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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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46-1972941
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(State or other Jurisdiction of Incorporation or Organization)
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(IRS Employer Identification Number)
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4200 W. 115th Street, Suite 350
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Leawood, Kansas
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66211
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Units Representing Limited Partner Interests
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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PART
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our ability to complete and integrate acquisitions from Tallgrass Development or from third parties, including our acquisition of water business assets in Weld County, Colorado that was completed in December 2015 and our purchase of an additional 31.3% interest in Tallgrass Pony Express Pipeline, LLC ("Pony Express") that was completed in January 2016;
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changes in general economic conditions;
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competitive conditions in our industry;
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actions taken by third-party operators, processors and transporters;
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the demand for our services, including crude oil transportation services, natural gas transportation, storage and processing services and water business services;
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our ability to successfully implement our business plan;
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our ability to complete internal growth projects on time and on budget;
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the price and availability of debt and equity financing;
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the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of crude oil, natural gas, NGLs, and other hydrocarbons;
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the availability and price of natural gas and crude oil, and fuels derived from both, to the consumer compared to the price of alternative and competing fuels;
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competition from the same and alternative energy sources;
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energy efficiency and technology trends;
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operating hazards and other risks incidental to transporting crude oil, transporting, storing and processing natural gas, and transporting, gathering and disposing of water produced in connection with hydrocarbon exploration and production activities;
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natural disasters, weather-related delays, casualty losses and other matters beyond our control;
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interest rates;
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labor relations;
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large or multiple customer defaults;
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changes in tax status;
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the effects of existing and future laws and governmental regulations;
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the effects of future litigation; and
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certain factors discussed elsewhere in this Annual Report.
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Crude Oil Transportation & Logistics—the ownership and operation of a crude oil pipeline system;
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Natural Gas Transportation & Logistics—the ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities; and
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Processing & Logistics—the ownership and operation of natural gas processing, treating and fractionation facilities, the provision of water business services primarily to the oil and gas exploration and production industry and the transportation of NGLs.
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Approximate Design Capacity (bbls/d)
(1)
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Approximate Contractible Capacity Under Contract
(2)
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Weighted Average Remaining Firm Contract Life
(3)
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Approximate Average Daily Throughput (bbls/d)
(4)
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320,000
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100
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%
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4 years
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288,362
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(1)
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Excludes additional capacity related to the Pony Express System's ability to inject drag reducing agent, which is an additive that increases pipeline flow efficiency.
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(2)
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We are required to make no less than 10% of design capacity available for non-contract, or "walk-up", shippers. Approximately 100% of the remaining design capacity (or available contractible capacity) is committed under contract.
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(3)
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Based on the average annual reservation capacity for each such contract's remaining life.
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(4)
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Approximate average daily throughput for the
year ended December 31, 2015
was 236,256 bbls/d and is reflective of the volumetric ramp-up during the year due to the construction and expansion efforts of the Pony Express lateral in Northeast Colorado and third-party pipelines with which Pony Express shares joint tariffs.
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Approximate Average Daily Throughput (MMcf/d)
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Year Ended December 31,
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2015
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2014
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2013
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Transportation
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1,129
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955
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991
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Approximate Number of Miles
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Approximate Capacity
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Total Firm Contracted Capacity
(1)
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Approximate % of Capacity Subscribed under Firm Contracts
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Weighted Average Remaining Firm Contract Life
(2)
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Transportation
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5,109
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1,982 MMcf/d
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1,428 MMcf/d
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72
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%
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2 years
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Storage
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n/a
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15.974 Bcf
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(3)
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11 Bcf
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69
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%
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6 years
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(1)
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Reflects total capacity reserved under long-term firm fee contracts, including backhaul service, as of
December 31, 2015
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(2)
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Weighted by contracted capacity as of
December 31, 2015
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(3)
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The FERC certificated working gas storage capacity.
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(1)
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The West Frenchie Draw natural gas treating facility treats natural gas before it flows into the Casper and Douglas plants and therefore does not result in additional inlet capacity.
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(2)
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Based on the average annual reservation capacity for each such contract's remaining life.
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Approximate Capacity Under Contract
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Approximate Current Design Capacity (bbls/d)
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Remaining Contract Life
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Approximate Average Volumes (bbls/d)
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Year Ended December 31,
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2015
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2014
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2013
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Freshwater
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56
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%
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30,863
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(1)
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5 years
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14,579
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16,433
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—
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Gathering and Disposal
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80
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%
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35,000
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(2)
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9 years
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7,951
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(2)
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—
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—
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(1)
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Represents the average daily fresh water supply for the BNN Redtail, LLC fresh water pipeline acquired in 2014 and the BNN Western, LLC ("Western") fresh water delivery and storage system in Weld County, Colorado acquired in December 2015 as discussed under
"Acquisitions"
below.
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(2)
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Represents the daily disposal well injection capacity and the average daily disposal injection volumes, respectively, for the Western produced water gathering and disposal system in Weld County, Colorado acquired in December 2015 as discussed under
"Acquisitions"
below.
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a 50% interest in, and operation of, the Rockies Express Pipeline, or REX Pipeline, an approximately 1,713 mile natural gas pipeline with a bi-directional design capacity of up to 1.8 Bcf/d, that extends from Opal, Wyoming and Meeker, Colorado to Clarington, Ohio; and
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Tallgrass Terminals, LLC, or Terminals, which holds a 20% membership interest in Deeprock Development, LLC (the owner of a crude oil terminal in Cushing, Oklahoma with approximately 2.3 million bbls of storage capacity), and a crude oil terminal in Sterling, Colorado with approximately 1.3 million bbls of storage capacity.
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Pony Express System
. Effective March 1, 2015, we acquired an additional 33.3% membership interest in Pony Express for cash consideration of approximately $700 million, bringing our total ownership in Pony Express to 66.7% on such date. Effective January 1, 2016, we acquired an additional 31.3% membership interest in exchange for cash consideration of $475 million and the issuance of 6,518,000 of our common units, bringing our total ownership interest in Pony Express to 98.0%.
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Weld County, Colorado Water Assets
. On December 16, 2015, we acquired the following assets located in Weld County, Colorado from Whiting Oil and Gas Corporation ("Whiting") in exchange for total cash consideration of $75 million: a fresh water delivery system and a produced water gathering and disposal system, seven fresh water ponds with approximately 2.4 million barrels of storage and three produced water disposal wells, along with long-term firm fee contracts and acreage dedications from Whiting.
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the level of firm services we provide to customers pursuant to firm fee contracts and the volume of customer products we transport, store, process, gather, treat and dispose using our assets;
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our ability to renew or replace expiring long-term firm fee contracts with other long-term firm fee contracts;
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the creditworthiness of our customers, particularly customers who are subject to firm fee contracts;
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our ability to complete and integrate acquisitions from Tallgrass Development or from third parties;
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the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of natural gas, NGLs, crude oil and other hydrocarbons;
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regional, domestic and foreign supply and perceptions of supply of natural gas, crude oil and other hydrocarbons;
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the level of demand and perceptions of demand in end-user markets we directly or indirectly serve;
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actual and anticipated future prices of natural gas, crude oil and other commodities (and the volatility thereof);
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applicable laws and regulations affecting our and our customers' business, including the market for natural gas, crude oil, other hydrocarbons and water, the rates we can charge on our assets, how we contract for services, our existing contracts, our operating costs or our operating flexibility;
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prevailing economic conditions;
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changes in the fees we charge for our services, including firm services and interruptible services;
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the effect of seasonal variations in temperature and climate on the amount of customer products we are able to transport, store, process, gather, treat and dispose using our assets;
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the realized pricing impacts on revenues and expenses that are directly related to commodity prices;
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the level of competition from other midstream energy companies in our geographic markets;
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the level of our operating and maintenance costs;
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damage to our assets and surrounding properties caused by earthquakes, floods, fires, severe weather, explosions and other natural disasters or acts of terrorism;
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outages in our assets;
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the relationship between natural gas and NGL prices and resulting effect on processing margins; and
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leaks or accidental releases of hazardous materials into the environment, whether as a result of human error or otherwise.
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our ability to borrow funds and access capital markets;
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the level, timing and characterization of capital expenditures we make;
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the level of our general and administrative expenses, including reimbursements to our general partner and its affiliates, including Tallgrass Development, for services provided to us;
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the cost of pursuing and completing acquisitions, if any;
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our debt service requirements and other liabilities;
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fluctuations in our working capital needs;
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restrictions contained in our debt agreements;
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the amount of cash reserves established by our general partner; and
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other business risks affecting our cash levels.
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the level of existing and new competition to provide competing services to our markets;
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the macroeconomic factors affecting crude oil and natural gas gathering economics for our current and potential customers;
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the balance of supply and demand for natural gas, crude oil and other hydrocarbons, on a short-term, seasonal and long-term basis, in the markets we serve;
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the extent to which the current and potential customers in our markets are willing to contract on a long-term basis; and
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the effects of federal, state or local laws or regulations on the contracting practices of our customers.
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mistaken assumptions about volumes, revenue and costs, including synergies and potential growth;
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an inability to maintain or secure adequate customer commitments to use the acquired systems or facilities;
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an inability to integrate successfully the assets or businesses we acquire;
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the assumption of unknown liabilities for which we are not indemnified or for which our indemnity is inadequate;
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the diversion of management’s and employees’ attention from other business concerns;
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unforeseen difficulties operating in new geographic areas or business lines; and
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a decrease in liquidity and increased leverage as a result of using significant amounts of available cash or debt to finance an acquisition.
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adverse changes in general global economic conditions;
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adverse changes in domestic regulations;
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technological advancements that may drive further increases in production and reduction in costs of developing natural gas shales;
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the price and availability of other forms of energy;
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prices for natural gas, crude oil and NGLs;
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decisions of the members of Organization of the Petroleum Exporting Countries, or OPEC, regarding price and production controls;
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increased costs to explore for, develop, produce, gather, process and transport hydrocarbons or water;
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weather conditions, seasonal trends and hurricane disruptions;
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the nature and extent of, and changes in, governmental regulation, for example GHG legislation, taxation and hydraulic fracturing;
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perceptions of customers on the availability and price volatility of our services and natural gas and crude oil prices, particularly customers’ perceptions on the volatility of natural gas and crude oil prices over the long-term;
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capacity and transportation service into, or out of, our markets; and
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petrochemical demand for NGLs.
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rates, operating terms and conditions of service;
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the form of tariffs governing service;
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the types of services we may offer to our customers;
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the certification and construction of new, or the expansion of existing, facilities;
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the acquisition, extension, disposition or abandonment of facilities;
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customer creditworthiness and credit support requirements;
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the maintenance of accounts and records;
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relationships among affiliated companies involved in certain aspects of the natural gas business;
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depreciation and amortization policies; and
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the initiation and discontinuation of services.
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rates, rules and regulations of service;
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the form of tariffs governing rates and service;
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the maintenance of accounts and records; and
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depreciation and amortization policies.
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damage to pipelines, facilities, equipment and surrounding properties caused by hurricanes, earthquakes, tornadoes, floods, fires or other adverse weather conditions and other natural disasters and acts of terrorism;
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inadvertent damage from construction, vehicles, farm and utility equipment;
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uncontrolled releases of crude oil, natural gas and other hydrocarbons or hazardous materials, including water from hydraulic fracturing;
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leaks, migrations or losses of natural gas and crude oil as a result of the malfunction of equipment or facilities;
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outages at our facilities;
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ruptures, fires, leaks and explosions; and
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other hazards that could also result in personal injury and loss of life, pollution and other environmental risks, and suspension of operations.
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reauthorizing funding for federal pipeline safety programs, increasing penalties for safety violations and establishing additional safety requirements for newly constructed pipelines;
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requiring PHMSA to adopt appropriate regulations within two years and requiring the use of automatic or remote- controlled shutoff valves on new or rebuilt pipeline facilities;
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requiring operators of pipelines to verify MAOP and report exceedances within five days; and
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requiring studies of certain safety issues that could result in the adoption of new regulatory requirements for new and existing pipelines, including changes to integrity management requirements for HCAs, and expansion of those requirements to areas outside of HCAs.
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CAA and analogous state and local laws, which impose obligations related to air emissions;
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CWA and analogous state and local laws, which regulate discharge of pollutants (Section 402) or fill material (Section 404) from our facilities to state and federal waters, including wetlands;
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CERCLA and analogous state and local laws, which regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations to which we have sent wastes for disposal;
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RCRA and analogous state and local laws, which impose requirements for the handling and discharge of hazardous and nonhazardous solid waste from our facilities;
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OSHA and analogous state and local laws, which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures;
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NEPA and analogous state and local laws, which requires federal agencies to evaluate major agency actions having the potential to significantly impact the environment and which may require the preparation of Environmental Assessments and more detailed Environmental Impact Statements that may be made available for public review and comment;
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The Migratory Bird Treaty Act, and analogous state and local laws, which implements various treaties and conventions between the United States and certain other nations for the protection of migratory birds and, pursuant to which the taking, killing or possessing of migratory birds is unlawful without a permit, thereby potentially requiring the implementation of operating restrictions or a temporary, seasonal, or permanent ban in affected areas;
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ESA and analogous state and local laws, which seek to ensure that activities do not jeopardize endangered or threatened animals, fish and plant species, nor destroy or modify the critical habitat of such species;
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Bald and Golden Eagle Protection Act and analogous state and local laws, which prohibits anyone, without a permit issued by the Secretary of the Interior, from "taking" bald or golden eagles, including their parts, nests, or eggs, and defines "take" as "pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, molest or disturb;"
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OPA and analogous state and local laws, which imposes liability for discharges of oil into waters of the United States and requires facilities which could be reasonably expected to discharge oil into waters of the United States to maintain and implement appropriate spill contingency plans; and
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National Historic Preservation Act and analogous state and local laws, which is intended to preserve and protect historical and archeological sites.
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incur or guarantee additional debt;
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redeem or repurchase units or make distributions under certain circumstances;
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make certain investments and acquisitions;
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incur certain liens or permit them to exist;
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enter into certain types of transactions with affiliates;
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merge or consolidate with another company; and
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transfer, sell or otherwise dispose of assets.
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our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
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our funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of our cash flow required to make interest payments on our debt;
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we may be more vulnerable to competitive pressures or a downturn in our business or the economy generally; and
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our flexibility in responding to changing business and economic conditions may be limited.
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Neither our partnership agreement nor any other agreement requires Tallgrass Energy Holdings, TEGP Management, Tallgrass Equity or their respective direct and indirect owners to pursue a business strategy that favors us, and the officers and directors of Tallgrass Energy Holdings, TEGP Management and Tallgrass Equity may have a fiduciary duty to make these decisions in the best interests of Tallgrass Energy Holdings, TEGP Management and Tallgrass Equity and their respective direct and indirect owners, respectively, which may be contrary to our interests. Tallgrass Energy Holdings, TEGP Management or Tallgrass Equity may choose to shift the focus of their investment and growth to areas not served by our assets.
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Tallgrass Energy Holdings, TEGP Management, Tallgrass Equity, their respective direct and indirect owners, and their respective affiliates are not limited in their ability to compete with us and, other than Tallgrass Development’s obligation to offer us certain assets (if Tallgrass Development decides to sell such assets) pursuant to the right of first offer under the TEP Omnibus Agreement, may offer business opportunities or sell midstream assets to third parties without first offering us the right to bid for them.
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Our general partner is allowed to take into account the interests of parties other than us, such as Tallgrass Energy Holdings, its direct and indirect owners, and their respective affiliates in resolving conflicts of interest and exercising certain rights under our partnership agreement, which has the effect of limiting its duty to our unitholders.
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All of the current officers and a majority of the current directors of our general partner are also officers and/or directors of Tallgrass Energy Holdings and will owe fiduciary duties to Tallgrass Energy Holdings and Tallgrass Development. Accordingly, these officers will devote significant time to the business of Tallgrass Development.
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Our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner’s liabilities and restricts the remedies available to our unitholders for actions that, without such limitations, might constitute breaches of fiduciary duty.
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Except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval.
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Disputes may arise under our commercial agreements with Tallgrass Development and its affiliates.
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Our general partner determines the amount and timing of asset purchases and sales, borrowings, issuance of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash available for distribution to our unitholders.
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Our general partner determines the amount and timing of any capital expenditures and whether a capital expenditure is classified as a maintenance capital expenditure, which reduces operating surplus, or an expansion or investment capital expenditure, which does not reduce operating surplus. This determination can affect the amount of cash that is distributed to our unitholders.
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Our general partner determines which costs incurred by it are reimbursable by us.
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Our general partner may cause us to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make incentive distributions.
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Our partnership agreement permits us to classify up to $40 million as operating surplus, even if it is generated from asset sales, non-working capital borrowings or other sources that would otherwise constitute capital surplus. This cash may be used to fund distributions on our general partner units or to our general partner in respect of the IDRs.
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Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or entering into additional contractual arrangements with any of these entities on our behalf.
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Our general partner may limit its liability regarding our contractual and other obligations.
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Our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units.
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Our general partner controls the enforcement of the obligations that it and its affiliates owe to us, including Tallgrass Development’s and its affiliates’ obligations under the TEP Omnibus Agreement and their commercial agreements with us.
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Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
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Our general partner may transfer its IDRs without unitholder approval.
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Our general partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our general partner’s IDRs without the approval of the conflicts committee of the board of directors of our general partner or our unitholders. This election may result in lower distributions to our common unitholders in certain situations.
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how to allocate business opportunities among us and its affiliates;
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whether to exercise its limited call right;
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
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how to exercise its voting rights with respect to the units it owns;
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whether to elect to reset target distribution levels;
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whether to transfer the IDRs or any units it owns to a third party; and
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whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to the partnership agreement.
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whenever our general partner, the board of directors of our general partner or any committee thereof (including the conflicts committee) makes a determination or takes, or declines to take, any other action in their respective capacities, our general partner, the board of directors of our general partner and any committee thereof (including the conflicts committee), as applicable, is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the decision was in the best interests of our partnership, and, except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;
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our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and
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our general partner will not be in breach of its obligations under the partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:
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*
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approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval;
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*
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approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates;
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*
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determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
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*
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determined by the board of directors of our general partner to be fair and reasonable to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
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our existing unitholders’ proportionate ownership interest in us will decrease;
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the amount of cash available for distribution on each unit may decrease;
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because the amount payable to holders of IDRs is based on a percentage of the total cash available for distribution, the distributions to holders of IDRs will increase even if the per unit distribution on common units remains the same;
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the ratio of taxable income to distributions may increase;
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the relative voting strength of each previously outstanding unit may be diminished; and
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the market price of the common units may decline.
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we were conducting business in a state but had not complied with that particular state’s partnership statute; or
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your right to act with other unitholders to remove or replace our general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute "control" of our business.
