TEP
$43.36
Tallgrass Energy Partners LP
$.60
1.40%
Earnings Details
3rd Quarter September 2017
Thursday, November 02, 2017 4:05:02 PM
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Summary

Tallgrass Energy Partners LP (TEP) Recent Earnings

Tallgrass Energy Partners LP (TEP) reported 3rd Quarter September 2017 earnings of $1.83 per share on revenue of $175.9 million. The consensus earnings estimate was $1.82 per share on revenue of $174.8 million. Revenue grew 15.6% on a year-over-year basis.

Tallgrass Energy Partners LP owns, operates, acquires & develops midstream energy assets. It provides natural gas transportation & storage services for customers in Rocky Mountain & Midwest regions of USA through its TIGT System & Trailblazer Pipeline.

Results
Reported Earnings
$1.83
Earnings Whisper
-
Consensus Estimate
$1.82
Reported Revenue
$175.9 Mil
Revenue Estimate
$174.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Tallgrass Energy Reports Record Third Quarter 2017 Results

Tallgrass Energy Partners, LP (TEP) ("TEP") and Tallgrass Energy GP, LP (TEGP) ("TEGP"), collectively referred to as Tallgrass Energy, today reported financial and operating results for the third quarter of 2017.

"Tallgrass Energy again delivered exceptional financial results for the third quarter and continued to execute our plan to grow the company through organic projects and third-party acquisitions," said Tallgrass President and CEO David Dehaemers Jr. "This quarter included a strategic acquisition that represents the first step toward providing Powder River producers direct access to the Pony Express Pipeline system. In addition, we announced binding open seasons supported by signed precedent agreements for a new natural gas pipeline and associated hub near Cheyenne, Wyo., that will provide a much-needed takeaway solution for DJ Basin producers. Our strong business performance and growth resulted in increased distributions at both TEP and TEGP and distribution coverage of approximately two times at TEP."

Third Quarter Distributions

Tallgrass Energy Partners, LP

As previously announced, the board of directors of TEP’s general partner declared a quarterly cash distribution of $0.945 per common unit for the third quarter of 2017. This quarterly distribution represents $3.78 on an annualized basis, a sequential increase of 2.2 percent from the second quarter 2017 distribution and an increase of 18.9 percent from the third quarter 2016 distribution. The quarterly distribution will be paid on Nov. 14, 2017, to unitholders of record as of the close of business on Oct. 31, 2017.

TEP has increased its distribution by a total of $0.11 for the second and third quarters of 2017. This exceeds management’s previously announced plan to recommend increases in TEP’s second and third quarter 2017 distributions that aggregate to at least $0.10 per unit (or $0.40 per unit on an annualized basis) over the first quarter 2017 distribution of $0.835.

Tallgrass Energy GP, LP

Also, as previously announced, the board of directors of TEGP’s general partner declared a quarterly cash distribution of $0.355 per Class A share for the third quarter of 2017. This quarterly distribution represents $1.42 per Class A share on an annualized basis, a sequential increase of 3.6 percent from the second quarter 2017 distribution and an increase of 35.2 percent from the third quarter 2016 distribution. The quarterly distribution will be paid on Nov. 14, 2017, to Class A shareholders of record as of the close of business on Oct. 31, 2017.

Tallgrass Energy Partners, LP Summary Financial Information(1)

Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands, except coverage and per unit data)
2017
2016
As
2017
2016
As
Reported
Reported
in 2016
in 2016
Net income attributable to partners
$ 184,090
$
64,345
$
60,734
$ 344,875
$ 200,260
$ 196,852
Add:
Interest expense(2)
22,888
10,907
10,907
57,265
27,639
27,639
Depreciation and amortization expense(2)
23,472
21,648
21,102
67,894
66,484
64,909
Distributions from unconsolidated investments
138,828
22,462
21,804
229,510
53,434
51,460
Non-cash loss (gain) related to derivative instruments(2)
688
4,410
4,410
(1,669 )
(5,391 )
(5,391 )
Non-cash compensation expense (3)
2,135
1,635
1,635
5,087
4,270
4,270
(Gain) loss from disposal of assets
--
--
--
(1,319 )
1,849
1,849
Less:
Equity in earnings of unconsolidated investments
(123,642 )
(12,764 )
(12,066 )
(187,121 )
(37,495 )
(35,387 )
Gain on remeasurement of unconsolidated investment
(9,728 )
--
--
(9,728 )
--
--
Adjusted EBITDA(4)
$ 238,731
$ 112,643
$ 108,526
$ 504,794
$ 311,050
$ 306,201
Add:
Deficiency payments received, net(2)
2,288
9,114
26,639
24,892
Less:
Cash interest cost
(21,814 )
(9,950 )
(53,973 )
(25,183 )
Maintenance capital expenditures, net
(3,689 )
(2,828 )
(7,746 )
(7,085 )
Distributable Cash Flow(4)
215,516
104,862
469,714
298,825
Less:
Distributions
(108,137 )
(85,295 )
(304,702 )
(233,794 )
Amounts in excess of distributions(5)
$ 107,379
$
19,567
$ 165,012
$
65,031
Distribution coverage
1.99 x
1.23 x
1.54 x
1.28 x
Common units outstanding(6)
73,200
72,115
73,200
72,115
Distribution per common unit
$
0.9450
$
0.7950
$
2.7050
$
2.2550
(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
Jan. 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)
Adjusted EBITDA and distributable cash flow are non-GAAP measures.
For additional detail see "Non-GAAP Measures" below.
(5)
Cumulative distribution coverage from TEP’s IPO in May 2013 through
September 30, 2017, is $297.4 million and the cumulative
distribution coverage ratio is 1.32x.
(6)
Common units represent the number of units as of the date of record
for the third quarter distributions in both 2017 and 2016.

Strategic Acquisitions, Organic Growth Projects and Financing Transactions

Since TEP’s Q2 2017 earnings call on Aug. 2, Tallgrass Energy has announced or completed the following acquisitions, growth projects and financing transactions.

The joint development of the Cheyenne Connector pipeline ("Cheyenne Connector") with Western Gas Partners, LP and DCP Midstream, LP. Cheyenne Connector is an approximately 70-mile natural gas pipeline with an initial capacity of at least 600 million cubic feet a day which will connect Denver-Julesburg Basin natural gas supply with the Rockies Express Pipeline Cheyenne Hub just south of the Colorado-Wyoming border

Rockies Express Pipeline LLC ("REX") announced an open season to bring gas into REX at the Cheyenne Hub with the ability to deliver to numerous interconnects providing take-away options with access to markets across the country

Acquired an oil gathering system in the Powder River Basin and announced plans to directly connect the system to the Pony Express Pipeline

Issued $500 million of 5.5 percent senior unsecured notes with investment-grade style covenants

Conference Call

Please join Tallgrass Energy for a conference call and webcast to discuss third quarter 2017 results at 3:30 p.m. Central Time on Thursday, Nov. 2, 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 "TEP’s 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
Nine Months Ended
September 30,
September 30,
(in thousands)
2017
2017
Adjusted EBITDA
$
238,731
$
504,794
Add:
Volumetric deficiency payments received, net(1)
2,288
26,639
Alternative Adjusted EBITDA(2)
$
241,019
$
531,433
(1)
Cumulative net volumetric deficiency balance at September 30, 2017,
is $87.8 million.
(2)
Alternative Adjusted EBITDA shows what TEP’s Adjusted EBITDA would
have been for the period presented if TEP included net volumetric
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
Nine Months Ended
September 30,
September 30,
(in thousands, except coverage)
2017
2017
Distributable Cash Flow
$ 215,516
$ 469,714
Add:
Cash flow impact of reduction in accumulated incremental volumes(1)
5,740
240
Alternative Distributable Cash Flow(2)
221,256
469,954
Less:
Distributions
(108,137 )
(304,702 )
Amounts in excess of distributions
$ 113,119
$ 165,252
Alternative distribution coverage(2)
2.05 x
1.54 x
(1)
Accumulated incremental volume balance at September 30, 2017, is
$14.6 million.
(2)
Alternative distributable cash flow and alternative distribution
coverage shows the impact of a reduction in accumulated incremental
volumes. Incremental volumes (volumes shipped in excess of firm
committed volumes) increase distributable cash flow during periods
when shipped. Conversely, previously shipped incremental volumes
reduce distributable cash flow during periods when they are utilized
by a shipper to meet current period firm committed volumes, thereby
reducing an accumulated incremental volume balance.

