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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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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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¨
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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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¨
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PART
I
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•
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our ability to complete and integrate acquisitions from Tallgrass Development or from third parties, including our acquisition of a 100% membership interest in Tallgrass NatGas Operator, LLC and Tallgrass Terminals, LLC that was completed in January 2017, and our acquisition of a 25% membership interest in Rockies Express Pipeline LLC from a unit of Sempra U.S. Gas and Power that was completed in May 2016;
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the demand for our services, including crude oil transportation, storage and terminalling services, natural gas transportation, storage and processing services and water business services;
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large or multiple customer defaults, including defaults resulting from actual or potential insolvencies;
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our ability to successfully implement our business plan;
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changes in general economic conditions;
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competitive conditions in our industry;
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the effects of existing and future laws and governmental regulations;
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actions taken by third-party operators, processors and transporters;
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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, natural gas liquids, 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, storing and terminalling 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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environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves;
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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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changes in tax status;
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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 FERC-regulated crude oil pipeline system and crude oil storage and terminalling facilities;
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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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(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 three months ended December 31, 2015 was 288,362 bbls/d. Approximate average daily throughput for the year ended December 31, 2015 reflects 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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Zone 1 - 328 miles of mainline pipeline from the Meeker Hub in Northwest Colorado, across Southern Wyoming to the Cheyenne Hub in Weld County, Colorado capable of transporting 2.0 Bcf/d of natural gas from west-to-east;
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Zone 2 - 714 miles of mainline pipeline from the Cheyenne Hub to an interconnect in Audrain County, Missouri capable of transporting 1.8 Bcf/d of natural gas from west-to-east; and
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Zone 3 - 643 miles of mainline pipeline from Audrain County, Missouri to Clarington, Ohio, which is bi-directional and capable of transporting 1.8 Bcf/d of natural gas from west-to-east and 2.6 Bcf/d of natural gas from east-to-west.
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Year Ended December 31,
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2016
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2015
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2014
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Approximate average daily deliveries (Bcf/d)
(1)
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3.2
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2.5
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1.7
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Approximate Capacity
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Total Firm Contracted Capacity
(2)
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Approximate % of Capacity Subscribed under Firm Contracts
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Weighted Average Remaining Firm Contract Life
(3)
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West-to-east
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2.0 Bcf/d
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1.5 Bcf/d
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75
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%
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4 years
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East-to-west
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2.6 Bcf/d
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(4)
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2.6 Bcf/d
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100
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%
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16 years
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(1)
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Reflects average total daily deliveries for the Rockies Express Pipeline, regardless of flow direction or distance traveled.
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(2)
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Reflects total capacity reserved under long-term firm fee contracts as of
December 31, 2016
. West-to-east firm contracted capacity excludes the 0.2 Bcf/d to be contracted with Ultra as part of the settlement agreement discussed in
"Recent Developments"
in Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations.
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(3)
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Weighted by contracted capacity as of
December 31, 2016
. Weighted average remaining firm contract life of west-to-east contracts excludes the 0.2 Bcf/d contract with Ultra beginning December 1, 2019 as discussed under
"Recent Developments"
in Item 7.—Management's Discussion and Analysis of Financial Condition and Results of Operations. After giving effect to the Ultra contract agreement reached in January 2017, the weighted average life of the west-to-east contract lives would be approximately 5 years.
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(4)
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East-to-west capacity of 2.6 Bcf/d is inclusive of the Rockies Express Zone 3 Capacity Enhancement Project completed in January 2017 that added an incremental 0.8 Bcf/d of east-to-west capacity within Zone 3.
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Year Ended December 31,
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2016
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2015
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2014
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Approximate average daily deliveries (Bcf/d)
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1.1
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1.1
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1.0
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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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2.0 Bcf/d
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1.6 Bcf/d
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79
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%
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3 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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5 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, 2016
.
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(2)
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Weighted by contracted capacity as of
December 31, 2016
.
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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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2016
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2015
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2014
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Freshwater
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56
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%
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30,863
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4 years
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13,201
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14,579
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16,433
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Gathering and Disposal
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63
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%
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45,000
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(1)
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8 years
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11,307
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7,951
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—
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(1)
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Represents the combined daily disposal well injection capacity for the BNN Western, LLC ("Western") produced water gathering and disposal system acquired in December 2015 and the West Texas produced water gathering and disposal system which commenced operations by Water Solutions in March 2016.
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•
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Additional Membership Interest in Pony Express
. Effective January 1, 2016, we acquired an additional
31.3%
membership interest in Pony Express in exchange for cash consideration of
$475 million
and
6,518,000
TEP common units (valued at approximately
$268.6 million
based on the December 31, 2015 closing price of our common units), issued to Tallgrass Development, for total consideration of approximately
$743.6 million
. The transaction increased our aggregate membership interest in Pony Express to
98%
.
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Rockies Express Pipeline LLC
. Effective May 6, 2016, we acquired a 25% membership interest in Rockies Express from Sempra for cash consideration of approximately $436 million, or an enterprise value of approximately $1.08 billion when adjusted for our proportionate share of outstanding indebtedness at Rockies Express as of the acquisition date.
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Additional Membership Interest in Water Solutions
. On July 1, 2016, we acquired the remaining 8% noncontrolling equity interest in Water Solutions and additional interests in Water Solutions' subsidiaries from Regency Investments I, LLC and BSEG Water Group LLC for total cash consideration of $6.0 million. Subsequent to the closing of the transaction, our aggregate membership interest in Water Solutions is 100%.
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Terminals and NatGas.
Effective January 1, 2017, we acquired
100%
of the issued and outstanding membership interests in Terminals and
100%
of the issued and outstanding membership interests in NatGas from Tallgrass Development for total cash consideration of
$140 million
.
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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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the actual and anticipated future prices, and the volatility thereof, of natural gas, crude oil and other commodities;
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changes in the fees we charge for our services, including firm services and interruptible services;
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our ability to identify, develop, and complete internal growth projects or expansion capital expenditures on favorable terms to improve optimization of our current assets;
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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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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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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 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 provide firm fee commitments 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 successfully integrate 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 crude oil and natural gas shale plays;
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the price and availability of other forms of energy, including alternative energy which may benefit from government subsidies;
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prices for natural gas, crude oil and NGLs;
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decisions of the members of the 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 natural gas or crude oil;
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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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Empowers PHMSA to issue emergency orders to individual operators, groups of operators, or the industry upon a written finding that an unsafe condition or practice constitutes or is causing an imminent hazard;
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Requires PHMSA, in consultation with other Federal agencies, to issue minimum safety standards for underground natural gas storage facilities within two years;
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Requires PHMSA to conduct post-inspection briefings outlining any concerns within 30 days and providing written preliminary findings within 90 days to the extent practicable;
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Requires liquid pipeline operators to provide safety data sheets on spilled product to the designated Federal On-Scene Coordinator and appropriate State and local emergency responders within 6 hours of telephonic or electronic notice of an accident to the National Response Center; and
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Requires PHMSA to publish updates on its website every 90 days on the status of an outstanding final rule required by a statutory mandate.
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CAA and analogous state and local laws, which impose obligations related to air emissions and which the EPA has relied upon as authority for adopting climate change regulatory initiatives;
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CWA and analogous state and local laws, which regulate discharge of pollutants or fill material from our facilities to state and federal waters, including wetlands and which require compliance with state water quality standards;
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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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The SDWA, which ensures the quality of the nation's public drinking water through adoption of drinking water standards and controls the waste fluids from disposal wells into below-ground formations;
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OSHA and analogous state and local laws, which establish 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 require 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, or MBTA, and analogous state and local laws, which implement 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, or BGEPA, and analogous state and local laws, which prohibit 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 impose 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, or NHPA, and analogous state and local laws, which are intended to preserve and protect historical and archeological sites.
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incur or guarantee additional indebtedness;
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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 indebtedness;
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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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Year
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Scheduled Maturities
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2018
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$
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550.0
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2019
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525.0
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2020
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750.0
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Thereafter
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750.0
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•
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make it more difficult for Rockies Express to satisfy its obligations with respect to its indebtedness;
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•
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increase the vulnerability of Rockies Express to general adverse economic and industry conditions;
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•
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limit the ability of Rockies Express to obtain additional financing for future working capital, capital expenditures and other general business purposes;
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•
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require Rockies Express to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, thereby reducing the availability of cash flow for operations and other purposes;
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•
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limit its flexibility in planning for, or reacting to, changes in its business and the industry in which Rockies Express operates;
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•
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place Rockies Express at a competitive disadvantage compared to its competitors that have less indebtedness; and
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•
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have a material adverse effect if Rockies Express fails to comply with the covenants in the indenture relating to its notes or in the instruments governing its other indebtedness.
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incurring secured indebtedness;
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entering into mergers, consolidations and sales of assets;
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•
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granting liens;
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•
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entering into transactions with affiliates; and
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•
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making restricted payments.
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•
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Neither our partnership agreement nor any other agreement requires Tallgrass Equity, TEGP Management, Tallgrass Energy Holdings 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 and 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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•
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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 may 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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•
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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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•
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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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•
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Disputes may arise under our commercial agreements with Tallgrass Development and its affiliates.
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•
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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.
|
•
|
Our general partner determines which costs incurred by it are reimbursable by us.
|
•
|
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.
|
•
|
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.
|
•
|
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.
|
•
|
Our general partner may limit its liability regarding our contractual and other obligations.
|
•
|
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.
|
•
|
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.
|
•
|
Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
|
•
|
Our general partner may transfer its IDRs without unitholder approval.
|
•
|
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.
|
•
|
how to allocate business opportunities among us and its affiliates;
|
•
|
whether to exercise its limited call right;
|
•
|
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;
|
•
|
how to exercise its voting rights with respect to the units it owns;
|
•
|
whether to elect to reset target distribution levels;
|
•
|
whether to transfer the IDRs or any units it owns to a third party; and
|
•
|
whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to the partnership agreement.
|
•
|
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;
|
•
|
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;
|
•
|
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
|
•
|
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:
|
◦
|
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);
|
◦
|
approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner and its affiliates;
|
◦
|
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
|
◦
|
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.
|
•
|
our existing unitholders' proportionate ownership interest in us will decrease;
|
•
|
the amount of cash available for distribution on each unit may decrease;
|
•
|
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;
|
•
|
the ratio of taxable income to distributions may increase;
|
•
|
the relative voting strength of each previously outstanding unit may be diminished; and
|
•
|
the market price of the common units may decline.
|
•
|
we were conducting business in a state but had not complied with that particular state's partnership statute; or
|
•
|
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.
|
Quarter Ended
|
|
High
|
|
Low
|
|
Distribution per Common Unit
|
||||||
December 31, 2016
|
|
$
|
48.86
|
|
|
$
|
42.59
|
|
|
$
|
0.8150
|
|
September 30, 2016
|
|
49.79
|
|
|
43.19
|
|
|
0.7950
|
|
|||
June 30, 2016
|
|
50.78
|
|
|
35.62
|
|
|
0.7550
|
|
|||
March 31, 2016
|
|
42.35
|
|
|
25.82
|
|
|
0.7050
|
|
|||
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
|
|
•
|
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 Nov. 13 to Dec. 31, 2012
|
|
|
Period from January 1 to November 12, 2012
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
||||||||||||||
|
(in thousands, except per unit amounts)
|
|
|
(in thousands, except per unit amounts)
|
||||||||||||||||||||
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenue
|
$
|
605,122
|
|
|
$
|
536,197
|
|
|
$
|
371,556
|
|
|
$
|
290,526
|
|
|
$
|
38,572
|
|
|
|
$
|
220,292
|
|
Operating income
|
$
|
256,370
|
|
|
$
|
197,915
|
|
|
$
|
53,413
|
|
|
$
|
33,999
|
|
|
$
|
69
|
|
|
|
$
|
50,113
|
|
Equity in earnings of unconsolidated investment
(2)
|
$
|
51,780
|
|
|
$
|
—
|
|
|
$
|
717
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Net income (loss)
|
$
|
267,894
|
|
|
$
|
184,814
|
|
|
$
|
59,329
|
|
|
$
|
7,624
|
|
|
$
|
(2,618
|
)
|
|
|
$
|
51,496
|
|
Net income (loss) attributable to partners
|
$
|
263,529
|
|
|
$
|
160,546
|
|
|
$
|
70,681
|
|
|
$
|
9,747
|
|
|
$
|
(2,366
|
)
|
|
|
$
|
51,496
|
|
Net income allocable to limited partners
|
$
|
161,064
|
|
|
$
|
114,068
|
|
|
$
|
61,774
|
|
|
$
|
6,991
|
|
(1)
|
N/A
|
|
|
|
N/A
|
|
||
Net income per limited partner unit - basic
|
$
|
2.26
|
|
|
$
|
1.95
|
|
|
$
|
1.39
|
|
|
$
|
0.17
|
|
(1)
|
N/A
|
|
|
|
N/A
|
|
||
Net income per limited partner unit - diluted
|
$
|
2.23
|
|
|
$
|
1.91
|
|
|
$
|
1.36
|
|
|
$
|
0.17
|
|
(1)
|
N/A
|
|
|
|
N/A
|
|
||
Balance sheet data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property, plant and equipment, net
|
$
|
2,012,263
|
|
|
$
|
2,025,018
|
|
|
$
|
1,853,081
|
|
|
$
|
1,116,806
|
|
|
$
|
726,754
|
|
|
|
$
|
717,486
|
|
Unconsolidated investments
(2)
|
$
|
461,915
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,255
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Total assets
|
$
|
3,018,971
|
|
|
$
|
2,562,074
|
|
|
$
|
2,457,197
|
|
|
$
|
1,631,413
|
|
|
$
|
1,238,598
|
|
|
|
$
|
767,681
|
|
Long-term debt, net
|
$
|
1,407,981
|
|
|
$
|
753,000
|
|
|
$
|
559,000
|
|
|
$
|
135,000
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Long-term debt allocated from TD
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
390,491
|
|
|
|
$
|
—
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Distributions declared per common unit
|
$
|
3.0700
|
|
|
$
|
2.3400
|
|
|
$
|
1.6000
|
|
|
$
|
0.7547
|
|
|
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.