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Quarter Ended
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High
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Low
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|
Distribution per Common Unit
|
|
||||||
December 31, 2015
|
|
$
|
47.63
|
|
|
$
|
33.40
|
|
|
$
|
0.6400
|
|
|
September 30, 2015
|
|
49.09
|
|
|
35.02
|
|
|
0.6000
|
|
|
|||
June 30, 2015
|
|
52.13
|
|
|
47.21
|
|
|
0.5800
|
|
|
|||
March 31, 2015
|
|
53.70
|
|
|
40.00
|
|
|
0.5200
|
|
|
|||
December 31, 2014
|
|
45.49
|
|
|
33.83
|
|
|
0.4850
|
|
|
|||
September 30, 2014
|
|
47.04
|
|
|
37.90
|
|
|
0.4100
|
|
|
|||
June 30, 2014
|
|
40.22
|
|
|
34.50
|
|
|
0.3800
|
|
|
|||
March 31, 2014
|
|
36.49
|
|
|
25.25
|
|
|
0.3250
|
|
|
|||
December 31, 2013
|
|
27.74
|
|
|
23.00
|
|
|
0.3150
|
|
|
|||
September 30, 2013
|
|
24.00
|
|
|
21.12
|
|
|
0.2975
|
|
|
|||
June 30, 2013
|
|
22.91
|
|
|
20.53
|
|
|
0.1422
|
|
(1)
|
|||
March 31, 2013
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(1)
|
The distribution declared in the second quarter of 2013 was prorated for the period from May 17, 2013 to June 30, 2013.
|
•
|
less, the amount of cash reserves established by our general partner to:
|
◦
|
provide for proper conduct of business;
|
◦
|
comply with applicable law or regulation, any of our debt instruments or other agreements; or
|
◦
|
provide funds for distributions to unitholders and to our general partner for any one or more of the next four quarters;
|
•
|
plus, if our general partner so determines, all or any portion of the cash on hand on the date of distribution of available cash for the quarter, including cash on hand resulting from working capital borrowings made subsequent to the end of such quarter.
|
|
TEP
|
|
|
TEP Pre-Predecessor
|
||||||||||||||||||||
|
Year Ended December 31,
|
|
Period from November 13 to December 31, 2012
|
|
|
Period from January 1 to November 12, 2012
|
|
Year Ended December 31, 2011
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|||||||||||||||
|
(in thousands, except per unit amounts)
|
|
|
(in thousands, except per unit amounts)
|
||||||||||||||||||||
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue
|
$
|
536,197
|
|
|
$
|
371,556
|
|
|
$
|
290,526
|
|
|
$
|
38,572
|
|
|
|
$
|
220,292
|
|
|
$
|
307,043
|
|
Operating income
|
$
|
197,915
|
|
|
$
|
53,413
|
|
|
$
|
33,999
|
|
|
$
|
69
|
|
|
|
$
|
50,113
|
|
|
$
|
75,499
|
|
Net income (loss)
|
$
|
184,814
|
|
|
$
|
59,329
|
|
|
$
|
7,624
|
|
|
$
|
(2,618
|
)
|
|
|
$
|
51,496
|
|
|
$
|
77,507
|
|
Net income (loss) attributable to partners
|
$
|
160,546
|
|
|
$
|
70,681
|
|
|
$
|
9,747
|
|
|
$
|
(2,366
|
)
|
|
|
$
|
51,496
|
|
|
$
|
77,507
|
|
Net income allocable to limited partners
|
$
|
114,068
|
|
|
$
|
61,774
|
|
|
$
|
6,991
|
|
(1)
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|||
Net income per limited partner unit - basic
|
$
|
1.95
|
|
|
$
|
1.39
|
|
|
$
|
0.17
|
|
(1)
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|||
Net income per limited partner unit - diluted
|
$
|
1.91
|
|
|
$
|
1.36
|
|
|
$
|
0.17
|
|
(1)
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
|||
Balance sheet data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property, plant and equipment, net
|
$
|
2,025,018
|
|
|
$
|
1,853,081
|
|
|
$
|
1,116,806
|
|
|
$
|
726,754
|
|
|
|
$
|
717,486
|
|
|
$
|
719,009
|
|
Total assets
|
$
|
2,562,074
|
|
|
$
|
2,457,197
|
|
|
$
|
1,631,413
|
|
|
$
|
1,238,598
|
|
|
|
$
|
767,681
|
|
|
$
|
772,896
|
|
Long-term debt
|
$
|
753,000
|
|
|
$
|
559,000
|
|
|
$
|
135,000
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Long-term debt allocated from TD
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
390,491
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions declared per common unit
|
$
|
2.3400
|
|
|
$
|
1.6000
|
|
|
$
|
0.7547
|
|
|
N/A
|
|
|
|
N/A
|
|
|
N/A
|
|
(1)
|
The net income allocated to the limited partners was based upon the number of days between the closing of the IPO on May 17, 2013 to December 31, 2013.
|
•
|
Crude Oil Transportation & Logistics—the ownership and operation of a crude oil pipeline system;
|
•
|
Natural Gas Transportation & Logistics—the ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities; and
|
•
|
Processing & Logistics—the ownership and operation of natural gas processing, treating and fractionation facilities, the provision of water business services primarily to the oil and gas exploration and production industry and the transportation of NGLs.
|
•
|
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.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Reconciliation of Adjusted EBITDA to Net Income
|
|
|
|
|
|
||||||
Net income attributable to partners
|
$
|
160,546
|
|
|
$
|
70,681
|
|
|
$
|
9,747
|
|
Add:
|
|
|
|
|
|
||||||
Interest expense, net of noncontrolling interest
|
15,517
|
|
|
7,648
|
|
|
11,035
|
|
|||
Depreciation and amortization expense, net of noncontrolling interest
|
75,529
|
|
|
45,389
|
|
|
37,898
|
|
|||
Loss on extinguishment of debt
|
226
|
|
|
—
|
|
|
17,526
|
|
|||
Non-cash (gain) loss related to derivative instruments
|
—
|
|
|
(184
|
)
|
|
386
|
|
|||
Non-cash compensation expense
|
5,103
|
|
|
5,136
|
|
|
1,798
|
|
|||
Non-cash loss from asset sales
|
4,795
|
|
|
—
|
|
|
—
|
|
|||
Distributions from unconsolidated investment
|
—
|
|
|
1,464
|
|
|
—
|
|
|||
Less:
|
|
|
|
|
|
||||||
Non-cash loss allocated to noncontrolling interest
|
(9,377
|
)
|
|
(10,151
|
)
|
|
—
|
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
(9,388
|
)
|
|
—
|
|
|||
Equity in earnings of unconsolidated investment
|
—
|
|
|
(717
|
)
|
|
—
|
|
|||
Adjusted EBITDA
|
$
|
252,339
|
|
|
$
|
109,878
|
|
|
$
|
78,390
|
|
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
289,296
|
|
|
$
|
79,444
|
|
|
$
|
82,482
|
|
Add:
|
|
|
|
|
|
||||||
Interest expense, net of noncontrolling interest
|
15,517
|
|
|
7,648
|
|
|
11,035
|
|
|||
Other, including changes in operating working capital
|
(52,474
|
)
|
|
22,786
|
|
|
(15,127
|
)
|
|||
Adjusted EBITDA
|
$
|
252,339
|
|
|
$
|
109,878
|
|
|
$
|
78,390
|
|
Add:
|
|
|
|
|
|
||||||
Pony Express preferred distributions in excess of distributable cash flow attributable to Pony Express
|
—
|
|
|
5,429
|
|
|
—
|
|
|||
Pony Express deficiency payments received, net
|
16,511
|
|
|
5,378
|
|
|
—
|
|
|||
Less:
|
|
|
|
|
|
||||||
Cash interest cost
|
(13,746
|
)
|
|
(6,266
|
)
|
|
(3,555
|
)
|
|||
Maintenance capital expenditures
|
(12,123
|
)
|
|
(9,913
|
)
|
|
(15,951
|
)
|
|||
Distributions to noncontrolling interest in excess of earnings
|
(22,479
|
)
|
|
(5,361
|
)
|
|
—
|
|
|||
Cash flow attributable to predecessor operations
|
—
|
|
|
(3,086
|
)
|
|
3,367
|
|
|||
Distributable Cash Flow
|
$
|
220,502
|
|
|
$
|
96,059
|
|
|
$
|
62,251
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Reconciliation of Adjusted EBITDA to Operating Income in the Crude Oil Transportation & Logistics Segment
(1)
|
|
|
|
|
|
||||||
Operating income (loss)
|
$
|
159,467
|
|
|
$
|
3,601
|
|
|
$
|
(3,156
|
)
|
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization expense, net of noncontrolling interest
|
39,359
|
|
|
10,553
|
|
|
1,009
|
|
|||
Adjusted EBITDA attributable to noncontrolling interests
|
(24,245
|
)
|
|
11,708
|
|
|
2,104
|
|
|||
Less:
|
|
|
|
|
|
||||||
Non-cash loss allocated to noncontrolling interest
|
(9,377
|
)
|
|
(10,151
|
)
|
|
—
|
|
|||
Segment Adjusted EBITDA
|
$
|
165,204
|
|
|
$
|
15,711
|
|
|
$
|
(43
|
)
|
Reconciliation of Adjusted EBITDA to Operating Income in the Natural Gas Transportation & Logistics Segment
(1)
|
|
|
|
|
|
||||||
Operating income
|
$
|
41,802
|
|
|
$
|
40,887
|
|
|
$
|
24,040
|
|
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
22,927
|
|
|
23,788
|
|
|
30,169
|
|
|||
Non-cash (gain) loss related to derivative instruments
|
—
|
|
|
(184
|
)
|
|
386
|
|
|||
Other income
|
2,639
|
|
|
3,102
|
|
|
2,226
|
|
|||
Segment Adjusted EBITDA
|
$
|
67,368
|
|
|
$
|
67,593
|
|
|
$
|
56,821
|
|
Reconciliation of Adjusted EBITDA to Operating Income in the Processing & Logistics Segment
(1)
|
|
|
|
|
|
||||||
Operating income
|
$
|
4,728
|
|
|
$
|
20,577
|
|
|
$
|
16,472
|
|
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization expense, net of noncontrolling interest
|
13,243
|
|
|
11,048
|
|
|
6,720
|
|
|||
Non-cash loss from asset sales
|
4,795
|
|
|
—
|
|
|
—
|
|
|||
Distributions from unconsolidated investment
|
—
|
|
|
1,464
|
|
|
—
|
|
|||
Adjusted EBITDA attributable to noncontrolling interests
|
(20
|
)
|
|
—
|
|
|
—
|
|
|||
Segment Adjusted EBITDA
|
$
|
22,746
|
|
|
$
|
33,089
|
|
|
$
|
23,192
|
|
Total Segment Adjusted EBITDA
|
$
|
255,318
|
|
|
$
|
116,393
|
|
|
$
|
79,970
|
|
Corporate general and administrative costs
|
(2,979
|
)
|
|
(2,500
|
)
|
|
(1,580
|
)
|
|||
Elimination of intersegment activity
|
—
|
|
|
(4,015
|
)
|
|
—
|
|
|||
Total Adjusted EBITDA
|
$
|
252,339
|
|
|
$
|
109,878
|
|
|
$
|
78,390
|
|
(1)
|
Segment results as presented represent total operating income and Adjusted EBITDA, including intersegment activity, for the Crude Oil Transportation & Logistics, Natural Gas Transportation & Logistics, and Processing & Logistics segments. For reconciliations to the consolidated financial data, see
Note 18
–
Reporting Segments
to the accompanying consolidated financial statements.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except operating data)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Crude oil transportation services
|
$
|
300,436
|
|
|
$
|
28,343
|
|
|
$
|
—
|
|
Natural gas transportation services
|
119,895
|
|
|
126,733
|
|
|
120,025
|
|
|||
Sales of natural gas, NGLs, and crude oil
|
82,133
|
|
|
181,249
|
|
|
155,700
|
|
|||
Processing and other revenues
|
33,733
|
|
|
35,231
|
|
|
14,801
|
|
|||
Total Revenues
|
536,197
|
|
|
371,556
|
|
|
290,526
|
|
|||
Operating Costs and Expenses:
|
|
|
|
|
|
||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
75,285
|
|
|
167,545
|
|
|
131,095
|
|
|||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
53,597
|
|
|
24,109
|
|
|
15,059
|
|
|||
Operations and maintenance
|
49,138
|
|
|
39,577
|
|
|
35,404
|
|
|||
Depreciation and amortization
|
83,476
|
|
|
47,048
|
|
|
39,917
|
|
|||
General and administrative
|
50,195
|
|
|
33,160
|
|
|
27,651
|
|
|||
Taxes, other than income taxes
|
21,796
|
|
|
6,704
|
|
|
7,401
|
|
|||
Loss on sale of assets
|
4,795
|
|
|
—
|
|
|
—
|
|
|||
Total Operating Costs and Expenses
|
338,282
|
|
|
318,143
|
|
|
256,527
|
|
|||
Operating Income
|
197,915
|
|
|
53,413
|
|
|
33,999
|
|
|||
Other (Expense) Income:
|
|
|
|
|
|
||||||
Interest expense, net
|
(15,514
|
)
|
|
(7,292
|
)
|
|
(11,054
|
)
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
9,388
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
(226
|
)
|
|
—
|
|
|
(17,526
|
)
|
|||
Equity in earnings of unconsolidated investment
|
—
|
|
|
717
|
|
|
—
|
|
|||
Other income, net
|
2,639
|
|
|
3,103
|
|
|
2,205
|
|
|||
Total Other (Expense) Income
|
(13,101
|
)
|
|
5,916
|
|
|
(26,375
|
)
|
|||
Net income
|
184,814
|
|
|
59,329
|
|
|
7,624
|
|
|||
Net (income) loss attributable to noncontrolling interests
|
(24,268
|
)
|
|
11,352
|
|
|
2,123
|
|
|||
Net income attributable to partners
|
160,546
|
|
|
70,681
|
|
|
9,747
|
|
|||
Other Financial Data
(1)
|
|
|
|
|
|
||||||
Adjusted EBITDA
|
$
|
252,339
|
|
|
$
|
109,878
|
|
|
$
|
78,390
|
|
Operating Data:
|
|
|
|
|
|
||||||
Crude oil transportation average throughput (Bbls/d)
(2)
|
236,256
|
|
|
85,229
|
|
|
N/A
|
|
|||
Gas transportation firm contracted capacity (MMcf/d)
|
1,517
|
|
|
1,537
|
|
|
1,411
|
|
|||
Natural gas processing inlet volumes (MMcf/d)
|
122
|
|
|
152
|
|
|
133
|
|
(1)
|
For more information regarding Adjusted EBITDA and a reconciliation of Adjusted EBITDA to its most directly comparable GAAP measure, please see "Non-GAAP Financial Measures" above.
|
(2)
|
Approximate average daily throughput for the year ended December 31, 2014 is reflective of the volumetric ramp up due to commercial in-service of the Pony Express System beginning in October 2014, including the lateral in Northeast Colorado in the second quarter of 2015, and delays in the construction and expansion efforts of third-party pipelines with which Pony Express shares joint tariffs.
|
|
Year Ended December 31,
|
||||||||||
Segment Financial Data - Crude Oil Transportation & Logistics
(1)
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Crude Oil transportation services
|
$
|
300,436
|
|
|
$
|
28,343
|
|
|
$
|
—
|
|
Sales of natural gas, NGLs, and crude oil
|
3,791
|
|
|
—
|
|
|
—
|
|
|||
Total revenues
|
304,227
|
|
|
28,343
|
|
|
—
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
4,257
|
|
|
—
|
|
|
—
|
|
|||
Cost of transportation services
|
47,367
|
|
|
7,025
|
|
|
—
|
|
|||
Operations and maintenance
|
8,795
|
|
|
717
|
|
|
—
|
|
|||
Depreciation and amortization
|
47,168
|
|
|
12,067
|
|
|
3,028
|
|
|||
General and administrative
|
20,620
|
|
|
4,683
|
|
|
128
|
|
|||
Taxes, other than income taxes
|
16,553
|
|
|
250
|
|
|
—
|
|
|||
Total operating costs and expenses
|
144,760
|
|
|
24,742
|
|
|
3,156
|
|
|||
Operating income (loss)
|
$
|
159,467
|
|
|
$
|
3,601
|
|
|
$
|
(3,156
|
)
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 18
–
Reporting Segments
to the accompanying consolidated financial statements.
|
|
Year Ended December 31,
|
||||||||||
Segment Financial Data - Natural Gas Transportation & Logistics
(1)
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Natural gas transportation services
|
$
|
125,279
|
|
|
$
|
131,990
|
|
|
$
|
121,945
|
|
Sales of natural gas, NGLs, and crude oil
|
6,346
|
|
|
7,868
|
|
|
5,906
|
|
|||
Processing and other revenues
|
32
|
|
|
222
|
|
|
26
|
|
|||
Total revenues
|
131,657
|
|
|
140,080
|
|
|
127,877
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
6,342
|
|
|
7,025
|
|
|
4,234
|
|
|||
Cost of transportation services
|
10,927
|
|
|
18,090
|
|
|
15,059
|
|
|||
Operations and maintenance
|
27,767
|
|
|
27,422
|
|
|
26,682
|
|
|||
Depreciation and amortization
|
22,927
|
|
|
23,788
|
|
|
30,169
|
|
|||
General and administrative
|
17,052
|
|
|
16,767
|
|
|
20,604
|
|
|||
Taxes, other than income taxes
|
4,840
|
|
|
6,101
|
|
|
7,089
|
|
|||
Total operating costs and expenses
|
89,855
|
|
|
99,193
|
|
|
103,837
|
|
|||
Operating income
|
$
|
41,802
|
|
|
$
|
40,887
|
|
|
$
|
24,040
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 18
–
Reporting Segments
to the accompanying consolidated financial statements.
|
|
Year Ended December 31,
|
||||||||||
Segment Financial Data - Processing & Logistics
(1)
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Sales of natural gas, NGLs, and crude oil
|
$
|
71,996
|
|
|
$
|
173,381
|
|
|
$
|
149,794
|
|
Processing and other revenues
|
33,701
|
|
|
35,009
|
|
|
14,775
|
|
|||
Total revenues
|
105,697
|
|
|
208,390
|
|
|
164,569
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
64,686
|
|
|
160,520
|
|
|
128,781
|
|
|||
Cost of transportation services
|
687
|
|
|
236
|
|
|
—
|
|
|||
Operations and maintenance
|
12,576
|
|
|
11,438
|
|
|
8,722
|
|
|||
Depreciation and amortization
|
13,381
|
|
|
11,193
|
|
|
6,720
|
|
|||
General and administrative
|
4,441
|
|
|
4,073
|
|
|
3,562
|
|
|||
Taxes, other than income taxes
|
403
|
|
|
353
|
|
|
312
|
|
|||
Loss on sale of assets
|
4,795
|
|
|
—
|
|
|
—
|
|
|||
Total operating costs and expenses
|
100,969
|
|
|
187,813
|
|
|
148,097
|
|
|||
Operating income
|
$
|
4,728
|
|
|
$
|
20,577
|
|
|
$
|
16,472
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 18
–
Reporting Segments
to the accompanying consolidated financial statements.
|
•
|
cash generated from our operations;
|
•
|
borrowing capacity available under our revolving credit facility; and
|
•
|
future issuances of additional partnership units and/or debt securities.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Cash on hand
|
$
|
1,611
|
|
|
$
|
867
|
|
|
|
|
|
||||
Total capacity under the revolving credit facility
|
1,100,000
|
|
|
850,000
|
|
||
Less: Outstanding borrowings under the revolving credit facility
|
(753,000
|
)
|
|
(559,000
|
)
|
||
Available capacity under the revolving credit facility
|
347,000
|
|
|
291,000
|
|
||
Total liquidity
|
$
|
348,611
|
|
|
$
|
291,867
|
|
•
|
a decrease
of
$73.4 million
in receivables from related parties due to the utilization of the Pony Express cash balance swept to TD under the cash management agreement;
|
•
|
an increase
in deferred revenue of
$21.0 million
from deficiency payments collected by Pony Express; and
|
•
|
an increase
in accrued taxes of
$9.9 million
as a result of placing the mainline portion of the Pony Express System into commercial service in October 2014.
|
•
|
a decrease
of
$40.1 million
in accounts payable, primarily driven by the timing of project invoices and payment of contractor retainages related to the construction of the Pony Express lateral in Northeast Colorado placed in service in April 2015 and lower producer settlements at TMID; and
|
•
|
an increase
of
$18.0 million
in accounts receivable, primarily driven by the start of commercial operations at the Pony Express lateral in Northeast Colorado and the activation of the Hiland Pipeline Company joint tariff at Pony Express.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
289,296
|
|
|
$
|
79,444
|
|
|
$
|
82,482
|
|
Investing activities
|
$
|
(845,270
|
)
|
|
$
|
(1,102,729
|
)
|
|
$
|
(347,610
|
)
|
Financing activities
|
$
|
556,718
|
|
|
$
|
1,024,152
|
|
|
$
|
265,128
|
|
•
|
maintenance capital expenditures, which are cash expenditures incurred (including expenditures for the construction or development of new capital assets) that we expect to maintain our long-term operating income or operating capacity. These expenditures typically include certain system integrity, compliance and safety improvements; and
|
•
|
expansion capital expenditures, which are cash expenditures to increase our operating income or operating capacity over the long-term. Expansion capital expenditures include acquisitions or capital improvements (such as additions to or improvements on the capital assets owned, or acquisition or construction of new capital assets).
