Tallgrass Energy Announces Strong Third Quarter 2016 Results and Operational Updates
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 third quarter of 2016.
“Tallgrass Energy delivered another excellent quarter underpinned by stable performance in our segments and a full quarter of a
25 percent interest in REX at TEP. All contributed to another consecutive increase in distributions at TEP and TEGP," said
Tallgrass Energy President and CEO David G. Dehaemers, Jr. "TEP's inaugural senior notes offering marks another milestone towards
achieving an investment grade capital structure. Moving forward we look ahead to the in-service of REX's Capacity Enhancement
Project. TEP is well-positioned to conclude an outstanding 2016 and to continue delivering top-tier distribution growth in
2017."
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 $0.795 per
common unit for the third quarter of 2016. This quarterly distribution represents $3.18 on an annualized basis, a sequential
increase of 5.3 percent from the second quarter 2016 distribution and an increase of 32.5 percent from the third quarter 2015
distribution. The quarterly distribution will be paid on Monday, Nov. 14, 2016, to unitholders of record as of the close of
business on Monday, Oct. 31, 2016.
Tallgrass Energy GP, LP
Also, as previously announced, the board of directors of TEGP's general partner declared a quarterly cash distribution of
$0.2625 per Class A share for the third quarter of 2016. This quarterly distribution represents $1.05 per Class A share on an
annualized basis, a sequential increase of 7.1 percent from the second quarter 2016 distribution and an increase of 82.3 percent
from the third quarter 2015 distribution. The quarterly distribution will be paid on Monday, Nov. 14, 2016, to Class A shareholders
of record as of the close of business on Monday, Oct. 31, 2016.
TEP Senior Notes Offering
On Sept. 1, 2016, TEP along with Tallgrass Energy Finance Corp., a subsidiary of TEP, closed an offering of $400 million in
aggregate principal amount of 5.50 percent senior unsecured notes due 2024. TEP used the net proceeds of the offering to repay
outstanding borrowings under its existing senior secured revolving credit facility, which will provide additional liquidity and
flexibility as TEP continues to execute its business plan. As of Nov. 2, 2016, TEP has approximately $750 million of availability
under its revolving credit facility.
REX Commercial and Operational Updates
During the third quarter Rockies Express Pipeline LLC ("REX") signed a precedent agreement with Citizens Gas, a local
distribution company in Indianapolis, Ind., for 20 million cubic feet a day on its Zone 3 Capacity Enhancement Project. The
agreement is for 15 years at a rate comparable to other precedent agreements REX has signed on the project. In addition, REX has
recently signed a precedent agreement for the remaining 50 million cubic feet a day. The project's design capacity of 800 million
cubic feet a day is now completely sold out for 15 years at an average rate of approximately $0.50. With this important milestone
complete, REX’s commercial team has turned its efforts to additional demand and west-end opportunities.
In addition to these positive contractual developments, REX averaged 1.3 billion cubic feet a day of west-to-east flows and 1.8
billion cubic feet a day of east-to-west flows during the third quarter for total average flows of 3.1 billion cubic feet a day.
These data points illustrate the strong demand for takeaway capacity in the Marcellus/Utica and the continuing demand for Rockies
takeaway capacity.
REX continues to pursue breach of contract claims against Ultra Petroleum and Berry Petroleum, two former REX customers
currently undergoing restructuring via bankruptcy. While the amount and timing of any potential recovery on these claims remains
unclear, any recovery, if realized, would provide additional cash available for distribution to TEP unitholders or debt
repayment.
Organizational Enhancements
To concentrate Tallgrass Energy’s commercial development efforts and continue to focus on developing relationships with, and
solutions for, our customers across all of our assets, Matthew Sheehy has been named Senior Vice President and Chief Commercial
Officer at Tallgrass Energy, reporting to William R. Moler, our Chief Operating Officer. Mr. Sheehy has been instrumental in
executing Tallgrass Energy's vision to transform REX into a bi-directional header system through the Seneca Lateral, East-to-West
and Capacity Enhancement projects and valuable customer contracts. As part of the transition, Crystal Heter will serve as the Vice
President and General Manager of REX. Ms. Heter, a chemical engineer, started her career as an engineering intern with predecessor
companies and moved up through both the technical and commercial sides of the business. She is an accomplished leader at Tallgrass
Energy and possesses a deep knowledge of REX, its customers and the markets it serves.
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) |
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to partners |
|
|
$ |
60,734 |
|
|
|
$ |
42,679 |
|
|
|
$ |
196,852 |
|
|
|
$ |
119,897 |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense(2) |
|
|
10,907 |
|
|
|
3,872 |
|
|
|
27,639 |
|
|
|
11,205 |
|
| Depreciation and amortization expense(2) |
|
|
21,102 |
|
|
|
18,826 |
|
|
|
64,909 |
|
|
|
57,661 |
|
| Distributions from unconsolidated investment |
|
|
21,804 |
|
|
|
— |
|
|
|
51,460 |
|
|
|
— |
|
| Non-cash loss (gain) related to derivative instruments(2) |
|
|
4,410 |
|
|
|
(259 |
) |
|
|
(5,391 |
) |
|
|
(218 |
) |
| Non-cash compensation expense |
|
|
1,635 |
|
|
|
734 |
|
|
|
4,270 |
|
|
|
3,988 |
|
| Non-cash loss from disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
1,849 |
|
|
|
4,483 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Equity in earnings of unconsolidated investment |
|
|
(12,066 |
) |
|
|
— |
|
|
|
(35,387 |
) |
|
|
— |
|
| Non-cash loss allocated to noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,377 |
) |
| Adjusted EBITDA |
|
|
$ |
108,526 |
|
|
|
$ |
65,852 |
|
|
|
$ |
306,201 |
|
|
|
$ |
187,639 |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Deficiency payments received, net |
|
|
9,114 |
|
|
|
8,342 |
|
|
|
24,892 |
|
|
|
12,050 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash interest cost |
|
|
(9,950 |
) |
|
|
(3,518 |
) |
|
|
(25,183 |
) |
|
|
(10,031 |
) |
| Maintenance capital expenditures, net |
|
|
(2,828 |
) |
|
|
(4,659 |
) |
|
|
(7,085 |
) |
|
|
(9,237 |
) |
| Distributions to noncontrolling interest in excess of earnings |
|
|
— |
|
|
|
(11,520 |
) |
|
|
— |
|
|
|
(22,517 |
) |
| Distributable Cash Flow |
|
|
104,862 |
|
|
|
54,497 |
|
|
|
298,825 |
|
|
|
157,904 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Distributions |
|
|
(85,295 |
) |
|
|
(48,574 |
) |
|
|
(233,794 |
) |
|
|
(133,540 |
) |
| Amounts in excess of distributions(3) |
|
|
$ |
19,567 |
|
|
|
$ |
5,923 |
|
|
|
$ |
65,031 |
|
|
|
$ |
24,364 |
|
| Distribution coverage |
|
|
1.23 |
x |
|
|
1.12 |
x |
|
|
1.28 |
x |
|
|
1.18 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common units outstanding(4) |
|
|
72,115 |
|
|
|
60,578 |
|
|
|
72,115 |
|
|
|
60,578 |
|
| Distribution per common unit |
|
|
$ |
0.7950 |
|
|
|
$ |
0.6000 |
|
|
|
$ |
2.2550 |
|
|
|
$ |
1.7000 |
|
| (1) |
|
The acquisitions of an additional 33.3 percent and 31.3 percent membership interest in
Tallgrass Pony Express Pipeline, LLC (“Pony Express”) effective March 1, 2015, and January 1, 2016, respectively, are
presented prospectively from the dates of acquisition, and as a result, financial information for periods prior to March 1,
2015, and January 1, 2016, have not been recast to reflect the additional 33.3 percent and 31.3 percent membership
interests.