|
(2)
|
Represents equity in earnings of our 25% membership interest in Rockies Express beginning in 2016, and our 50% equity interest in Grasslands Water Services I, LLC ("GWSI") in periods prior to May 2014. For more information see
Note 9
–
Investments in Unconsolidated Affiliates
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
•
|
Crude Oil Transportation & Logistics—the ownership and operation of a FERC-regulated crude oil pipeline system and crude oil storage and terminalling facilities;
|
•
|
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,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Reconciliation of Adjusted EBITDA to Net Income
|
|
|
|
|
|
||||||
Net income attributable to partners
|
$
|
263,529
|
|
|
$
|
160,546
|
|
|
$
|
70,681
|
|
Add:
|
|
|
|
|
|
||||||
Interest expense, net of noncontrolling interest
|
40,688
|
|
|
15,517
|
|
|
7,648
|
|
|||
Depreciation and amortization expense, net of noncontrolling interest
|
85,971
|
|
|
75,529
|
|
|
45,389
|
|
|||
Distributions from unconsolidated investment
|
75,900
|
|
|
—
|
|
|
1,464
|
|
|||
Non-cash loss (gain) related to derivative instruments, net of noncontrolling interest
|
1,547
|
|
|
—
|
|
|
(184
|
)
|
|||
Non-cash compensation expense
(1)
|
5,780
|
|
|
5,103
|
|
|
5,136
|
|
|||
Non-cash loss from disposal of assets
|
1,849
|
|
|
4,795
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
226
|
|
|
—
|
|
|||
Less:
|
|
|
|
|
|
||||||
Equity in earnings of unconsolidated investment
|
(51,780
|
)
|
|
—
|
|
|
(717
|
)
|
|||
Non-cash loss allocated to noncontrolling interest
|
—
|
|
|
(9,377
|
)
|
|
(10,151
|
)
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
—
|
|
|
(9,388
|
)
|
|||
Adjusted EBITDA
|
$
|
423,484
|
|
|
$
|
252,339
|
|
|
$
|
109,878
|
|
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
409,484
|
|
|
$
|
289,296
|
|
|
$
|
79,444
|
|
Add:
|
|
|
|
|
|
||||||
Interest expense, net of noncontrolling interest
|
40,688
|
|
|
15,517
|
|
|
7,648
|
|
|||
Other, including changes in operating working capital
|
(26,688
|
)
|
|
(52,474
|
)
|
|
22,786
|
|
|||
Adjusted EBITDA
|
$
|
423,484
|
|
|
$
|
252,339
|
|
|
$
|
109,878
|
|
Add:
|
|
|
|
|
|
||||||
Deficiency payments received, net
|
33,496
|
|
|
16,511
|
|
|
5,378
|
|
|||
Pony Express preferred distributions in excess of distributable cash flow attributable to Pony Express
|
—
|
|
|
—
|
|
|
5,429
|
|
|||
Less:
|
|
|
|
|
|
||||||
Cash interest cost
|
(37,110
|
)
|
|
(13,746
|
)
|
|
(6,266
|
)
|
|||
Maintenance capital expenditures, net
|
(11,323
|
)
|
|
(12,123
|
)
|
|
(9,913
|
)
|
|||
Distributions to noncontrolling interest in excess of earnings
|
—
|
|
|
(22,479
|
)
|
|
(5,361
|
)
|
|||
Cash flow attributable to predecessor operations
|
—
|
|
|
—
|
|
|
(3,086
|
)
|
|||
Distributable Cash Flow
|
$
|
408,547
|
|
|
$
|
220,502
|
|
|
$
|
96,059
|
|
(1)
|
Represents TEP's portion of non-cash compensation expense related to Equity Participation Units, excluding amounts allocated to TD, as discussed in
Note 16
–
Equity-Based Compensation
.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Reconciliation of Adjusted EBITDA to Operating Income in the Crude Oil Transportation & Logistics Segment
(1)
|
|
|
|
|
|
||||||
Operating income
|
$
|
215,784
|
|
|
$
|
159,467
|
|
|
$
|
3,601
|
|
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization expense, net of noncontrolling interest
|
52,464
|
|
|
39,359
|
|
|
10,553
|
|
|||
Adjusted EBITDA attributable to noncontrolling interests
|
(4,288
|
)
|
|
(24,245
|
)
|
|
11,708
|
|
|||
Non-cash loss related to derivative instruments, net of noncontrolling interest
|
431
|
|
|
—
|
|
|
—
|
|
|||
Less:
|
|
|
|
|
|
||||||
Non-cash loss allocated to noncontrolling interest
|
—
|
|
|
(9,377
|
)
|
|
(10,151
|
)
|
|||
Segment Adjusted EBITDA
|
$
|
264,391
|
|
|
$
|
165,204
|
|
|
$
|
15,711
|
|
Reconciliation of Adjusted EBITDA to Operating Income in the Natural Gas Transportation & Logistics Segment
(1)
|
|
|
|
|
|
||||||
Operating income
|
$
|
49,907
|
|
|
$
|
41,802
|
|
|
$
|
40,887
|
|
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
20,976
|
|
|
22,927
|
|
|
23,788
|
|
|||
Distributions from unconsolidated investment
|
75,900
|
|
|
—
|
|
|
—
|
|
|||
Non-cash loss (gain) related to derivative instruments
|
116
|
|
|
—
|
|
|
(184
|
)
|
|||
Other income, net
|
1,723
|
|
|
2,639
|
|
|
3,102
|
|
|||
Segment Adjusted EBITDA
|
$
|
148,622
|
|
|
$
|
67,368
|
|
|
$
|
67,593
|
|
Reconciliation of Adjusted EBITDA to Operating Income in the Processing & Logistics Segment
(1)
|
|
|
|
|
|
||||||
Operating income
|
$
|
1,081
|
|
|
$
|
4,728
|
|
|
$
|
20,577
|
|
Add:
|
|
|
|
|
|
||||||
Depreciation and amortization expense, net of noncontrolling interest
|
12,531
|
|
|
13,243
|
|
|
11,048
|
|
|||
Non-cash gain related to derivative instruments
|
(291
|
)
|
|
—
|
|
|
—
|
|
|||
Non-cash loss from disposal of assets
|
1,849
|
|
|
4,795
|
|
|
—
|
|
|||
Distributions from unconsolidated investment
|
—
|
|
|
—
|
|
|
1,464
|
|
|||
Adjusted EBITDA attributable to noncontrolling interests
|
(77
|
)
|
|
(20
|
)
|
|
—
|
|
|||
Segment Adjusted EBITDA
|
$
|
15,093
|
|
|
$
|
22,746
|
|
|
$
|
33,089
|
|
Total Segment Adjusted EBITDA
|
$
|
428,106
|
|
|
$
|
255,318
|
|
|
$
|
116,393
|
|
Corporate general and administrative costs
|
(4,622
|
)
|
|
(2,979
|
)
|
|
(2,500
|
)
|
|||
Elimination of intersegment activity
|
—
|
|
|
—
|
|
|
(4,015
|
)
|
|||
Total Adjusted EBITDA
|
$
|
423,484
|
|
|
$
|
252,339
|
|
|
$
|
109,878
|
|
(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 19
–
Reportable Segments
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands, except operating data)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Crude oil transportation services
|
$
|
374,949
|
|
|
$
|
300,436
|
|
|
$
|
28,343
|
|
Natural gas transportation services
|
119,962
|
|
|
119,895
|
|
|
126,733
|
|
|||
Sales of natural gas, NGLs, and crude oil
|
77,394
|
|
|
82,133
|
|
|
181,249
|
|
|||
Processing and other revenues
|
32,817
|
|
|
33,733
|
|
|
35,231
|
|
|||
Total Revenues
|
605,122
|
|
|
536,197
|
|
|
371,556
|
|
|||
Operating Costs and Expenses:
|
|
|
|
|
|
||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
71,920
|
|
|
75,285
|
|
|
167,545
|
|
|||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
58,341
|
|
|
53,597
|
|
|
24,109
|
|
|||
Operations and maintenance
|
53,386
|
|
|
49,138
|
|
|
39,577
|
|
|||
Depreciation and amortization
|
84,896
|
|
|
83,476
|
|
|
47,048
|
|
|||
General and administrative
|
53,633
|
|
|
50,195
|
|
|
33,160
|
|
|||
Taxes, other than income taxes
|
24,727
|
|
|
21,796
|
|
|
6,704
|
|
|||
Loss on disposal of assets
|
1,849
|
|
|
4,795
|
|
|
—
|
|
|||
Total Operating Costs and Expenses
|
348,752
|
|
|
338,282
|
|
|
318,143
|
|
|||
Operating Income
|
256,370
|
|
|
197,915
|
|
|
53,413
|
|
|||
Other Income (Expense):
|
|
|
|
|
|
||||||
Interest expense, net
|
(40,688
|
)
|
|
(15,514
|
)
|
|
(7,292
|
)
|
|||
Unrealized loss on derivative instrument
|
(1,291
|
)
|
|
—
|
|
|
—
|
|
|||
Equity in earnings of unconsolidated investment
|
51,780
|
|
|
—
|
|
|
717
|
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
—
|
|
|
9,388
|
|
|||
Other income, net
|
1,723
|
|
|
2,413
|
|
|
3,103
|
|
|||
Total Other Income (Expense)
|
11,524
|
|
|
(13,101
|
)
|
|
5,916
|
|
|||
Net income
|
267,894
|
|
|
184,814
|
|
|
59,329
|
|
|||
Net (income) loss attributable to noncontrolling interests
|
(4,365
|
)
|
|
(24,268
|
)
|
|
11,352
|
|
|||
Net income attributable to partners
|
$
|
263,529
|
|
|
$
|
160,546
|
|
|
$
|
70,681
|
|
Other Financial Data
|
|
|
|
|
|
||||||
Adjusted EBITDA
(1)
|
$
|
423,484
|
|
|
$
|
252,339
|
|
|
$
|
109,878
|
|
Operating Data:
|
|
|
|
|
|
||||||
Crude oil transportation average throughput (Bbls/d)
(2)
|
285,507
|
|
|
236,256
|
|
|
85,229
|
|
|||
Gas transportation average firm contracted volumes (MMcf/d)
(3)
|
1,627
|
|
|
1,679
|
|
|
1,698
|
|
|||
Natural gas processing inlet volumes (MMcf/d)
|
103
|
|
|
122
|
|
|
152
|
|
(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 years ended December 31, 2015 and 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.
|
(3)
|
Volumes transported under firm fee contracts, excluding Rockies Express.
|
|
Year Ended December 31,
|
||||||||||
Segment Financial Data – Crude Oil Transportation & Logistics
(1)
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Crude oil transportation services
|
$
|
374,949
|
|
|
$
|
300,436
|
|
|
$
|
28,343
|
|
Sales of natural gas, NGLs, and crude oil
|
5,554
|
|
|
3,791
|
|
|
—
|
|
|||
Total revenues
|
380,503
|
|
|
304,227
|
|
|
28,343
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
4,728
|
|
|
4,257
|
|
|
—
|
|
|||
Cost of transportation services
|
55,519
|
|
|
47,367
|
|
|
7,025
|
|
|||
Operations and maintenance
|
13,075
|
|
|
8,795
|
|
|
717
|
|
|||
Depreciation and amortization
|
51,362
|
|
|
47,168
|
|
|
12,067
|
|
|||
General and administrative
|
20,650
|
|
|
20,620
|
|
|
4,683
|
|
|||
Taxes, other than income taxes
|
19,385
|
|
|
16,553
|
|
|
250
|
|
|||
Total operating costs and expenses
|
164,719
|
|
|
144,760
|
|
|
24,742
|
|
|||
Operating income
|
$
|
215,784
|
|
|
$
|
159,467
|
|
|
$
|
3,601
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 19
–
Reportable Segments
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
Segment Financial Data – Natural Gas Transportation & Logistics
(1)
|
Year Ended December 31,
|
||||||||||
2016
|
|
2015
|
|
2014
|
|||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Natural gas transportation services
|
$
|
125,603
|
|
|
$
|
125,279
|
|
|
$
|
131,990
|
|
Sales of natural gas, NGLs, and crude oil
|
3,241
|
|
|
6,346
|
|
|
7,868
|
|
|||
Processing and other revenues
|
25
|
|
|
32
|
|
|
222
|
|
|||
Total revenues
|
128,869
|
|
|
131,657
|
|
|
140,080
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
3,804
|
|
|
6,342
|
|
|
7,025
|
|
|||
Cost of transportation services
|
5,051
|
|
|
10,927
|
|
|
18,090
|
|
|||
Operations and maintenance
|
28,458
|
|
|
27,767
|
|
|
27,422
|
|
|||
Depreciation and amortization
|
20,976
|
|
|
22,927
|
|
|
23,788
|
|
|||
General and administrative
|
16,335
|
|
|
17,052
|
|
|
16,767
|
|
|||
Taxes, other than income taxes
|
4,338
|
|
|
4,840
|
|
|
6,101
|
|
|||
Total operating costs and expenses
|
78,962
|
|
|
89,855
|
|
|
99,193
|
|
|||
Operating income
|
$
|
49,907
|
|
|
$
|
41,802
|
|
|
$
|
40,887
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 19
–
Reportable Segments
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
|
Year Ended December 31,
|
||||||||||
Segment Financial Data – Processing & Logistics
(1)
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Sales of natural gas, NGLs, and crude oil
|
$
|
68,599
|
|
|
$
|
71,996
|
|
|
$
|
173,381
|
|
Processing and other revenues
|
32,792
|
|
|
33,701
|
|
|
35,009
|
|
|||
Total revenues
|
101,391
|
|
|
105,697
|
|
|
208,390
|
|
|||
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
63,646
|
|
|
64,686
|
|
|
160,520
|
|
|||
Cost of transportation services
|
3,154
|
|
|
687
|
|
|
236
|
|
|||
Operations and maintenance
|
11,853
|
|
|
12,576
|
|
|
11,438
|
|
|||
Depreciation and amortization
|
12,558
|
|
|
13,381
|
|
|
11,193
|
|
|||
General and administrative
|
6,246
|
|
|
4,441
|
|
|
4,073
|
|
|||
Taxes, other than income taxes
|
1,004
|
|
|
403
|
|
|
353
|
|
|||
Loss on disposal of assets
|
1,849
|
|
|
4,795
|
|
|
—
|
|
|||
Total operating costs and expenses
|
100,310
|
|
|
100,969
|
|
|
187,813
|
|
|||
Operating income
|
$
|
1,081
|
|
|
$
|
4,728
|
|
|
$
|
20,577
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 19
–
Reportable Segments
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
•
|
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, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Cash on hand
|
$
|
1,873
|
|
|
$
|
1,611
|
|
|
|
|
|
||||
Total capacity under the revolving credit facility
(1)
|
1,750,000
|
|
|
1,100,000
|
|
||
Less: Outstanding borrowings under the revolving credit facility
(2)
|
(1,015,000
|
)
|
|
(753,000
|
)
|
||
Available capacity under the revolving credit facility
|
735,000
|
|
|
347,000
|
|
||
Total liquidity
|
$
|
736,873
|
|
|
$
|
348,611
|
|
(1)
|
Effective January 4, 2016, in connection with the acquisition of an additional
31.3%
membership interest in Pony Express, TEP exercised the committed accordion feature to increase the total capacity of the revolving credit facility to
$1.5 billion
. In connection with the acquisition of a
25%
membership interest in Rockies Express, TEP amended the revolving credit facility to increase the total capacity to
$1.75 billion
, which increase became effective May 6, 2016.