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Maintenance capital expenditures
|
$
|
12,140
|
|
|
$
|
9,913
|
|
|
$
|
15,951
|
|
Expansion capital expenditures
|
155,795
|
|
|
762,073
|
|
|
422,981
|
|
|||
Total capital expenditures incurred
|
$
|
167,935
|
|
|
$
|
771,986
|
|
|
$
|
438,932
|
|
|
|
Payments Due By Period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less Than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than 5 Years
|
||||||||||
|
|
(in thousands)
|
||||||||||||||||||
Debt obligations
(1)
|
|
$
|
753,000
|
|
|
$
|
—
|
|
|
$
|
753,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest on debt obligations
(2)
|
|
37,241
|
|
|
15,696
|
|
|
21,545
|
|
|
—
|
|
|
—
|
|
|||||
Operating lease and service contract obligations
(3)
|
|
621,069
|
|
|
27,689
|
|
|
56,789
|
|
|
58,853
|
|
|
477,738
|
|
|||||
Land site lease and right-of-way
(4)
|
|
1,480
|
|
|
116
|
|
|
280
|
|
|
272
|
|
|
812
|
|
|||||
Other purchase commitments
(5)
|
|
13,808
|
|
|
6,295
|
|
|
3,716
|
|
|
3,716
|
|
|
81
|
|
|||||
Total
|
|
$
|
1,426,598
|
|
|
$
|
49,796
|
|
|
$
|
835,330
|
|
|
$
|
62,841
|
|
|
$
|
478,631
|
|
(1)
|
Debt obligations at
December 31, 2015
consisted of borrowings under the revolving credit facility. For additional information, see
Note 10
–
Long-term Debt
to the Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data.
|
(2)
|
Interest on debt obligations is estimated using current borrowings and interest rates as of
December 31, 2015
. For additional information, see
Note 10
–
Long-term Debt
to the Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data.
|
(3)
|
Operating leases and service contracts consist of leases for crude oil storage as well as office space and equipment. For additional information, see
Note 12
–
Commitments & Contingent Liabilities
to the Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data.
|
(4)
|
Land site lease and right-of-way contracts consist of payments to landowners, primarily in our Crude Oil Transportation & Logistics and Natural Gas Transportation & Logistics segments. For additional information, see
Note 12
–
Commitments & Contingent Liabilities
to the Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data.
|
(5)
|
Other purchase commitments primarily relate to planned non-reimbursable capital expenditures and operating and maintenance expenditures.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results Differ from Assumptions
|
Impairment of Goodwill
|
||||
We evaluate goodwill for impairment annually in the third quarter, and whenever events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
|
|
We determine fair value using widely accepted valuation techniques, primarily discounted cash flow and market multiple analyses. These techniques are also used when assigning the purchase price to acquired assets and liabilities. These types of analyses require us to make assumptions and estimates regarding industry and economic factors and the profitability of future business strategies. Our impairment analyses require management to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets, assessing the probability of different outcomes, including anticipated volumes, contract renewals and changes in our regulated rates, and selecting the discount rate that reflects the risk inherent in future cash flows. It is our policy to conduct impairment testing based on our current business strategy in light of present industry and economic conditions, as well as future expectations.
|
|
We primarily use a discounted cash flow analysis, supplemented by a market approach analysis, to perform the assessment. Key assumptions in the analysis include the use of an appropriate discount rate, terminal year multiples, and estimated future cash flows including an estimate of operating and general and administrative costs. In estimating cash flows, we incorporate current market information, as well as historical and other factors, into our forecasted commodity prices. If our assumptions are not appropriate, or future events indicate that our goodwill is impaired, our net income would be impacted by the amount by which the carrying value exceeds the fair value of the reporting unit, to the extent of the balance of goodwill. A prolonged period of lower commodity prices may adversely affect our estimate of future operating results, which could result in future goodwill impairment for reporting units due to the potential impact on our operations and cash flows. We completed our impairment testing of goodwill in the third quarter of 2015 using the methodology described herein, and determined there was no impairment. As a result of a decreased commodity prices in late 2015 and into early 2016, which caused a significant drop in the volumes anticipated from several producers from which TMID receives natural gas for processing, we identified a potential impairment trigger with respect to the $79.2 million of goodwill at the TMID reporting unit, which is a component of our Processing & Logistics segment. We tested TMID's goodwill for impairment as of December 31, 2015 and determined that the fair value of the reporting unit exceeds the carrying value by approximately 21%. As a result, no impairment charge was recorded, however our analysis includes assumptions of a gradual recovery of commodity prices and a corresponding increase in volumes over time. If our outlook for long-term commodity prices is not realized, or our producers further decrease volumes, we could have an impairment in the future.
|
Risk Management Activities
|
||||
Derivative assets and liabilities are recorded on our consolidated balance sheets at their estimated fair value as of each reporting date. Changes in the fair value of derivative contracts are recognized in earnings in the period in which the change occurs.
|
|
When available, quoted market prices or prices obtained through external sources are used to determine a contract’s fair value. For contracts with a delivery location or duration for which quoted market prices are not available, fair value is determined based on pricing models developed primarily from historical information and the expected relationship with quoted market prices.
|
|
If our estimates of fair value are inaccurate, we may be exposed to losses or gains that could be material. As of December 31, 2015, we had no natural gas hedges outstanding and thus no fair value change due to a hypothetical increase in the natural gas price forward curve.
|
Description
|
|
Judgments and Uncertainties
|
|
Effect if Actual Results Differ from Assumptions
|
Equity-Based Compensation
|
||||
Equity-based compensation grants are measured at their grant date fair value and related compensation cost is recognized over the vesting period of the grant. Compensation cost for awards with graded vesting provisions is recognized on a straight-line basis over the requisite service period of each separately vesting portion of the award.
|
|
Estimating the fair value of each award, the number of awards that will ultimately vest, and the forfeiture rate requires management to apply judgment to estimate the tenure of our employees and the achievement of certain performance targets over the performance period.
|
|
If actual results are not consistent with our assumptions and judgments or our assumptions and estimates change due to new information, we may experience material changes in compensation expense.
|
|
Crude Oil Transportation & Logistics
|
|
Natural Gas Transportation & Logistics
|
|
Processing & Logistics
|
|
Corporate & Other
|
|
Consolidated
|
|||||
Firm fee
|
65
|
%
|
|
26
|
%
|
|
4
|
%
|
|
—
|
%
|
|
95
|
%
|
Volumetric fee
|
—
|
%
|
|
1
|
%
|
|
3
|
%
|
|
—
|
%
|
|
4
|
%
|
Commodity exposed
|
—
|
%
|
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
|
1
|
%
|
Other
|
—
|
%
|
|
—
|
%
|
|
1
|
%
|
|
(1
|
)%
|
|
—
|
%
|
Total
|
65
|
%
|
|
27
|
%
|
|
9
|
%
|
|
(1
|
)%
|
|
100
|
%
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
ASSETS
|
|
||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,611
|
|
|
$
|
867
|
|
Accounts receivable, net
|
57,742
|
|
|
39,768
|
|
||
Receivable from related parties
|
15
|
|
|
73,393
|
|
||
Gas imbalances
|
1,227
|
|
|
2,442
|
|
||
Inventories
|
13,793
|
|
|
13,045
|
|
||
Prepayments and other current assets
|
2,835
|
|
|
2,766
|
|
||
Total Current Assets
|
77,223
|
|
|
132,281
|
|
||
Property, plant and equipment, net
|
2,025,018
|
|
|
1,853,081
|
|
||
Goodwill
|
343,288
|
|
|
343,288
|
|
||
Intangible asset, net
|
96,546
|
|
|
104,538
|
|
||
Deferred financing costs, net
|
5,105
|
|
|
5,528
|
|
||
Deferred charges and other assets
|
14,894
|
|
|
18,481
|
|
||
Total Assets
|
$
|
2,562,074
|
|
|
$
|
2,457,197
|
|
LIABILITIES AND PARTNERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable, including $10,554 and $45,534 related to variable interest entities
|
$
|
22,218
|
|
|
$
|
62,329
|
|
Accounts payable to related parties
|
7,852
|
|
|
3,915
|
|
||
Gas imbalances
|
1,605
|
|
|
3,611
|
|
||
Accrued taxes
|
13,844
|
|
|
3,989
|
|
||
Accrued liabilities
|
10,019
|
|
|
9,384
|
|
||
Deferred revenue
|
26,511
|
|
|
5,468
|
|
||
Other current liabilities
|
6,880
|
|
|
7,872
|
|
||
Total Current Liabilities
|
88,929
|
|
|
96,568
|
|
||
Long-term debt
|
753,000
|
|
|
559,000
|
|
||
Other long-term liabilities and deferred credits
|
5,143
|
|
|
6,478
|
|
||
Total Long-term Liabilities
|
758,143
|
|
|
565,478
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common unitholders (60,644,232 and 32,834,105 units issued and outstanding at December 31, 2015 and 2014, respectively)
|
1,618,766
|
|
|
800,333
|
|
||
Subordinated unitholder (0 and 16,200,000 units issued and outstanding at December 31, 2015 and 2014)
|
—
|
|
|
274,133
|
|
||
General partner (834,391 units issued and outstanding at December 31, 2015 and 2014, respectively)
|
(348,841
|
)
|
|
(35,743
|
)
|
||
Total Partners’ Equity
|
1,269,925
|
|
|
1,038,723
|
|
||
Noncontrolling interests
|
$
|
445,077
|
|
|
$
|
756,428
|
|
Total Equity
|
$
|
1,715,002
|
|
|
$
|
1,795,151
|
|
Total Liabilities and Equity
|
$
|
2,562,074
|
|
|
$
|
2,457,197
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except per unit amounts)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Crude oil transportation services
|
$
|
300,436
|
|
|
$
|
28,343
|
|
|
$
|
—
|
|
Natural gas transportation services
|
119,895
|
|
|
126,733
|
|
|
120,025
|
|
|||
Sales of natural gas, NGLs, and crude oil
|
82,133
|
|
|
181,249
|
|
|
155,700
|
|
|||
Processing and other revenues
|
33,733
|
|
|
35,231
|
|
|
14,801
|
|
|||
Total Revenues
|
536,197
|
|
|
371,556
|
|
|
290,526
|
|
|||
Operating Costs and Expenses:
|
|
|
|
|
|
||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
75,285
|
|
|
167,545
|
|
|
131,095
|
|
|||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
53,597
|
|
|
24,109
|
|
|
15,059
|
|
|||
Operations and maintenance
|
49,138
|
|
|
39,577
|
|
|
35,404
|
|
|||
Depreciation and amortization
|
83,476
|
|
|
47,048
|
|
|
39,917
|
|
|||
General and administrative
|
50,195
|
|
|
33,160
|
|
|
27,651
|
|
|||
Taxes, other than income taxes
|
21,796
|
|
|
6,704
|
|
|
7,401
|
|
|||
Loss on sale of assets
|
4,795
|
|
|
—
|
|
|
—
|
|
|||
Total Operating Costs and Expenses
|
338,282
|
|
|
318,143
|
|
|
256,527
|
|
|||
Operating Income
|
197,915
|
|
|
53,413
|
|
|
33,999
|
|
|||
Other (Expense) Income:
|
|
|
|
|
|
||||||
Interest expense, net
|
(15,514
|
)
|
|
(7,292
|
)
|
|
(11,054
|
)
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
9,388
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
(226
|
)
|
|
—
|
|
|
(17,526
|
)
|
|||
Equity in earnings of unconsolidated investment
|
—
|
|
|
717
|
|
|
—
|
|
|||
Other income, net
|
2,639
|
|
|
3,103
|
|
|
2,205
|
|
|||
Total Other (Expense) Income
|
(13,101
|
)
|
|
5,916
|
|
|
(26,375
|
)
|
|||
Net income
|
184,814
|
|
|
59,329
|
|
|
7,624
|
|
|||
Net (income) loss attributable to noncontrolling interests
|
(24,268
|
)
|
|
11,352
|
|
|
2,123
|
|
|||
Net income attributable to partners
|
$
|
160,546
|
|
|
$
|
70,681
|
|
|
$
|
9,747
|
|
Allocation of income to the limited partners:
|
|
|
|
|
|
||||||
Net income attributable to partners
|
$
|
160,546
|
|
|
$
|
70,681
|
|
|
$
|
9,747
|
|
Predecessor operations interest in net (income) loss
|
—
|
|
|
(1,508
|
)
|
|
4,432
|
|
|||
Net income attributable to partners, excluding predecessor operations interest
|
160,546
|
|
|
69,173
|
|
|
14,179
|
|
|||
Net income attributable to partners prior to May 17, 2013
|
—
|
|
|
—
|
|
|
(6,982
|
)
|
|||
Net income attributable to partners subsequent to May 17, 2013
|
160,546
|
|
|
69,173
|
|
|
7,197
|
|
|||
General partner interest in net income subsequent to May 17, 2013
|
(46,478
|
)
|
|
(7,399
|
)
|
|
(206
|
)
|
|||
Common and subordinated unitholders' interest in net income subsequent to May 17, 2013
|
$
|
114,068
|
|
|
$
|
61,774
|
|
|
$
|
6,991
|
|
Basic net income per common and subordinated unit
|
$
|
1.95
|
|
|
$
|
1.39
|
|
|
$
|
0.17
|
|
Diluted net income per common and subordinated unit
|
$
|
1.91
|
|
|
$
|
1.36
|
|
|
$
|
0.17
|
|
Basic average number of common and subordinated units outstanding
|
58,597
|
|
|
44,346
|
|
|
40,450
|
|
|||
Diluted average number of common and subordinated units outstanding
|
59,575
|
|
|
45,394
|
|
|
41,458
|
|
|
TEP Predecessor Member's Capital
|
|
Predecessor Equity
|
|
Limited Partners
|
|
General Partner
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
|
Common
|
|
Subordinated
|
|
|
|
|
|
Total Partners’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
|||||||||||||||||||||||||
|
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
Units
|
|
Amount
|
|
|
|
||||||||||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2013
|
$
|
571,834
|
|
|
$
|
121,446
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
693,280
|
|
|
$
|
70,397
|
|
|
$
|
763,677
|
|
Net income (loss) attributable to to the period from January 1, 2013 to May 16, 2013
|
6,982
|
|
|
(1,172
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,810
|
|
|
(761
|
)
|
|
5,049
|
|
||||||||
Distributions to Member, net
|
(118,538
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(118,538
|
)
|
|
—
|
|
|
(118,538
|
)
|
||||||||
Contribution of net assets of TIGT and TMID
|
(460,278
|
)
|
|
—
|
|
|
9,700
|
|
|
167,051
|
|
|
16,200
|
|
|
278,992
|
|
|
827
|
|
|
14,235
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Issuance of units to public, net of offering costs
|
—
|
|
|
—
|
|
|
14,600
|
|
|
290,483
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
290,483
|
|
|
—
|
|
|
290,483
|
|
||||||||
Net (loss) income attributable to the period from May 17, 2013 to December 31, 2013
|
—
|
|
|
(3,260
|
)
|
|
—
|
|
|
4,194
|
|
|
—
|
|
|
2,797
|
|
|
—
|
|
|
206
|
|
|
3,937
|
|
|
(1,362
|
)
|
|
2,575
|
|
||||||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,685
|
)
|
|
—
|
|
|
(7,123
|
)
|
|
—
|
|
|
(363
|
)
|
|
(18,171
|
)
|
|
—
|
|
|
(18,171
|
)
|
||||||||
Noncash compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
4,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,154
|
|
|
—
|
|
|
4,154
|
|
||||||||
Contributions from Predecessor Entities, net
|
—
|
|
|
130,207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
130,207
|
|
|
249,665
|
|
|
379,872
|
|
||||||||
Balance at December 31, 2013
|
$
|
—
|
|
|
$
|
247,221
|
|
|
24,300
|
|
|
$
|
455,197
|
|
|
16,200
|
|
|
$
|
274,666
|
|
|
827
|
|
|
$
|
14,078
|
|
|
$
|
991,162
|
|
|
$
|
317,939
|
|
|
$
|
1,309,101
|
|
Net income (loss)
|
—
|
|
|
1,508
|
|
|
—
|
|
|
39,141
|
|
|
—
|
|
|
22,633
|
|
|
—
|
|
|
7,399
|
|
|
70,681
|
|
|
(11,352
|
)
|
|
59,329
|
|
||||||||
Issuance of units to public, net of offering costs
|
—
|
|
|
—
|
|
|
8,079
|
|
|
320,385
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
320,385
|
|
|
—
|
|
|
320,385
|
|
||||||||
Noncash compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
10,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,154
|
|
|
—
|
|
|
10,154
|
|
||||||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,567
|
)
|
|
—
|
|
|
(23,166
|
)
|
|
—
|
|
|
(3,384
|
)
|
|
(68,117
|
)
|
|
—
|
|
|
(68,117
|
)
|
||||||||
Contribution from TD
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,488
|
|
|
27,488
|
|
|
—
|
|
|
27,488
|
|
||||||||
(Distributions to) Contributions from Predecessor Entities, net
|
—
|
|
|
(97,887
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(97,887
|
)
|
|
410,012
|
|
|
312,125
|
|
||||||||
Contributions from Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,429
|
|
|
5,429
|
|
||||||||
Distributions to Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,406
|
)
|
|
(5,406
|
)
|
||||||||
Issuance of general partner units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
263
|
|
|
263
|
|
|
—
|
|
|
263
|
|
||||||||