|
| (2) |
|
Net of noncontrolling interest.
|
| (3) |
|
Cumulative distribution coverage from TEP's IPO in May 2013 through September 30, 2016, is
$110.8 million and the cumulative distribution coverage ratio is 1.20x.
|
| (4) |
|
Common units represent the number of units as of the date of record for the third quarter
distributions in both 2016 and 2015.
|
|
|
|
Tallgrass Energy Partners, LP Alternative Reconciliations
Adjusted EBITDA and/or 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. 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
September 30,
|
|
|
Nine Months Ended
September 30,
|
| (in thousands) |
|
|
2016 |
|
|
2016 |
|
|
|
|
|
|
|
| Adjusted EBITDA |
|
|
$ |
108,526 |
|
|
|
$ |
306,201 |
| Add: |
|
|
|
|
|
|
| Deficiency payments received, net(1) |
|
|
9,114 |
|
|
|
24,892 |
| Alternative Adjusted EBITDA(2) |
|
|
$ |
117,640 |
|
|
|
$ |
331,093 |
| (1) |
|
Cumulative net deficiency balance at September 30, 2016, is $51.9 million.
|
| (2) |
|
Alternative Adjusted EBITDA shows what TEP's Adjusted EBITDA would have been for the periods
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
September 30,
|
|
|
Nine Months Ended
September 30,
|
| (in thousands, except coverage) |
|
|
2016 |
|
|
2016 |
|
|
|
|
|
|
|
| Distributable Cash Flow |
|
|
$ |
104,862 |
|
|
|
$ |
298,825 |
|
| Less: |
|
|
|
|
|
|
| Cash flow from incremental barrels shipped(1) |
|
|
(2,723 |
) |
|
|
(18,033 |
) |
| Alternative Distributable Cash Flow(2) |
|
|
102,139 |
|
|
|
280,792 |
|
| Less: |
|
|
|
|
|
|
| Distributions |
|
|
(85,295 |
) |
|
|
(233,794 |
) |
| Amounts in excess of distributions |
|
|
$ |
16,844 |
|
|
|
$ |
46,998 |
|
| Alternative distribution coverage(2) |
|
|
1.20 |
x |
|
|
1.20 |
x |
| (1) |
|
Cumulative shipper incremental balance at September 30, 2016, is $20.3 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)
The third quarter 2016 comparative results by segment are summarized below:
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(in thousands) |
| Crude Oil Transportation & Logistics |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
$ |
53,227 |
|
|
|
$ |
44,069 |
|
|
|
$ |
159,619 |
|
|
|
$ |
103,857 |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense(2) |
|
|
13,112 |
|
|
|
10,323 |
|
|
|
39,276 |
|
|
|
30,752 |
|
| Adjusted EBITDA attributable to noncontrolling interests |
|
|
(1,060 |
) |
|
|
(6,866 |
) |
|
|
(3,170 |
) |
|
|
(5,880 |
) |
| Non-cash loss related to derivative instruments(2) |
|
|
152 |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-cash loss allocated to noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9,377 |
) |
| Segment Adjusted EBITDA |
|
|
$ |
65,431 |
|
|
|
$ |
47,526 |
|
|
|
$ |
195,732 |
|
|
|
$ |
119,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average daily throughput (BBls/d)(3) |
|
|
276,138 |
|
|
|
252,540 |
|
|
|
284,512 |
|
|
|
218,697 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(in thousands) |
| Natural Gas Transportation & Logistics |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income |
|
|
$ |
14,254 |
|
|
|
$ |
10,499 |
|
|
|
$ |
35,018 |
|
|
|
$ |
32,989 |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense |
|
|
4,876 |
|
|
|
5,241 |
|
|
|
16,233 |
|
|
|
17,066 |
|
| Distributions from unconsolidated investment(4) |
|
|
21,804 |
|
|
|
— |
|
|
|
51,460 |
|
|
|
— |
|
| Non-cash (gain) loss related to derivative instruments |
|
|
(161 |
) |
|
|
(259 |
) |
|
|
190 |
|
|
|
(218 |
) |
| Other income, net |
|
|
480 |
|
|
|
502 |
|
|
|
1,267 |
|
|
|
1,983 |
|
| Segment Adjusted EBITDA |
|
|
$ |
41,253 |
|
|
|
$ |
15,983 |
|
|
|
$ |
104,168 |
|
|
|
$ |
51,820 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TIGT and Trailblazer average firm contracted volumes (MMcf/d) |
|
|
1,440 |
|
|
|
1,506 |
|
|
|
1,464 |
|
|
|
1,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(in thousands) |
| Processing & Logistics |
|
|
|
|
|
|
|
|
|
|
|
|
| Operating income (loss) |
|
|
$ |
120 |
|
|
|
$ |
(212 |
) |
|
|
$ |
(1,074 |
) |
|
|
$ |
4,508 |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization expense(2) |
|
|
3,114 |
|
|
|
3,262 |
|
|
|
9,400 |
|
|
|
9,843 |
|
| Non-cash loss from disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
1,849 |
|
|
|
4,483 |
|
| Adjusted EBITDA attributable to noncontrolling interests |
|
|
(24 |
) |
|
|
(4 |
) |
|
|
(65 |
) |
|
|
7 |
|
| Segment Adjusted EBITDA |
|
|
$ |
3,210 |
|
|
|
$ |
3,046 |
|
|
|
$ |
10,110 |
|
|
|
$ |
18,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Natural gas processing inlet volumes (MMcf/d) |
|
|
103 |
|
|
|
110 |
|
|
|
102 |
|
|
|
128 |
|
| (1) |
|
Segment reporting does not include corporate general and administrative costs or intersegment
eliminations.