|
(2)
|
As of
February 3, 2017
, our outstanding borrowings under the revolving credit facility were approximately
$1.130 billion
.
|
•
|
an increase
in deferred revenue of
$34.2 million
primarily from deficiency payments collected by Pony Express;
|
•
|
an increase
in accrued liabilities of
$6.5 million
primarily due to $7.3 million of interest accrued at December 31, 2016 associated with the 2024 Notes issued on September 1, 2016, partially offset by a decrease in environmental accruals due to remediation spending during the year ended December 31, 2016; and
|
•
|
an increase
in accrued taxes of
$2.5 million
as a result of higher tax assessments for 2016 due to the Pony Express lateral in Northeast Colorado and the recently acquired Western assets, partially offset by reduced assessments at certain assets as a result of successful appeals with state taxing authorities on the assessed value of property.
|
•
|
an increase
of
$11.0 million
in derivative assets at fair value as a result of the call option derivative asset remaining as of December 31, 2016; and
|
•
|
an increase
of
$4.0 million
in prepayments and other current assets as a result of prepayment of insurance policies by TEP, which had previously been paid by TD and reimbursed by TEP as they were incurred.
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
409,484
|
|
|
$
|
289,296
|
|
|
$
|
79,444
|
|
Investing activities
|
$
|
(581,704
|
)
|
|
$
|
(845,270
|
)
|
|
$
|
(1,102,729
|
)
|
Financing activities
|
$
|
172,482
|
|
|
$
|
556,718
|
|
|
$
|
1,024,152
|
|
•
|
cash outflows of
$436.0 million
for the acquisition of a 25% membership interest in Rockies Express on May 6, 2016;
|
•
|
capital expenditures of
$70.7 million
, primarily due to post in-service spending on Pony Express System projects and the Pipeline Integrity Management Program at Trailblazer;
|
•
|
cash outflows of
$49.1 million
for a portion of the acquisition of an additional 31.3% membership interest in Pony Express on January 1, 2016, the remainder of which is classified as a financing activity as discussed below; and
|
•
|
contributions to Rockies Express in the amount of
$50.0 million
.
|
•
|
the cash outflow of
$700.0 million
for the acquisition of an additional 33.3% membership interest in Pony Express, which allowed TD to continue funding the pipeline construction at Pony Express; and
|
•
|
the cash outflow of
$75.0 million
for the acquisition of Western, and capital expenditures of
$65.4 million
, primarily due to construction of the Pony Express System, including the lateral in Northeast Colorado.
|
•
|
proceeds from the issuance of
$400.0 million
in aggregate principal amount of 5.50% Senior Notes due 2024;
|
•
|
the issuance of
7,696,708
common units under the Equity Distribution Agreements for net cash proceeds of
$337.7 million
;
|
•
|
net borrowings under the revolving credit facility of
$262.0 million
;
|
•
|
the issuance of
2,416,987
common units representing limited partnership interests in a private placement transaction for net cash proceeds of
$90.0 million
; and
|
•
|
contributions from TD of
$17.9 million
, which consisted of contributions from TD to TEP in order to indemnify TEP for any out of pocket costs incurred between April 1, 2014 and April 1, 2017 related to repairing or remediating the Trailblazer Pipeline, as discussed further in
Note 18
–
Legal and Environmental Matters
.
|
•
|
$425.9 million
for the portion of the acquisition of an additional 31.3% membership interest in Pony Express which exceeds the cumulative capital spending on the underlying assets acquired;
|
•
|
distributions to unitholders of
$292.8 million
; and
|
•
|
$204.6 million
for the partial exercise of the call option granted by TD covering
4,814,906
common units.
|
•
|
net cash proceeds of
$554.1 million
from the issuance of 11,200,000 common units in a public offering and
65,744
common units issued under the Equity Distribution Agreements during 2015; and
|
•
|
net borrowings under the revolving credit facility of
$194.0 million
.
|
•
|
distributions to unitholders of
$161.8 million
; and
|
•
|
distributions to noncontrolling interests of $25.1 million, primarily driven by distributions to TD from Pony Express.
|
•
|
capital expenditures of
$665.7 million
, primarily due to construction at Pony Express, including the lateral in Northeast Colorado, as well as the capacity expansion projects at TMID and other expansion projects at Trailblazer;
|
•
|
cash outflows of
$270.0 million
associated with the related party loan to TD under the Pony Express cash management agreement; and
|
•
|
cash outflows of
$150.0 million
,
$27.0 million
, and
$7.6 million
for the acquisitions of Trailblazer, Pony Express, and Water Solutions, respectively.
|
•
|
net proceeds of
$320.4 million
from the issuance of 8,050,000 common units in a public offering and
28,625
common units issued under the Equity Distribution Agreements during 2014;
|
•
|
a contribution from TD of
$27.5 million
representing the difference between the carrying amount of the Replacement Gas Facilities, as defined in
Note 5
–
Related Party Transactions
, and the proceeds received from TD.
|
•
|
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,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Maintenance capital expenditures
|
$
|
11,323
|
|
|
$
|
12,123
|
|
|
$
|
9,913
|
|
Expansion capital expenditures
|
30,576
|
|
|
16,859
|
|
|
193,704
|
|
|||
Total capital expenditures incurred
|
$
|
41,899
|
|
|
$
|
28,982
|
|
|
$
|
203,617
|
|
|
|
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)
|
|
$
|
1,415,000
|
|
|
$
|
—
|
|
|
$
|
1,015,000
|
|
|
$
|
—
|
|
|
$
|
400,000
|
|
Interest on debt obligations
(2)
|
|
204,297
|
|
|
47,220
|
|
|
53,466
|
|
|
44,000
|
|
|
59,611
|
|
|||||
Operating lease and service contract obligations
(3)
|
|
593,239
|
|
|
28,103
|
|
|
57,700
|
|
|
59,858
|
|
|
447,578
|
|
|||||
Land site lease and right-of-way
(4)
|
|
2,440
|
|
|
274
|
|
|
416
|
|
|
475
|
|
|
1,275
|
|
|||||
Other purchase commitments
(5)
|
|
13,989
|
|
|
7,993
|
|
|
4,042
|
|
|
1,885
|
|
|
69
|
|
|||||
Total
|
|
$
|
2,228,965
|
|
|
$
|
83,590
|
|
|
$
|
1,130,624
|
|
|
$
|
106,218
|
|
|
$
|
908,533
|
|
(1)
|
Debt obligations at
December 31, 2016
consisted of borrowings under the revolving credit facility and the 2024 Notes. For additional information, see
Note 11
–
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, 2016
. For additional information, see
Note 11
–
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. Lease obligations include approximately $255.8 million in future minimum lease payments to Terminals related to the Sterling Terminal facilities, which we acquired effective January 1, 2017. Lease obligations for the crude oil storage at the Sterling and Deeprock Terminals assume renewal for the full 20-year lease term. For additional information, see
Note 13
–
Commitments & Contingent Liabilities
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
(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 13
–
Commitments & Contingent Liabilities
to our Consolidated Financial Statements in Item 8.—Financial Statements and Supplementary Data in this Form 10-K.
|
(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 2016 using the methodology described herein, and determined there was no impairment.
|
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. See Item 7A.—Quantitative and Qualitative Disclosures About Market Risk for details regarding the impact of potential changes in the crude oil and natural gas forward price curves on our derivative instruments at December 31, 2016.
|
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
|
62
|
%
|
|
33
|
%
|
|
2
|
%
|
|
—
|
%
|
|
97
|
%
|
Volumetric fee
|
<1%
|
|
|
1
|
%
|
|
1
|
%
|
|
—
|
%
|
|
2
|
%
|
Commodity exposed
|
<1%
|
|
|
<1%
|
|
|
1
|
%
|
|
—
|
%
|
|
1
|
%
|
Other
|
—
|
%
|
|
1
|
%
|
|
—
|
%
|
|
(1
|
)%
|
|
—
|
%
|
Total
|
62
|
%
|
|
35
|
%
|
|
4
|
%
|
|
(1
|
)%
|
|
100
|
%
|
|
Fair Value
|
|
Effect of 10% Price Increase
|
|
Effect of 10% Price Decrease
|
||||||
|
(in thousands)
|
||||||||||
Natural gas derivative contracts
(1)
|
$
|
291
|
|
|
$
|
142
|
|
|
$
|
(142
|
)
|
Natural gas derivative contracts
(2)
|
$
|
(116
|
)
|
|
$
|
(105
|
)
|
|
$
|
105
|
|
Crude oil derivative contract
(3)
|
$
|
(440
|
)
|
|
$
|
(702
|
)
|
|
$
|
702
|
|
(1)
|
Represents long natural gas swaps outstanding with a notional volume of approximately
0.4
Bcf covering a portion of the natural gas that is expected to be purchased by our Processing & Logistics segment throughout 2017.
|
(2)
|
Represents short natural gas swaps outstanding with a notional volume of approximately
0.3
Bcf covering a portion of the natural gas that is expected to be sold by our Natural Gas Transportation & Logistics segment in the first quarter of 2017.