Acquisition of Trailblazer
|
—
|
|
|
(91,090
|
)
|
|
385
|
|
|
14,023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72,933
|
)
|
|
(150,000
|
)
|
|
—
|
|
|
(150,000
|
)
|
||||||||
Acquisition of Water Solutions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,400
|
|
|
1,400
|
|
||||||||
Acquisition of 33.3% Pony Express membership interest
|
—
|
|
|
(59,752
|
)
|
|
70
|
|
|
3,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,654
|
)
|
|
(65,406
|
)
|
|
38,406
|
|
|
(27,000
|
)
|
||||||||
Balance at December 31, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
32,834
|
|
|
$
|
800,333
|
|
|
16,200
|
|
|
$
|
274,133
|
|
|
835
|
|
|
$
|
(35,743
|
)
|
|
$
|
1,038,723
|
|
|
$
|
756,428
|
|
|
$
|
1,795,151
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
108,888
|
|
|
—
|
|
|
5,180
|
|
|
—
|
|
|
46,478
|
|
|
160,546
|
|
|
24,268
|
|
|
184,814
|
|
||||||||
Issuance of units to public, net of offering costs
|
—
|
|
|
—
|
|
|
11,266
|
|
|
554,084
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
554,084
|
|
|
—
|
|
|
554,084
|
|
||||||||
Noncash compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
9,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,337
|
|
|
—
|
|
|
9,337
|
|
||||||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
—
|
|
|
(118,729
|
)
|
|
—
|
|
|
(7,857
|
)
|
|
—
|
|
|
(35,248
|
)
|
|
(161,834
|
)
|
|
—
|
|
|
(161,834
|
)
|
||||||||
Common units issued under LTIP, net of units tendered by employees to satisfy tax withholding obligations
|
—
|
|
|
—
|
|
|
344
|
|
|
(6,603
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,603
|
)
|
|
—
|
|
|
(6,603
|
)
|
Contributions from Noncontrolling Interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110,127
|
|
|
110,127
|
|
||||||||
Distributions to Noncontrolling Interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(69,474
|
)
|
|
(69,474
|
)
|
||||||||
Acquisition of additional 33.3% membership interest in Pony Express
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(324,328
|
)
|
|
(324,328
|
)
|
|
(375,672
|
)
|
|
(700,000
|
)
|
||||||||
Acquisition of noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(600
|
)
|
|
(600
|
)
|
||||||||
Conversion of subordinated units
|
—
|
|
|
—
|
|
|
16,200
|
|
|
271,456
|
|
|
(16,200
|
)
|
|
(271,456
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance at December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
60,644
|
|
|
$
|
1,618,766
|
|
|
—
|
|
|
$
|
—
|
|
|
835
|
|
|
$
|
(348,841
|
)
|
|
$
|
1,269,925
|
|
|
$
|
445,077
|
|
|
$
|
1,715,002
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
184,814
|
|
|
$
|
59,329
|
|
|
$
|
7,624
|
|
Adjustments to reconcile net income to net cash flows from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
87,367
|
|
|
49,041
|
|
|
41,663
|
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
(9,388
|
)
|
|
—
|
|
|||
Loss on extinguishment of debt
|
226
|
|
|
—
|
|
|
17,526
|
|
|||
Noncash compensation expense
|
5,103
|
|
|
5,136
|
|
|
1,798
|
|
|||
Loss on sale of assets
|
4,795
|
|
|
—
|
|
|
—
|
|
|||
Changes in components of working capital:
|
|
|
|
|
|
||||||
Accounts receivable and other
|
(15,605
|
)
|
|
(348
|
)
|
|
8,506
|
|
|||
Gas imbalances
|
(757
|
)
|
|
1,504
|
|
|
2,393
|
|
|||
Inventories
|
(5,169
|
)
|
|
(8,367
|
)
|
|
(2,807
|
)
|
|||
Accounts payable and accrued liabilities
|
9,799
|
|
|
(21,787
|
)
|
|
12,207
|
|
|||
Deferred revenue
|
20,612
|
|
|
6,619
|
|
|
—
|
|
|||
Deferred lease payment
|
—
|
|
|
—
|
|
|
(4,563
|
)
|
|||
Other operating, net
|
(1,889
|
)
|
|
(2,295
|
)
|
|
(1,865
|
)
|
|||
Net Cash Provided by Operating Activities
|
289,296
|
|
|
79,444
|
|
|
82,482
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(65,387
|
)
|
|
(665,650
|
)
|
|
(346,020
|
)
|
|||
Issuance of related party loan
|
—
|
|
|
(270,000
|
)
|
|
—
|
|
|||
Acquisition of Western
|
(75,000
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of Trailblazer
|
—
|
|
|
(150,000
|
)
|
|
—
|
|
|||
Acquisition of additional equity interests in Water Solutions
|
—
|
|
|
(7,600
|
)
|
|
—
|
|
|||
Acquisition of Pony Express membership interest
|
(700,000
|
)
|
|
(27,000
|
)
|
|
—
|
|
|||
Other investing, net
|
(4,883
|
)
|
|
17,521
|
|
|
(1,590
|
)
|
|||
Net Cash Used in Investing Activities
|
(845,270
|
)
|
|
(1,102,729
|
)
|
|
(347,610
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Distributions to unitholders
|
(161,834
|
)
|
|
(68,117
|
)
|
|
(18,171
|
)
|
|||
Distributions to noncontrolling interests
|
(25,136
|
)
|
|
—
|
|
|
—
|
|
|||
Contribution from TD
|
—
|
|
|
27,488
|
|
|
—
|
|
|||
Repayment of debt assumed from TD
|
—
|
|
|
—
|
|
|
(400,000
|
)
|
|||
Borrowings under revolving credit facility, net
|
194,000
|
|
|
424,000
|
|
|
135,000
|
|
|||
Proceeds from public offering, net of offering costs
|
554,084
|
|
|
320,385
|
|
|
290,483
|
|
|||
Contributions from Predecessor Entities, net
|
—
|
|
|
312,125
|
|
|
379,872
|
|
|||
Distributions to Member, net
|
—
|
|
|
—
|
|
|
(118,538
|
)
|
|||
Other financing, net
|
(4,396
|
)
|
|
8,271
|
|
|
(3,518
|
)
|
|||
Net Cash Provided by Financing Activities
|
556,718
|
|
|
1,024,152
|
|
|
265,128
|
|
|||
Net Change in Cash and Cash Equivalents
|
744
|
|
|
867
|
|
|
—
|
|
|||
Cash and Cash Equivalents, beginning of period
|
867
|
|
|
—
|
|
|
—
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
1,611
|
|
|
$
|
867
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Supplemental Disclosures:
|
|
|
|
|
|
||||||
Cash payments for interest, net
|
$
|
(14,021
|
)
|
|
$
|
(6,801
|
)
|
|
$
|
(3,450
|
)
|
Schedule of Noncash Investing and Financing Activities:
|
|
|
|
|
|
||||||
Property, plant and equipment acquired via the cash management agreement with TD
|
$
|
138,936
|
|
|
$
|
158,357
|
|
|
$
|
—
|
|
Contributions from noncontrolling interests settled via the cash management agreement with TD
|
$
|
68,277
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Distributions to noncontrolling interests settled via the cash management agreement with TD
|
$
|
(69,017
|
)
|
|
$
|
(5,361
|
)
|
|
$
|
—
|
|
Increase in accrual for payment of property, plant and equipment
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
90,373
|
|
Increase in accrual for reimbursable construction in progress projects
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,470
|
|
Fair value of assets acquired by TEP Predecessor
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,027,127
|
|
Fair value of liabilities acquired by TEP Predecessor
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(566,849
|
)
|
•
|
Crude Oil Transportation & Logistics—the ownership and operation of a crude oil pipeline system;
|
•
|
Natural Gas Transportation & Logistics—the ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities; and
|
•
|
Processing & Logistics—the ownership and operation of natural gas processing, treating and fractionation facilities, the provision of water business services primarily to the oil and gas exploration and production industry and the transportation of NGLs.
|
Unit Holder
|
|
Limited Partner Common Units
|
|
General Partner Units
|
|
Percentage of Outstanding Limited Partner Common Units
|
|
Percentage of Outstanding Common and General Partner Units
|
||||
Public Unitholders
|
|
34,288,752
|
|
|
—
|
|
|
56.54
|
%
|
|
55.77
|
%
|
Tallgrass Equity, LLC
|
|
20,000,000
|
|
|
—
|
|
|
32.98
|
%
|
|
32.53
|
%
|
Tallgrass Development, LP
|
|
6,355,480
|
|
|
—
|
|
|
10.48
|
%
|
|
10.34
|
%
|
Tallgrass MLP GP, LLC
(1)
|
|
—
|
|
|
834,391
|
|
|
—
|
|
|
1.36
|
%
|
Total
|
|
60,644,232
|
|
|
834,391
|
|
|
100.00
|
%
|
|
100.00
|
%
|
(1)
|
Tallgrass MLP GP, LLC (the "general partner") also holds all of TEP's incentive distribution rights ("IDRs").
|
•
|
a significant decrease in the market value of a long-lived asset or group;
|
•
|
a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition;
|
•
|
a significant adverse change in legal factors or in the business climate could affect the value of long-lived asset or asset group, including an adverse action or assessment by a regulator which would exclude allowable costs from the rate-making process;
|
•
|
an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the long-lived asset or asset group;
|
•
|
a current period operating cash flow loss combined with a history of operating cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group; and
|
•
|
a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
|
|
Range of Depreciation Rates
|
Crude oil pipelines
|
2.8%
|
Natural gas pipelines
|
0.7 - 3.4%
|
Processing & treating assets
|
3.3%
|
Water business assets
|
3.3 - 20.0%
|
Replacement Gas Facilities
(1)
|
10.0%
|
General & other
|
6.8 - 12.0%
|
(1)
|
Represents the Replacement Gas Facilities as discussed in
Note 5
–
Related Party Transactions
and
Note 16
–
Regulatory Matters
.
|
•
|
Level 1 Inputs-quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;
|
•
|
Level 2 Inputs-inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and
|
•
|
Level 3 Inputs-unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances (which might include the reporting entity’s own data).
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Current assets
|
$
|
46,800
|
|
|
$
|
93,019
|
|
Noncurrent assets
|
1,391,906
|
|
|
1,300,816
|
|
||
Total assets
|
$
|
1,438,706
|
|
|
$
|
1,393,835
|
|
Current liabilities
|
$
|
51,349
|
|
|
$
|
52,547
|
|
Total liabilities
|
$
|
51,349
|
|
|
$
|
52,547
|
|
|
Year Ended December 31,
|
||||
|
2015
|
|
2014
|
||
|
(in thousands)
|
||||
Revenue
|
538,033
|
|
|
373,470
|
|
Net income attributable to partners
|
161,184
|
|
|
71,347
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Cost of transportation services
(1)
|
$
|
25,046
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges to TEP:
(2)
|
|
|
|
|
|
||||||
Property, plant and equipment, net
|
$
|
4,320
|
|
|
$
|
17,936
|
|
|
$
|
7,604
|
|
Other deferred charges
|
$
|
7
|
|
|
$
|
27
|
|
|
$
|
799
|
|
Operation and maintenance
|
$
|
23,520
|
|
|
$
|
18,783
|
|
|
$
|
18,439
|
|
General and administrative
|
$
|
33,432
|
|
|
$
|
23,475
|
|
|
$
|
20,140
|
|
(1)
|
Reflects rent expense under operating lease agreements that primarily consist of crude oil storage capacity leased by Pony Express from Deeprock Development, LLC ("Deeprock"), an unconsolidated affiliate of TD, and Tallgrass Sterling Terminal, LLC ("Sterling"), a consolidated subsidiary of TD. For more information, see
Note 12
–
Commitments & Contingent Liabilities
.
|
(2)
|
Charges to TEP, inclusive of Pony Express, include directly charged wages and salaries, other compensation and benefits, and shared services.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Receivables from related parties:
|
|
|
|
||||
Tallgrass Operations, LLC
|
$
|
—
|
|
|
$
|
73,393
|
|
Rockies Express Pipeline LLC
|
15
|
|
|
—
|
|
||
Total receivables from related parties
|
$
|
15
|
|
|
$
|
73,393
|
|
Accounts payable to related parties:
|
|
|
|
||||
Tallgrass Operations, LLC
|
$
|
7,792
|
|
|
$
|
3,894
|
|
Tallgrass Equity, LLC
|
36
|
|
|
—
|
|
||
Deeprock Development, LLC
|
17
|
|
|
—
|
|
||
Rockies Express Pipeline LLC
|
7
|
|
|
21
|
|
||
Total accounts payable to related parties
|
$
|
7,852
|
|
|
$
|
3,915
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Affiliate gas balance receivables
|
$
|
92
|
|
|
$
|
275
|
|
Affiliate gas balance payables
|
$
|
227
|
|
|
$
|
455
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Crude oil
|
$
|
2,661
|
|
|
$
|
581
|
|
Materials and supplies
|
8,581
|
|
|
3,049
|
|
||
Natural gas liquids
|
395
|
|
|
519
|
|
||
Gas in underground storage
|
2,156
|
|
|
8,896
|
|
||
Total inventory
|
$
|
13,793
|
|
|
$
|
13,045
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Crude oil pipelines
|
$
|
1,172,684
|
|
|
$
|
939,536
|
|
Natural gas pipelines
|
550,710
|
|
|
548,482
|
|
||
Processing and treating assets
|
254,073
|
|
|
237,218
|
|
||
Water business assets
|
81,098
|
|
|
4,453
|
|
||
General and other
|
69,181
|
|
|
42,719
|
|
||
Construction work in progress
|
30,699
|
|
|
139,873
|
|
||
Accumulated depreciation and amortization
|
(133,427
|
)
|
|
(59,200
|
)
|
||
Total property, plant and equipment, net
|
$
|
2,025,018
|
|
|
$
|
1,853,081
|
|
Year
|
|
Total
|
||
2016
|
|
$
|
3,952
|
|
2017
|
|
3,967
|
|
|
2018
|
|
3,982
|
|
|
2019
|
|
3,997
|
|
|
2020
|
|
3,385
|
|
|
Thereafter
|
|
15,114
|
|
|
Total
|
|
$
|
34,397
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||||||||||||||||
|
Natural Gas Transportation & Logistics
|
|
Processing & Logistics
|
|
Total
|
|
Natural Gas Transportation & Logistics
|
|
Processing & Logistics
|
|
Total
|
||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||
Balance at beginning of period
|
$
|
255,558
|
|
|
$
|
87,730
|
|
|
$
|
343,288
|
|
|
$
|
255,558
|
|
|
$
|
79,157
|
|
|
$
|
334,715
|
|
Goodwill acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,573
|
|
(1)
|
8,573
|
|
||||||
Balance at end of period
|
$
|
255,558
|
|
|
$
|
87,730
|
|
|
$
|
343,288
|
|
|
$
|
255,558
|
|
|
$
|
87,730
|
|
|
$
|
343,288
|
|
(1)
|
The
$8.6 million
of goodwill was recorded in connection with the acquisition of a controlling interest in Water Solutions on May 13, 2014.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Pony Express oil conversion use rights
|
$
|
105,973
|
|
|
$
|
105,973
|
|
Redtail customer contract
(1)
|
—
|
|
|
8,200
|
|
||
Accumulated amortization
|
(9,427
|
)
|
|
(9,635
|
)
|
||
Intangible assets, net
|
$
|
96,546
|
|
|
$
|
104,538
|
|
(1)
|
The Redtail customer contract was fully amortized as of December 31, 2015.
|
Year
|
|
Total
|
||
2016
|
|
$
|
3,028
|
|
2017
|
|
3,028
|
|
|
2018
|
|
3,028
|
|
|
2019
|
|
3,028
|
|
|
2020
|
|
3,028
|
|
|
Thereafter
|
|
81,406
|
|
|
Total
|
|
$
|
96,546
|
|
|
Location of
gain (loss) recognized in income on derivatives |
|
Amount of gain (loss) recognized in income on derivatives
|
||||||||||
|
|
Year Ended December 31,
|
|||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|||||||
|
|
|
(in thousands)
|
||||||||||
Derivatives not designated as hedging contracts:
|
|
|
|
|
|
|
|
||||||
Energy commodity derivative contracts
|
Natural gas sales
|
|
$
|
427
|
|
|
$
|
(410
|
)
|
|
$
|
(548
|
)
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Total capacity under the revolving credit facility
|
$
|
1,100,000
|
|
|
$
|
850,000
|
|
Less: Outstanding borrowings under the revolving credit facility
|
(753,000
|
)
|
|
(559,000
|
)
|
||
Available capacity under the revolving credit facility
|
$
|
347,000
|
|
|
$
|
291,000
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Quoted prices
in active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
|
Total
|
|
Carrying
Amount |
||||||||||
|
(in thousands)
|
||||||||||||||||||
December 31, 2015
|
$
|
—
|
|
|
$
|
753,000
|
|
|
$
|
—
|
|
|
$
|
753,000
|
|
|
$
|
753,000
|
|
December 31, 2014
|
$
|
—
|
|
|
$
|
559,000
|
|
|
$
|
—
|
|
|
$
|
559,000
|
|
|
$
|
559,000
|
|
|
|
|
|
Distributions
|
|
Distribution per Limited Partner Common and Subordinated Unit
|
|
||||||||||||||||
|
|
|
|
Limited Partner
Common and Subordinated Units |
|
General Partner
|
|
|
|
|
|||||||||||||
Three Months Ended
|
|
Date Paid
|
|
Incentive Distribution Rights
|
|
General Partner Units
|
|
Total
|
|
|
|||||||||||||
|
|
|
|
(in thousands, except per unit amounts)
|
|
||||||||||||||||||
December 31, 2015
|
|
February 12, 2016
|
|
$
|
42,984
|
|
|
$
|
15,332
|
|
|
$
|
724
|
|
|
$
|
59,040
|
|
|
$
|
0.6400
|
|
|
September 30, 2015
|
|
November 13, 2015
|
|
36,347
|
|
|
11,567
|
|
|
660
|
|
|
48,574
|
|
|
0.6000
|
|
|
|||||
June 30, 2015
|
|
August 14, 2015
|
|
35,135
|
|
|
10,418
|
|
|
627
|
|
|
46,180
|
|
|
0.5800
|
|
|
|||||
March 31, 2015
|
|
May 14, 2015
|
|
31,322
|
|
|
6,934
|
|
|
530
|
|
|
38,786
|
|
|
0.5200
|
|
|
|||||
December 31, 2014
|
|
February 13, 2015
|
|
23,782
|
|
|
4,039
|
|
|
473
|
|
|
28,294
|
|
|
0.4850
|
|
|
|||||
September 30, 2014
|
|
November 14, 2014
|
|
20,092
|
|
|
1,208
|
|
|
363
|
|
|
21,663
|
|
|
0.4100
|
|
|
|||||
June 30, 2014
|
|
August 14, 2014
|
|
18,596
|
|
|
758
|
|
|
330
|
|
|
19,684
|
|
|
0.3800
|
|
|
|||||
March 31, 2014
|
|
May 14, 2014
|
|
13,288
|
|
|
126
|
|
|
274
|
|
|
13,688
|
|
|
0.3250
|
|
|
|||||
December 31, 2013
|
|
February 12, 2014
|
|
12,757
|
|
|
63
|
|
|
262
|
|
|
13,082
|
|
|
0.3150
|
|
|
|||||
September 30, 2013
|
|
November 13, 2013
|
|
12,049
|
|
|
—
|
|
|
245
|
|
|
12,294
|
|
|
0.2975
|
|
|
|||||
June 30, 2013
|
|
August 13, 2013
|
|
5,759
|
|
|
—
|
|
|
118
|
|
|
5,877
|
|
|
0.1422
|
|
(1)
|
|||||
March 31, 2013
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(1)
|
The distribution declared on July 18, 2013 for the second quarter of 2013 represented a prorated amount of the MQD of
$0.2875
per common unit, based upon the number of days between the closing of the IPO on May 17, 2013 and June 30, 2013.