|
| (2) |
|
Net of noncontrolling interest.
|
| (3) |
|
Approximate average daily throughput for the three and nine months ended September 30, 2015 is
reflective of the volumetric ramp up due to commercial in-service of the Pony Express System beginning in October 2014 and
delays in the construction and expansion efforts of third-party pipelines with which Pony Express shares joint
tariffs.
|
| (4) |
|
Represents the distributions TEP received from REX for the third quarter of 2016 and from May
6, 2016, the date of TEP's acquisition, through September 30, 2016, respectively.
|
|
|
|
TEP acquired a 25 percent interest in REX effective May 6, 2016. TEP's consolidated Adjusted EBITDA, as shown above, includes
TEP's 25 percent 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, 2016 and 2015, presented to provide additional information on REX's
financial results.
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(in thousands) |
| Net income |
|
|
$ |
34,184 |
|
|
|
$ |
78,626 |
|
|
|
$ |
226,847 |
|
|
|
$ |
170,779 |
|
| Add: |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
39,309 |
|
|
|
41,143 |
|
|
|
119,694 |
|
|
|
129,030 |
|
| Depreciation and amortization expense |
|
|
50,332 |
|
|
|
49,972 |
|
|
|
150,831 |
|
|
|
149,057 |
|
| Adjusted EBITDA |
|
|
123,825 |
|
|
|
169,741 |
|
|
|
497,372 |
|
|
|
448,866 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash interest cost |
|
|
(38,304 |
) |
|
|
(40,212 |
) |
|
|
(117,192 |
) |
|
|
(126,476 |
) |
| Maintenance capital expenditures |
|
|
(1,601 |
) |
|
|
(3,246 |
) |
|
|
(5,878 |
) |
|
|
(7,063 |
) |
| Distributable Cash Flow |
|
|
$ |
83,920 |
|
|
|
$ |
126,283 |
|
|
|
$ |
374,302 |
|
|
|
$ |
315,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Distributions to Members |
|
|
$ |
(87,219 |
) |
|
|
$ |
(126,035 |
) |
|
|
$ |
(373,888 |
) |
|
|
$ |
(320,186 |
) |
| Contributions from Members |
|
|
$ |
84,260 |
|
|
|
$ |
85,697 |
|
|
|
$ |
246,755 |
|
|
|
$ |
668,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average firm contracted volumes (MMcf/d) |
|
|
3,324 |
|
|
|
3,140 |
|
|
|
3,376 |
|
|
|
2,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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):
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September
30, 2016
|
|
|
Period from
May 12, 2015
(IPO) through
September
30, 2015
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
|
|
|
|
2016 |
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TEP distributions to Tallgrass Equity(1) |
|
|
|
|
|
|
|
|
|
|
|
|
| General partner interest |
|
|
$ |
976 |
|
|
|
$ |
660 |
|
|
|
$ |
2,717 |
|
|
|
$ |
1,287 |
|
| Incentive Distribution Rights |
|
|
26,987 |
|
|
|
11,567 |
|
|
|
71,065 |
|
|
|
21,985 |
|
| TEP common units owned by Tallgrass Equity |
|
|
15,900 |
|
|
|
12,000 |
|
|
|
45,100 |
|
|
|
23,600 |
|
| Total TEP distributions to Tallgrass Equity |
|
|
43,863 |
|
|
|
24,227 |
|
|
|
118,882 |
|
|
|
46,872 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cash interest expense attributable to Tallgrass Equity |
|
|
(1,132 |
) |
|
|
(1,020 |
) |
|
|
(3,322 |
) |
|
|
(1,565 |
) |
| Cash general and administrative expenses attributable to Tallgrass
Equity |
|
|
(500 |
) |
|
|
(500 |
) |
|
|
(1,500 |
) |
|
|
(750 |
) |
| Cash available for distribution by Tallgrass Equity |
|
|
42,231 |
|
|
|
22,707 |
|
|
|
114,060 |
|
|
|
44,557 |
|
| Distributions to predecessor owners of pre-IPO available cash(2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10,202 |
|
| Distributions to Class A (TEGP) |
|
|
12,528 |
|
|
|
6,872 |
|
|
|
34,243 |
|
|
|
10,356 |
|
| Distributions to Class B (Exchange Right Holders) |
|
|
28,745 |
|
|
|
15,769 |
|
|
|
78,570 |
|
|
|
23,763 |
|
| Total cash distributions by Tallgrass Equity |
|
|
$ |
41,273 |
|
|
|
$ |
22,641 |
|
|
|
$ |
112,813 |
|
|
|
$ |
44,321 |
|
| TEGP |
|
|
|
|
|
|
|
|
|
|
|
|
| Distributions from Tallgrass Equity |
|
|
$ |
12,528 |
|
|
|
$ |
6,872 |
|
|
|
$ |
34,243 |
|
|
|
$ |
10,356 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
| Distributions to Class A shareholders |
|
|
(12,528 |
) |
|
|
(6,872 |
) |
|
|
(34,243 |
) |
|
|
(10,356 |
) |
| Amounts in excess of distributions |
|
|
— |
|
|
|
— |
|
|
|
$ |
— |
|
|
|
$ |
— |
|
| Distribution coverage |
|
|
1.00 |
x |
|
|
1.00 |
x |
|
|
1.00 |
x |
|
|
1.00 |
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Class A shares outstanding |
|
|
47,725 |
|
|
|
47,725 |
|
|
|
47,725 |
|
|
|
47,725 |
|
| Distribution per Class A share |
|
|
$ |
0.2625 |
|
|
|
$ |
0.1440 |
|
|
|
$ |
0.7175 |
|
|
|
$ |
0.2170 |
|
| (1) |
|
Represents distributions expected to be received by Tallgrass Equity from TEP on or about
November 14, 2016, in connection with TEP's distribution for the quarter ended September 30, 2016.
|
| (2) |
|
Represents distributions received by Tallgrass Equity from TEP and Tallgrass MLP GP, LLC
related to periods prior to the closing of TEGP’s initial public offering on May 12, 2015, which were paid to Tallgrass
Development and the predecessor owners of Tallgrass Equity.
|
|
|
|
Conference Call
Please join Tallgrass Energy for a conference call and webcast to discuss third quarter 2016 results at 3:30 p.m. Central Time
on Wednesday, November 2, 2016. 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.