|
(3)
|
Represents the sale of
125,000
barrels of crude oil by our Crude Oil Transportation & Logistics segment which will settle throughout 2017.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
ASSETS
|
|
||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,873
|
|
|
$
|
1,611
|
|
Accounts receivable, net
|
59,469
|
|
|
57,757
|
|
||
Gas imbalances
|
1,597
|
|
|
1,227
|
|
||
Inventories
|
12,805
|
|
|
13,793
|
|
||
Derivative assets at fair value
|
10,967
|
|
|
—
|
|
||
Prepayments and other current assets
|
6,820
|
|
|
2,835
|
|
||
Total Current Assets
|
93,531
|
|
|
77,223
|
|
||
Property, plant and equipment, net
|
2,012,263
|
|
|
2,025,018
|
|
||
Goodwill
|
343,288
|
|
|
343,288
|
|
||
Intangible asset, net
|
93,522
|
|
|
96,546
|
|
||
Unconsolidated investment
|
461,915
|
|
|
—
|
|
||
Deferred financing costs, net
|
4,815
|
|
|
5,105
|
|
||
Deferred charges and other assets
|
9,637
|
|
|
14,894
|
|
||
Total Assets
|
$
|
3,018,971
|
|
|
$
|
2,562,074
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable (including $10,554 at December 31, 2015 related to variable interest entities)
|
$
|
24,076
|
|
|
$
|
22,218
|
|
Accounts payable to related parties
|
5,879
|
|
|
7,852
|
|
||
Gas imbalances
|
1,239
|
|
|
1,605
|
|
||
Derivative liabilities at fair value
|
556
|
|
|
—
|
|
||
Accrued taxes
|
16,328
|
|
|
13,844
|
|
||
Accrued liabilities
|
16,525
|
|
|
10,019
|
|
||
Deferred revenue
|
60,757
|
|
|
26,511
|
|
||
Other current liabilities
|
6,446
|
|
|
6,880
|
|
||
Total Current Liabilities
|
131,806
|
|
|
88,929
|
|
||
Long-term debt, net
|
1,407,981
|
|
|
753,000
|
|
||
Other long-term liabilities and deferred credits
|
7,063
|
|
|
5,143
|
|
||
Total Long-term Liabilities
|
1,415,044
|
|
|
758,143
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common unitholders (72,485,954 and 60,644,232 units issued and outstanding at December 31, 2016 and 2015, respectively)
|
2,070,495
|
|
|
1,618,766
|
|
||
General partner (834,391 units issued and outstanding at December 31, 2016 and 2015, respectively)
|
(632,339
|
)
|
|
(348,841
|
)
|
||
Total Partners' Equity
|
1,438,156
|
|
|
1,269,925
|
|
||
Noncontrolling interests
|
33,965
|
|
|
445,077
|
|
||
Total Equity
|
1,472,121
|
|
|
1,715,002
|
|
||
Total Liabilities and Equity
|
$
|
3,018,971
|
|
|
$
|
2,562,074
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands, except per unit amounts)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Crude oil transportation services
|
$
|
374,949
|
|
|
$
|
300,436
|
|
|
$
|
28,343
|
|
Natural gas transportation services
|
119,962
|
|
|
119,895
|
|
|
126,733
|
|
|||
Sales of natural gas, NGLs, and crude oil
|
77,394
|
|
|
82,133
|
|
|
181,249
|
|
|||
Processing and other revenues
|
32,817
|
|
|
33,733
|
|
|
35,231
|
|
|||
Total Revenues
|
605,122
|
|
|
536,197
|
|
|
371,556
|
|
|||
Operating Costs and Expenses:
|
|
|
|
|
|
||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
71,920
|
|
|
75,285
|
|
|
167,545
|
|
|||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
58,341
|
|
|
53,597
|
|
|
24,109
|
|
|||
Operations and maintenance
|
53,386
|
|
|
49,138
|
|
|
39,577
|
|
|||
Depreciation and amortization
|
84,896
|
|
|
83,476
|
|
|
47,048
|
|
|||
General and administrative
|
53,633
|
|
|
50,195
|
|
|
33,160
|
|
|||
Taxes, other than income taxes
|
24,727
|
|
|
21,796
|
|
|
6,704
|
|
|||
Loss on disposal of assets
|
1,849
|
|
|
4,795
|
|
|
—
|
|
|||
Total Operating Costs and Expenses
|
348,752
|
|
|
338,282
|
|
|
318,143
|
|
|||
Operating Income
|
256,370
|
|
|
197,915
|
|
|
53,413
|
|
|||
Other Income (Expense):
|
|
|
|
|
|
||||||
Interest expense, net
|
(40,688
|
)
|
|
(15,514
|
)
|
|
(7,292
|
)
|
|||
Unrealized loss on derivative instrument
|
(1,291
|
)
|
|
—
|
|
|
—
|
|
|||
Equity in earnings of unconsolidated investment
|
51,780
|
|
|
—
|
|
|
717
|
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
—
|
|
|
9,388
|
|
|||
Other income, net
|
1,723
|
|
|
2,413
|
|
|
3,103
|
|
|||
Total Other Income (Expense)
|
11,524
|
|
|
(13,101
|
)
|
|
5,916
|
|
|||
Net income
|
267,894
|
|
|
184,814
|
|
|
59,329
|
|
|||
Net (income) loss attributable to noncontrolling interests
|
(4,365
|
)
|
|
(24,268
|
)
|
|
11,352
|
|
|||
Net income attributable to partners
|
$
|
263,529
|
|
|
$
|
160,546
|
|
|
$
|
70,681
|
|
Allocation of income to the limited partners:
|
|
|
|
|
|
||||||
Net income attributable to partners
|
$
|
263,529
|
|
|
$
|
160,546
|
|
|
$
|
70,681
|
|
Predecessor operations interest in net income
|
—
|
|
|
—
|
|
|
(1,508
|
)
|
|||
Net income attributable to partners, excluding predecessor operations interest
|
263,529
|
|
|
160,546
|
|
|
69,173
|
|
|||
General partner interest in net income
|
(102,465
|
)
|
|
(46,478
|
)
|
|
(7,399
|
)
|
|||
Common and subordinated unitholders' interest in net income
|
$
|
161,064
|
|
|
$
|
114,068
|
|
|
$
|
61,774
|
|
Basic net income per common and subordinated unit
|
$
|
2.26
|
|
|
$
|
1.95
|
|
|
$
|
1.39
|
|
Diluted net income per common and subordinated unit
|
$
|
2.23
|
|
|
$
|
1.91
|
|
|
$
|
1.36
|
|
Basic average number of common and subordinated units outstanding
|
71,150
|
|
|
58,597
|
|
|
44,346
|
|
|||
Diluted average number of common and subordinated units outstanding
|
72,107
|
|
|
59,575
|
|
|
45,394
|
|
|
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, 2014
|
$
|
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
|
|
|||||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
(41,567
|
)
|
|
—
|
|
|
(23,166
|
)
|
|
—
|
|
|
(3,384
|
)
|
|
(68,117
|
)
|
|
—
|
|
|
(68,117
|
)
|
|||||||
Noncash compensation expense
|
—
|
|
|
—
|
|
|
10,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,154
|
|
|
—
|
|
|
10,154
|
|
|||||||
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
|
|
|||||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
(118,729
|
)
|
|
—
|
|
|
(7,857
|
)
|
|
—
|
|
|
(35,248
|
)
|
|
(161,834
|
)
|
|
—
|
|
|
(161,834
|
)
|
|||||||
Noncash compensation expense
|
—
|
|
|
—
|
|
|
9,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,337
|
|
|
—
|
|
|
9,337
|
|
|||||||
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
|
|
Net income
|
—
|
|
|
—
|
|
|
161,064
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
102,465
|
|
|
263,529
|
|
|
4,365
|
|
|
267,894
|
|
|||||||
Issuance of units to public, net of offering costs
|
—
|
|
|
7,697
|
|
|
337,671
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
337,671
|
|
|
—
|
|
|
337,671
|
|
|||||||
Issuance of units in a private placement, net of offering costs
|
—
|
|
|
2,417
|
|
|
90,009
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,009
|
|
|
—
|
|
|
90,009
|
|
|||||||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
(202,996
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89,838
|
)
|
|
(292,834
|
)
|
|
—
|
|
|
(292,834
|
)
|
|||||||
Noncash compensation expense
|
—
|
|
|
—
|
|
|
7,879
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,879
|
|
|
—
|
|
|
7,879
|
|
|||||||
Acquisition of additional 31.3% membership interest in Pony Express
|
—
|
|
|
6,518
|
|
|
268,607
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(279,967
|
)
|
|
(11,360
|
)
|
|
(417,679
|
)
|
|
(429,039
|
)
|
|||||||
Partial exercise of call option
|
—
|
|
|
(4,815
|
)
|
|
(204,634
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,993
|
)
|
|
(238,627
|
)
|
|
—
|
|
|
(238,627
|
)
|
|||||||
Contributions from TD
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,894
|
|
|
17,894
|
|
|
—
|
|
|
17,894
|
|
|||||||
Contributions from noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,304
|
|
|
9,304
|
|
|||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,534
|
)
|
|
(6,534
|
)
|
|||||||
Acquisition of noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,373
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
|
(5,432
|
)
|
|
(568
|
)
|
|
(6,000
|
)
|
|||||||
Common units issued under LTIP, net of units tendered by employees to satisfy tax withholding obligations
|
—
|
|
|
25
|
|
|
(498
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(498
|
)
|
|
—
|
|
|
(498
|
)
|
|||||||
Balance at December 31, 2016
|
$
|
—
|
|
|
72,486
|
|
|
$
|
2,070,495
|
|
|
—
|
|
|
$
|
—
|
|
|
835
|
|
|
$
|
(632,339
|
)
|
|
$
|
1,438,156
|
|
|
$
|
33,965
|
|
|
$
|
1,472,121
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
267,894
|
|
|
$
|
184,814
|
|
|
$
|
59,329
|
|
Adjustments to reconcile net income to net cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
91,453
|
|
|
87,367
|
|
|
49,041
|
|
|||
Equity in earnings of unconsolidated investments
|
(51,780
|
)
|
|
—
|
|
|
(717
|
)
|
|||
Distributions from unconsolidated investments
|
51,780
|
|
|
—
|
|
|
717
|
|
|||
Noncash compensation expense
|
5,780
|
|
|
5,103
|
|
|
5,136
|
|
|||
Noncash change in the fair value of derivative financial instruments
|
1,556
|
|
|
—
|
|
|
(184
|
)
|
|||
Loss on disposal of assets
|
1,849
|
|
|
4,795
|
|
|
—
|
|
|||
Gain on remeasurement of unconsolidated investment
|
—
|
|
|
—
|
|
|
(9,388
|
)
|
|||
Changes in components of working capital:
|
|
|
|
|
|
||||||
Accounts receivable and other
|
2,024
|
|
|
(15,605
|
)
|
|
(348
|
)
|
|||
Gas imbalances
|
1,157
|
|
|
(757
|
)
|
|
1,504
|
|
|||
Inventories
|
(938
|
)
|
|
(5,169
|
)
|
|
(8,367
|
)
|
|||
Accounts payable and accrued liabilities
|
9,966
|
|
|
9,799
|
|
|
(21,787
|
)
|
|||
Deferred revenue
|
33,815
|
|
|
20,612
|
|
|
6,619
|
|
|||
Other operating, net
|
(5,072
|
)
|
|
(1,663
|
)
|
|
(2,111
|
)
|
|||
Net Cash Provided by Operating Activities
|
409,484
|
|
|
289,296
|
|
|
79,444
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(70,719
|
)
|
|
(65,387
|
)
|
|
(665,650
|
)
|
|||
Acquisition of unconsolidated affiliate
|
(436,022
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisition of Pony Express membership interest
|
(49,118
|
)
|
|
(700,000
|
)
|
|
(27,000
|
)
|
|||
Contributions to unconsolidated affiliate
|
(50,013
|
)
|
|
—
|
|
|
(1,999
|
)
|
|||
Distributions from unconsolidated investment in excess of cumulative earnings
|
24,120
|
|
|
—
|
|
|
747
|
|
|||
Issuance of related party loan
|
—
|
|
|
—
|
|
|
(270,000
|
)
|
|||
Acquisition of Trailblazer
|
—
|
|
|
—
|
|
|
(150,000
|
)
|
|||
Acquisition of Western
|
—
|
|
|
(75,000
|
)
|
|
—
|
|
|||
Acquisition of additional equity interests in Water Solutions
|
—
|
|
|
—
|
|
|
(7,600
|
)
|
|||
Other investing, net
|
48
|
|
|
(4,883
|
)
|
|
18,773
|
|
|||
Net Cash Used in Investing Activities
|
(581,704
|
)
|
|
(845,270
|
)
|
|
(1,102,729
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Acquisition of Pony Express membership interest
|
(425,882
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of long-term debt
|
400,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from public offering, net of offering costs
|
337,671
|
|
|
554,084
|
|
|
320,385
|
|
|||
Distributions to unitholders
|
(292,834
|
)
|
|
(161,834
|
)
|
|
(68,117
|
)
|
|||
Borrowings under revolving credit facility, net
|
262,000
|
|
|
194,000
|
|
|
424,000
|
|
|||
Partial exercise of call option
|
(204,634
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from private placement, net of offering costs
|
90,009
|
|
|
—
|
|
|
—
|
|
|||
Contributions from Predecessor Entities, net
|
—
|
|
|
—
|
|
|
312,125
|
|
|||
Contribution from TD
|
17,894
|
|
|
—
|
|
|
27,488
|
|
|||
Other financing, net
|
(11,742
|
)
|
|
(29,532
|
)
|
|
8,271
|
|
|||
Net Cash Provided by Financing Activities
|
172,482
|
|
|
556,718
|
|
|
1,024,152
|
|
|||
Net Change in Cash and Cash Equivalents
|
262
|
|
|
744
|
|
|
867
|
|
|||
Cash and Cash Equivalents, beginning of period
|
1,611
|
|
|
867
|
|
|
—
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
1,873
|
|
|
$
|
1,611
|
|
|
$
|
867
|
|
Supplemental Disclosures:
|
|
|
|
|
|
||||||
Cash payments for interest, net
|
$
|
(29,754
|
)
|
|
$
|
(14,021
|
)
|
|
$
|
(6,801
|
)
|
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
|
)
|
•
|
Crude Oil Transportation & Logistics—the ownership and operation of a FERC-regulated crude oil pipeline system and crude oil storage and terminalling facilities;
|
•
|
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
(1)
|
|
44,427,380
|
|
|
—
|
|
|
61.29
|
%
|
|
60.59
|
%
|
Tallgrass Equity, LLC
|
|
20,000,000
|
|
|
—
|
|
|
27.59
|
%
|
|
27.28
|
%
|
Tallgrass Development, LP
(2)
|
|
8,058,574
|
|
|
—
|
|
|
11.12
|
%
|
|
10.99
|
%
|
Tallgrass MLP GP, LLC
(3)
|
|
—
|
|
|
834,391
|
|
|
—
|
%
|
|
1.14
|
%
|
Total
(4)
|
|
72,485,954
|
|
|
834,391
|
|
|
100.00
|
%
|
|
100.00
|
%
|
(1)
|
As discussed in
Note 12
–
Partnership Equity and Distributions
, we issued and sold an additional
2,092,440
common units subsequent to
December 31, 2016
. As of
February 15, 2017
, there were
46,519,820
common units held by public unitholders outstanding.
|
(2)
|
As discussed in
Note 10
–
Risk Management
and
Note 12
–
Partnership Equity and Distributions
,
2,439,356
of the common units held by Tallgrass Development, LP ("TD") as of
December 31, 2016
were subsequently deemed cancelled as of
February 1, 2017
. As of
February 15, 2017
, there were
5,619,218
common units held by TD outstanding.
|
(3)
|
Tallgrass MLP GP, LLC (the "general partner") also holds all of TEP's incentive distribution rights.
|
(4)
|
As of
February 15, 2017
, there were
72,973,429
total limited partner and general partner units outstanding.