|
•
|
We have distributed available cash from operating surplus to all of the common unitholders (and during the subordination period, to the subordinated unitholders) in an amount equal to the MQD for each outstanding unit for such quarter; and
|
•
|
We have distributed available cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in the payment of the MQD to common unitholders;
|
•
|
first
,
98%
to all unitholders, pro rata, and
2%
to our general partner, until each unitholder receives a total of
$0.3048
per unit for that quarter (the "first target distribution");
|
•
|
second
,
85%
to all unitholders, pro rata, and
15%
to our general partner, until each unitholder receives a total of
$0.3536
per unit for that quarter (the "second target distribution");
|
•
|
third
,
75%
to all unitholders, pro rata, and
25%
to our general partner, until each unitholder receives a total of
$0.4313
per unit for that quarter (the "third target distribution"); and
|
•
|
thereafter
,
50%
to all unitholders, pro rata, and
50%
to our general partner.
|
•
|
less,
the amount of cash reserves established by our general partner to:
|
▪
|
provide for the proper conduct of our business (including reserves for future capital expenditures, for anticipated future credit needs subsequent to that quarter, for legal matters and for refunds of collected rates reasonably likely to be refunded as a result of a settlement or hearing related to FERC rate proceedings);
|
▪
|
comply with applicable law or regulation, or any of our debt instruments or other agreements; or
|
▪
|
provide funds for distributions to unitholders and to our general partner for any one or more of the next four quarters (provided that our general partner may not establish cash reserves for distributions if the effect of the establishment of such reserves will prevent us from distributing the MQD on all common units and any cumulative arrearages on such common units for the current quarter);
|
•
|
plus
, if our general partner so determines, all or any portion of the cash on hand on the date of distribution of available cash for the quarter, including cash on hand resulting from working capital borrowings made subsequent to the end of such quarter.
|
Year
|
|
Total
|
||
2016
|
|
$
|
27,805
|
|
2017
|
|
28,355
|
|
|
2018
|
|
28,714
|
|
|
2019
|
|
29,246
|
|
|
2020
|
|
29,879
|
|
|
Thereafter
|
|
478,550
|
|
|
Total
|
|
$
|
622,549
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
|
Year Ended December 31, 2013
|
|
Period from January 1, 2013 to May 16, 2013
|
|
Period from May 17, 2013 to December 31, 2013
|
||||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||||||
Net income
|
$
|
184,814
|
|
|
$
|
59,329
|
|
|
$
|
7,624
|
|
|
$
|
5,049
|
|
|
$
|
2,575
|
|
Net (income) loss attributable to noncontrolling interests
|
(24,268
|
)
|
|
11,352
|
|
|
2,123
|
|
|
761
|
|
|
1,362
|
|
|||||
Net income attributable to partners
|
160,546
|
|
|
70,681
|
|
|
9,747
|
|
|
5,810
|
|
|
3,937
|
|
|||||
Predecessor operations interest in net (income) loss
|
—
|
|
|
(1,508
|
)
|
|
4,432
|
|
|
1,172
|
|
|
3,260
|
|
|||||
General partner interest in net income
|
(46,478
|
)
|
|
(7,399
|
)
|
|
(7,188
|
)
|
|
(6,982
|
)
|
|
(206
|
)
|
|||||
Net income available to common and subordinated unitholders
|
$
|
114,068
|
|
|
$
|
61,774
|
|
|
$
|
6,991
|
|
|
$
|
—
|
|
|
$
|
6,991
|
|
Basic net income per common and subordinated unit
|
$
|
1.95
|
|
|
$
|
1.39
|
|
|
$
|
0.17
|
|
|
|
|
$
|
0.17
|
|
||
Diluted net income per common and subordinated unit
|
$
|
1.91
|
|
|
$
|
1.36
|
|
|
$
|
0.17
|
|
|
|
|
$
|
0.17
|
|
||
Basic average number of common and subordinated units outstanding
|
58,597
|
|
|
44,346
|
|
|
40,450
|
|
|
|
|
40,450
|
|
||||||
Equity Participation Unit equivalent units
|
978
|
|
|
1,048
|
|
|
1,008
|
|
|
|
|
1,008
|
|
||||||
Diluted average number of common and subordinated units outstanding
|
59,575
|
|
|
45,394
|
|
|
41,458
|
|
|
|
|
41,458
|
|
|
|
Percentage of
Segment Revenue
|
Crude Oil Transportation & Logistics
|
|
96%
|
Natural Gas Transportation & Logistics
|
|
51%
|
Processing & Logistics
|
|
93%
|
|
Year Ended December 31, 2015
|
|||||
|
Equity Participation Units
|
|
Weighted Average
Grant Date Fair Value |
|||
Beginning of period
|
1,525,750
|
|
|
$
|
18.75
|
|
Granted
|
338,591
|
|
|
40.01
|
|
|
Vested
(1)
|
(480,555
|
)
|
|
(19.39
|
)
|
|
Forfeited
|
(58,825
|
)
|
|
(16.98
|
)
|
|
End of period
|
1,324,961
|
|
|
$
|
24.11
|
|
(1)
|
During the
year ended December 31, 2015
, approximately
344,383
common units (net of tax withholding of approximately
136,172
common units) were issued in connection with the settlement of vested awards.
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||||||||||||||||||||||||||
Revenue:
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||
Crude Oil Transportation & Logistics
|
$
|
304,227
|
|
|
$
|
—
|
|
|
$
|
304,227
|
|
|
$
|
28,343
|
|
|
$
|
—
|
|
|
$
|
28,343
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Natural Gas Transportation & Logistics
|
131,657
|
|
|
(5,384
|
)
|
|
126,273
|
|
|
140,080
|
|
|
(5,257
|
)
|
|
134,823
|
|
|
127,877
|
|
|
(1,920
|
)
|
|
125,957
|
|
|||||||||
Processing & Logistics
|
105,697
|
|
|
—
|
|
|
105,697
|
|
|
208,390
|
|
|
—
|
|
|
208,390
|
|
|
164,569
|
|
|
—
|
|
|
164,569
|
|
|||||||||
Corporate and other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total revenue
|
$
|
541,581
|
|
|
$
|
(5,384
|
)
|
|
$
|
536,197
|
|
|
$
|
376,813
|
|
|
$
|
(5,257
|
)
|
|
$
|
371,556
|
|
|
$
|
292,446
|
|
|
$
|
(1,920
|
)
|
|
$
|
290,526
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||||||||||||||||||||||||||
Adjusted EBITDA:
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||
Crude Oil Transportation & Logistics
|
$
|
165,204
|
|
|
$
|
5,384
|
|
|
$
|
170,588
|
|
|
$
|
15,711
|
|
|
$
|
—
|
|
|
$
|
15,711
|
|
|
$
|
(43
|
)
|
|
$
|
—
|
|
|
$
|
(43
|
)
|
Natural Gas Transportation & Logistics
|
67,368
|
|
|
(5,384
|
)
|
|
61,984
|
|
|
67,593
|
|
|
(4,015
|
)
|
|
63,578
|
|
|
56,821
|
|
|
(1,920
|
)
|
|
54,901
|
|
|||||||||
Processing & Logistics
|
22,746
|
|
|
—
|
|
|
22,746
|
|
|
33,089
|
|
|
—
|
|
|
33,089
|
|
|
23,192
|
|
|
1,920
|
|
|
25,112
|
|
|||||||||
Corporate and other
|
(2,979
|
)
|
|
—
|
|
|
(2,979
|
)
|
|
(2,500
|
)
|
|
—
|
|
|
(2,500
|
)
|
|
(1,580
|
)
|
|
—
|
|
|
(1,580
|
)
|
|||||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Equity in earnings of unconsolidated investment
|
|
|
|
|
—
|
|
|
|
|
|
|
717
|
|
|
|
|
|
|
—
|
|
|||||||||||||||
Non-cash loss allocated to noncontrolling interest
|
|
|
|
|
9,377
|
|
|
|
|
|
|
10,151
|
|
|
|
|
|
|
—
|
|
|||||||||||||||
Gain on remeasurement of unconsolidated investment
|
|
|
|
|
—
|
|
|
|
|
|
|
9,388
|
|
|
|
|
|
|
—
|
|
|||||||||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Interest expense, net of noncontrolling interest
|
|
|
|
|
(15,517
|
)
|
|
|
|
|
|
(7,648
|
)
|
|
|
|
|
|
(11,035
|
)
|
|||||||||||||||
Depreciation and amortization expense, net of noncontrolling interest
|
|
|
|
|
(75,529
|
)
|
|
|
|
|
|
(45,389
|
)
|
|
|
|
|
|
(37,898
|
)
|
|||||||||||||||
Non-cash (gain) loss related to derivative instruments
|
|
|
|
|
—
|
|
|
|
|
|
|
184
|
|
|
|
|
|
|
(386
|
)
|
|||||||||||||||
Non-cash compensation expense
|
|
|
|
|
(5,103
|
)
|
|
|
|
|
|
(5,136
|
)
|
|
|
|
|
|
(1,798
|
)
|
|||||||||||||||
Non-cash loss from asset sales
|
|
|
|
|
(4,795
|
)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|||||||||||||||
Distributions from unconsolidated investment
|
|
|
|
|
—
|
|
|
|
|
|
|
(1,464
|
)
|
|
|
|
|
|
—
|
|
|||||||||||||||
Loss on extinguishment of debt
|
|
|
|
|
(226
|
)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(17,526
|
)
|
|||||||||||||||
Net income attributable to partners
|
|
|
|
|
$
|
160,546
|
|
|
|
|
|
|
$
|
70,681
|
|
|
|
|
|
|
$
|
9,747
|
|
|
Year Ended December 31,
|
||||||||||
Capital Expenditures:
|
2015
|
|
2014
|
|
2013
|
||||||
|
|
|
(in thousands)
|
|
|
||||||
Crude Oil Transportation & Logistics
|
$
|
38,802
|
|
|
$
|
631,883
|
|
|
$
|
286,824
|
|
Natural Gas Transportation & Logistics
|
10,478
|
|
|
20,580
|
|
|
28,184
|
|
|||
Processing & Logistics
|
16,107
|
|
|
13,187
|
|
|
31,012
|
|
|||
Total capital expenditures
|
$
|
65,387
|
|
|
$
|
665,650
|
|
|
$
|
346,020
|
|
Assets:
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Crude Oil Transportation & Logistics
|
$
|
1,439,418
|
|
|
$
|
1,394,793
|
|
Natural Gas Transportation & Logistics
|
706,576
|
|
|
716,106
|
|
||
Processing & Logistics
|
409,795
|
|
|
340,620
|
|
||
Corporate and other
|
6,285
|
|
|
5,678
|
|
||
Total assets
|
$
|
2,562,074
|
|
|
$
|
2,457,197
|
|
|
Quarter Ended 2015
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Total revenues
|
$
|
114,675
|
|
|
$
|
132,970
|
|
|
$
|
138,168
|
|
|
$
|
150,384
|
|
Operating income
|
$
|
25,718
|
|
|
$
|
56,355
|
|
|
$
|
52,919
|
|
|
$
|
62,923
|
|
Net income
|
$
|
22,990
|
|
|
$
|
53,231
|
|
|
$
|
49,550
|
|
|
$
|
59,043
|
|
Net income attributable to partners
|
$
|
32,319
|
|
|
$
|
44,899
|
|
|
$
|
42,679
|
|
|
$
|
40,649
|
|
Net income allocable to limited partners
|
$
|
24,881
|
|
|
$
|
33,869
|
|
|
$
|
30,533
|
|
|
$
|
24,785
|
|
Basic net income per limited partner unit
|
$
|
0.47
|
|
|
$
|
0.56
|
|
|
$
|
0.50
|
|
|
$
|
0.41
|
|
Diluted net income per limited partner unit
|
$
|
0.46
|
|
|
$
|
0.55
|
|
|
$
|
0.50
|
|
|
$
|
0.40
|
|
|
Quarter Ended 2014
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Total revenues
|
$
|
94,779
|
|
|
$
|
77,320
|
|
|
$
|
89,953
|
|
|
$
|
109,504
|
|
Operating income
|
$
|
16,529
|
|
|
$
|
6,475
|
|
|
$
|
11,580
|
|
|
$
|
18,829
|
|
Net income
|
$
|
16,617
|
|
|
$
|
14,728
|
|
|
$
|
11,253
|
|
|
$
|
16,731
|
|
Net income attributable to partners
|
$
|
17,124
|
|
|
$
|
15,286
|
|
|
$
|
11,444
|
|
|
$
|
26,827
|
|
Net income allocable to limited partners
|
$
|
12,518
|
|
|
$
|
15,771
|
|
|
$
|
11,143
|
|
|
$
|
22,342
|
|
Basic net income per limited partner unit
|
$
|
0.31
|
|
|
$
|
0.39
|
|
|
$
|
0.24
|
|
|
$
|
0.46
|
|
Diluted net income per limited partner unit
|
$
|
0.30
|
|
|
$
|
0.38
|
|
|
$
|
0.23
|
|
|
$
|
0.45
|
|
Name
|
|
Age
|
|
Position with our General Partner
|
David G. Dehaemers, Jr.
|
|
55
|
|
President, Chief Executive Officer and Director
|
William R. Moler
|
|
50
|
|
Executive Vice President, Chief Operating Officer and Director
|
Gary J. Brauchle
|
|
42
|
|
Executive Vice President and Chief Financial Officer
|
George E. Rider
|
|
62
|
|
Executive Vice President, General Counsel and Secretary
|
Richard L. Bullock
|
|
60
|
|
Vice President, Human Resources, Tax and Risk Management
|
Gary D. Watkins
|
|
43
|
|
Vice President and Chief Accounting Officer
|
Frank J. Loverro
|
|
46
|
|
Director
|
Stanley de J. Osborne
|
|
45
|
|
Director
|
Jeffrey A. Ball
|
|
41
|
|
Director
|
John T. Raymond
|
|
45
|
|
Director
|
Terrance D. Towner
|
|
57
|
|
Director
|
Roy N. Cook
|
|
58
|
|
Director
|
Jeffrey R. Armstrong
|
|
46
|
|
Director
|
•
|
Adjusted EBITDA of $205 - 225 million for the year ended December 31, 2015;
|
•
|
Distributable Cash Flow of $180 - 195 million for the year ended December 31, 2015;
|
•
|
Distribution coverage of 1.05 - 1.10x for the year ended December 31, 2015; and
|
•
|
Growth of approximately 20% in our annualized distribution rate for the calendar year 2015.
|
•
|
Our Adjusted EBITDA for the year ended December 31, 2015 was approximately $252 million;
|
•
|
Our Distributable Cash Flow for the year ended December 31, 2015 was approximately $220 million;
|
•
|
Our distribution coverage for the year ended December 31, 2015 was 1.14x; and
|
•
|
We grew our annualized distribution rate during calendar year 2015 by 32%.
|
|
Year
|
|
Salary
(1)
|
|
Bonus
(2)
|
|
Equity Awards
(3)
|
|
All Other Compensation
(4)
|
|
Total
|
||||||||||
David G. Dehaemers, Jr.
|
2015
|
|
$
|
300,000
|
|
|
$
|
601,000
|
|
|
$
|
—
|
|
|
$
|
27,796
|
|
|
$
|
928,796
|
|
President, Chief Executive
|
2014
|
|
$
|
300,000
|
|
|
$
|
251,000
|
|
|
$
|
—
|
|
|
$
|
31,274
|
|
|
$
|
582,274
|
|
Officer and Director
|
2013
|
|
$
|
300,000
|
|
|
$
|
100,000
|
|
|
$
|
—
|
|
|
$
|
33,186
|
|
|
$
|
433,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
William R. Moler
|
2015
|
|
$
|
300,000
|
|
|
$
|
551,000
|
|
|
$
|
—
|
|
|
$
|
27,796
|
|
|
$
|
878,796
|
|
Executive Vice President, Chief
|
2014
|
|
$
|
297,118
|
|
|
$
|
501,000
|
|
|
$
|
—
|
|
|
$
|
30,436
|
|
|
$
|
828,554
|
|
Operating Officer and Director
|
2013
|
|
$
|
275,000
|
|
|
$
|
200,000
|
|
|
$
|
874,500
|
|
|
$
|
30,578
|
|
|
$
|
1,380,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gary J. Brauchle
|
2015
|
|
$
|
275,000
|
|
|
$
|
551,000
|
|
|
$
|
—
|
|
|
$
|
27,665
|
|
|
$
|
853,665
|
|
Executive Vice President and
|
2014
|
|
$
|
272,116
|
|
|
$
|
501,000
|
|
|
$
|
—
|
|
|
$
|
26,059
|
|
|
$
|
799,175
|
|
Chief Financial Officer
|
2013
|
|
$
|
250,000
|
|
|
$
|
200,000
|
|
|
$
|
874,500
|
|
|
$
|
26,430
|
|
|
$
|
1,350,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
George E. Rider
|
2015
|
|
$
|
275,000
|
|
|
$
|
551,000
|
|
|
$
|
—
|
|
|
$
|
27,688
|
|
|
$
|
853,688
|
|
Executive Vice President,
|
2014
|
|
$
|
272,116
|
|
|
$
|
501,000
|
|
|
$
|
—
|
|
|
$
|
29,930
|
|
|
$
|
803,046
|
|
General Counsel and Secretary
|
2013
|
|
$
|
250,000
|
|
|
$
|
200,000
|
|
|
$
|
874,500
|
|
|
$
|
27,893
|
|
|
$
|
1,352,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gary D. Watkins
|
2015
|
|
$
|
212,322
|
|
|
$
|
201,000
|
|
|
$
|
1,226,264
|
|
|
$
|
22,152
|
|
|
$
|
1,661,738
|
|
Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects actual salary received. Salary adjustments are typically implemented during February, which results in odd amounts actually received by the indicated Named Executive Officer. In our annual report on Form 10-K/A for the year ended December 31, 2014, the Named Executive Officer's adjusted annual salary, rather than the actual amount of salary received, was reported in the salary column for 2014.