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 and TEGP’s expected performance into year-end
2016 and for 2017, the execution by REX of a precedent agreement for 50 million cubic feet a day and any potential breach of
contract recoveries from Ultra Petroleum and Berry Petroleum. 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)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 |
|
|
December 31, 2015 |
|
|
|
(in thousands) |
| ASSETS |
|
|
|
| Current Assets: |
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
417 |
|
|
|
$ |
1,611 |
|
| Accounts receivable, net |
|
|
53,085 |
|
|
|
57,757 |
|
| Gas imbalances |
|
|
890 |
|
|
|
1,227 |
|
| Inventories |
|
|
13,375 |
|
|
|
13,793 |
|
| Derivative assets at fair value |
|
|
25,690 |
|
|
|
— |
|
| Prepayments and other current assets |
|
|
3,838 |
|
|
|
2,835 |
|
| Total Current Assets |
|
|
97,295 |
|
|
|
77,223 |
|
| Property, plant and equipment, net |
|
|
2,003,532 |
|
|
|
2,025,018 |
|
| Goodwill |
|
|
343,288 |
|
|
|
343,288 |
|
| Intangible asset, net |
|
|
94,280 |
|
|
|
96,546 |
|
| Unconsolidated investment |
|
|
455,401 |
|
|
|
— |
|
| Deferred financing costs, net |
|
|
5,676 |
|
|
|
5,105 |
|
| Deferred charges and other assets |
|
|
10,816 |
|
|
|
14,894 |
|
| Total Assets |
|
|
$ |
3,010,288 |
|
|
|
$ |
2,562,074 |
|
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
| Accounts payable |
|
|
$ |
17,046 |
|
|
|
$ |
22,218 |
|
| Accounts payable to related parties |
|
|
6,207 |
|
|
|
7,852 |
|
| Gas imbalances |
|
|
1,117 |
|
|
|
1,605 |
|
| Derivative liabilities at fair value |
|
|
197 |
|
|
|
— |
|
| Accrued taxes |
|
|
20,676 |
|
|
|
13,844 |
|
| Accrued liabilities |
|
|
10,214 |
|
|
|
10,019 |
|
| Deferred revenue |
|
|
52,138 |
|
|
|
26,511 |
|
| Other current liabilities |
|
|
6,725 |
|
|
|
6,880 |
|
| Total Current Liabilities |
|
|
114,320 |
|
|
|
88,929 |
|
| Long-term debt, net |
|
|
1,398,003 |
|
|
|
753,000 |
|
| Other long-term liabilities and deferred credits |
|
|
7,341 |
|
|
|
5,143 |
|
| Total Long-term Liabilities |
|
|
1,405,344 |
|
|
|
758,143 |
|
| Commitments and Contingencies |
|
|
|
|
|
|
| Equity: |
|
|
|
|
|
|
|
Common unitholders (72,738,251 and 60,644,232 units issued and
outstanding at September 30, 2016 and December 31, 2015, respectively)
|
|
|
2,094,821 |
|
|
|
1,618,766 |
|
|
General partner (834,391 units issued and outstanding at September 30, 2016
and December 31, 2015)
|
|
|
(637,945 |
) |
|
|
(348,841 |
) |
| Total Partners' Equity |
|
|
1,456,876 |
|
|
|
1,269,925 |
|
| Noncontrolling interests |
|
|
$ |
33,748 |
|
|
|
$ |
445,077 |
|
| Total Equity |
|
|
$ |
1,490,624 |
|
|
|
$ |
1,715,002 |
|
| Total Liabilities and Equity |
|
|
$ |
3,010,288 |
|
|
|
$ |
2,562,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(in thousands, except per unit amounts) |
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil transportation services |
|
|
$ |
91,387 |
|
|
|
$ |
81,928 |
|
|
|
$ |
279,281 |
|
|
|
$ |
206,331 |
|
| Natural gas transportation services |
|
|
31,444 |
|
|
|
29,431 |
|
|
|
89,406 |
|
|
|
90,620 |
|
| Sales of natural gas, NGLs, and crude oil |
|
|
20,758 |
|
|
|
20,252 |
|
|
|
51,514 |
|
|
|
62,132 |
|
| Processing and other revenues |
|
|
8,536 |
|
|
|
6,557 |
|
|
|
24,260 |
|
|
|
26,730 |
|
| Total Revenues |
|
|
152,125 |
|
|
|
138,168 |
|
|
|
444,461 |
|
|
|
385,813 |
|
| Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of sales (exclusive of depreciation and amortization shown below) |
|
|
18,590 |
|
|
|
18,186 |
|
|
|
48,116 |
|
|
|
54,959 |
|
| Cost of transportation services (exclusive of depreciation and amortization shown
below) |
|
|
13,528 |
|
|
|
14,862 |
|
|
|
43,924 |
|
|
|
39,069 |
|
| Operations and maintenance |
|
|
14,714 |
|
|
|
14,071 |
|
|
|
41,055 |
|
|
|
36,054 |
|
| Depreciation and amortization |
|
|
20,831 |
|
|
|
20,802 |
|
|
|
64,099 |
|
|
|
61,762 |
|
| General and administrative |
|
|
13,147 |
|
|
|
11,807 |
|
|
|
40,072 |
|
|
|
37,947 |
|
| Taxes, other than income taxes |
|
|
6,717 |
|
|
|
5,521 |
|
|
|
19,862 |
|
|
|
16,547 |
|
| Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
1,849 |
|
|
|
4,483 |
|
| Total Operating Costs and Expenses |
|
|
87,527 |
|
|
|
85,249 |
|
|
|
258,977 |
|
|
|
250,821 |