|
•
|
a significant decrease in the market value of a long-lived asset or asset 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 - 5.0%
|
Processing & treating assets
|
3.3%
|
Water business assets
|
2.3 - 20.0%
|
Replacement Gas Facilities
(1)
|
10.0%
|
General & other
|
2.9 - 25.0%
|
(1)
|
Represents the Replacement Gas Facilities as discussed in
Note 5
–
Related Party Transactions
and
Note 17
–
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).
|
•
|
We have formed an implementation team that meets to discuss implementation challenges, technical interpretations, industry-specific treatment of certain revenue contract types, and project status.
|
•
|
We are currently reviewing contracts for each revenue stream identified within each of our business segments. Through this process, we are determining and documenting expected changes in revenue recognition upon adoption of the revised guidance.
|
•
|
We plan to evaluate the potential information technology and internal control changes that will be required for adoption based on the findings from our contract review process.
|
•
|
We plan to provide internal training and awareness related to the revised guidance to the key stakeholders throughout our organization.
|
|
December 31, 2015
|
||
|
|
||
Current assets
|
$
|
46,800
|
|
Noncurrent assets
|
1,391,906
|
|
|
Total assets
|
$
|
1,438,706
|
|
Current liabilities
|
$
|
51,349
|
|
Total liabilities
|
$
|
51,349
|
|
|
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,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in thousands)
|
||||||||||
Cost of transportation services
(1)
|
$
|
29,244
|
|
|
$
|
25,046
|
|
|
$
|
—
|
|
Charges to TEP:
(2)
|
|
|
|
|
|
||||||
Property, plant and equipment, net
|
$
|
2,741
|
|
|
$
|
4,320
|
|
|
$
|
17,936
|
|
Other deferred charges
|
$
|
44
|
|
|
$
|
7
|
|
|
$
|
27
|
|
Operation and maintenance
|
$
|
24,895
|
|
|
$
|
23,520
|
|
|
$
|
18,783
|
|
General and administrative
|
$
|
38,567
|
|
|
$
|
33,432
|
|
|
$
|
23,475
|
|
(1)
|
Reflects rent expense for the crude oil storage at the Sterling and Deeprock Terminals. For more information, see
Note 13
–
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, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Receivable from related parties:
|
|
|
|
||||
Rockies Express Pipeline LLC
|
$
|
560
|
|
|
$
|
15
|
|
Total receivable from related parties
|
$
|
560
|
|
|
$
|
15
|
|
Accounts payable to related parties:
|
|
|
|
||||
Tallgrass Operations, LLC
|
$
|
5,798
|
|
|
$
|
7,792
|
|
Tallgrass Equity, LLC
|
68
|
|
|
36
|
|
||
Deeprock Development, LLC
|
13
|
|
|
17
|
|
||
Rockies Express Pipeline LLC
|
—
|
|
|
7
|
|
||
Total accounts payable to related parties
|
$
|
5,879
|
|
|
$
|
7,852
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Affiliate gas imbalance receivables
|
$
|
177
|
|
|
$
|
92
|
|
Affiliate gas imbalance payables
|
$
|
—
|
|
|
$
|
227
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Crude oil
|
$
|
5,180
|
|
|
$
|
2,661
|
|
Materials and supplies
|
6,377
|
|
|
8,581
|
|
||
Natural gas liquids
|
265
|
|
|
395
|
|
||
Gas in underground storage
|
983
|
|
|
2,156
|
|
||
Total inventory
|
$
|
12,805
|
|
|
$
|
13,793
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Crude oil pipelines
|
$
|
1,202,125
|
|
|
$
|
1,172,684
|
|
Natural gas pipelines
|
572,150
|
|
|
550,710
|
|
||
Processing and treating assets
|
256,901
|
|
|
254,073
|
|
||
Water business assets
|
85,077
|
|
|
81,098
|
|
||
General and other
|
71,508
|
|
|
69,181
|
|
||
Construction work in progress
|
18,228
|
|
|
30,699
|
|
||
Accumulated depreciation and amortization
|
(193,726
|
)
|
|
(133,427
|
)
|
||
Total property, plant and equipment, net
(1)
|
$
|
2,012,263
|
|
|
$
|
2,025,018
|
|
(1)
|
Property, plant and equipment, net includes approximately
$435.9 million
of assets at our regulated natural gas pipelines.
|
Year
|
|
Total
|
||
2017
|
|
$
|
3,967
|
|
2018
|
|
3,982
|
|
|
2019
|
|
3,997
|
|
|
2020
|
|
3,385
|
|
|
2021
|
|
3,180
|
|
|
Thereafter
|
|
11,934
|
|
|
Total
|
|
$
|
30,445
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Natural Gas Transportation & Logistics
|
$
|
255,558
|
|
|
$
|
255,558
|
|
Processing & Logistics
|
87,730
|
|
|
87,730
|
|
||
Total goodwill
|
$
|
343,288
|
|
|
$
|
343,288
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Pony Express oil conversion use rights
|
$
|
105,973
|
|
|
$
|
105,973
|
|
Accumulated amortization
|
(12,451
|
)
|
|
(9,427
|
)
|
||
Intangible assets, net
|
$
|
93,522
|
|
|
$
|
96,546
|
|
Year
|
|
Total
|
||
2017
|
|
$
|
3,028
|
|
2018
|
|
3,028
|
|
|
2019
|
|
3,028
|
|
|
2020
|
|
3,028
|
|
|
2021
|
|
3,028
|
|
|
Thereafter
|
|
78,382
|
|
|
Total
|
|
$
|
93,522
|
|
|
Basis Difference
|
|
Amortization Period
|
||
|
(in thousands)
|
|
|
||
Long-term debt
|
$
|
8,421
|
|
|
2 - 25 years
|
Property, plant and equipment
|
(404,046
|
)
|
|
35 years
|
|
Total basis difference
|
$
|
(395,625
|
)
|
|
|
|
December 31, 2016
|
||
|
(in thousands)
|
||
Current assets
|
$
|
195,698
|
|
Noncurrent assets
|
$
|
6,079,292
|
|
Current liabilities
|
$
|
188,139
|
|
Noncurrent liabilities
|
$
|
2,656,836
|
|
Members' equity
|
$
|
3,430,015
|
|
|
Period from May 6, 2016 to December 31, 2016
|
||
|
|
||
Revenue
|
$
|
421,324
|
|
Operating income
|
$
|
190,050
|
|
Net income to Members
|
$
|
170,562
|
|
(1)
|
As discussed in
Note 4
–
Acquisitions
, in conjunction with our acquisition of an additional
31.3%
membership interest in Pony Express effective January 1, 2016, TD granted us an
18
-month call option covering the
6,518,000
common units issued to TD. As of February 1, 2017, no common units remained subject to the call option.
|
(2)
|
As of
December 31, 2016
, the fair value shown for natural gas derivative contracts was comprised of derivative volumes for short and long natural gas fixed-price swaps totaling
0.3
Bcf and
0.4
Bcf, respectively. As of
December 31, 2015
, there were no natural gas derivative contracts outstanding.
|
(3)
|
As of
December 31, 2016
, the fair value shown for crude oil derivative contracts was comprised of derivative contracts representing the sale of
125,000
barrels throughout 2017. As of
December 31, 2015
, there were no crude oil derivative contracts outstanding.
|
|
Location of
gain (loss) recognized in income on derivatives |
|
Amount of gain (loss) recognized in income on derivatives
|
||||||||||
|
|
Year Ended December 31,
|
|||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|||||||
|
|
|
(in thousands)
|
||||||||||
Derivatives not designated as hedging contracts:
|
|
|
|
|
|
|
|
||||||
Call option derivative
|
Unrealized loss on derivative instrument
|
|
$
|
(1,291
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Natural gas derivative contracts
|
Sales of natural gas, NGLs, and crude oil
|
|
$
|
74
|
|
|
$
|
427
|
|
|
$
|
(410
|
)
|
Crude oil derivative contract
|
Sales of natural gas, NGLs, and crude oil
|
|
$
|
(40
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Asset Position
|
||
|
(in thousands)
|
||
Gross
|
$
|
291
|
|
Netting agreement impact
|
(58
|
)
|
|
Cash collateral held
|
—
|
|
|
Net Exposure
|
$
|
233
|
|
|
|
|
Asset Fair Value Measurements Using
|
||||||||||||
|
Total
|
|
Quoted prices in
active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||
|
(in thousands)
|
||||||||||||||
As of December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Call option derivative
|
$
|
10,676
|
|
|
$
|
—
|
|
|
$
|
10,676
|
|
|
$
|
—
|
|
Natural gas derivative contracts
|
$
|
291
|
|
|
$
|
—
|
|
|
$
|
291
|
|
|
$
|
—
|
|
|
|
|
Liability Fair Value Measurements Using
|
||||||||||||
|
Total
|
|
Quoted prices in
active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
||||||||
|
(in thousands)
|
||||||||||||||
As of December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Crude oil derivative contract
|
$
|
440
|
|
|
$
|
—
|
|
|
$
|
440
|
|
|
$
|
—
|
|
Natural gas derivative contracts
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Revolving credit facility
|
$
|
1,015,000
|
|
|
$
|
753,000
|
|
5.50% senior notes due September 15, 2024
|
400,000
|
|
|
—
|
|
||
Less: Deferred financing costs, net
(1)
|
(7,019
|
)
|
|
—
|
|
||
Total long-term debt, net
|
$
|
1,407,981
|
|
|
$
|
753,000
|
|
(1)
|
Deferred financing costs, net as presented above relate solely to the 2024 Notes. Deferred financing costs associated with our revolving credit facility are presented in noncurrent assets on our consolidated balance sheets.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Total capacity under the revolving credit facility
(1)
|
$
|
1,750,000
|
|
|
$
|
1,100,000
|
|
Less: Outstanding borrowings under the revolving credit facility
(2)
|
(1,015,000
|
)
|
|
(753,000
|
)
|
||
Available capacity under the revolving credit facility
|
$
|
735,000
|
|
|
$
|
347,000
|
|
(1)
|
Effective January 4, 2016, in connection with the acquisition of an additional
31.3%
membership interest in Pony Express, TEP exercised the committed accordion feature to increase the total capacity of the revolving credit facility to
$1.5 billion
. In connection with the acquisition of a
25%
membership interest in Rockies Express, TEP amended the revolving credit facility to increase the total capacity to
$1.75 billion
, which increase became effective May 6, 2016.
|
(2)
|
As of
February 3, 2017
, our outstanding borrowings under the revolving credit facility were approximately
$1.130 billion
.
|
|
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)
|
||||||||||||||||||
As of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
1,015,000
|
|
|
$
|
—
|
|
|
$
|
1,015,000
|
|
|
$
|
1,015,000
|
|
2024 Notes
|
$
|
—
|
|
|
$
|
398,000
|
|
|
$
|
—
|
|
|
$
|
398,000
|
|
|
$
|
392,981
|
|
As of December 31, 2015:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
753,000
|
|
|
$
|
—
|
|
|
$
|
753,000
|
|
|
$
|
753,000
|
|
|
|
|
|
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, 2016
|
|
February 14, 2017
|
|
$
|
58,793
|
|
|
$
|
28,358
|
|
|
$
|
1,008
|
|
|
$
|
88,159
|
|
|
$
|
0.8150
|
|
September 30, 2016
|
|
November 14, 2016
|
|
57,332
|
|
|
26,987
|
|
|
976
|
|
|
85,295
|
|
|
0.7950
|
|
|||||
June 30, 2016
|
|
August 12, 2016
|
|
54,442
|
|
|
24,262
|
|
|
911
|
|
|
79,615
|
|
|
0.7550
|
|
|||||
March 31, 2016
|
|
May 13, 2016
|
|
48,238
|
|
|
19,816
|
|
|
830
|
|
|
68,884
|
|
|
0.7050
|
|
|||||
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
|
|
•
|
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
|
||
2017
|
|
$
|
28,377
|
|
2018
|
|
28,788
|
|
|
2019
|
|
29,328
|
|
|
2020
|
|
29,959
|
|
|
2021
|
|
30,374
|
|
|
Thereafter
|
|
448,853
|
|
|
Total
|
|
$
|
595,679
|
|
Year
|
|
Total
|
||
2017
|
|
$
|
1,843
|
|
2018
|
|
1,843
|
|
|
2019
|
|
1,858
|
|
|
2020
|
|
1,858
|
|
|
2021
|
|
27
|
|
|
Thereafter
|
|
69
|
|
|
Total
|
|
$
|
7,498
|
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||
|
(in thousands, except per unit amounts)
|
||||||||||
Net income
|
$
|
267,894
|
|
|
$
|
184,814
|
|
|
$
|
59,329
|
|
Net (income) loss attributable to noncontrolling interests
|
(4,365
|
)
|
|
(24,268
|
)
|
|
11,352
|
|
|||
Net income attributable to partners
|
263,529
|
|
|
160,546
|
|
|
70,681
|
|
|||
Predecessor operations interest in net income
|
—
|
|
|
—
|
|
|
(1,508
|
)
|
|||
General partner interest in net income
|
(102,465
|
)
|
|
(46,478
|
)
|
|
(7,399
|
)
|
|||
Net income available to common and subordinated unitholders
|
$
|
161,064
|
|
|
$
|
114,068
|
|
|
$
|
61,774
|
|
Basic net income per common and subordinated unit
|
$
|
2.26
|
|
|
$
|
1.95
|
|
|
$
|
1.39
|
|
Diluted net income per common and subordinated unit
|
$
|
2.23
|
|
|
$
|
1.91
|
|
|
$
|
1.36
|
|
Basic average number of common and subordinated units outstanding
|
71,150
|
|
|
58,597
|
|
|
44,346
|
|
|||
Equity Participation Unit equivalent units
|
957
|
|
|
978
|
|
|
1,048
|
|
|||
Diluted average number of common and subordinated units outstanding
|
72,107
|
|
|
59,575
|
|
|
45,394
|
|
|
|
Percentage of
Segment Revenue
|
Crude Oil Transportation & Logistics
|
|
95%
|
Natural Gas Transportation & Logistics
|
|
58%
|
Processing & Logistics
|
|
91%
|
|
Equity Participation Units
|
|
Weighted Average
Grant Date Fair Value |
|||
|
|
|
|
|||
Outstanding at December 31, 2013
|
1,474,250
|
|
|
$
|
17.54
|
|
Granted
|
147,500
|
|
|
30.23
|
|
|
Forfeited
|
(96,000
|
)
|
|
(17.83
|
)
|
|
Outstanding at December 31, 2014
|
1,525,750
|
|
|
18.75
|
|
|
Granted
|
338,591
|
|
|
40.01
|
|
|
Vested
(1)
|
(480,555
|
)
|
|
(19.39
|
)
|
|
Forfeited
|
(58,825
|
)
|
|
(16.98
|
)
|
|
Outstanding at December 31, 2015
|
1,324,961
|
|
|
24.11
|
|
|
Granted
|
94,750
|
|
|
35.12
|
|
|
Vested
(1)
|
(35,998
|
)
|
|
(23.74
|
)
|
|
Forfeited
|
(43,829
|
)
|
|
(20.08
|
)
|
|
Outstanding at December 31, 2016
|
1,339,884
|
|
|
$
|
24.92
|
|
(1)
|
During the
years ended December 31, 2016
and
2015
, approximately
24,933
and
344,383
common units (net of tax withholding of approximately
11,065
and
136,172
common units) were issued in connection with the settlement of vested awards, respectively.