|
(2)
|
Represents discretionary bonuses paid in 2016, 2015 and 2014 based on performance in 2015, 2014 and 2013, respectively. In 2014 and 2015, the amounts also include a $1,000 bonus that was paid to all employees.
|
(3)
|
The amounts in this column include both equity participation units granted pursuant to the TEP LTIP and equity participation shares granted pursuant to the TEGP LTIP. Of the officers listed above, only Mr. Watkins received a grant under the TEGP LTIP, which occurred during 2015. In addition, the amounts in this column represent the aggregate grant date fair value determined in accordance with ASC Topic 718 for equity participation units, or EPUs, granted under the TEP LTIP and equity participation shares granted under the TEGP LTIP. Pursuant to SEC rules, the amounts shown in the Summary Compensation Table for awards subject to performance conditions are based on the probable outcome as of the date of grant and exclude the impact of estimated forfeitures. The EPU and equity participation share grants are measured at their grant date fair value. The Equity participation units and equity participation shares are non-participating, therefore the grant date fair value is discounted from the grant date fair value of TEP’s common units or TEGP’s Class A shares, as appropriate, for the present value of the expected (but non-participating) future dividends during the vesting period. For additional information, see
Note 15
–
Equity-Based Compensation
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data. These amounts do not correspond to the actual value that will be recognized by the executive.
|
(4)
|
The amounts in the column include the following: contributions under the 401(k) savings plan (includes $26,500 for Mr. Dehaemers, $26,500 for Mr. Moler, $26,477 for Mr. Brauchle, $26,500 for Mr. Rider, and $21,232 for Mr. Watkins for the year ended December 31, 2015, $30,000 for Mr. Dehaemers, $29,615 for Mr. Moler, $26,366 for Mr. Rider, and $25,519 for Mr. Brauchle for the year ended December 31, 2014, and $30,000 for Mr. Dehaemers, $27,500 for Mr. Moler, $24,923 for Mr. Rider, and $23,460 for Mr. Brauchle for the year ended December 31, 2013) and the dollar value of premiums paid for group life, accidental death and dismemberment insurance.
|
|
Grant Type
|
|
Grant Date
|
|
Number of Shares or Units
|
|
Grant Date Fair Value of Awards
(1)
|
|||
Gary D. Watkins
|
|
|
|
|
|
|
|
|||
Vice President and
|
TEP Equity Participation Units
|
|
August 1, 2015
|
|
6,400
|
|
(2)
|
$
|
247,160
|
|
Chief Accounting Officer
|
TEGP Equity Participation Shares
|
|
August 1, 2015
|
|
35,000
|
|
(3)
|
$
|
979,104
|
|
(1)
|
The amounts in this column include both EPUs granted pursuant to the TEP LTIP and equity participation shares granted pursuant to the TEGP LTIP. In addition, the amounts in this column represent the aggregate grant date fair value determined in accordance with ASC Topic 718 for equity participation units, or EPUs, granted under the TEP LTIP and equity participation shares granted under the TEGP LTIP. Pursuant to SEC rules, the amounts shown in this table for awards subject to performance conditions are based on the probable outcome as of the date of grant and exclude the impact of estimated forfeitures. The EPU and equity participation share grants are measured at their grant date fair value. The EPUs and equity participation shares are non-participating, therefore the grant date fair value is discounted from the grant date fair value of TEP’s common units or TEGP’s Class A shares, as appropriate, for the present value of the expected (but non-participating) future dividends during the vesting period. For additional information, see
Note 15
–
Equity-Based Compensation
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data. These amounts do not correspond to the actual value that will be recognized by the executive.
|
(2)
|
Vesting of the equity participation units is contingent upon TEP quarterly distribution levels and will occur in two parts, with one-half vesting on the later to occur of the TEP Distribution Achievement Date or May 13, 2018, and the remaining half vesting on the later to occur of the TEP Distribution Achievement Date or May 13, 2019. If TEP has not distributed at least $0.6875 on each outstanding common unit for any full quarter ending on or before May 13, 2020, the unvested equity participation units will expire and no vesting will occur.
|
(3)
|
Vesting of the equity participation shares is contingent upon the later to occur of the TEGP Distribution Achievement Date or May 12, 2019. If TEGP has not distributed at least $0.35 on each outstanding Class A Share for any full quarter ending on or before May 12, 2020, the unvested equity participation shares will expire and no vesting will occur.
|
|
Equity Participation Unit Awards
(1)
|
||||||||||||
|
Number of EPU Awards That Have Not Vested
(2)
|
|
Market Value of EPU Awards That Have Not Vested
(3)
|
|
Number of Unearned EPUs That Have Not Vested
|
|
Market or Payout Value of Unearned EPUs That Have Not Vested
|
||||||
David G. Dehaemers, Jr.
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
William R. Moler
|
33,333
|
|
|
$
|
1,373,653
|
|
|
—
|
|
|
$
|
—
|
|
Gary J. Brauchle
|
33,333
|
|
|
$
|
1,373,653
|
|
|
—
|
|
|
$
|
—
|
|
George E. Rider
|
33,333
|
|
|
$
|
1,373,653
|
|
|
—
|
|
|
$
|
—
|
|
Gary D. Watkins
|
16,666
|
|
|
$
|
686,806
|
|
|
6,400
|
|
|
$
|
263,744
|
|
(1)
|
The plan administrator may make grants of equity participation units under the plan containing such terms as the plan administrator shall determine, including the period over which equity participation units granted will vest. The plan administrator, in its discretion, may base its determination upon the achievement of specified financial or other performance objectives. The award agreements pursuant to which the EPUs set forth above were granted provide for the settlement of the EPUs in common units.
|
(2)
|
Vesting of the EPUs is contingent upon the later of the Pony Express System in-service date or May 13, 2017. The Pony Express System was placed in service in October 2014.
|
(3)
|
Reflects the closing price of $41.21 per TEP common unit at December 31, 2015.
|
(4)
|
Vesting will occur in two parts, with one-half vesting on the later to occur of the TEP Distribution Achievement Date or May 13, 2018, and one-half vesting on the later to occur of the TEP Distribution Achievement Date or May 13, 2019. If TEP has not distributed at least $0.6875 on each outstanding common unit for any full quarter ending on or before May 13, 2020, the unvested EPUs will expire and no vesting will occur.
|
|
Equity Participation Share Awards
(1)
|
||||||||||||
|
Number of Equity Participation Share Awards That Have Not Vested
|
|
Market Value of Equity Participation Share Awards That Have Not Vested
|
|
Number of Unearned Equity Participation Shares That Have Not Vested
(2)
|
|
Market or Payout Value of Unearned Equity Participation Shares That Have Not Vested
(3)
|
||||||
David G. Dehaemers, Jr.
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
William R. Moler
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Gary J. Brauchle
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
George E. Rider
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Gary D. Watkins
|
—
|
|
|
$
|
—
|
|
|
35,000
|
|
|
$
|
558,950
|
|
(1)
|
The plan administrator may make grants of equity participation shares under the plan containing such terms as the plan administrator shall determine, including the period over which equity participation shares granted will vest. The plan administrator, in its discretion, may base its determination upon the achievement of specified financial or other performance objectives. The award agreements pursuant to which the equity participation shares set forth above were granted provide for the settlement of the equity participation shares in TEGP Class A Shares.
|
(2)
|
Vesting of the equity participation shares is contingent upon the later to occur of the TEGP Distribution Achievement Date or May 12, 2019. If TEGP has not distributed at least $0.35 on each outstanding Class A Share for any full quarter ending on or before May 12, 2020, the unvested equity participation shares will expire and no vesting will occur.
|
(3)
|
Reflects the closing price of $15.97 per TEGP Class A share at December 31, 2015.
|
|
Number of Equity Participation Units Acquired on Vesting
(1)
|
|
Value Realized on Vesting
(2)
|
||
David G. Dehaemers, Jr.
|
—
|
|
$
|
—
|
|
President, Chief Executive
|
|
|
|
||
Officer and Director
|
|
|
|
||
|
|
|
|
||
William R. Moler
|
16,667
|
|
$
|
809,350
|
|
Executive Vice President, Chief
|
|
|
|
||
Operating Officer and Director
|
|
|
|
||
|
|
|
|
||
Gary J. Brauchle
|
16,667
|
|
$
|
809,350
|
|
Executive Vice President and
|
|
|
|
||
Chief Financial Officer
|
|
|
|
||
|
|
|
|
||
George E. Rider
|
16,667
|
|
$
|
809,350
|
|
Executive Vice President,
|
|
|
|
||
General Counsel and Secretary
|
|
|
|
||
|
|
|
|
||
Gary D. Watkins
|
8,334
|
|
$
|
404,699
|
|
Vice President and
|
|
|
|
||
Chief Accounting Officer
|
|
|
|
(1)
|
Represents the gross number of EPUs that vested during the year ended December 31, 2015. The actual number of EPUs delivered to the Named Executive Officers was, in some cases, less than the number shown in the above table due to the Named Executive Officers' option to net out common units to cover a portion of applicable tax withholding obligations.
|
(2)
|
The stated value realized upon vesting is computed by multiplying the closing market price ($48.56) of our common units on the date they vested (May 13, 2015) by the number of units that vested.
|
•
|
"Cause" means (i) his conviction of, or plea of nolo contendere to, any crime or offense constituting a felony under applicable law; (ii) his commission of fraud or embezzlement against Tallgrass Management, LLC or certain of its affiliates; (iii) gross neglect by Mr. Dehaemers of, or gross or willful misconduct of Mr. Dehaemers in connection with the performance of, his duties that is not cured within 30 days of receiving a written notice of such gross neglect or gross or willful misconduct; (iv) Mr. Dehaemers’ willful failure or refusal to carry out the reasonable and lawful instructions of the board of managers of the entity with ultimate control over our general partner; (v) Mr. Dehaemers’ failure to perform the duties and responsibilities of his office as his primary business activity; (vi) a judicial determination that Mr. Dehaemers has breached his fiduciary duties with respect to Tallgrass Management, LLC or certain of its affiliates; or (vii) Mr. Dehaemers’ willful and material breach of his obligations under the operating agreements of our general partner or certain affiliates of Tallgrass Management, in his capacity as an officer of such entities.
|
•
|
"Good reason" means (i) during the period prior to Tallgrass Management, LLC or certain of its affiliates accessing the public markets (through an initial public offering, merger or otherwise), Kelso and EMG and their respective affiliates cease to hold, in the aggregate, a majority of certain equity interests issued to them on or about the date of our initial public offering; (ii) a material diminution of Mr. Dehaemers’ duties and responsibilities to Tallgrass Management, LLC or certain of its affiliates to a level inconsistent with those of a chief executive officer; (iii) a material reduction in Mr. Dehaemers’ cash compensation or the aggregate welfare benefits provided to him (excluding any reduction that is not limited to him specifically); (iv) a willful or intentional breach of his employment agreement by Tallgrass Management, LLC; or (v) a willful or intentional breach by our general partner or certain affiliates of Tallgrass Management of a material provision of the applicable operating agreements of such entities that has a material and adverse effect on Mr. Dehaemers.
|
•
|
any Person or group, other than Tallgrass Equity or its affiliates, becomes the owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of (A) the combined voting power of the equity interests in our general partner, or (B) the general partner interests in TEP (excluding incentive distribution rights);
|
•
|
the limited partners of TEP approve, in one or a series of transactions, a plan of complete liquidation of TEP; or
|
•
|
the sale or other disposition by TEP of all or substantially all of its assets in one or more transactions to any person other than our general partner or its affiliates.
|
•
|
any Person or group, other than Tallgrass Energy Holdings or its affiliates, becomes the owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of (A) the combined voting power of the equity interests in TEGP Management or (B) the general partner interests in TEGP;
|
•
|
the limited partners of TEGP approve, in one or a series of transactions, a plan of complete liquidation of TEGP; or
|
•
|
the sale or other disposition by TEGP of all or substantially all of its assets in one or more transactions to any person other than TEGP Management or an affiliate of the TEGP Management.
|
(1)
|
The stated value upon a change in control is computed by assuming that a triggering change of control occurred on December 31, 2015 and multiplying the closing market price (TEP: $41.21 and TEGP: $15.97) of the relevant units and shares on such date by the number of units and shares that would have vested.
|
•
|
Quarterly cash retainer payments of $10,000, resulting in an effective annual cash retainer of $40,000.
|
•
|
For serving as the audit committee chair or the conflicts committee chair, an annual committee chair retainer of $5,000.
|
Name and Principal Position
|
Fees Earned or Paid in Cash
(1)
|
|
EPU Awards
|
|
Non-Equity Incentive Plan Compensation
|
|
Total
|
||||||||
Terrance D. Towner
|
$
|
45,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,000
|
|
Roy N. Cook
|
$
|
50,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,000
|
|
Jeffrey R. Armstrong
|
$
|
40,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,000
|
|
(1)
|
Includes cash retainer, meeting fees and committee chair fees paid during the year ended December 31, 2015, regardless of the period during which the compensation was earned.
|
•
|
each person known by us to be a beneficial owner of more than 5% of the units;
|
•
|
each of the directors of our general partner;
|
•
|
each of the named executive officers of our general partner; and
|
•
|
all directors and executive officers of our general partner as a group.
|
Name of Beneficial Owner
(1)
|
|
Common Units Beneficially Owned
(2)
|
|
Percentage of Common Units Beneficially Owned
|
||
Tallgrass Energy Holdings
(3)
|
|
32,873,480
|
|
|
48.95
|
%
|
OppenheimerFunds, Inc.
(4)
|
|
4,263,391
|
|
|
6.35
|
%
|
Kayne Anderson Capital Advisors, L.P.
(5)
|
|
3,930,228
|
|
|
5.85
|
%
|
David G. Dehaemers, Jr.
(6)
|
|
300,047
|
|
|
*
|
|
William R. Moler
(7)
|
|
14,428
|
|
|
*
|
|
Gary J. Brauchle
(8)
|
|
25,780
|
|
|
*
|
|
George E. Rider
|
|
12,928
|
|
|
*
|
|
Gary D. Watkins
|
|
6,668
|
|
|
*
|
|
Frank J. Loverro
|
|
—
|
|
|
—
|
|
Stanley de J. Osborne
|
|
—
|
|
|
—
|
|
Jeffrey A. Ball
|
|
20,000
|
|
|
*
|
|
John T. Raymond
|
|
100,000
|
|
|
*
|
|
Roy N. Cook
|
|
50,000
|
|
|
*
|
|
Terrance D. Towner
|
|
18,000
|
|
|
*
|
|
Jeffrey R. Armstrong
|
|
1,000
|
|
|
*
|
|
All directors and executive officers as a group (13 persons)
|
|
559,911
|
|
|
*
|
|
*
|
Less than 1%.
|
(1)
|
Unless otherwise indicated, the address for all beneficial owners in this table is c/o Tallgrass Energy Partners, LP, 4200 W. 115th Street, Suite 350, Leawood, Kansas 66211, Attn: General Counsel.
|
(2)
|
This column reflects the number of TEP common units held of record or owned through a bank, broker or other nominee. The common units of TEP presented as being beneficially owned by our general partner’s directors and executive officers do not include the TEP common units held by Tallgrass Equity that may be attributable to such directors and officers based on their indirect ownership of Tallgrass Equity.
|
(3)
|
Consists of common units held of record by (i) Tallgrass Equity and (ii) Tallgrass Operations. Tallgrass Energy Holdings is the sole member of TEGP Management, LLC, TEGP’s general partner. TEGP is the managing member of Tallgrass Equity. As such, Tallgrass Energy Holdings has the sole voting and dispositive power with respect to the common units owned by Tallgrass Equity. Tallgrass Energy Holdings, as the general partner of Tallgrass Development, which is the sole owner of Tallgrass Operations, also has the sole voting and dispositive power with respect to the common units owned by Tallgrass Operations. Tallgrass Energy Holdings is controlled by its board of directors, which currently consists of the following: David G. Dehaemers, Jr., William R. Moler, Frank J. Loverro, Stanley de J. Osborne, Jeffrey A. Ball and John T. Raymond. Each of the members of the board of directors of Tallgrass Energy Holdings may be deemed to beneficially own the common units owned by Tallgrass Equity and Tallgrass Operations; however, each disclaims beneficial ownership.
|
(4)
|
As reported on Schedule 13G filed with the SEC on February 5, 2016. Consists of common units of record by OppenheimerFunds, Inc. OppenheimerFunds, Inc. disclaims beneficial ownership pursuant to Rule 13d-4 of the Exchange Act of 1934. The business address for this person is Two World Financial Center, 225 Liberty Street, New York, New York 10281.
|
(5)
|
As reported on Schedule 13G filed with the SEC on January 27, 2016. Kayne Anderson Capital Advisors, L.P. is the general partner (or general partner of the general partner) of the limited partnerships and investment adviser to the other accounts. Richard A. Kayne is the controlling shareholder of the corporate owner of Kayne Anderson Investment Management, Inc., the general partner of Kayne Anderson Capital Advisors, L.P. Mr. Kayne is also a limited partner of each of the limited partnerships and a shareholder of the registered investment company. Kayne Anderson Capital Advisors, L.P. disclaims beneficial ownership of the units reported, except those units attributable to it by virtue of its general partner interests in the limited partnerships. Mr. Kayne disclaims beneficial ownership of the units reported, except those units held by him or attributable to him by virtue of his limited partnership interests in the limited partnerships, his indirect interest in the interest of Kayne Anderson Capital Advisors, L.P. in the limited partnerships, and his ownership of common stock of the registered investment company. The business address for Kayne Anderson Capital Advisors, L.P. is 1800 Avenue of the Stars, Third Floor, Los Angeles, California 90067.
|
(6)
|
David G. Dehaemers, Jr. indirectly owns the common units through the David G. Dehaemers, Jr. Revocable Trust, dated April 26, 2006, for which Mr. Dehaemers serves as Trustee.
|
(7)
|
William R. Moler indirectly owns the common units through the William R. Moler Revocable Trust, under a trust agreement dated August 29, 2013, for which Mr. Moler serves as Trustee.
|
(8)
|
Gary J. Brauchle indirectly owns the common units through the Brauchle Revocable Trust, under trust agreement dated April 10, 2014, for which Mr. Brauchle serves as a Trustee.
|
Plan Category
|
|
(a)
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
|
|
(b)
Weighted average
grant date fair value of
outstanding options,
warrants and rights
|
|
(c)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
|
||||
Equity compensation plans approved by security holders
(1)
|
|
1,324,961
|
|
|
$
|
24.11
|
|
|
8,675,039
|
|
Equity compensation plans not approved by security holders
(2)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
Total
|
|
1,324,961
|
|
|
$
|
24.11
|
|
|
8,675,039
|
|
(1)
|
Amounts shown represent equity participation unit awards outstanding under the TEP LTIP as of December 31, 2015. The outstanding awards will be settled in common units pursuant to the terms of the award agreements and are not subject to an exercise price.
|
(2)
|
There are no equity compensation plans in place pursuant to which TEP common units may be issued except for the TEP LTIP.
|
•
|
the provision by Tallgrass Energy Holdings to us of certain administrative services and our agreement to reimburse it for such services;
|
•
|
the provision by Tallgrass Energy Holdings of such employees as may be necessary to operate and manage our business, and our agreement to reimburse it for the expenses associated with such employees;
|
•
|
certain indemnification obligations;
|
•
|
our use of the name "Tallgrass" and related marks; and
|
•
|
our right of first offer to acquire certain assets, including each of the Retained Assets from Tallgrass Development, if Tallgrass Development decides to sell such assets.