Tallgrass Energy Partners, LP Segment Overview(1)(2)

The third quarter 2017 comparative results by segment are summarized below:

Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
As
2017
2016
As
Reported
Reported
in 2016
in 2016
(in thousands)
Natural Gas Transportation
Operating income
$
17,016
$
15,436
$
14,254
$
49,910
$
39,873
$
35,018
Add:
Depreciation and amortization expense
4,794
4,876
4,876
14,369
16,233
16,233
Distributions from unconsolidated investment
138,132
21,804
21,804
227,547
51,460
51,460
Other income, net
455
480
480
807
1,267
1,267
Less:
Non-cash (gain) loss related to derivative instruments
--
(161 )
(161 )
(116 )
190
190
Segment Adjusted EBITDA
$ 160,397
$
42,435
$
41,253
$ 292,517
$ 109,023
$ 104,168
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
(in thousands)
Crude Oil Transportation
Operating income
$
51,478
$
53,227
$ 145,462
$ 159,619
Add:
Depreciation and amortization expense(3)
13,027
13,112
39,673
39,276
Less:
Adjusted EBITDA attributable to noncontrolling interests
(1,024 )
(1,060 )
(2,895 )
(3,170 )
Non-cash loss (gain) related to derivative instruments(3)
202
152
(432 )
7
Segment Adjusted EBITDA
$
63,683
$
65,431
$ 181,808
$ 195,732
Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
As
2017
2016
As
Reported
Reported
in 2016
in 2016
(in thousands)
Gathering, Processing & Terminalling
Operating income (loss)
$
9,045
$
1,851
$
120
$
20,928
$
(4,629 )
$
(1,074 )
Add:
Depreciation and amortization expense(3)
5,651
3,660
3,114
13,852
10,975
9,400
Non-cash loss related to derivative instruments
486
--
--
764
--
--
Distributions from unconsolidated investment
696
658
--
1,963
1,974
--
Other (expense) income, net
(1 )
--
--
142
--
--
Less:
(Gain) loss on disposal of assets
--
--
--
(1,319 )
1,849
1,849
Adjusted EBITDA attributable to noncontrolling interests
(389 )
(24 )
(24 )
(346 )
(65 )
(65 )
Segment Adjusted EBITDA
$
15,488
$
6,145
$
3,210
$
35,984
$
10,104
$
10,110
(1)
The financial results for the Natural Gas Transportation and
Gathering, Processing & Terminalling segments for the three and nine
months ended September 30, 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 Natural Gas Transportation and Gathering, Processing &
Terminalling segments for the three and nine months ended September
30, 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.

Supplemental Information

TEP acquired a 25 percent interest in Rockies Express Pipeline, LLC ("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 and nine months ended September 30, 2017 and 2016, presented to provide additional information on REX’s financial results. REX’s Adjusted EBITDA and Distributable Cash Flow are non-GAAP measures. For additional detail see "Non-GAAP Measures" below.

Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
(in thousands)
Rockies Express Pipeline LLC
Net income
$
233,990
$
34,184
$
371,185
$
226,847
Add:
Interest expense
42,102
39,309
125,979
119,694
Depreciation and amortization expense
54,761
50,332
163,560
150,831
Adjusted EBITDA
330,853
123,825
660,724
497,372
Less:
Cash interest cost
(41,267 )
(38,304 )
(123,476 )
(117,192 )
Maintenance capital expenditures
(2,386 )
(1,601 )
(9,326 )
(5,878 )
Distributable Cash Flow
$
287,200
$
83,920
$
527,922
$
374,302
Distributions to Members
$ (276,508 )
$ (87,219 )
$ (515,613 )
$ (373,888 )
Contributions from Members
$
23,334
$
84,260
$
72,394
$
246,755

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
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
TEP distributions to Tallgrass Equity(1)
General partner interest
$
1,219
$
976
$
3,445
$
2,717
Incentive Distribution Rights
37,744
26,987
103,926
71,065
20 million TEP common units owned by Tallgrass Equity
18,900
15,900
54,100
45,100
Total TEP distributions to Tallgrass Equity
57,863
43,863
161,471
118,882
Less:
Cash interest expense attributable to Tallgrass Equity
(1,402 )
(1,132 )
(3,919 )
(3,322 )
Cash general and administrative expenses attributable to Tallgrass
(500 )
(500 )
(1,500 )
(1,500 )
Equity
Cash available for distribution by Tallgrass Equity
55,961
42,231
156,052
114,060
Distributions to Class A (TEGP)
20,617
12,528
57,205
34,243
Distributions to Class B (Exchange Right Holders)
35,200
28,745
97,667
78,570
Total cash distributions by Tallgrass Equity
$
55,817
$
41,273
$
154,872
$
112,813
TEGP
Distributions from Tallgrass Equity
$
20,617
$
12,528
$
57,205
$
34,243
Less:
Distributions to Class A shareholders
(20,617 )
(12,528 )
(57,205 )
(34,243 )
Amounts in excess of distributions
--
--
$ --
$ --
Distribution coverage
1.00 x
1.00 x
1.00 x
1.00 x
Class A shares outstanding
58,075
47,725
58,075
47,725
Distribution per Class A share
$
0.3550
$
0.2625
$
0.9850
$
0.7175
(1)
Represents distributions expected to be received by Tallgrass Equity
from TEP on or about November 14, 2017, in connection with TEP’s
distribution for the quarter ended September 30, 2017.

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 whether Powder River producers will have direct access to the Pony Express System, either through TEP’s new oil gathering system in the Powder River Basin or otherwise, whether the Cheyenne Connector will provide a take-away solution for DJ Basin producers, and the joint development of the Cheyenne Connector, including its expected initial capacity. 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.

About Tallgrass Energy

Tallgrass Energy is a family of companies that includes publicly traded partnerships Tallgrass Energy Partners, LP (TEP) and Tallgrass Energy GP, LP (TEGP), and privately held Tallgrass Development, LP. Operating across 10 states, Tallgrass is a growth-oriented midstream energy operator with transportation, storage, terminal, water, gathering 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.

