achieve record distributable cash flow and distribution coverage in 2017, whether there will be any and, if so, the amount of, TEP's quarterly distribution increases during the second and third quarters of 2017 and the amount of any distribution from REX resulting from Ultra's expected settlement payment. 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
(UNAUDITED)
 
March 31, 2017
 
December 31, 2016
 
(in thousands)
ASSETS
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1,198

 
$
1,873

Accounts receivable, net
57,274

 
59,536

Gas imbalances
636

 
1,597

Inventories
15,647

 
13,093

Derivative assets at fair value
304

 
10,967

Prepayments and other current assets
6,785

 
7,628

Total Current Assets
81,844

 
94,694

Property, plant and equipment, net
2,085,670

 
2,079,232

Goodwill
343,288

 
343,288

Intangible asset, net
92,764

 
93,522

Unconsolidated investments
935,918

 
475,625

Deferred financing costs, net
3,930

 
4,815

Deferred charges and other assets
9,242

 
11,037

Total Assets
$
3,552,656

 
$
3,102,213

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
22,050

 
$
24,122

Accounts payable to related parties
6,175

 
5,935

Gas imbalances
1,473

 
1,239

Derivative liabilities at fair value

 
556

Accrued taxes
21,857

 
16,996

Accrued liabilities
6,783

 
16,702

Deferred revenue
77,067

 
60,757

Other current liabilities
6,001

 
6,446

Total Current Liabilities
141,406

 
132,753

Long-term debt, net
1,960,232

 
1,407,981

Other long-term liabilities and deferred credits
7,125

 
7,063

Total Long-term Liabilities
1,967,357

 
1,415,044

Commitments and Contingencies
 
 
 
Equity:
 
 
 
Predecessor Equity

 
82,295

Limited partners (72,184,472 and 72,485,954 common units issued and outstanding at March 31, 2017 and December 31, 2016, respectively)
2,045,163

 
2,070,495

General partner (834,391 units issued and outstanding at March 31, 2017 and December 31, 2016)
(635,406
)
 
(632,339
)
Total Partners' Equity
1,409,757

 
1,520,451

Noncontrolling interests
34,136

 
33,965

Total Equity
1,443,893

 
1,554,416

Total Liabilities and Equity
$
3,552,656

 
$
3,102,213






TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 
Three Months Ended March 31,
 
2017
 
2016
 
(in thousands, except per unit amounts)
Revenues:
 
 
 
Crude oil transportation services
$
84,331

 
$
94,572

Natural gas transportation services
31,685

 
29,280

Sales of natural gas, NGLs, and crude oil
15,381

 
13,926

Processing and other revenues
13,003

 
9,390

Total Revenues
144,400

 
147,168

Operating Costs and Expenses:
 
 
 
Cost of sales (exclusive of depreciation and amortization shown below)
12,370

 
13,568

Cost of transportation services (exclusive of depreciation and amortization shown below)
13,503

 
13,529

Operations and maintenance
12,903

 
12,958

Depreciation and amortization
21,403

 
22,007

General and administrative
13,663

 
13,490

Taxes, other than income taxes
8,226

 
7,650

Gain on disposal of assets
(1,448
)
 

Total Operating Costs and Expenses
80,620

 
83,202

Operating Income
63,780

 
63,966

Other Income (Expense):
 
 
 
Interest expense, net
(14,689
)
 
(7,499
)
Unrealized gain (loss) on derivative instrument
1,885

 
(8,946
)
Equity in earnings of unconsolidated investments
20,738

 
709

Other income, net
70

 
566

Total Other Income (Expense)
8,004

 
(15,170
)
Net income
71,784

 
48,796

Net income attributable to noncontrolling interests
(879
)
 
(1,041
)
Net income attributable to partners
$
70,905

 
$
47,755

Allocation of income to the limited partners:
 
 
 
Net income attributable to partners
$
70,905

 
$
47,755

Predecessor operations interest in net income

 
(3,685
)
General partner interest in net income
(30,583
)
 
(20,353
)
Common unitholders' interest in net income
40,322

 
23,717

Basic net income per common unit
$
0.56

 
$
0.35

Diluted net income per common unit
$
0.55

 
$
0.35

Basic average number of common units outstanding
72,544

 
66,967

Diluted average number of common units outstanding
73,580

 
67,807






TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Three Months Ended March 31,
 
2017
 
2016
 
(in thousands)
Cash Flows from Operating Activities:
 
 
 
Net income
$
71,784

 
$
48,796

Adjustments to reconcile net income to net cash flows provided by operating activities:
 
 
 
Depreciation and amortization
23,575

 
23,385

Equity in earnings of unconsolidated investments
(20,738
)
 
(709
)
Distributions from unconsolidated investments
20,740

 
634

Noncash change in the fair value of derivative financial instruments
(2,454
)
 
8,990

Changes in components of working capital:
 
 
 