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Audit fees
(1)
|
$
|
1,400
|
|
|
$
|
1,137
|
|
Audit related fees
(2)
|
—
|
|
|
—
|
|
||
Tax fees
(3)
|
495
|
|
|
346
|
|
||
Total
|
$
|
1,895
|
|
|
$
|
1,483
|
|
(1)
|
Audit fees represent amounts billed for each of the years presented for professional services rendered in connection with (i) the integrated audit of our annual financial statements and internal control over financial reporting, (ii) the review of our quarterly financial statements or (iii) those services normally provided in connection with statutory and regulatory filings or engagements including comfort letters, consents and other services related to SEC matters. This information is presented as of the latest practicable date for this Annual Report.
|
(2)
|
Audit-related fees represent amounts we were billed in each of the years presented for assurance and related services that are reasonably related to the performance of the annual audit or quarterly reviews of our financial statements and are not reported under audit fees.
|
(3)
|
Tax fees represent amounts we were billed in each of the years presented for professional services rendered in connection with tax compliance, tax advice and tax planning.
|
(1) Financial Statements
|
|
Page No.
|
|
|
|
|
|
(a)
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
(b)
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
|
|
|
|
|
|
(c)
|
Consolidated Statements of Income for the years ended December 31, 2015, 2014, and 2013
|
|
|
|
|
|
|
(d)
|
Consolidated Statements of Equity for the years ended December 31, 2015, 2014, and 2013
|
|
|
|
|
|
|
(e)
|
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014, and 2013
|
|
|
|
|
|
|
(f)
|
Notes to Consolidated Financial Statements
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Limited Partnership of Tallgrass Energy Partners, LP (incorporated by reference to Exhibit 3.1 to the Partnership’s Registration Statement on Form S-1 (File No. 333-187595) filed on March 28, 2013).
|
|
|
|
3.2
|
|
Certificate of Amendment to Certificate of Limited Partnership of Tallgrass Energy Partners, LP (incorporated by reference to Exhibit 3.2 to the Partnership’s Registration Statement on Form S-1 (File No. 333-187595) filed on March 28, 2013).
|
|
|
|
3.3
|
|
Amended and Restated Agreement of Limited Partnership of Tallgrass Energy Partners, LP, dated May 17, 2013 (incorporated by reference to Exhibit 3.2 to the Partnership’s Current Report on Form 8-K filed on May 17, 2013).
|
|
|
|
3.4
|
|
Certificate of Formation of Tallgrass MLP GP, LLC (incorporated by reference to Exhibit 3.4 to the Partnership’s Registration Statement on Form S-1 (File No. 333-187595) filed on March 28, 2013).
|
|
|
|
3.5
|
|
Second Amended and Restated Limited Liability Company Agreement of Tallgrass MLP GP, LLC, dated May 17, 2013 (incorporated by reference to Exhibit 3.4 to the Partnership’s Current Report on Form 8-K filed on May 17, 2013).
|
|
|
|
3.6
|
|
Amendment No. 1, dated February 19, 2015, to Second Amended and Restated Limited Liability Company Agreement of Tallgrass MLP GP, LLC, dated May 17, 2013 (incorporated by reference to Exhibit 3.8 to the Partnership’s Annual Report on Form 10-K/A filed on June 6, 2015).
|
|
|
|
3.7
|
|
Third Amended and Restated Limited Liability Company Agreement of Tallgrass Pony Express Pipeline, LLC, dated as of March 1, 2015, by and among Tallgrass Pony Express Pipeline, LLC, Tallgrass Operations, LLC, and Tallgrass PXP Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8-K filed on March 2, 2015).
|
|
|
|
10.1
|
|
Contribution, Conveyance and Assumption Agreement, dated May 17, 2013, by and among Tallgrass Energy Partners, LP, Tallgrass MLP GP, LLC, Tallgrass Development, LP, Tallgrass Development GP, LLC, Tallgrass GP Holdings, LLC, Tallgrass Operations, LLC, Tallgrass Interstate Gas Transmission, LLC, Tallgrass Midstream, LLC and Tallgrass MLP Operations, LLC (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on May 17, 2013).
|
|
|
|
10.2
|
|
Omnibus Agreement, dated May 17, 2013, by and among Tallgrass Development, LP, Tallgrass Energy Partners, LP, Tallgrass MLP GP, LLC and Tallgrass Development GP, LLC (incorporated by reference to Exhibit 10.2 to the Partnership’s Current Report on Form 8- K filed on May 17, 2013).
|
|
|
|
10.3
|
|
Purchase and Sale Agreement, dated August 1, 2012, between Kinder Morgan Interstate Gas Transmission LLC and Kinder Morgan Pony Express Pipeline LLC (incorporated by reference to Exhibit 10.7 to the Partnership’s Registration Statement on Form S-1/A (File No. 333-187595) filed on April 8, 2013).
|
|
|
|
10.4 †
|
|
Tallgrass MLP GP, LLC Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to the Partnership’s Current Report on Form 8-K filed on May 17, 2013).
|
|
|
|
10.5 †
|
|
Form of Employee Equity Participation Unit Agreement (incorporated by reference to Exhibit 4.5 to the Partnership’s Registration Statement on Form S-8 filed on June 28, 2013).
|
|
|
|
10.6 †
|
|
Amended and Restated Employment Agreement, dated May 17, 2013, by and among Tallgrass Management, LLC, Tallgrass Development GP, LLC, Tallgrass GP Holdings, LLC, Tallgrass MLP GP, LLC and David G. Dehaemers, Jr. (incorporated by reference to Exhibit 10.5 to the Partnership’s Registration Statement on Form S-1/A (File No. 333-187595) filed on April 18, 2013).
|
|
|
|
10.7
|
|
Revolving Credit Agreement, dated May 17, 2013, by and among Tallgrass Energy Partners, LP, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.3 to the Partnership’s Current Report on Form 8- K filed on May 17, 2013).
|
|
|
|
10.8
|
|
Amendment No. 1, dated June 25, 2014, to the Revolving Credit Agreement, dated May 17, 2013, by and among Tallgrass Energy Partners, LP, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on June 30, 2014).
|
|
|
|
10.9
|
|
Amendment No. 2 to Credit Agreement, dated as of November 24, 2015, by and among Tallgrass Energy Partners, LP, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on November 30, 2015).
|
|
|
|
10.10*
|
|
Amendment No. 3 to Credit Agreement, dated January 11, 2016, by and among Tallgrass Energy Partners, LP, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein.
|
|
|
|
10.11
|
|
Contribution and Sale Agreement, dated April 1, 2014, by and between Tallgrass Energy Partners, LP and Tallgrass Operations, LLC, and for certain limited purposes, Tallgrass Development, LP (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on April 2, 2014).
|
|
|
|
10.12
|
|
Contribution and Transfer Agreement, dated September 1, 2014, by and among Tallgrass Energy Partners, LP, Tallgrass Operations, LLC and Tallgrass Pony Express Pipeline, LLC, and for certain limited purposes, Tallgrass Development, LP (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on September 8, 2014).
|
|
|
|
10.13
|
|
Purchase and Sale Agreement, dated as of March 1, 2015, by and among Tallgrass Energy Partners, LP, Tallgrass Development, LP and Tallgrass Operations, LLC (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on March 2, 2015).
|
|
|
|
10.14*
|
|
Contribution and Transfer Agreement, dated January 1, 2016, by and among Tallgrass Energy Partners, LP, Tallgrass Operations, LLC, and for certain limited purposes, Tallgrass Development, LP.
|
|
|
|
10.15
|
|
Transfer, Purchase and Sale Agreement, dated as of December 16, 2015, by and between Whiting Oil and Gas Corporation, BNN Western, LLC and BNN Redtail, LLC (incorporated by reference to Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed on December 16, 2015).
|
|
|
|
12.1*
|
|
Ratio of Earnings to Fixed Charges
|
|
|
|
21.1*
|
|
List of Subsidiaries of Tallgrass Energy Partners, LP.
|
|
|
|
|
|
|
23.1*
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
|
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of David G. Dehaemers, Jr.
|
|
|
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Gary J. Brauchle.
|
|
|
|
32.1*
|
|
Section 1350 Certification of David G. Dehaemers, Jr.
|
|
|
|
32.2*
|
|
Section 1350 Certification of Gary J. Brauchle.
|
|
|
|
101.INS*
|
|
XBRL Instance Document.
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
* -
|
filed herewith
|
† -
|
Management contract of compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 15(b).
|
By:
|
|
Tallgrass MLP GP, LLC, its general partner
|
|
|
|
By:
|
|
/s/ David G. Dehaemers, Jr.
|
|
|
David G. Dehaemers, Jr.
|
|
|
President and Chief Executive Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ David G. Dehaemers, Jr.
|
|
Director, President and Chief Executive Officer
|
|
February 17, 2016
|
David G. Dehaemers, Jr.
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Gary J. Brauchle
|
|
Executive Vice President and Chief Financial Officer
|
|
February 17, 2016
|
Gary J. Brauchle
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Gary D. Watkins
|
|
Vice President and Chief Accounting Officer
|
|
February 17, 2016
|
Gary D. Watkins
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Frank J. Loverro
|
|
Director
|
|
February 17, 2016
|
Frank J. Loverro
|
|
|
|
|
|
|
|
|
|
/s/ Stanley de J. Osborne
|
|
Director
|
|
February 17, 2016
|
Stanley de J. Osborne
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey A. Ball
|
|
Director
|
|
February 17, 2016
|
Jeffrey A. Ball
|
|
|
|
|
|
|
|
|
|
/s/ John T. Raymond
|
|
Director
|
|
February 17, 2016
|
John T. Raymond
|
|
|
|
|
|
|
|
|
|
/s/ William R. Moler
|
|
Director
|
|
February 17, 2016
|
William R. Moler
|
|
|
|
|
|
|
|
|
|
/s/ Terrance D. Towner
|
|
Director
|
|
February 17, 2016
|
Terrance D. Towner
|
|
|
|
|
|
|
|
|
|
/s/ Roy N. Cook
|
|
Director
|
|
February 17, 2016
|
Roy N. Cook
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey R. Armstrong
|
|
Director
|
|
February 17, 2016
|
Jeffrey R. Armstrong
|
|
|
|
|
Article I
DEFINITIONS
|
2
|
|
Section 1.1
Definitions
|
2
|
|
Section 1.2
Construction
|
5
|
|
Arti
cle II
CONTRIBUTION AND TRANSFER;CLOSING
|
6
|
|
Section 2.1
Contribution and Transfer
|
6
|
|
Section 2.2
Transaction Proceeds
|
6
|
|
Section 2.3
Call Option
|
6
|
|
Section 2.4
Closing
|
6
|
|
Section 2.5
Transfer Taxes
|
6
|
|
Section 2.6
Tax Treatment and Related Covenants
|
7
|
|
Article III
REPRESENTATIONS AND WARRANTIES OF DEVELOPMENT AND OPERATION
|
7
|
|
Section 3.1
Organization
|
8
|
|
Section 3.2
Authority and Approval
|
8
|
|
Section 3.3
No Conflict; Consent
|
8
|
|
Section 3.4
Title to Subject Interest
|
9
|
|
Section 3.5
Litigation
|
9
|
|
Section 3.6
Brokerage Arrangements
|
9
|
|
Section 3.7
Investment Intent
|
9
|
|
Section 3.8
Information
|
10
|
|
Section 3.9
Management Projections and Budget
|
10
|
|
Article IV
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
|
10
|
|
Section 4.1
Organization and Existence
|
10
|
|
Section 4.2
Authority and Approval
|
10
|
|
Section 4.3
Common Units
|
11
|
|
Section 4.4
No Conflict; Consents
|
11
|
|
Section 4.5
Periodic Reports
|
12
|
|
Section 4.6
Brokerage Arrangements
|
12
|
|
Section 4.7
No Registration
|
12
|
|
Section 4.8
Litigation
|
12
|
|
Section 4.9
Investment Intent
|
13
|
|
Article V
INDEMNIFICATION
|
13
|
|
Section 5.1
Indemnification of the Partnership
|
13
|
|
Section 5.2
Indemnification of Development
|
13
|
|
Section 5.3
Corrosion Costs Indemnification
|
13
|
|
Section 5.4
Survival
|
13
|
|
Section 5.5
Demands
|
14
|
|
Section 5.6
Right to Contest and Defend
|
14
|
|
Section 5.7
Cooperation
|
15
|
|
Section 5.8
Right to Participate
|
15
|
|
Section 5.9
Payment of Damages and Corrosion Costs
|
15
|
|
Section 5.10
Direct Claim
|
15
|
|
Section 5.11
Limitations on Indemnification
|
16
|
|
Section 5.12
Sole Remedy
|
16
|
|
Ar
ticle V
I MISCELLANEOUS
|
16
|
|
Section 6.1
Acknowledgments
|
16
|
|
Section 6.2
Cooperation, Further Assurances
|
16
|
|
Section 6.3
Expenses
|
17
|
|
Section 6.4
Notices
|
17
|
|
Section 6.5
Governing Law
|
18
|
|
Section 6.6
Public Statements
|
19
|
|
Section 6.7
Entire Agreement; Amendments and Waivers
|
19
|
|
Section 6.8
Conflicting Provisions
|
19
|
|
Section 6.9
Binding Effect and Assignment
|
19
|
|
Section 6.10
Severability
|
19
|
|
Section 6.11
Interpretation
|
19
|
|
Section 6.12
Headings and Disclosure Schedule
|
20
|
|
Section 6.13
Multiple Counterparts
|
20
|
|
Section 6.14
Action by the Partnership
|
20
|
|
Disclosure Schedule 3.3
|
- Consents
|
Disclosure Schedule 3.5
|
- Litigation
|
Disclosure Schedule 3.9
|
- Management Projections and Budget
|
Exhibit A
|
- Form of Assignment Agreement
|
Exhibit B
|
- Statement Regarding Qualified Capital Expenditures
|
Appendix A
|
- The Partnership, Development and Operations Designated
|
Section 1.1
|
Definitions
.
|
Section 1.2
|
Construction
.
|
Section 2.1
|
Contribution and Transfer
.
|
Section 2.2
|
Transaction Proceeds
.
|
(a)
|
A wire transfer of the Cash Amount in immediately available funds paid to Operations or its designee(s); and
|
(b)
|
The issuance to Operations of a number of Common Units equal to the Common Unit Quantity, subject to
Section 2.3
.
|
Section 2.3
|
Call Option
.
|
Section 2.4
|
Closing
.
|
Section 2.5
|
Transfer Taxes
.
|
Section 2.6
|
Tax Treatment and Related Covenants
.
|
(a)
|
Except as otherwise provided in this
Section 2.6
, the parties acknowledge that the transactions described in this Agreement are properly characterized as transactions described in Sections 721(a) and 731 of the Code and agree to file all Tax Returns in a manner consistent with such treatment.
|
(b)
|
The Cash Amount shall be treated (A) as a reimbursement of Operations’ capital expenditures within the meaning of Treasury Regulation Section 1.707-4(d) to the extent that Operations provides to the Partnership on or before January 15 of the year following the year in which such amount was paid a statement in the form attached as
Exhibit B
that states the amount of qualifying capital expenditures, the basis for the qualification, and evidence satisfactory to the Partnership documenting the capital expenditures and their qualification, (B) as a “debt-financed transfer” to Operations under Treasury Regulation Section 1.707-5(b), but only as provided in the following sentence, and (C) as the proceeds of a sale by Operations of the Subject Interest to the Partnership to the extent clause (A), clause (B), or any other exception to the “disguised sale” rules under Section 707 and the Treasury Regulations thereunder, are inapplicable, as Operations shall notify the Partnership on or before January 15 of the year following the year in which such amount was paid. No later than on or before January 15 of the year following the year in which such amount was paid, the Partnership shall provide to Operations a calculation of the minimum and maximum amounts that could be treated as qualifying as a “debt-financed transfer” under Treasury Regulation Section 1.707-5(b), based on the Partnership’s exercise of its discretion under Treasury Regulation Section 1.163-8T, and no later than January 31 of such year, Operations will inform the Partnership of the amount within that range of minimum and maximum amounts that Operations wishes to treat as qualifying as such a debt-financed transfer. The parties will prepare and file all Tax Returns consistent with the treatment described in this
Section 2.6(b)
, including based upon the amount elected by Operations as a debt-financed transfer. Except with the prior written consent of Operations, the Partnership agrees to act at all times in a manner consistent with such intended treatment, including, if required, disclosing the distribution of such amounts in accordance with the requirements of Treasury Regulation Section 1.707-3(c)(2).
|
(c)
|
The parties acknowledge that Operations is disregarded for federal income tax purposes as an entity apart from Development pursuant to Treasury Regulation Section 301.7701-2(c)(2)(i); accordingly, references to Operations in this
Section 2.6
include Development as the context requires.
|
Section 3.1
|
Organization
.
|
(a)
|
Operations is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited liability company power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.
|
(b)
|
Development is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite limited partnership power and authority to own, operate and lease its properties and assets and to carry on its business as now conducted.
|
Section 3.2
|
Authority and Approval
.
|
(a)
|
Each of Development and Operations has full limited partnership or limited liability company, as applicable, power and authority to execute and deliver this Agreement and the Assignment Agreement to which it is party, to consummate the transactions contemplated hereby and thereby and to perform all of the obligations hereof and thereof to be performed by it. The execution and delivery by each of Development and Operations of this Agreement and the Assignment Agreement, the consummation of the transactions contemplated hereby and thereby and the performance of all of the obligations hereof and thereof to be performed by Development and Operations have been duly authorized and approved by all requisite limited partnership or limited liability company, as applicable, action on the part of Development and Operations.