|
| Operating Income |
|
|
64,598 |
|
|
|
52,919 |
|
|
|
185,484 |
|
|
|
134,992 |
|
| Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net |
|
|
(10,907 |
) |
|
|
(3,871 |
) |
|
|
(27,639 |
) |
|
|
(11,204 |
) |
| Unrealized (loss) gain on derivative instrument |
|
|
(4,419 |
) |
|
|
— |
|
|
|
5,588 |
|
|
|
— |
|
| Equity in earnings of unconsolidated investment |
|
|
12,066 |
|
|
|
— |
|
|
|
35,387 |
|
|
|
— |
|
| Other income, net |
|
|
480 |
|
|
|
502 |
|
|
|
1,267 |
|
|
|
1,983 |
|
| Total Other (Expense) Income |
|
|
(2,780 |
) |
|
|
(3,369 |
) |
|
|
14,603 |
|
|
|
(9,221 |
) |
| Net income |
|
|
61,818 |
|
|
|
49,550 |
|
|
|
200,087 |
|
|
|
125,771 |
|
| Net income attributable to noncontrolling interests |
|
|
(1,084 |
) |
|
|
(6,871 |
) |
|
|
(3,235 |
) |
|
|
(5,874 |
) |
| Net income attributable to partners |
|
|
$ |
60,734 |
|
|
|
$ |
42,679 |
|
|
|
$ |
196,852 |
|
|
|
$ |
119,897 |
|
| Allocation of income to the limited partners: |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income attributable to partners |
|
|
$ |
60,734 |
|
|
|
$ |
42,679 |
|
|
|
$ |
196,852 |
|
|
|
$ |
119,897 |
|
| General partner interest in net income |
|
|
(27,674 |
) |
|
|
(12,146 |
) |
|
|
(73,347 |
) |
|
|
(30,614 |
) |
| Common and subordinated unitholders' interest in net income |
|
|
33,060 |
|
|
|
30,533 |
|
|
|
123,505 |
|
|
|
89,283 |
|
| Basic net income per common and subordinated unit |
|
|
$ |
0.45 |
|
|
|
$ |
0.50 |
|
|
|
$ |
1.75 |
|
|
|
$ |
1.54 |
|
| Diluted net income per common and subordinated unit |
|
|
$ |
0.45 |
|
|
|
$ |
0.50 |
|
|
|
$ |
1.73 |
|
|
|
$ |
1.52 |
|
| Basic average number of common and subordinated units outstanding |
|
|
73,089 |
|
|
|
60,576 |
|
|
|
70,686 |
|
|
|
57,917 |
|
| Diluted average number of common and subordinated units outstanding |
|
|
74,063 |
|
|
|
61,536 |
|
|
|
71,590 |
|
|
|
58,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2016 |
|
|
2015 |
|
|
|
(in thousands) |
| Cash Flows from Operating Activities: |
|
|
|
|
|
|
| Net income |
|
|
$ |
200,087 |
|
|
|
$ |
125,771 |
|
| Adjustments to reconcile net income to net cash flows provided by operating
activities: |
|
|
|
|
|
|
| Depreciation and amortization |
|
|
68,693 |
|
|
|
64,624 |
|
| Equity in earnings of unconsolidated investment |
|
|
(35,387 |
) |
|
|
— |
|
| Distributions from unconsolidated investment |
|
|
35,387 |
|
|
|
— |
|
| Noncash compensation expense |
|
|
4,270 |
|
|
|
3,988 |
|
| Noncash change in fair value of derivative financial instruments |
|
|
(5,391 |
) |
|
|
(218 |
) |
| Loss on disposal of assets |
|
|
1,849 |
|
|
|
4,483 |
|
| Changes in components of working capital: |
|
|
|
|
|
|
| Accounts receivable and other |
|
|
7,924 |
|
|
|
(11,538 |
) |
| Inventories |
|
|
(867 |
) |
|
|
(5,265 |
) |
| Accounts payable and accrued liabilities |
|
|
4,827 |
|
|
|
6,786 |
|
| Deferred revenue |
|
|
25,303 |
|
|
|
13,995 |
|
| Other operating, net |
|
|
(779 |
) |
|
|
(5,142 |
) |
| Net Cash Provided by Operating Activities |
|
|
305,916 |
|
|
|
197,484 |
|
| Cash Flows from Investing Activities: |
|
|
|
|
|
|
| Capital expenditures |
|
|
(45,252 |
) |
|
|
(65,146 |
) |
| Acquisition of unconsolidated affiliate |
|
|
(436,022 |
) |
|
|
— |
|
| Acquisition of Pony Express membership interest |
|
|
(49,118 |
) |
|
|
(700,000 |
) |
| Contributions to unconsolidated investment |
|
|
(35,452 |
) |
|
|
— |
|
| Distributions from unconsolidated investment in excess of cumulative earnings |
|
|
16,073 |
|
|
|
— |
|
| Other investing, net |
|
|
205 |
|
|
|
(4,625 |
) |
| Net Cash Used in Investing Activities |
|
|
(549,566 |
) |
|
|
(769,771 |
) |
| Cash Flows from Financing Activities: |
|
|
|
|
|
|
| Acquisition of Pony Express membership interest |
|
|
(425,882 |
) |
|
|
— |
|
| Proceeds from issuance of long-term debt |
|
|
400,000 |
|
|
|
— |
|
| Proceeds from public offering, net of offering costs |
|
|
290,474 |
|
|
|
551,243 |
|
| Borrowings under revolving credit facility, net |
|
|
252,000 |
|
|
|
137,000 |
|
| Distributions to unitholders |
|
|
(207,539 |
) |
|
|
(113,260 |
) |
| Partial exercise of call option |
|
|
(151,434 |
) |
|
|
— |
|
| Proceeds from private placement, net of offering costs |
|
|
90,009 |
|
|
|
— |
|