Tallgrass Energy Partners, LP Financial Statements

TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, 2017
December 31, 2016
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents
$
2,998
$
1,873
Accounts receivable, net
95,629
59,536
Gas imbalances
1,020
1,597
Inventories
10,173
13,093
Derivative assets
--
10,967
Prepayments and other current assets
3,407
7,628
Total Current Assets
113,227
94,694
Property, plant and equipment, net
2,350,830
2,079,232
Goodwill
404,838
343,288
Intangible assets, net
98,876
93,522
Unconsolidated investments
922,280
475,625
Deferred financing costs, net
12,329
4,815
Deferred charges and other assets
3,016
11,037
Total Assets
$ 3,905,396
$ 3,102,213
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$
69,620
$
24,122
Accounts payable to related parties
6,072
5,935
Gas imbalances
1,119
1,239
Derivative liabilities
473
556
Accrued taxes
22,890
16,996
Accrued liabilities
11,154
16,702
Deferred revenue
87,979
60,757
Other current liabilities
6,690
6,446
Total Current Liabilities
205,997
132,753
Long-term debt, net
2,115,086
1,407,981
Other long-term liabilities and deferred credits
18,396
7,063
Total Long-term Liabilities
2,133,482
1,415,044
Commitments and Contingencies
Equity:
Predecessor Equity
--
82,295
2,125,788
2,070,495
Limited partners (73,176,516 and 72,485,954 common units issued and
outstanding
at September 30, 2017 and December 31, 2016, respectively)
(626,704 )
(632,339 )
General partner (834,391 units issued and outstanding at September
30, 2017
and December 31, 2016)
Total Partners’ Equity
1,499,084
1,520,451
Noncontrolling interests
66,833
33,965
Total Equity
1,565,917
1,554,416
Total Liabilities and Equity
$ 3,905,396
$ 3,102,213
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
(in thousands, except per unit amounts)
Revenues:
Crude oil transportation services
$
86,180
$
91,387
$ 260,366
$ 279,281
Natural gas transportation services
30,256
31,444
91,370
89,406
Sales of natural gas, NGLs, and crude oil
32,215
20,487
70,514
51,243
Processing and other revenues
27,218
9,950
58,882
29,521
Total Revenues
175,869
153,268
481,132
449,451
Operating Costs and Expenses:
Cost of sales (exclusive of depreciation and amortization shown
26,984
18,319
58,740
47,845
below)
Cost of transportation services (exclusive of depreciation and
10,538
10,842
38,799
35,946
amortization shown below)
Operations and maintenance
17,412
15,146
45,569
42,374
Depreciation and amortization
23,782
21,177
67,276
65,074
General and administrative
15,925
13,413
44,362
41,225
Taxes, other than income taxes
6,661
6,860
21,799
20,293
Contract termination
--
--
--
8,061
(Gain) loss on disposal of assets
--
--
(1,264 )
1,849
Total Operating Costs and Expenses
101,302
85,757
275,281
262,667
Operating Income
74,567
67,511
205,851
186,784
Other Income (Expense):
Interest expense, net
(22,888 )
(10,907 )
(57,265 )
(27,639 )
Unrealized (loss) gain on derivative instrument
--
(4,419 )
1,885
5,588
Equity in earnings of unconsolidated investments
123,642
12,764
187,121
37,495
Gain on remeasurement of unconsolidated investment
9,728
--
9,728
--
Other income, net
454
480
796
1,267
Total Other Income (Expense)
110,936
(2,082 )
142,265
16,711
Net income
185,503
65,429
348,116
203,495