|
(b)
|
This Agreement has been duly executed and delivered by Development and Operations and constitutes the valid and legally binding obligation of each of Development and Operations, enforceable against it in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a proceeding at law or in equity). When executed and delivered by each of the parties party thereto, the Assignment Agreement will constitute a valid and legally binding obligation of Operations, enforceable against Operations in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a proceeding at law or in equity).
|
Section 3.3
|
No Conflict; Consents
.
|
(a)
|
the execution, delivery and performance of this Agreement by Development and Operations does not, and the execution, delivery and performance of the Assignment Agreement by Operations will not, and the fulfillment and compliance with the terms and conditions hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, result in any breach of, or require the consent of any Person under, any of the terms, conditions or provisions of the certificate of formation, limited partnership agreement, limited liability company agreement or equivalent governing instruments of
|
(b)
|
no consent, approval, license, permit, order or authorization of any Governmental Authority or other Person is required to be obtained or made by Operations or the Company with respect to the Subject Interest in connection with the execution, delivery and performance of this Agreement and the Assignment Agreement or the consummation of the transactions contemplated hereby or thereby, except (i) as have been waived or obtained or with respect to which the time for asserting such right has expired or (ii) for those which individually or in the aggregate would not reasonably be expected to have a Company Material Adverse Effect (including such consents, approvals, licenses, permits, orders or authorizations that are not customarily obtained prior to the Closing and are reasonably expected to be obtained in the ordinary course of business following the Closing).
|
Section 3.4
|
Title to Subject Interest
.
|
Section 3.5
|
Litigation
.
|
(a)
|
There are no civil, criminal or administrative actions, suits, claims, hearings, arbitrations, investigations or proceedings pending or, to Development’s and Operations’ Knowledge, threatened that (a) question or involve the validity or enforceability of any of Development’s or Operations’ obligations under this Agreement or the Assignment Agreement or (b) seek (or reasonably might be expected to seek) (i) to prevent or delay the consummation by Development or Operations of the transactions contemplated by this Agreement or the Assignment Agreement or (ii) damages in connection with any such consummation.
|
(b)
|
Operations is not in violation of any Applicable Law, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
|
Section 3.6
|
Brokerage Arrangements.
|
Section 3.7
|
Investment Intent
.
|
Section 3.8
|
Information
.
|
Section 3.9
|
Management Projections and Budget
.
|
Section 4.1
|
Organization and Existence
.
|
Section 4.2
|
Authority and Approval
.
|
(a)
|
The Partnership has full limited partnership power and authority to execute and deliver this Agreement and the Assignment Agreement, PXP Holdings has full limited liability company power and authority to execute and deliver the Assignment Agreement, and each has full limited partnership or limited liability company power and authority, as applicable, to consummate the transactions contemplated hereby and thereby and to perform all of the obligations hereof and thereof to be performed by it. The execution and delivery of this Agreement and the Assignment Agreement, the consummation of the transactions contemplated hereby and thereby and the performance of all of the obligations hereof and thereof to be performed by the Partnership and PXP Holdings have been duly authorized and approved by all requisite limited partnership and limited liability company action of the Partnership and PXP Holdings, as applicable.
|
(b)
|
This Agreement has been duly executed and delivered by or on behalf of the Partnership and constitutes the valid and legally binding obligation of the Partnership, enforceable against the Partnership in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a proceeding at law or in equity). When executed and delivered by each of the parties party thereto, the Assignment Agreement will constitute a valid and legally binding obligation of the Partnership and PXP Holdings, enforceable against the Partnership and PXP Holdings in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights and remedies generally and by general principles of equity (whether applied in a proceeding at law or in equity).
|
Section 4.3
|
Common Units.
|
(a)
|
The issuance by the Partnership of the Common Unit Quantity pursuant to this Agreement and the limited partner interests represented thereby: (i) has been duly authorized by or on behalf of the Partnership pursuant to the Partnership Agreement; (ii) when issued and delivered in accordance with the terms of this Agreement and the Partnership Agreement, will be validly issued, fully paid (to the extent required by the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA); and (iii) will be free of any and all Liens and restrictions on transfer, other than restrictions on transfer under the Partnership Agreement, the DRULPA, and applicable state and federal securities laws.
|
(b)
|
The Partnership’s Common Units are listed on the New York Stock Exchange, and the Partnership has not received any notice of delisting.
|
(c)
|
On the Closing Date, the Common Unit Quantity will have those rights, preferences, privileges and restrictions governing the Common Units as set forth in the Partnership Agreement and
Section 2.3
of this Agreement.
|
Section 4.4
|
No Conflict; Consents
.
|
(a)
|
The execution, delivery and performance of this Agreement by the Partnership does not, and the execution, delivery and performance of the Assignment Agreement by the Partnership and PXP Holdings will not, and the fulfillment and compliance with the terms and conditions hereof and the consummation of the transactions contemplated hereby and thereby will not, (i) violate, conflict with, result in any breach of, or require the consent of any Person under, any of the
|
(b)
|
No consent, approval, license, permit, order or authorization of any Governmental Authority or other Person is required to be obtained or made by or with respect to the Partnership or PXP Holdings in connection with the execution, delivery, and performance of this Agreement or the Assignment Agreement or the consummation of the transactions contemplated hereby and thereby, except as have been waived or obtained or with respect to which the time for asserting such right has expired.
|
Section 4.5
|
Periodic Reports
.
|
Section 4.6
|
Brokerage Arrangements
.
|
Section 4.7
|
No Registration
.
|
Section 4.8
|
Litigation
.
|
Section 4.9
|
Investment Intent
.
|
Section 5.1
|
Indemnification of the Partnership
.
|
Section 5.2
|
Indemnification of Development
.
|
Section 5.3
|
Corrosion Costs Indemnification
.
|
Section 5.4
|
Survival
.
|
Section 5.5
|
Demands
.
|
(a)
|
Each indemnified party hereunder agrees that promptly upon its discovery of facts giving rise to a claim for indemnity under the provisions of this Agreement, including receipt by it of notice of any demand, assertion, claim, action or proceeding, judicial or otherwise, by any third party (such claims for indemnity involving third-party claims being collectively referred to herein as the “
Third Party Indemnity Claim
”), with respect to any matter as to which it claims to be entitled to indemnity under the provisions of this Agreement, it will give prompt notice thereof in writing to the indemnifying party, together with a statement of such information respecting any of the foregoing as it shall have. Such notice shall include a formal demand for indemnification under this Agreement.
|
(b)
|
Notwithstanding the foregoing, if the indemnified party fails to notify the indemnifying party thereof in accordance with the provisions of this Agreement in sufficient time to permit the indemnifying party or its counsel to defend against a Third Party Indemnity Claim and to make a timely response thereto, the indemnifying party’s indemnity obligation relating to such Third Party Indemnity Claim shall not be relieved except in the event and only to the extent that the indemnifying party is prejudiced or damaged by such failure.
|
Section 5.6
|
Right to Contest and Defend
.
|
(a)
|
The indemnifying party shall be entitled, at its cost and expense, to contest and defend by all appropriate legal proceedings any Third Party Indemnity Claim for which it is called upon to indemnify the indemnified party under the provisions of this Agreement;
provided
, that notice of the intention to so contest shall be delivered by the indemnifying party to the indemnified party within thirty (30) days from the date of receipt by the indemnifying party of notice by the
|
(b)
|
The indemnifying party shall have full authority to determine all action to be taken with respect thereto;
provided
,
however
, that the indemnifying party will not have the authority to subject the indemnified party to any obligation whatsoever, other than the performance of purely ministerial tasks or obligations not involving material expense or injunctive relief. If the indemnifying party does not elect to contest any such Third Party Indemnity Claim, the indemnifying party shall be bound by the result obtained with respect thereto by the indemnified party. If the indemnifying party assumes the defense of a Third Party Indemnity Claim, the indemnified party shall agree to any settlement, compromise or discharge of a Third Party Indemnity Claim that the indemnifying party may recommend and that by its terms obligates the indemnifying party to pay the full amount of the liability in connection with such Third Party Indemnity Claim, which releases the indemnified party completely in connection with such Third Party Indemnity Claim and which would not otherwise adversely affect the indemnified party as determined by the indemnified party in its sole discretion.
|
(c)
|
Notwithstanding the foregoing, the indemnifying party shall not be entitled to assume the defense of any Third Party Indemnity Claim (and shall be liable for the reasonable fees and expenses of counsel incurred by the indemnified party in defending such Third Party Indemnity Claim) if the Third Party Indemnity Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the indemnified party which the indemnified party reasonably determines, after conferring with its outside counsel, cannot be separated from any related claim for money damages. If such equitable relief or other relief portion of the Third Party Indemnity Claim can be so separated from that for money damages, the indemnifying party shall be entitled to assume the defense of the portion relating to money damages.
|
Section 5.7
|
Cooperation
.
|
Section 5.8
|
Right to Participate
.
|
Section 5.9
|
Payment of Damages and Corrosion Costs
.
|
Section 5.10
|
Direct Claim
.
|
Section 5.11
|
Limitations on Indemnification
.
|
(a)
|
To the extent that the Partnership Indemnified Parties would otherwise be entitled to indemnification for Damages pursuant to
Section 5.1(i)
, Development and Operations shall be liable only if (i) the Damages with respect to any individual claim exceed $100,000 (the “
Minimum Claim Amount
”) and (ii) the Damages for all claims that exceed the Minimum Claim Amount exceed, in the aggregate, $7,500,000 (the “
Deductible Amount
”), and then Development and Operations shall be liable only for Damages to the extent of any excess over the Deductible Amount. In no event shall Development’s and Operations’ aggregate liability to the Partnership Indemnified Parties under
Section 5.1
exceed $75,000,000 (the “
Ceiling Amount
”). Notwithstanding the foregoing, the Deductible Amount and the Ceiling Amount shall not apply to breaches or inaccuracies of representations and warranties contained in
Section 3.1
,
Section 3.2
and
Section 3.4
.
|
(b)
|
To the extent that the Partnership would otherwise be entitled to indemnification for Corrosion Costs pursuant to
Section 5.3
, Development and Operations shall be liable only if the Corrosion Costs exceed, in the aggregate, $1,000,000 (the “
Annual Corrosion Indemnification Deductible
Amount
”) during any annual period commencing on the Closing Date or any anniversary thereof (each, an “
Annual Period
”), and then Development and Operations shall be liable only for Corrosion Costs incurred during any Annual Period to the extent of any excess over the Annual Corrosion Indemnification Deductible Amount. In no event shall Development’s and Operations’ aggregate liability to the Partnership under
Section 5.3
exceed $11,000,000.
|
(c)
|
Additionally, neither the Partnership, on the one hand, nor Development and Operations, on the other hand, will be liable as an indemnitor under this Agreement for any consequential, incidental, special, indirect or exemplary damages suffered or incurred by the indemnified party or parties except to the extent resulting pursuant to Third Party Indemnity Claims.
|
Section 5.12
|
Sole Remedy
.
|
Section 6.1
|
Acknowledgements
.
|
Section 6.2
|
Cooperation; Further Assurances
.
|
Section 6.3
|
Expenses
.
|
Section 6.4
|
Notices
.
|
Section 6.5
|
Governing Law
.
|
(a)
|
This Agreement shall be subject to and governed by the laws of the State of Delaware. Each Party hereby submits to the exclusive jurisdiction of the state and federal courts in the State of Kansas and to venue in the state courts in Johnson County, Kansas and in the federal courts of Wyandotte County, Kansas.
|
(b)
|
Each of the parties to this Agreement irrevocably waives any and all right to trial by jury in any legal proceeding between the parties arising out of or relating to this Agreement or the transactions contemplated by this Agreement.
|
(c)
|
Each party to this Agreement waives, to the fullest extent permitted by Applicable Law, any right it may have to receive damages from any other party based on any theory of liability for any special, indirect, consequential (including lost profits), exemplary or punitive damages (except to the extent that any such damages are included in indemnifiable losses resulting from a third party claim in accordance with
Article V
).
|
Section 6.6
|
Public Statements
.
|
Section 6.7
|
Entire Agreement; Amendments and Waivers
.
|
(a)
|
This Agreement and the Assignment Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Each party to this Agreement agrees that no other party to this Agreement (including its agents and representatives) has made any representation, warranty, covenant or agreement to or with such party relating to this Agreement or the transactions contemplated hereby, other than those expressly set forth herein and in the Assignment Agreement.
|
(b)
|
No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by each party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided.
|
Section 6.8
|
Conflicting Provisions
.
|
Section 6.9
|
Binding Effect and Assignment
.
|
Section 6.10
|
Severability
.
|
Section 6.11
|
Interpretation
.
|
Section 6.12
|
Headings and Disclosure Schedule
.
|
Section 6.13
|
Multiple Counterparts
.
|
Section 6.14
|
Action by the Partnership
.
|
By:
|
Tallgrass MLP GP, LLC,
its general partner |
By:
|
Tallgrass Energy Holdings, LLC,
its general partner |
ASSIGNOR:
TALLGRASS OPERATIONS, LLC
By:
David G. Dehaemers, Jr.
President and Chief Executive Officer
|
|
|
PARTNERSHIP:
TALLGRASS ENERGY PARTNERS, LP
By: Tallgrass MLP GP, LLC, its general partner
By:
David G. Dehaemers, Jr.
President and Chief Executive Officer
|
ASSIGNEE:
TALLGRASS PXP HOLDINGS, LLC
By:
David G. Dehaemers, Jr.
Chief Executive Officer
|
|
•
|
David G. Dehaemers, Jr.
|
•
|
William R. Moler
|
•
|
George E. Rider
|
•
|
Gary J. Brauchle
|
•
|
Richard L. Bullock
|
•
|
Christopher R. Jones
|
•
|
David G. Dehaemers, Jr.
|
•
|
William R. Moler
|
•
|
George E. Rider
|
•
|
Gary J. Brauchle
|
•
|
Richard L. Bullock
|
•
|
Christopher R. Jones
|
|
TEP
(1)
|
|
|
TEP Pre-Predecessor
|
||||||||||||||||||||
|
Year Ended December 31,
|
|
Period from November 12, 2012 to December 31, 2012
|
|
|
Period from January 1, 2012 to November 12, 2012
|
|
Year Ended December 31, 2011
|
||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
|
|
|
|||||||||||||||
Earnings from continuing operations before fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pre-tax income from continuing operations before earnings from unconsolidated affiliates
(2)
|
$
|
184,814
|
|
|
$
|
58,612
|
|
|
$
|
7,624
|
|
|
$
|
(2,618
|
)
|
|
|
$
|
51,775
|
|
|
$
|
77,803
|
|
Fixed charges
|
25,437
|
|
|
11,626
|
|
|
13,360
|
|
|
3,450
|
|
|
|
69
|
|
|
83
|
|
||||||
Amortization of capitalized interest
|
66
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||
Distributed earnings from unconsolidated affiliates
|
—
|
|
|
717
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||
less: Capitalized interest
|
(811
|
)
|
|
(1,025
|
)
|
|
(242
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||
Earnings from continuing operations before fixed charges
|
$
|
209,506
|
|
|
$
|
69,965
|
|
|
$
|
20,742
|
|
|
$
|
832
|
|
|
|
$
|
51,844
|
|
|
$
|
77,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net of capitalized interest
|
14,226
|
|
|
7,648
|
|
|
11,264
|
|
|
3,040
|
|
|
|
—
|
|
|
—
|
|
||||||
Capitalized interest
|
811
|
|
|
1,025
|
|
|
242
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||||
Estimate of interest within rental expense (33.3%)
|
8,615
|
|
|
1,574
|
|
|
109
|
|
|
14
|
|
|
|
69
|
|
|
83
|
|
||||||
Amortization of debt costs
|
1,785
|
|
|
1,379
|
|
|
1,745
|
|
|
396
|
|
|
|
—
|
|
|
—
|
|
||||||
Total fixed charges
|
$
|
25,437
|
|
|
$
|
11,626
|
|
|
$
|
13,360
|
|
|
$
|
3,450
|
|
|
|
$
|
69
|
|
|
$
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
|
8.24
|
|
|
6.02
|
|
|
1.55
|
|
|
—
|
(3)
|
|
751.36
|
|
|
938.39
|
|
(1)
|
TEP closed the acquisition of Trailblazer on April 1, 2014 and the acquisition of a controlling 33.3% membership interest in Pony Express effective September 1, 2014. As the acquisitions of Trailblazer and the initial 33.3% of Pony Express were considered transactions between entities under common control, and changes in reporting entity, financial information presented subsequent to November 13, 2012 and prior to the respective acquisition dates has been recast to include Trailblazer and the initial 33.3% of Pony Express. TEP closed the acquisition of an additional 33.3% membership interest in Pony Express effective March 1, 2015, which represents a transaction between entities under common control and an acquisition of noncontrolling interests. As a result, financial information for periods prior to March 1, 2015 have not been recast to reflect the additional 33.3% membership interest.
|
(2)
|
For purposes of determining the ratio of earnings to fixed charges, earnings are defined as pretax income or loss from continuing operations before earnings from unconsolidated affiliates, plus fixed charges, plus distributed earnings from unconsolidated affiliates, less capitalized interest. Fixed charges consist of interest expensed, capitalized interest, amortization of deferred loan costs, and an estimate of the interest within rental expense.
|
(3)
|
As a result of the net loss for the period from November 12, 2012 to December 31, 2012, the ratio of earnings to fixed charges was less than 1:1. TEP would have needed to generate additional earnings of $2.6 million to achieve an earnings to fixed charges ratio of 1:1 for the period from November 12, 2012 to December 31, 2012.
|
Company
|
Jurisdiction of Organization
|
Tallgrass MLP Operations, LLC
|
Delaware
|
Tallgrass Energy Finance Corp.
|
Delaware
|
Tallgrass Interstate Gas Transmission, LLC
|
Colorado
|
Tallgrass Midstream, LLC
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Delaware
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Tallgrass Energy Investments, LLC
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Delaware
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Trailblazer Pipeline Company LLC
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Delaware
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Tallgrass PXP Holdings, LLC
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Delaware
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Tallgrass Pony Express Pipeline, LLC
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Delaware
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Tallgrass Colorado Pipeline, Inc.
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Colorado
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BNN Water Solutions, LLC
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Delaware
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BNN Redtail, LLC
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Delaware
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Alpha Reclaim Technology, LLC
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Texas
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BNN Western, LLC
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Delaware
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BNN South Texas, LLC
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Delaware
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BNN West Texas, LLC
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Delaware
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BNN Recycle, LLC
|
Delaware
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1.
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I have reviewed this Annual Report on Form 10-K of Tallgrass Energy Partners, LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ David G. Dehaemers, Jr.
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David G. Dehaemers, Jr.
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President and Chief Executive Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
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1.
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I have reviewed this Annual Report on Form 10-K of Tallgrass Energy Partners, LP;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Gary J. Brauchle
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Gary J. Brauchle
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Executive Vice President and Chief Financial Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
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By:
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/s/ David G. Dehaemers, Jr.
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David G. Dehaemers, Jr.
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President and Chief Executive Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
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By:
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/s/Gary J. Brauchle
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Gary J. Brauchle
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Executive Vice President and Chief Financial Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
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