| Contributions from noncontrolling interests |
|
|
8,700 |
|
|
|
19,303 |
|
| Other financing, net |
|
|
(13,872 |
) |
|
|
(4,161 |
) |
| Net Cash Provided by Financing Activities |
|
|
242,456 |
|
|
|
590,125 |
|
| Net Change in Cash and Cash Equivalents |
|
|
(1,194 |
) |
|
|
17,838 |
|
| Cash and Cash Equivalents, beginning of period |
|
|
1,611 |
|
|
|
867 |
|
| Cash and Cash Equivalents, end of period |
|
|
$ |
417 |
|
|
|
$ |
18,705 |
|
|
|
|
|
|
|
|
|
|
|
|
Tallgrass Energy GP, LP Financial Statements
|
TALLGRASS ENERGY GP, LP
CONDENSED CONSOLIDATING BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 |
|
|
December 31, 2015 |
|
|
|
TEP |
|
|
Consolidating
Adjustments (1)
|
|
|
TEGP |
|
|
TEP |
|
|
Consolidating
Adjustments (1)
|
|
|
TEGP |
|
|
|
(in thousands) |
|
|
(in thousands) |
| ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
|
$ |
417 |
|
|
|
$ |
942 |
|
|
|
$ |
1,359 |
|
|
|
$ |
1,611 |
|
|
|
$ |
623 |
|
|
|
$ |
2,234 |
| Accounts receivable, net |
|
|
53,085 |
|
|
|
— |
|
|
|
53,085 |
|
|
|
57,757 |
|
|
|
— |
|
|
|
57,757 |
| Gas imbalances |
|
|
890 |
|
|
|
— |
|
|
|
890 |
|
|
|
1,227 |
|
|
|
— |
|
|
|
1,227 |
| Inventories |
|
|
13,375 |
|
|
|
— |
|
|
|
13,375 |
|
|
|
13,793 |
|
|
|
— |
|
|
|
13,793 |
| Derivative asset at fair value |
|
|
25,690 |
|
|
|
— |
|
|
|
25,690 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Prepayments and other current assets |
|
|
3,838 |
|
|
|
— |
|
|
|
3,838 |
|
|
|
2,835 |
|
|
|
— |
|
|
|
2,835 |
| Total Current Assets |
|
|
97,295 |
|
|
|
942 |
|
|
|
98,237 |
|
|
|
77,223 |
|
|
|
623 |
|
|
|
77,846 |
| Property, plant and equipment, net |
|
|
2,003,532 |
|
|
|
— |
|
|
|
2,003,532 |
|
|
|
2,025,018 |
|
|
|
— |
|
|
|
2,025,018 |
| Goodwill |
|
|
343,288 |
|
|
|
— |
|
|
|
343,288 |
|
|
|
343,288 |
|
|
|
— |
|
|
|
343,288 |
| Intangible asset, net |
|
|
94,280 |
|
|
|
— |
|
|
|
94,280 |
|
|
|
96,546 |
|
|
|
— |
|
|
|
96,546 |
| Unconsolidated investment |
|
|
455,401 |
|
|
|
— |
|
|
|
455,401 |
|
|
|
|
|
|
|
|
|
|
| Deferred tax asset |
|
|
— |
|
|
|
439,638 |
|
|
|
439,638 |
|
|
|
— |
|
|
|
452,430 |
|
|
|
452,430 |
| Deferred financing costs, net |
|
|
5,676 |
|
|
|
1,338 |
|
|
|
7,014 |
|
|
|
5,105 |
|
|
|
1,533 |
|
|
|
6,638 |
| Deferred charges and other assets |
|
|
10,816 |
|
|
|
— |
|
|
|
10,816 |
|
|
|
14,894 |
|
|
|
— |
|
|
|
14,894 |
| Total Assets |
|
|
$ |
3,010,288 |
|
|
|
$ |
441,918 |
|
|
|
$ |
3,452,206 |
|
|
|
$ |
2,562,074 |
|
|
|
$ |
454,586 |
|
|
|
$ |
3,016,660 |
| LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accounts payable |
|
|
$ |
17,046 |
|
|
|
$ |
— |
|
|
|
$ |
17,046 |
|
|
|
$ |
22,218 |
|
|
|
$ |
— |
|
|
|
$ |
22,218 |
| Accounts payable to related parties |
|
|
6,207 |
|
|
|
(110 |
) |
|
|
6,097 |
|
|
|
7,852 |
|
|
|
(97 |
) |
|
|
7,755 |
| Gas imbalances |
|
|
1,117 |
|
|
|
— |
|
|
|
1,117 |
|
|
|
1,605 |
|
|
|
— |
|
|
|
1,605 |
| Derivative liabilities at fair value |
|
|
197 |
|
|
|
— |
|
|
|
197 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
| Accrued taxes |
|
|
20,676 |
|
|
|
— |
|
|
|
20,676 |
|
|
|
13,844 |
|
|
|
— |
|
|
|
13,844 |
| Accrued liabilities |
|
|
10,214 |
|
|
|
59 |
|
|
|
10,273 |
|
|
|
10,019 |
|
|
|
187 |
|
|
|
10,206 |
| Deferred revenue |
|
|
52,138 |
|
|
|
— |
|
|
|
52,138 |
|
|
|
26,511 |
|
|
|
— |
|
|
|
26,511 |
| Other current liabilities |
|
|
6,725 |
|
|
|
— |
|
|
|
6,725 |
|
|
|
6,880 |
|
|
|
— |
|
|
|
6,880 |
| Total Current Liabilities |
|
|
114,320 |
|
|
|
(51 |
) |
|
|
114,269 |
|
|
|
88,929 |
|
|
|
90 |
|
|
|
89,019 |
| Long-term debt, net |
|
|
1,398,003 |
|
|
|
148,000 |
|
|
|
1,546,003 |
|
|
|
753,000 |
|
|
|
148,000 |
|
|
|
901,000 |
|
Other long-term liabilities and
deferred credits
|
|
|
7,341 |
|
|
|
— |
|
|
|
7,341 |
|
|
|
5,143 |
|
|
|
— |
|
|
|
5,143 |
| Total Long-term Liabilities |
|
|
1,405,344 |
|
|
|
148,000 |
|
|
|
1,553,344 |
|
|
|
758,143 |
|
|
|
148,000 |
|
|
|
906,143 |
| Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Partners' Equity |
|
|
1,456,876 |
|
|
|
(1,288,818 |
) |
|
|
168,058 |
|
|
|
1,269,925 |
|
|
|
(847,615 |
) |
|
|
422,310 |
| Noncontrolling interests |
|
|
33,748 |
|
|
|
1,582,787 |
|
|
|
1,616,535 |
|
|
|
445,077 |
|
|
|
1,154,111 |
|
|
|
1,599,188 |
| Total Equity |
|
|
$ |
1,490,624 |
|
|
|
$ |