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||
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
|
$
|
380,503
|
|
|
$
|
—
|
|
|
$
|
380,503
|
|
|
$
|
304,227
|
|
|
$
|
—
|
|
|
$
|
304,227
|
|
|
$
|
28,343
|
|
|
$
|
—
|
|
|
$
|
28,343
|
|
Natural Gas Transportation & Logistics
|
128,869
|
|
|
(5,641
|
)
|
|
123,228
|
|
|
131,657
|
|
|
(5,384
|
)
|
|
126,273
|
|
|
140,080
|
|
|
(5,257
|
)
|
|
134,823
|
|
|||||||||
Processing & Logistics
|
101,391
|
|
|
—
|
|
|
101,391
|
|
|
105,697
|
|
|
—
|
|
|
105,697
|
|
|
208,390
|
|
|
—
|
|
|
208,390
|
|
|||||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Total revenue
|
$
|
610,763
|
|
|
$
|
(5,641
|
)
|
|
$
|
605,122
|
|
|
$
|
541,581
|
|
|
$
|
(5,384
|
)
|
|
$
|
536,197
|
|
|
$
|
376,813
|
|
|
$
|
(5,257
|
)
|
|
$
|
371,556
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||
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
|
$
|
264,391
|
|
|
$
|
5,383
|
|
|
$
|
269,774
|
|
|
$
|
165,204
|
|
|
$
|
5,384
|
|
|
$
|
170,588
|
|
|
$
|
15,711
|
|
|
$
|
—
|
|
|
$
|
15,711
|
|
Natural Gas Transportation & Logistics
|
148,622
|
|
|
(5,641
|
)
|
|
142,981
|
|
|
67,368
|
|
|
(5,384
|
)
|
|
61,984
|
|
|
67,593
|
|
|
(4,015
|
)
|
|
63,578
|
|
|||||||||
Processing & Logistics
|
15,093
|
|
|
258
|
|
|
15,351
|
|
|
22,746
|
|
|
—
|
|
|
22,746
|
|
|
33,089
|
|
|
—
|
|
|
33,089
|
|
|||||||||
Corporate and Other
|
(4,622
|
)
|
|
—
|
|
|
(4,622
|
)
|
|
(2,979
|
)
|
|
—
|
|
|
(2,979
|
)
|
|
(2,500
|
)
|
|
—
|
|
|
(2,500
|
)
|
|||||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Equity in earnings of unconsolidated investment
|
|
|
|
|
51,780
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
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
|
|
|
|
|
(40,688
|
)
|
|
|
|
|
|
(15,517
|
)
|
|
|
|
|
|
(7,648
|
)
|
|||||||||||||||
Depreciation and amortization expense, net of noncontrolling interest
|
|
|
|
|
(85,971
|
)
|
|
|
|
|
|
(75,529
|
)
|
|
|
|
|
|
(45,389
|
)
|
|||||||||||||||
Distributions from unconsolidated investment
|
|
|
|
|
(75,900
|
)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
(1,464
|
)
|
|||||||||||||||
Non-cash (loss) gain related to derivative instruments, net of noncontrolling interests
|
|
|
|
|
(1,547
|
)
|
|
|
|
|
|
—
|
|
|
|
|
|
|
184
|
|
|||||||||||||||
Non-cash compensation expense
|
|
|
|
|
(5,780
|
)
|
|
|
|
|
|
(5,103
|
)
|
|
|
|
|
|
(5,136
|
)
|
|||||||||||||||
Non-cash loss from disposal of assets
|
|
|
|
|
(1,849
|
)
|
|
|
|
|
|
(4,795
|
)
|
|
|
|
|
|
—
|
|
|||||||||||||||
Loss on extinguishment of debt
|
|
|
|
|
—
|
|
|
|
|
|
|
(226
|
)
|
|
|
|
|
|
—
|
|
|||||||||||||||
Net income attributable to partners
|
|
|
|
|
$
|
263,529
|
|
|
|
|
|
|
$
|
160,546
|
|
|
|
|
|
|
$
|
70,681
|
|
|
Year Ended December 31,
|
||||||||||
Capital Expenditures:
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
(in thousands)
|
|
|
||||||
Crude Oil Transportation & Logistics
|
$
|
29,893
|
|
|
$
|
38,802
|
|
|
$
|
631,883
|
|
Natural Gas Transportation & Logistics
|
28,475
|
|
|
10,478
|
|
|
20,580
|
|
|||
Processing & Logistics
|
12,351
|
|
|
16,107
|
|
|
13,187
|
|
|||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total capital expenditures
|
$
|
70,719
|
|
|
$
|
65,387
|
|
|
$
|
665,650
|
|
Assets:
|
December 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Crude Oil Transportation & Logistics
|
$
|
1,410,654
|
|
|
$
|
1,439,418
|
|
Natural Gas Transportation & Logistics
|
1,176,117
|
|
|
706,576
|
|
||
Processing & Logistics
|
411,999
|
|
|
409,795
|
|
||
Corporate and Other
|
20,201
|
|
|
6,285
|
|
||
Total assets
|
$
|
3,018,971
|
|
|
$
|
2,562,074
|
|
|
Quarter Ended 2016
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Total revenues
|
$
|
145,405
|
|
|
$
|
146,931
|
|
|
$
|
152,125
|
|
|
$
|
160,661
|
|
Operating income
|
$
|
60,990
|
|
|
$
|
59,896
|
|
|
$
|
64,598
|
|
|
$
|
70,886
|
|
Net income
|
$
|
45,111
|
|
|
$
|
93,158
|
|
|
$
|
61,818
|
|
|
$
|
67,807
|
|
Net income attributable to partners
|
$
|
44,070
|
|
|
$
|
92,048
|
|
|
$
|
60,734
|
|
|
$
|
66,677
|
|
Net income allocable to limited partners
|
$
|
23,717
|
|
|
$
|
66,728
|
|
|
$
|
33,060
|
|
|
$
|
37,559
|
|
Basic net income per limited partner unit
|
$
|
0.35
|
|
|
$
|
0.93
|
|
|
$
|
0.45
|
|
|
$
|
0.52
|
|
Diluted net income per limited partner unit
|
$
|
0.35
|
|
|
$
|
0.92
|
|
|
$
|
0.45
|
|
|
$
|
0.51
|
|
|
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
|
|
Name
|
|
Age
|
|
Position with our General Partner
|
David G. Dehaemers, Jr.
|
|
56
|
|
President, Chief Executive Officer and Director
|
William R. Moler
|
|
51
|
|
Executive Vice President, Chief Operating Officer and Director
|
Gary J. Brauchle
|
|
43
|
|
Executive Vice President and Chief Financial Officer
|
Christopher R. Jones
|
|
40
|
|
Vice President, General Counsel and Secretary
|
Richard L. Bullock
|
|
61
|
|
Vice President, Human Resources, Tax and Risk Management
|
Gary D. Watkins
|
|
44
|
|
Vice President and Chief Accounting Officer
|
Frank J. Loverro
|
|
47
|
|
Director
|
Stanley de J. Osborne
|
|
46
|
|
Director
|
Jeffrey A. Ball
|
|
42
|
|
Director
|
John T. Raymond
|
|
46
|
|
Director
|
Terrance D. Towner
|
|
58
|
|
Director
|
Roy N. Cook
|
|
59
|
|
Director
|
Jeffrey R. Armstrong
|
|
47
|
|
Director
|
•
|
Distributable Cash Flow of $285 - 305 million for the year ended December 31, 2016;
|
•
|
Distribution coverage of 1.05 - 1.15x for the year ended December 31, 2016; and
|
•
|
Growth of approximately 20% in our annualized distribution rate for the calendar year 2016.
|
•
|
Our Distributable Cash Flow for the year ended December 31, 2016 was approximately $408.5 million;
|
•
|
Our distribution coverage for the year ended December 31, 2016 was 1.27x; and
|
•
|
We grew our annualized distribution rate during calendar year 2016 by 27.3%.
|
•
|
The acquisition by us of a 25% membership interest in Rockies Express from a unit of Sempra U.S. Gas and Power in May 2016;
|
•
|
The acquisition by us of
100%
of the membership interests in Terminals and
100%
of the membership interests in NatGas from Tallgrass Development effective January 1, 2017; and
|
•
|
Substantially completing the Rockies Express Zone 3 Capacity Enhancement Project during 2016, for an additional 0.8 Bcf/d of east-to-west Zone 3 mainline capacity.
|
|
Year
|
|
Salary
(1)
|
|
Bonus
(2)
|
|
Equity Awards
(3)
|
|
All Other Compensation
(4)
|
|
Total
|
||||||||||
David G. Dehaemers, Jr.
|
2016
|
|
$
|
300,000
|
|
|
$
|
651,467
|
|
|
$
|
—
|
|
|
$
|
27,544
|
|
|
$
|
979,011
|
|
President, Chief Executive
|
2015
|
|
$
|
300,000
|
|
|
$
|
601,000
|
|
|
$
|
—
|
|
|
$
|
27,796
|
|
|
$
|
928,796
|
|
Officer and Director
|
2014
|
|
$
|
300,000
|
|
|
$
|
251,000
|
|
|
$
|
—
|
|
|
$
|
31,274
|
|
|
$
|
582,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
William R. Moler
|
2016
|
|
$
|
300,000
|
|
|
$
|
576,468
|
|
|
$
|
—
|
|
|
$
|
24,544
|
|
|
$
|
901,012
|
|
Executive Vice President, Chief
|
2015
|
|
$
|
300,000
|
|
|
$
|
551,000
|
|
|
$
|
—
|
|
|
$
|
27,796
|
|
|
$
|
878,796
|
|
Operating Officer and Director
|
2014
|
|
$
|
297,118
|
|
|
$
|
501,000
|
|
|
$
|
—
|
|
|
$
|
30,436
|
|
|
$
|
828,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gary J. Brauchle
|
2016
|
|
$
|
294,904
|
|
|
$
|
576,144
|
|
|
$
|
—
|
|
|
$
|
27,537
|
|
|
$
|
898,585
|
|
Executive Vice President and
|
2015
|
|
$
|
275,000
|
|
|
$
|
551,000
|
|
|
$
|
—
|
|
|
$
|
27,665
|
|
|
$
|
853,665
|
|
Chief Financial Officer
|
2014
|
|
$
|
272,116
|
|
|
$
|
501,000
|
|
|
$
|
—
|
|
|
$
|
26,059
|
|
|
$
|
799,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Christopher R. Jones
(5)
|
2016
|
|
$
|
240,068
|
|
|
$
|
426,467
|
|
|
$
|
69,836
|
|
|
$
|
24,486
|
|
|
$
|
760,857
|
|
Vice President, General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gary D. Watkins
|
2016
|
|
$
|
222,975
|
|
|
$
|
201,470
|
|
|
$
|
69,836
|
|
|
$
|
23,081
|
|
|
$
|
517,362
|
|
Vice President and
|
2015
|
|
$
|
212,322
|
|
|
$
|
201,000
|
|
|
$
|
1,226,264
|
|
|
$
|
22,152
|
|
|
$
|
1,661,738
|
|
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 2017, 2016 and 2015 based on performance in 2016, 2015 and 2014, respectively, as well as a bonus of $1,000 after tax that was paid to all employees in 2016 and a $1,000 pre-tax bonus that was paid to all employees in 2015 and 2014.
|
(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. Mr. Jones and Mr. Watkins were the only Named Executive Officers to receive grants under the TEP LTIP during 2016 and Mr. Watkins was the only Named Executive Officer to receive grants under the TEGP LTIP 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 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 16
–
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, $26,500 for Mr. Brauchle, $23,629 for Mr. Jones, and $22,297 for Mr. Watkins for the year ended December 31, 2016, $26,500 for Mr. Dehaemers, $26,500 for Mr. Moler, $26,477 for Mr. Brauchle, and $21,232 for Mr. Watkins for the year ended December 31, 2015, and $30,000 for Mr. Dehaemers, $29,615 for Mr. Moler, and $25,519 for Mr. Brauchle for the year ended December 31, 2014) and the dollar value of premiums paid for group life, accidental death and dismemberment insurance.