Net income attributable to noncontrolling interests
(1,413 )
(1,084 )
(3,241 )
(3,235 )
Net income attributable to partners
$ 184,090
$
64,345
$ 344,875
$ 200,260
Allocation of income to the limited partners:
Net income attributable to partners
$ 184,090
$
64,345
$ 344,875
$ 200,260
Predecessor operations interest in net income
--
(3,611 )
--
(3,408 )
General partner interest in net income
(39,809 )
(27,674 )
(107,693 )
(73,347 )
Net income available to common unitholders
144,281
33,060
237,182
123,505
Basic net income per common unit
$
1.97
$
0.45
$
3.26
$
1.75
Diluted net income per common unit
$
1.96
$
0.45
$
3.23
$
1.73
Basic average number of common units outstanding
73,138
73,089
72,769
70,686
Diluted average number of common units outstanding
73,638
74,063
73,319
71,590
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
2017
2016
(in thousands)
Cash Flows from Operating Activities:
Net income
$ 348,116
$
203,495
Adjustments to reconcile net income to net cash flows provided by
operating activities:
Depreciation and amortization
72,732
70,269
Equity in earnings of unconsolidated investments
(187,121 )
(37,495 )
Distributions from unconsolidated investments
187,624
37,361
Gain on remeasurement of unconsolidated investment
(9,728 )
--
Changes in components of working capital:
Accounts receivable and other
(34,197 )
8,204
Accounts payable and accrued liabilities
43,037
5,053
Deferred revenue
26,898
25,303
Other current assets and liabilities
5,032
(1,033 )
Other operating, net
3,755
(149 )
Net Cash Provided by Operating Activities
456,148
311,008
Cash Flows from Investing Activities:
Acquisition of Rockies Express membership interest
(400,000 )
(436,022 )
Acquisition of Terminals and NatGas
(140,000 )
--
Acquisition of Douglas Gathering System
(128,526 )
--
Capital expenditures
(88,050 )
(55,397 )
Acquisition of Deeprock Development
(57,202 )
--
Distributions from unconsolidated investments in excess of
41,886
16,073
cumulative earnings
Acquisition of PRB Crude System
(36,030 )
--
Contributions to unconsolidated investments
(31,570 )
(35,515 )
Acquisition of Pony Express membership interest
--
(49,118 )
Other investing, net
(13,449 )
205
Net Cash Used in Investing Activities
(852,941 )
(559,774 )
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt
850,000
400,000
Distributions to unitholders
(284,724 )
(207,539 )
(Repayments) borrowings under revolving credit facility, net
(134,000 )
252,000
Proceeds from public offering, net of offering costs
112,393
290,474
Partial exercise of call option
(72,381 )
(151,434 )
Repurchase of common units from TD
(35,335 )
--
Acquisition of Pony Express membership interest
--
(425,882 )
Proceeds from private placement, net of offering costs
--
90,009
Other financing, net
(38,035 )
(56 )
Net Cash Provided by Financing Activities
397,918
247,572
Net Change in Cash and Cash Equivalents
1,125
(1,194 )
Cash and Cash Equivalents, beginning of period
1,873
1,611
Cash and Cash Equivalents, end of period
$
2,998
$
417
Schedule of Noncash Investing and Financing Activities:
Common units issued as partial consideration to acquire additional
$
6,617
$ --
9%
membership interest in Deeprock Development
Increase in accrual for payment of property, plant and equipment
$
1,342
$ --