293,969 |
|
|
|
$ |
1,784,593 |
|
|
|
$ |
1,715,002 |
|
|
|
$ |
306,496 |
|
|
|
$ |
2,021,498 |
| Total Liabilities and Equity |
|
|
$ |
3,010,288 |
|
|
|
$ |
441,918 |
|
|
|
$ |
3,452,206 |
|
|
|
$ |
2,562,074 |
|
|
|
$ |
454,586 |
|
|
|
$ |
3,016,660 |
(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, 2016
|
|
|
Three Months Ended September 30, 2015 |
|
|
|
TEP |
|
|
Consolidating
Adjustments (1)
|
|
|
TEGP |
|
|
TEP |
|
|
Consolidating
Adjustments (1)
|
|
|
TEGP |
|
|
|
(in thousands) |
|
|
(in thousands) |
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil transportation services |
|
|
$ |
91,387 |
|
|
|
$ |
— |
|
|
|
$ |
91,387 |
|
|
|
$ |
81,928 |
|
|
|
$ |
— |
|
|
|
$ |
81,928 |
|
| Natural gas transportation services |
|
|
31,444 |
|
|
|
— |
|
|
|
31,444 |
|
|
|
29,431 |
|
|
|
— |
|
|
|
29,431 |
|
| Sales of natural gas, NGLs, and crude oil |
|
|
20,758 |
|
|
|
— |
|
|
|
20,758 |
|
|
|
20,252 |
|
|
|
— |
|
|
|
20,252 |
|
| Processing and other revenues |
|
|
8,536 |
|
|
|
— |
|
|
|
8,536 |
|
|
|
6,557 |
|
|
|
— |
|
|
|
6,557 |
|
| Total Revenues |
|
|
152,125 |
|
|
|
— |
|
|
|
152,125 |
|
|
|
138,168 |
|
|
|
— |
|
|
|
138,168 |
|
| Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (exclusive of
depreciation and amortization
shown below)
|
|
|
18,590 |
|
|
|
— |
|
|
|
18,590 |
|
|
|
18,186 |
|
|
|
— |
|
|
|
18,186 |
|
|
Cost of transportation services
(exclusive of depreciation and
amortization shown below)
|
|
|
13,528 |
|
|
|
— |
|
|
|
13,528 |
|
|
|
14,862 |
|
|
|
— |
|
|
|
14,862 |
|
| Operations and maintenance |
|
|
14,714 |
|
|
|
— |
|
|
|
14,714 |
|
|
|
14,071 |
|
|
|
— |
|
|
|
14,071 |
|
| Depreciation and amortization |
|
|
20,831 |
|
|
|
— |
|
|
|
20,831 |
|
|
|
20,802 |
|
|
|
— |
|
|
|
20,802 |
|
| General and administrative |
|
|
13,147 |
|
|
|
568 |
|
|
|
13,715 |
|
|
|
11,807 |
|
|
|
514 |
|
|
|
12,321 |
|
| Taxes, other than income taxes |
|
|
6,717 |
|
|
|
— |
|
|
|
6,717 |
|
|
|
5,521 |
|
|
|
— |
|
|
|
5,521 |
|
| Total Operating Costs and Expenses |
|
|
87,527 |
|
|
|
568 |
|
|
|
88,095 |
|
|
|
85,249 |
|
|
|
514 |
|
|
|
85,763 |
|
| Operating Income |
|
|
64,598 |
|
|
|
(568 |
) |
|
|
64,030 |
|
|
|
52,919 |
|
|
|
(514 |
) |
|
|
52,405 |
|
| Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net |
|
|
(10,907 |
) |
|
|
(1,250 |
) |
|
|
(12,157 |
) |
|
|
(3,871 |
) |
|
|
(1,111 |
) |
|
|
(4,982 |
) |
|
Unrealized (loss) gain on
derivative instrument
|
|
|
(4,419 |
) |
|
|
— |
|
|
|
(4,419 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Equity in earnings of
unconsolidated investment
|
|
|
12,066 |
|
|
|
— |
|
|
|
12,066 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Other income, net |
|
|
480 |
|
|
|
— |
|
|
|
480 |
|
|
|
502 |
|
|
|
— |
|
|
|
502 |
|
| Total Other (Expense) Income |
|
|
(2,780 |
) |
|
|
(1,250 |
) |
|
|
(4,030 |
) |
|
|
(3,369 |
) |
|
|
(1,111 |
) |
|
|
(4,480 |
) |
| Net income before tax |
|
|
61,818 |
|
|
|
(1,818 |
) |
|
|
60,000 |
|
|
|
49,550 |
|
|
|
(1,625 |
) |
|
|
47,925 |
|
| Current income tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Deferred income tax expense |
|
|
— |
|
|
|
(3,209 |
) |
|
|
(3,209 |
) |
|
|
— |
|
|
|
(1,828 |
) |
|
|
(1,828 |
) |
| Net income |
|
|
61,818 |
|
|
|
(5,027 |
) |
|
|
56,791 |
|
|
|
49,550 |
|
|
|
(3,453 |
) |
|
|
46,097 |
|
|
Net income attributable to
noncontrolling interests
|
|
|
(1,084 |
) |
|
|
(48,666 |
) |
|
|
(49,750 |
) |
|
|
(6,871 |
) |
|
|
(34,803 |
) |
|
|
(41,674 |
) |
| Net income attributable to TEGP |
|
|
$ |
60,734 |
|
|
|
$ |
(53,693 |
) |
|
|
$ |
7,041 |
|
|
|
$ |
42,679 |
|
|
|
$ |
(38,256 |
) |
|
|
$ |
4,423 |
|
| Basic net income per Class A share |
|
|
|
|
|
|
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
$ |
0.09 |
|
| Diluted net income per Class A share |
|
|
|
|
|
|
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
$ |
0.09 |
|
|
Basic average number of Class A
shares outstanding
|
|
|
|
|
|
|
|
|
47,725 |
|
|
|
|
|
|
|
|
|
47,725 |
|
|
Diluted average number of Class A
shares outstanding
|
|
|
|
|
|
|
|
|
47,775 |
|
|
|
|
|
|
|
|
|
47,808 |
|
(1) Represents the aggregate consolidating adjustments necessary to produce consolidated financial statements
for TEGP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2016 |