Accounts receivable and other
2,450

 
6,072

Accounts payable and accrued liabilities
(5,691
)
 
(2,175
)
Deferred revenue
16,202

 
7,204

Other current assets and liabilities
(819
)
 
10

Other operating, net
(808
)
 
968

Net Cash Provided by Operating Activities
104,241

 
93,175

Cash Flows from Investing Activities:
 
 
 
Acquisition of Rockies Express membership interest
(400,000
)
 

Acquisition of Terminals and NatGas
(140,000
)
 

Capital expenditures
(26,769
)
 
(21,207
)
Distributions from unconsolidated investments in excess of cumulative earnings
10,079

 

Contributions to unconsolidated investments
(6,693
)
 
(63
)
Acquisition of Pony Express membership interest

 
(49,118
)
Other investing, net
1,341

 
25

Net Cash Used in Investing Activities
(562,042
)
 
(70,363
)
Cash Flows from Financing Activities:
 
 
 
Borrowings under revolving credit facility, net
552,000

 
447,000

Proceeds from public offering, net of offering costs
99,373

 
12,636

Distributions to unitholders
(88,159
)
 
(59,040
)
Partial exercise of call option
(72,381
)
 

Repurchase of common units from TD
(35,335
)
 

Acquisition of Pony Express membership interest

 
(425,882
)
Other financing, net
1,628

 
3,748

Net Cash Provided by (Used in) Financing Activities
457,126

 
(21,538
)
Net Change in Cash and Cash Equivalents
(675
)
 
1,274

Cash and Cash Equivalents, beginning of period
1,873

 
1,611

Cash and Cash Equivalents, end of period
$
1,198

 
$
2,885






Tallgrass Energy GP, LP Financial Statements
TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING BALANCE SHEETS 
(UNAUDITED)
 
March 31, 2017
 
December 31, 2016
 
TEP
 
Consolidating Adjustments (1)
 
TEGP
 
TEP
 
Consolidating Adjustments (1)
 
TEGP
 
(in thousands)
 
(in thousands)
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,198

 
$
855

 
$
2,053

 
$
1,873

 
$
586

 
$
2,459

Accounts receivable, net
57,274

 

 
57,274

 
59,536

 

 
59,536

Gas imbalances
636

 

 
636

 
1,597

 

 
1,597

Inventories
15,647

 

 
15,647

 
13,093

 

 
13,093

Derivative assets at fair value
304

 

 
304

 
10,967

 

 
10,967

Prepayments and other current assets
6,785

 

 
6,785

 
7,628

 

 
7,628

Total Current Assets
81,844

 
855

 
82,699

 
94,694

 
586

 
95,280

Property, plant and equipment, net
2,085,670

 

 
2,085,670

 
2,079,232

 

 
2,079,232

Goodwill
343,288

 

 
343,288

 
343,288

 

 
343,288

Intangible asset, net
92,764

 

 
92,764

 
93,522

 

 
93,522

Unconsolidated investments
935,918

 

 
935,918

 
475,625

 

 
475,625

Deferred tax asset

 
518,790

 
518,790

 

 
521,454

 
521,454

Deferred financing costs, net
3,930

 
1,109

 
5,039

 
4,815

 
1,227

 
6,042

Deferred charges and other assets
9,242

 

 
9,242

 
11,037

 

 
11,037

Total Assets
$
3,552,656

 
$
520,754

 
$
4,073,410

 
$
3,102,213

 
$
523,267

 
$
3,625,480

LIABILITIES AND EQUITY
 
 
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
22,050

 
$

 
$
22,050

 
$
24,122

 
$
327

 
$
24,449

Accounts payable to related parties
6,175

 
(108
)
 
6,067

 
5,935

 
(111
)
 
5,824

Gas imbalances
1,473

 

 
1,473

 
1,239

 

 
1,239

Derivative liabilities at fair value

 

 

 
556

 

 
556

Accrued taxes
21,857

 

 
21,857

 
16,996

 

 
16,996

Accrued liabilities
6,783

 
13

 
6,796

 
16,702

 
53

 
16,755

Deferred revenue
77,067

 

 
77,067

 
60,757

 

 
60,757

Other current liabilities
6,001

 

 
6,001

 
6,446

 

 
6,446

Total Current Liabilities
141,406

 
(95
)
 
141,311

 
132,753

 
269

 
133,022

Long-term debt, net
1,960,232

 
148,000

 
2,108,232

 
1,407,981

 
148,000

 
1,555,981

Other long-term liabilities and deferred credits
7,125

 

 
7,125

 
7,063

 

 
7,063

Total Long-term Liabilities
1,967,357

 
148,000

 
2,115,357

 
1,415,044

 
148,000

 
1,563,044

Equity:
 
 
 
 
 
 
 
 
 
 
 
Total Partners' Equity
1,409,757

 
(1,165,147
)
 
244,610

 
1,520,451

 
(1,187,189
)
 
333,262

Noncontrolling interests
34,136

 
1,537,996

 
1,572,132

 
33,965

 
1,562,187

 
1,596,152

Total Equity
1,443,893

 
372,849

 
1,816,742

 
1,554,416

 
374,998

 
1,929,414

Total Liabilities and Equity
$
3,552,656

 
$
520,754

 
$
4,073,410

 
$
3,102,213

 
$
523,267

 
$
3,625,480

(1) 
Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for TEGP.





TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(UNAUDITED)
 
Three Months Ended March 31, 2017
 
Three Months Ended March 31, 2016
 
TEP
 
Consolidating Adjustments (1)
 
TEGP
 
TEP
 
Consolidating Adjustments (1)
 
TEGP
 
(in thousands)
 
(in thousands)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Crude oil transportation services
$
84,331

 
$

 
$
84,331

 
$
94,572

 
$

 
$
94,572

Natural gas transportation services
31,685

 

 
31,685

 
29,280

 

 
29,280

Sales of natural gas, NGLs, and crude oil
15,381

 

 
15,381

 
13,926

 

 
13,926

Processing and other revenues
13,003

 

 
13,003

 
9,390

 

 
9,390

Total Revenues
144,400

 

 
144,400

 
147,168

 

 
147,168

Operating Costs and Expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of sales (exclusive of depreciation and amortization shown below)
12,370

 

 
12,370

 
13,568

 

 
13,568

Cost of transportation services (exclusive of depreciation and amortization shown below)
13,503

 

 
13,503

 
13,529

 

 
13,529

Operations and maintenance
12,903

 

 
12,903

 
12,958

 

 
12,958

Depreciation and amortization
21,403

 

 
21,403

 
22,007

 

 
22,007

General and administrative
13,663

 
554

 
14,217

 
13,490

 
521

 
14,011

Taxes, other than income taxes
8,226

 

 
8,226

 
7,650

 

 
7,650

Gain on disposal of assets
(1,448
)
 

 
(1,448
)
 

 

 

Total Operating Costs and Expenses
80,620

 
554

 
81,174

 
83,202

 
521

 
83,723

Operating Income
63,780

 
(554
)
 
63,226

 
63,966

 
(521
)
 
63,445

Other Income (Expense):
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(14,689
)
 
(1,328
)
 
(16,017
)
 
(7,499
)
 
(1,178
)
 
(8,677
)
Unrealized gain (loss) on derivative instrument
1,885

 

 
1,885

 
(8,946
)
 

 
(8,946
)
Equity in earnings of unconsolidated investments
20,738

 

 
20,738

 
709

 

 
709

Other income, net
70

 

 
70

 
566

 

 
566

Total Other Income (Expense)
8,004

 
(1,328
)
 
6,676

 
(15,170
)
 
(1,178
)
 
(16,348
)
Net income before tax
71,784

 
(1,882
)
 
69,902

 
48,796

 
(1,699
)
 
47,097

Deferred income tax expense

 
(2,664
)
 
(2,664
)
 

 
(2,791
)
 
(2,791
)
Net income
71,784

 
(4,546
)
 
67,238

 
48,796

 
(4,490
)
 
44,306

Net income attributable to noncontrolling interests
(879
)
 
(54,330
)
 
(55,209
)
 
(1,041
)
 
(31,991
)
 
(33,032
)
Net income attributable to TEGP
$
70,905

 
$
(58,876
)
 
$
12,029

 
$
47,755

 
$
(36,481
)
 
$
11,274

 
 
 
 
 
 
 
 
 
 
 
 





Allocation of income:
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to TEGP
 
 
 
 
$
12,029

 
 
 
 
 
$
11,274

Predecessor operations interest in net income
 
 
 
 

 
 
 
 
 
(3,685
)
Net income attributable to TEGP, excluding predecessor operations interest
 
 
 
 
12,029

 
 
 
 
 
7,589

Basic net income per Class A share
 
 
 
 
$
0.21

 
 
 
 
 
$
0.16

Diluted net income per Class A share
 
 
 
 
$
0.21

 
 
 
 
 
$
0.16

Basic average number of Class A shares outstanding
 
 
 
 
58,075

 
 
 
 
 
47,725

Diluted average number of Class A shares outstanding
 
 
 
 
58,165

 
 
 
 
 
47,725

(1) 
Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements for TEGP.





About Tallgrass Energy
Tallgrass Energy is a family of companies that includes publicly traded partnerships Tallgrass Energy Partners, LP (NYSE: TEP) and Tallgrass Energy GP, LP (NYSE: TEGP), and privately held Tallgrass Development, LP. Operating across 10 states, Tallgrass is a growth-oriented midstream energy operator with transportation, storage, terminal and processing assets that serve some of the nation’s most prolific crude oil and natural gas basins.
To learn more, please visit our website at www.tallgrassenergy.com.
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