Tallgrass Energy GP, LP Financial Statements

TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING BALANCE SHEETS
(UNAUDITED)
September 30, 2017
December 31, 2016
TEP
Consolidating
TEGP
TEP
Consolidating
TEGP
Adjustments (1)
Adjustments (1)
(in thousands)
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents
$
2,998
$
281
$
3,279
$
1,873
$
586
$
2,459
Accounts receivable, net
95,629
--
95,629
59,536
--
59,536
Gas imbalances
1,020
--
1,020
1,597
--
1,597
Inventories
10,173
--
10,173
13,093
--
13,093
Derivative assets
--
--
--
10,967
--
10,967
Prepayments and other current assets
3,407
--
3,407
7,628
--
7,628
113,227
281
113,508
94,694
586
95,280
Total Current Assets
Property, plant and equipment, net
2,350,830
--
2,350,830
2,079,232
--
2,079,232
Goodwill
404,838
--
404,838
343,288
--
343,288
Intangible assets, net
98,876
--
98,876
93,522
--
93,522
Unconsolidated investments
922,280
--
922,280
475,625
--
475,625
Deferred tax asset
--
496,472
496,472
--
521,454
521,454
Deferred financing costs, net
12,329
997
13,326
4,815
1,227
6,042
Deferred charges and other assets
3,016
--
3,016
11,037
--
11,037
Total Assets
$ 3,905,396
$
497,750
$ 4,403,146
$ 3,102,213
$ 523,267
$ 3,625,480
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable
$
69,620
$ --
$
69,620
$
24,122
$
327
$
24,449
Accounts payable to related parties
6,072
(117 )
5,955
5,935
(111 )
5,824
Gas imbalances
1,119
--
1,119
1,239
--
1,239
Derivative liabilities
473
--
473
556
--
556
Accrued taxes
22,890
--
22,890
16,996
--
16,996
Accrued liabilities
11,154
29
11,183
16,702
53
16,755
Deferred revenue
87,979
--
87,979
60,757
--
60,757
Other current liabilities
6,690
--
6,690
6,446
--
6,446
Total Current Liabilities
205,997
(88 )
205,909
132,753
269
133,022
Long-term debt, net
2,115,086
146,000
2,261,086
1,407,981
148,000
1,555,981
Other long-term liabilities and deferred credits
18,396
--
18,396
7,063
--
7,063
Total Long-term Liabilities
2,133,482
146,000
2,279,482
1,415,044
148,000
1,563,044
Equity:
Total Partners’ Equity
1,499,084
(1,264,843 )
234,241
1,520,451
(1,187,189 )
333,262
Noncontrolling interests
66,833
1,616,681
1,683,514
33,965
1,562,187
1,596,152
Total Equity
1,565,917
351,838
1,917,755
1,554,416
374,998
1,929,414
Total Liabilities and Equity
$ 3,905,396
$
497,750
$ 4,403,146
$ 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 September 30, 2017
Three Months Ended September 30, 2016
TEP
Consolidating
TEGP
TEP
Consolidating
TEGP
Adjustments (1)
Adjustments (1)
(in thousands)
(in thousands)
Revenues:
Crude oil transportation services
$
86,180
$ --
$
86,180
$
91,387
$ --
$
91,387
Natural gas transportation services
30,256
--
30,256
31,444
--
31,444
Sales of natural gas, NGLs, and crude oil
32,215
--
32,215
20,487
--
20,487
Processing and other revenues
27,218
--
27,218
9,950
--
9,950
Total Revenues
175,869
--
175,869
153,268
--
153,268
Operating Costs and Expenses:
Cost of sales (exclusive of depreciation and amortization shown
26,984
--
26,984
18,319
--
18,319
below)
Cost of transportation services (exclusive of depreciation and
10,538
--
10,538
10,842
--
10,842
amortization shown below)
Operations and maintenance
17,412
--
17,412
15,146
--
15,146
Depreciation and amortization
23,782
--
23,782
21,177
--
21,177
General and administrative
15,925
564
16,489
13,413
568
13,981
Taxes, other than income taxes
6,661
--
6,661
6,860
--
6,860
Total Operating Costs and Expenses
101,302
564
101,866
85,757
568
86,325
Operating Income
74,567
(564 )
74,003
67,511
(568 )
66,943
Other Income (Expense):
Interest expense, net
(22,888 )
(1,520 )
(24,408 )
(10,907 )
(1,250 )
(12,157 )
Unrealized (loss) gain on derivative instrument
--
--
--
(4,419 )
--
(4,419 )
Equity in earnings of unconsolidated investments
123,642
--
123,642
12,764
--
12,764
Gain on remeasurement of unconsolidated investment
9,728
--
9,728
--
--
--
Other income, net
454
--
454
480
--
480
Total Other Income (Expense)
110,936
(1,520 )
109,416
(2,082 )
(1,250 )
(3,332 )
Net income before tax
185,503
(2,084 )
183,419
65,429