|
|
Nine Months Ended September 30, 2015 |
|
|
|
TEP |
|
|
Consolidating
Adjustments (1)
|
|
|
TEGP |
|
|
TEP |
|
|
Consolidating
Adjustments (1)
|
|
|
TEGP |
|
|
|
(in thousands) |
|
|
(in thousands) |
| Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Crude oil transportation services |
|
|
$ |
279,281 |
|
|
|
$ |
— |
|
|
|
$ |
279,281 |
|
|
|
$ |
206,331 |
|
|
|
$ |
— |
|
|
|
$ |
206,331 |
|
| Natural gas transportation services |
|
|
89,406 |
|
|
|
— |
|
|
|
89,406 |
|
|
|
90,620 |
|
|
|
— |
|
|
|
90,620 |
|
|
Sales of natural gas, NGLs, and
crude oil
|
|
|
51,514 |
|
|
|
— |
|
|
|
51,514 |
|
|
|
62,132 |
|
|
|
— |
|
|
|
62,132 |
|
| Processing and other revenues |
|
|
24,260 |
|
|
|
— |
|
|
|
24,260 |
|
|
|
26,730 |
|
|
|
— |
|
|
|
26,730 |
|
| Total Revenues |
|
|
444,461 |
|
|
|
— |
|
|
|
444,461 |
|
|
|
385,813 |
|
|
|
— |
|
|
|
385,813 |
|
| Operating Costs and Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (exclusive of
depreciation and amortization
shown below)
|
|
|
48,116 |
|
|
|
— |
|
|
|
48,116 |
|
|
|
54,959 |
|
|
|
— |
|
|
|
54,959 |
|
|
Cost of transportation services
(exclusive of depreciation and
amortization shown below)
|
|
|
43,924 |
|
|
|
— |
|
|
|
43,924 |
|
|
|
39,069 |
|
|
|
— |
|
|
|
39,069 |
|
| Operations and maintenance |
|
|
41,055 |
|
|
|
— |
|
|
|
41,055 |
|
|
|
36,054 |
|
|
|
— |
|
|
|
36,054 |
|
| Depreciation and amortization |
|
|
64,099 |
|
|
|
— |
|
|
|
64,099 |
|
|
|
61,762 |
|
|
|
— |
|
|
|
61,762 |
|
| General and administrative |
|
|
40,072 |
|
|
|
1,638 |
|
|
|
41,710 |
|
|
|
37,947 |
|
|
|
764 |
|
|
|
38,711 |
|
| Taxes, other than income taxes |
|
|
19,862 |
|
|
|
— |
|
|
|
19,862 |
|
|
|
16,547 |
|
|
|
— |
|
|
|
16,547 |
|
| Loss on disposal of assets |
|
|
1,849 |
|
|
|
— |
|
|
|
1,849 |
|
|
|
4,483 |
|
|
|
— |
|
|
|
4,483 |
|
| Total Operating Costs and Expenses |
|
|
258,977 |
|
|
|
1,638 |
|
|
|
260,615 |
|
|
|
250,821 |
|
|
|
764 |
|
|
|
251,585 |
|
| Operating Income |
|
|
185,484 |
|
|
|
(1,638 |
) |
|
|
183,846 |
|
|
|
134,992 |
|
|
|
(764 |
) |
|
|
134,228 |
|
| Other Income (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense, net |
|
|
(27,639 |
) |
|
|
(3,636 |
) |
|
|
(31,275 |
) |
|
|
(11,204 |
) |
|
|
(1,697 |
) |
|
|
(12,901 |
) |
|
Unrealized (loss) gain on
derivative instrument
|
|
|
5,588 |
|
|
|
— |
|
|
|
5,588 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Equity in earnings of
unconsolidated investment
|
|
|
35,387 |
|
|
|
— |
|
|
|
35,387 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Other income, net |
|
|
1,267 |
|
|
|
— |
|
|
|
1,267 |
|
|
|
1,983 |
|
|
|
— |
|
|
|
1,983 |
|
| Total Other (Expense) Income |
|
|
14,603 |
|
|
|
(3,636 |
) |
|
|
10,967 |
|
|
|
(9,221 |
) |
|
|
(1,697 |
) |
|
|
(10,918 |
) |
| Net income before tax |
|
|
200,087 |
|
|
|
(5,274 |
) |
|
|
194,813 |
|
|
|
125,771 |
|
|
|
(2,461 |
) |
|
|
123,310 |
|
| Deferred income tax expense |
|
|
— |
|
|
|
(12,792 |
) |
|
|
(12,792 |
) |
|
|
— |
|
|
|
(3,600 |
) |
|
|
(3,600 |
) |
| Net income |
|
|
200,087 |
|
|
|
(18,066 |
) |
|
|
182,021 |
|
|
|
125,771 |
|
|
|
(6,061 |
) |
|
|
119,710 |
|
|
Net income attributable to
noncontrolling interests
|
|
|
(3,235 |
) |
|
|
(160,708 |
) |
|
|
(163,943 |
) |
|
|
(5,874 |
) |
|
|
(99,557 |
) |
|
|
(105,431 |
) |
| Net income attributable to TEGP |
|
|
$ |
196,852 |
|
|
|
$ |
(178,774 |
) |
|
|
$ |
18,078 |
|
|
|
$ |
119,897 |
|
|
|
$ |
(105,618 |
) |
|
|
$ |
14,279 |
|
|
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 |
|
|
|
|
|
|
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
$ |
0.14 |
|
| Diluted net income per Class A share |
|
|
|
|
|
|
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
$ |
0.14 |
|
|
Basic average number of Class A
shares outstanding
|
|
|
|
|
|
|
|
|
47,725 |
|
|
|
|
|
|
|
|
|
47,725 |
|
|
Diluted average number of Class A
shares outstanding
|
|
|
|
|
|
|
|
|
47,740 |
|
|
|
|
|
|
|
|
|
47,812 |
|
(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.
Tallgrass Energy
Investor and Financial Inquiries
Nate Lien, 913-928-6012
investor.relations@tallgrassenergylp.com
or
Media and Trade Inquiries
Phyllis Hammond, 913-928-6014
media.relations@tallgrassenergylp.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20161102006571/en/