|
(5)
|
Mr. Jones was appointed Vice President, General Counsel and Secretary of TEP and TEGP effective July 1, 2016.
|
|
Grant Type
|
|
Grant Date
|
|
Number of Shares or Units
|
|
Grant Date Fair Value of Awards
(1)
|
||||
Christopher R. Jones
|
|
|
|
|
|
|
|
||||
Vice President, General Counsel
|
TEP Equity Participation Units
|
|
11/2/2016
|
|
|
2,000
|
|
(2)
|
$
|
69,836
|
|
and Secretary
|
TEGP Equity Participation Shares
|
|
—
|
|
|
—
|
|
(3)
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||
Gary D. Watkins
|
|
|
|
|
|
|
|
||||
Vice President and
|
TEP Equity Participation Units
|
|
11/2/2016
|
|
|
2,000
|
|
(2)
|
$
|
69,836
|
|
Chief Accounting Officer
|
TEGP Equity Participation Shares
|
|
—
|
|
|
—
|
|
(3)
|
$
|
—
|
|
(1)
|
The amounts in this column include EPUs granted pursuant to the TEP 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, if applicable, 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 16
–
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 will occur on November 1, 2019.
|
(3)
|
There were no equity participation shares granted under the TEGP LTIP during the year ended December 31, 2016.
|
|
Equity Participation Unit Awards
(1)
|
||||||||||||
|
Number of EPU Awards That Have Not Vested
|
|
Market Value of EPU Awards That Have Not Vested
(2)
|
|
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
|
|
(3)
|
$
|
1,581,651
|
|
|
—
|
|
|
$
|
—
|
|
Gary J. Brauchle
|
33,333
|
|
(3)
|
$
|
1,581,651
|
|
|
—
|
|
|
$
|
—
|
|
Christopher R. Jones
|
23,800
|
|
(4)
|
$
|
1,129,310
|
|
|
—
|
|
|
$
|
—
|
|
Gary D. Watkins
|
25,066
|
|
(5)
|
$
|
1,189,382
|
|
|
—
|
|
|
$
|
—
|
|
(1)
|
The award agreements pursuant to which the EPUs set forth above were granted provide for the settlement of the EPUs in common units.
|
(2)
|
Reflects the closing price of
$47.45
per TEP common unit at December 30, 2016.
|
(3)
|
Mr. Moler and Mr. Brauchle each hold 33,333 EPUs that will vest on May 13, 2017.
|
(4)
|
Mr. Jones holds 16,000 EPUs that will vest on May 13, 2017, 2,900 EPUs that will vest on May 13, 2018, 2,900 EPUs that will vest on May 13, 2019, and 2,000 EPUs that will vest on November 1, 2019.
|
(5)
|
Mr. Watkins holds 16,666 EPUs that will vest on May 13, 2017, 3,200 EPUs that will vest on May 13, 2018, 3,200 EPUs that will vest on May 13, 2019, and 2,000 EPUs that will vest on November 1, 2019.
|
|
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
|
|
Market or Payout Value of Unearned Equity Participation Shares That Have Not Vested
(2)
|
||||||
David G. Dehaemers, Jr.
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
William R. Moler
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Gary J. Brauchle
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Christopher R. Jones
|
—
|
|
|
$
|
—
|
|
|
35,000
|
|
(3)
|
$
|
938,000
|
|
Gary D. Watkins
|
—
|
|
|
$
|
—
|
|
|
35,000
|
|
(3)
|
$
|
938,000
|
|
(1)
|
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)
|
Reflects the closing price of
$26.80
per TEGP Class A share at December 30, 2016.
|
(3)
|
Mr. Jones and Mr. Watkins each hold 35,000 equity participation shares that will vest 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.
|
•
|
"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 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 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) a material diminution of Mr. Dehaemers' duties and responsibilities to Tallgrass Management or certain of its affiliates to a level inconsistent with those of a chief executive officer; (ii) 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); (iii) a willful or intentional breach of his employment agreement by Tallgrass Management; or (iv) 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 30, 2016 and multiplying the closing market price (TEP:
$47.45
and TEGP:
$26.80
) of the relevant units and shares on such date by the number of units and shares that would have vested.
|
•
|
Quarterly cash payments of $10,000, resulting in an effective annual cash payment of $40,000.
|
•
|
For serving as the conflicts committee chair, an annual committee chair cash payment of $5,000.
|
Name and Principal Position
|
Fees Earned
|
|
EPU Awards
|
|
Non-Equity Incentive Plan Compensation
|
|
Total
|
||||||||
Terrance D. Towner
|
$
|
40,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,000
|
|
Roy N. Cook
|
$
|
45,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
45,000
|
|
Jeffrey R. Armstrong
|
$
|
40,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
40,000
|
|
•
|
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)
|
|
25,619,218
|
|
|
35.51
|
%
|
OppenheimerFunds, Inc.
(4)
|
|
3,827,358
|
|
|
5.31
|
%
|
David G. Dehaemers, Jr.
(5)
|
|
312,847
|
|
|
*
|
|
William R. Moler
(6)
|
|
14,428
|
|
|
*
|
|
Gary J. Brauchle
(7)
|
|
25,780
|
|
|
*
|
|
Christopher R. Jones
|
|
10,378
|
|
|
*
|
|
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
|
|
51,000
|
|
|
*
|
|
Terrance D. Towner
|
|
24,000
|
|
|
*
|
|
Jeffrey R. Armstrong
|
|
2,000
|
|
|
*
|
|
All directors and executive officers as a group (13 persons)
|
|
578,161
|
|
|
*
|
|
*
|
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 and Tallgrass Operations that may be attributable to such directors and officers based on their indirect ownership of Tallgrass Equity and Tallgrass Operations.
|
(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 6, 2017. 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)
|
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.
|
(6)
|
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.
|
(7)
|
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)
|
|
1,339,884
|
|
|
$
|
24.92
|
|
|
8,290,800
|
|
Equity compensation plans not approved by security holders
(2)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
Total
|
|
1,339,884
|
|
|
$
|
24.92
|
|
|
8,290,800
|
|
(1)
|
Amounts shown represent equity participation unit awards outstanding under the TEP LTIP as of December 31, 2016. 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,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Audit fees
(1)
|
$
|
1,634
|
|
|
$
|
1,400
|
|
Audit related fees
(2)
|
—
|
|
|
—
|
|
||
Tax fees
(3)
|
445
|
|
|
495
|
|
||
Total
|
$
|
2,079
|
|
|
$
|
1,895
|
|
(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.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
118.4
|
|
|
$
|
48.0
|
|
Accounts receivable, net
|
59.4
|
|
|
87.6
|
|
||
Regulatory assets
|
12.3
|
|
|
0.3
|
|
||
Other current assets
|
5.6
|
|
|
4.0
|
|
||
Total Current Assets
|
195.7
|
|
|
139.9
|
|
||
Property, plant and equipment, net
|
6,063.7
|
|
|
5,941.0
|
|
||
Deferred charges and other assets
|
15.6
|
|
|
19.0
|
|
||
Total Noncurrent Assets
|
6,079.3
|
|
|
5,960.0
|
|
||
Total Assets
|
$
|
6,275.0
|
|
|
$
|
6,099.9
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
38.1
|
|
|
$
|
29.0
|
|
Accrued interest
|
56.3
|
|
|
56.3
|
|
||
Accrued taxes
|
67.7
|
|
|
68.2
|
|
||
MFN revenue sharing liability
|
9.4
|
|
|
9.5
|
|
||
Construction advances
|
11.7
|
|
|
12.3
|
|
||
Accrued other current liabilities
|
4.9
|
|
|
4.5
|
|
||
Total Current Liabilities
|
188.1
|
|
|
179.8
|
|
||
Long-term Liabilities and Deferred Credits:
|
|
|
|
||||
Long-term debt
|
2,561.7
|
|
|
2,557.9
|
|
||
Other long-term liabilities and deferred credits
|
95.2
|
|
|
44.0
|
|
||
Total Long-term Liabilities and Deferred Credits
|
2,656.9
|
|
|
2,601.9
|
|
||
|
|
|
|
||||
Commitments and Contingencies
|
|
|
|
||||
|
|
|
|
||||
Members' Equity:
|
|
|
|
||||
Members' equity
|
3,430.0
|
|
|
3,318.2
|
|
||
Total Liabilities and Members' Equity
|
$
|
6,275.0
|
|
|
$
|
6,099.9
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Transportation services
|
$
|
715.1
|
|
|
$
|
779.0
|
|
|
$
|
703.6
|
|
Natural gas sales
|
—
|
|
|
2.1
|
|
|
36.7
|
|
|||
Total Revenues
|
715.1
|
|
|
781.1
|
|
|
740.3
|
|
|||
Operating Costs and Expenses:
|
|
|
|
|
|
||||||
Cost of natural gas sales (exclusive of depreciation and amortization shown below)
|
—
|
|
|
2.3
|
|
|
32.3
|
|
|||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
26.5
|
|
|
30.2
|
|
|
29.8
|
|
|||
Operations and maintenance
|
24.8
|
|
|
21.2
|
|
|
19.4
|
|
|||
Depreciation and amortization
|
204.3
|
|
|
199.4
|
|
|
195.1
|
|
|||
General and administrative
|
39.9
|
|
|
26.7
|
|
|
21.5
|
|
|||
Taxes, other than income taxes
|
71.9
|
|
|
73.9
|
|
|
70.8
|
|
|||
Total Operating Costs and Expenses
|
367.4
|
|
|
353.7
|
|
|
368.9
|
|
|||
Operating Income
|
347.7
|
|
|
427.4
|
|
|
371.4
|
|
|||
|
|
|
|
|
|
||||||
Other (Expense) Income:
|
|
|
|
|
|
||||||
Interest expense, net
|
(158.6
|
)
|
|
(170.1
|
)
|
|
(185.3
|
)
|
|||
Gain on litigation settlement
|
61.7
|
|
|
—
|
|
|
—
|
|
|||
Other income, net
|
27.7
|
|
|
6.6
|
|
|
3.3
|
|
|||
Total Other Expense, net
|
(69.2
|
)
|
|
(163.5
|
)
|
|
(182.0
|
)
|
|||
Net Income to Members
|
$
|
278.5
|
|
|
$
|
263.9
|
|
|
$
|
189.4
|
|
|
Total
|
|
Rockies Express Holdings, LLC
|
|
TEP REX Holdings, LLC
|
|
Sempra REX Holdings, LLC
|
|
P66 REX LLC
|
||||||||||
|
(in millions)
|
||||||||||||||||||
Members' Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at December 31, 2013
|
$
|
2,826.8
|
|
|
$
|
1,413.2
|
|
|
$
|
—
|
|
|
$
|
706.8
|
|
|
$
|
706.8
|
|
Net Income to Members
|
189.4
|
|
|
94.6
|
|
|
—
|
|
|
47.4
|
|
|
47.4
|
|
|||||
Contributions from Members
|
165.7
|
|
|
83.1
|
|
|
—
|
|
|
41.3
|
|
|
41.3
|
|
|||||
Distributions to Members
|
(361.7
|
)
|
|
(180.9
|
)
|
|
—
|
|
|
(90.4
|
)
|
|
(90.4
|
)
|
|||||
Balance at December 31, 2014
|
$
|
2,820.2
|
|
|
$
|
1,410.0
|
|
|
$
|
—
|
|
|
$
|
705.1
|
|
|
$
|
705.1
|
|
Net Income to Members
|
263.9
|
|
|
131.9
|
|
|
—
|
|
|
66.0
|
|
|
66.0
|
|
|||||
Contributions from Members
|
733.1
|
|
|
366.5
|
|
|
—
|
|
|
183.3
|
|
|
183.3
|
|
|||||
Distributions to Members
|
(499.0
|
)
|
|
(249.4
|
)
|
|
—
|
|
|
(124.8
|
)
|
|
(124.8
|
)
|
|||||
Balance at December 31, 2015
|
$
|
3,318.2
|
|
|
$
|
1,659.0
|
|
|
$
|
—
|
|
|
$
|
829.6
|
|
|
$
|
829.6
|
|
Net Income to Members
|
278.5
|
|
|
139.3
|
|
|
42.6
|
|
|
27.0
|
|
|
69.6
|
|
|||||
Contributions from Members
|
304.9
|
|
|
152.5
|
|
|
50.0
|
|
|
26.2
|
|
|
76.2
|
|
|||||
Distributions to Members
|
(471.6
|
)
|
|
(235.8
|
)
|
|
(75.9
|
)
|
|
(42.0
|
)
|
|
(117.9
|
)
|
|||||
Transfer of equity interest (see Note 1)
|
—
|
|
|
—
|
|
|
840.8
|
|
|
(840.8
|
)
|
|
—
|
|
|||||
Balance at December 31, 2016
|
$
|
3,430.0
|
|
|
$
|
1,715.0
|
|
|
$
|
857.5
|
|
|
$
|
—
|
|
|
$
|
857.5
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income to Members
|
$
|
278.5
|
|
|
$
|
263.9
|
|
|
$
|
189.4
|
|
Adjustments to reconcile net income to net cash flows from operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
209.6
|
|
|
204.8
|
|
|
201.1
|
|
|||
Changes in components of working capital:
|
|
|
|
|
|
||||||
Accounts receivable
|
28.2
|
|
|
(23.8
|
)
|
|
6.3
|
|
|||
Current regulatory assets and liabilities, net
|
(12.5
|
)
|
|
(10.2
|
)
|
|
(15.2
|
)
|
|||
Other current assets and liabilities
|
(0.7
|
)
|
|
(0.9
|
)
|
|
0.6
|
|
|||
Accounts payable
|
12.2
|
|
|
3.7
|
|
|
0.8
|
|
|||
Accrued taxes
|
(0.6
|
)
|
|
3.7
|
|
|
(3.1
|
)
|
|||
Customer deposits
|
52.9
|
|
|
32.2
|
|
|
—
|
|
|||
Other operating, net
|
(22.5
|
)
|
|
(3.0
|
)
|
|
(6.9
|
)
|
|||
Net Cash Provided by Operating Activities
|
545.1
|
|
|
470.4
|
|
|
373.0
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(305.7
|
)
|
|
(281.9
|
)
|
|
(158.6
|
)
|
|||
Other investing, net
|
(2.3
|
)
|
|
(1.9
|
)
|
|
(2.0
|
)
|
|||
Net Cash Used in Investing Activities
|
(308.0
|
)
|
|
(283.8
|
)
|
|
(160.6
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Distributions to Members
|
(471.6
|
)
|
|
(499.0
|
)
|
|
(361.7
|
)
|
|||
Contributions from Members
|
304.9
|
|
|
733.1
|
|
|
165.7
|
|
|||
Repayment of debt
|
—
|
|
|
(450.0
|
)
|
|
—
|
|
|||
Payments for deferred financing costs
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|||
Net Cash Used in Financing Activities
|
(166.7
|
)
|
|
(216.6
|
)
|
|
(196.0
|
)
|
|||
Net Change in Cash and Cash Equivalents
|
70.4
|
|
|
(30.0
|
)
|
|
16.4
|
|
|||
Cash and Cash Equivalents, beginning of period
|
48.0
|
|
|
78.0
|
|
|
61.6
|
|
|||
Cash and Cash Equivalents, end of period
|
$
|
118.4
|
|
|
$
|
48.0
|
|
|
$
|
78.0
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
||||||
Cash paid during the period for interest (net of capitalized interest)
|
$
|
155.6
|
|
|
$
|
170.7
|
|
|
$
|
181.3
|
|
Schedule of Noncash Investing and Financing Activities:
|
|
|
|
|
|
||||||
Increase in accrual for payment of property, plant and equipment
|
$
|
—
|
|
|
$
|
8.4
|
|
|
$
|
—
|
|
•
|
Zone 1 - a
328
-mile pipeline from the Meeker Hub in Northwest Colorado, across Southern Wyoming to the Cheyenne Hub in Weld County, Colorado capable of transporting 2.0 Bcf/d of natural gas from west to east;
|
•
|
Zone 2 - a
714
-mile pipeline from the Cheyenne Hub to an interconnect in Audrain County, Missouri capable of transporting 1.8 Bcf/d of natural gas from west to east; and
|
•
|
Zone 3 - a
643
-mile pipeline from Audrain County, Missouri to Clarington, Ohio, which is bi-directional and capable of transporting 1.8 Bcf/d of natural gas from west to east and 2.6 Bcf/d of natural gas from east to west.