(1,818 )
63,611
Deferred income tax expense
--
(12,642 )
(12,642 )
--
(3,209 )
(3,209 )
Net income
185,503
(14,726 )
170,777
65,429
(5,027 )
60,402
Net income attributable to noncontrolling interests
(1,413 )
(153,498 )
(154,911 )
(1,084 )
(48,666 )
(49,750 )
Net income attributable to TEGP
$ 184,090
$
(168,224 )
$
15,866
$
64,345
$
(53,693 )
$
10,652
Allocation of income:
Net income attributable to TEGP
$
15,866
$
10,652
Predecessor operations interest in net income
--
(3,611 )
Net income attributable to TEGP, excluding predecessor operations
15,866
7,041
interest
Basic net income per Class A share
$
0.27
$
0.15
Diluted net income per Class A share
$
0.27
$
0.15
Basic average number of Class A shares outstanding
58,075
47,725
Diluted average number of Class A shares outstanding
58,192
47,775
(1)
Represents the aggregate consolidating adjustments necessary to
produce consolidated financial statements for TEGP.
TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended September 30, 2017
Nine Months Ended September 30, 2016
TEP
Consolidating
TEGP
TEP
Consolidating
TEGP
Adjustments (1)
Adjustments (1)
(in thousands)
(in thousands)
Revenues:
Crude oil transportation services
$ 260,366
$ --
$ 260,366
$ 279,281
$ --
$ 279,281
Natural gas transportation services
91,370
--
91,370
89,406
--
89,406
Sales of natural gas, NGLs, and crude oil
70,514
--
70,514
51,243
--
51,243
Processing and other revenues
58,882
--
58,882
29,521
--
29,521
Total Revenues
481,132
--
481,132
449,451
--
449,451
Operating Costs and Expenses:
Cost of sales (exclusive of depreciation and amortization shown
58,740
--
58,740
47,845
--
47,845
below)
Cost of transportation services (exclusive of depreciation and
38,799
--
38,799
35,946
--
35,946
amortization shown below)
Operations and maintenance
45,569
--
45,569
42,374
--
42,374
Depreciation and amortization
67,276
--
67,276
65,074
--
65,074
General and administrative
44,362
1,678
46,040
41,225
1,638
42,863
Taxes, other than income taxes
21,799
--
21,799
20,293
--
20,293
Contract termination
--
--
--
8,061
--
8,061
(Gain) loss on disposal of assets
(1,264 )
--
(1,264 )
1,849
--
1,849
Total Operating Costs and Expenses
275,281
1,678
276,959
262,667
1,638
264,305
Operating Income
205,851
(1,678 )
204,173
186,784
(1,638 )
185,146
Other Income (Expense):
Interest expense, net
(57,265 )
(4,274 )
(61,539 )
(27,639 )
(3,636 )
(31,275 )
Unrealized gain on derivative instrument
1,885
--
1,885
5,588
--
5,588
Equity in earnings of unconsolidated investments
187,121
--
187,121
37,495
--
37,495
Gain on remeasurement of unconsolidated investment
9,728
--
9,728
--
--
--
Other income, net
796
--
796
1,267
--
1,267
Total Other Income (Expense)
142,265
(4,274 )
137,991
16,711
(3,636 )
13,075
Net income before tax
348,116
(5,952 )
342,164
203,495
(5,274 )
198,221
Deferred income tax expense
--
(24,982 )
(24,982 )
--
(12,792 )
(12,792 )
Net income
348,116
(30,934 )
317,182
203,495
(18,066 )
185,429
Net income attributable to noncontrolling interests
(3,241 )
(277,293 )
(280,534 )
(3,235 )
(160,708 )
(163,943 )
Net income attributable to TEGP
$ 344,875
$
(308,227 )
$
36,648
$ 200,260
$
(178,774 )
$
21,486
Allocation of income:
Net income attributable to TEGP
$
36,648
$
21,486
Predecessor operations interest in net income
--
(3,408 )
Net income attributable to TEGP, excluding predecessor operations
36,648
18,078
interest
Basic net income per Class A share
$
0.63
$
0.38
Diluted net income per Class A share
$
0.63
$
0.38
Basic average number of Class A shares outstanding
58,075
47,725
Diluted average number of Class A shares outstanding
58,193
47,740
(1)
Represents the aggregate consolidating adjustments necessary to
produce consolidated financial statements for TEGP.

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SOURCE: Tallgrass Energy

Tallgrass Energy
Investor and Financial Inquiries
Nate Lien, 913-928-6012
investor.relations@tallgrassenergylp.com
or
Media and Trade Inquiries
Phyllis Hammond, 303-763-3568
media.relations@tallgrassenergylp.com