|
•
|
50%
- Rockies Express Holdings, LLC ("REX Holdings"), an indirect wholly owned subsidiary of Tallgrass Development, LP ("TD");
|
•
|
25%
- TEP REX Holdings, LLC ("TEP REX"), an indirect wholly owned subsidiary of Tallgrass Energy Partners, LP ("TEP"); and
|
•
|
25%
- P66REX LLC, formerly known as COPREX LLC, a wholly owned subsidiary of Phillips 66.
|
•
|
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 a 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.
|
•
|
Rockies Express management has formed an implementation team that meets to discuss implementation challenges, technical interpretations, industry-specific treatment of certain revenue contract types, and project status.
|
•
|
Rockies Express management is currently reviewing contracts for each revenue stream identified. Through this process, management is determining and documenting expected changes in revenue recognition upon adoption of the revised guidance.
|
•
|
Rockies Express management plans to evaluate the potential information technology and internal control changes that will be required for adoption based on the findings from its contract review process.
|
•
|
Rockies Express management plans to provide internal training and awareness related to the revised guidance to the key stakeholders throughout its organization.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Natural gas pipelines
|
$
|
7,085.8
|
|
|
$
|
7,062.6
|
|
General and other
|
9.9
|
|
|
9.2
|
|
||
Construction work in progress
|
503.2
|
|
|
202.0
|
|
||
Accumulated depreciation and amortization
|
(1,535.2
|
)
|
|
(1,332.8
|
)
|
||
Total property, plant and equipment, net
|
$
|
6,063.7
|
|
|
$
|
5,941.0
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
6.85% senior notes due July 15, 2018
|
$
|
550.0
|
|
|
$
|
550.0
|
|
6.00% senior notes due January 15, 2019
|
525.0
|
|
|
525.0
|
|
||
5.625% senior notes due April 15, 2020
|
750.0
|
|
|
750.0
|
|
||
7.50% senior notes due July 15, 2038
|
250.0
|
|
|
250.0
|
|
||
6.875% senior notes due April 15, 2040
|
500.0
|
|
|
500.0
|
|
||
Less: Unamortized debt discount and debt issuance costs
|
(13.3
|
)
|
|
(17.1
|
)
|
||
Total long-term debt
|
$
|
2,561.7
|
|
|
$
|
2,557.9
|
|
Year
|
|
Scheduled Maturities
|
||
2017
|
|
$
|
—
|
|
2018
|
|
550.0
|
|
|
2019
|
|
525.0
|
|
|
2020
|
|
750.0
|
|
|
2021
|
|
—
|
|
|
Thereafter
|
|
750.0
|
|
|
Total scheduled maturities
|
|
2,575.0
|
|
|
Unamortized debt discount and debt issuance costs
|
|
(13.3
|
)
|
|
Total debt
|
|
$
|
2,561.7
|
|
•
|
incurring secured indebtedness;
|
•
|
entering into mergers, consolidations and sales of assets;
|
•
|
granting liens;
|
•
|
entering into transactions with affiliates; and
|
•
|
making restricted payments.
|
|
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 millions)
|
|
|
||||||||||||||||
December 31, 2016
|
$
|
—
|
|
|
$
|
2,684.9
|
|
|
$
|
—
|
|
|
$
|
2,684.9
|
|
|
$
|
2,561.7
|
|
December 31, 2015
|
$
|
—
|
|
|
$
|
2,412.6
|
|
|
$
|
—
|
|
|
$
|
2,412.6
|
|
|
$
|
2,557.9
|
|
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(in millions)
|
||||||||||
Revenues: Transportation services
(1)
|
$
|
14.4
|
|
|
$
|
10.8
|
|
|
$
|
13.5
|
|
Charges from TD:
|
|
|
|
|
|
||||||
Compensation, benefits and other charges
|
$
|
20.6
|
|
|
$
|
18.5
|
|
|
$
|
17.1
|
|
General and administrative charges from affiliate
|
$
|
9.4
|
|
|
$
|
8.6
|
|
|
$
|
5.9
|
|
Oversight Fees:
|
|
|
|
|
|
||||||
Tallgrass NatGas Operator, LLC
|
$
|
6.2
|
|
|
$
|
6.3
|
|
|
$
|
5.7
|
|
(1)
|
Transportation services revenue for the
years ended
December 31, 2016
,
2015
, and
2014
is primarily from Sempra Energy prior to the May 6, 2016 sale of Sempra Energy's ownership to TEP REX Holdings, LLC as described in
Note 1
–
Description of Business
.
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Receivables from affiliated companies:
|
|
|
|
||||
Sempra Energy
|
$
|
—
|
|
|
$
|
1.2
|
|
Total receivables from affiliated companies
|
$
|
—
|
|
|
$
|
1.2
|
|
Payables to affiliated companies:
|
|
|
|
||||
TD
|
$
|
4.5
|
|
|
2.8
|
|
|
TEP
|
0.6
|
|
|
—
|
|
||
Total payables to affiliated companies
|
$
|
5.1
|
|
|
$
|
2.8
|
|
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in millions)
|
||||||
Affiliate gas balance receivables
|
$
|
—
|
|
|
$
|
0.2
|
|
Affiliate gas balance payables
|
$
|
0.2
|
|
|
$
|
0.1
|
|
Year
|
|
Future Minimum Lease Payments
|
||
2017
|
|
$
|
29.2
|
|
2018
|
|
29.2
|
|
|
2019
|
|
29.2
|
|
|
2020
|
|
29.2
|
|
|
2021
|
|
29.2
|
|
|
Thereafter
|
|
174.9
|
|
|
Total
|
|
$
|
320.9
|
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Limited Partnership of Tallgrass Energy Partners, LP, dated as of February 6, 2013 (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, dated as of February 7, 2013 (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, dated as of February 6, 2013 (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).
|
|
|
|
4.1
|
|
Indenture, dated September 1, 2016, among Tallgrass Energy Partners, LP, Tallgrass Energy Finance Corp., the Guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K filed on September 1, 2016).
|
|
|
|
4.2
|
|
Form of 5.50% Senior Note (included as Exhibit A in Exhibit 4.1 which is incorporated by reference to Exhibit 4.1 to the Partnership’s Current Report on Form 8-K filed on September 1, 2016).
|
|
|
|
10.1
|
|
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).
|
|
|
|
10.2†
|
|
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).
|
|
|
|
10.3†
|
|
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).
|
|
|
|
10.4†*
|
|
Second Amended and Restated Employment Agreement, dated November 2, 2016, by and among Tallgrass Management, LLC, Tallgrass Energy Holdings, LLC, Tallgrass Equity, LLC, Tallgrass MLP GP, LLC, TEGP Management, LLC and David G. Dehaemers, Jr.
|
|
|
|
10.5
|
|
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).
|
|
|
|
10.6
|
|
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).
|
|
|
|
10.7
|
|
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).
|
|
|
|
10.8
|
|
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 (incorporated by reference to Exhibit 10.10 to the Partnership’s Annual Report on Form 10-K filed on February 17, 2016).
|
|
|
|
10.9
|
|
Amendment No. 4 to Credit Agreement, dated as of April 27, 2016, 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 April 28, 2016).
|
|
|
|
10.10
|
|
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).
|
|
|
|
10.11
|
|
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 (incorporated by reference to Exhibit 10.14 to the Partnership’s Annual Report on Form 10-K filed on February 17, 2016).
|
|
|
|
10.12
|
|
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).
|
|
|
|
10.13
|
|
Membership Interest Purchase Agreement, dated as of March 29, 2016, by and between Sempra REX Holdings, LLC and TEP REX Holdings, LLC (as successor by assignment to Rockies Express Holdings, LLC) (incorporated by reference to Exhibit 10.2 to the Partnership’s Quarterly Report on Form 10-Q filed on August 3, 2016).
|
|
|
|
10.14
|
|
Assignment and Assumption Agreement, dated as of May 6, 2016, by and among Rockies Express Holdings, LLC, TEP REX Holdings, LLC and, for the limited purposes set forth therein, Tallgrass Development, LP (incorporated by reference to Exhibit 10.3 to the Partnership’s Quarterly Report on Form 10-Q filed on August 3, 2016).
|
|
|
|
10.15
|
|
Second Amended and Restated Limited Liability Company Agreement of Rockies Express Pipeline LLC, dated effective as of January 1, 2010, among Rockies Express Holdings, LLC (as successor by assignment to Kinder Morgan W2E Pipeline LLC), TEP REX Holdings, LLC (as successor by assignment to Sempra REX Holdings, LLC and P&S Project I, LLC), and P66REX LLC (f/k/a COPREX LLC) (incorporated by reference to Exhibit 10.4 to the Partnership’s Quarterly Report on Form 10-Q filed on August 3, 2016).
|
|
|
|
10.16
|
|
Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Rockies Express Pipeline LLC, dated effective as of November 13, 2012, among Kinder Morgan W2E Pipeline LLC, TEP REX Holdings, LLC (as successor by assignment to Sempra REX Holdings, LLC and P&S Project I, LLC), Rockies Express Holdings, LLC and P66REX LLC (f/k/a COPREX LLC) (incorporated by reference to Exhibit 10.5 to the Partnership’s Quarterly Report on Form 10-Q filed on August 3, 2016).
|
|
|
|
10.17
|
|
Amendment No. 2 to Second Amended and Restated Limited Liability Company Agreement, dated effective as of May 5, 2016, among Sempra REX Holdings, LLC and P&S Project I, LLC, Rockies Express Holdings, LLC and P66REX LLC (incorporated by reference to Exhibit 10.6 to the Partnership’s Quarterly Report on Form 10-Q filed on August 3, 2016).
|
|
|
|
10.18
|
|
Purchase and Sale Agreement, dated as of January 1, 2017, 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 January 3, 2017).
|
|
|
|
12.1*
|
|
Ratio of Earnings to Fixed Charges
|
|
|
|
21.1*
|
|
List of Subsidiaries of Tallgrass Energy Partners, LP.
|
|
|
|
23.1*
|
|
Consent of PricewaterhouseCoopers LLP on Consolidated Financial Statements of Tallgrass Energy Partners, LP and the effectiveness of Tallgrass Energy Partners, LP's internal control over financial reporting.
|
|
|
|
23.2*
|
|
Consent of PricewaterhouseCoopers LLP on Financial Statements of Rockies Express Pipeline LLC.
|
|
|
|
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 15, 2017
|
David G. Dehaemers, Jr.
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Gary J. Brauchle
|
|
Executive Vice President and Chief Financial Officer
|
|
February 15, 2017
|
Gary J. Brauchle
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Gary D. Watkins
|
|
Vice President and Chief Accounting Officer
|
|
February 15, 2017
|
Gary D. Watkins
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Frank J. Loverro
|
|
Director
|
|
February 15, 2017
|
Frank J. Loverro
|
|
|
|
|
|
|
|
|
|
/s/ Stanley de J. Osborne
|
|
Director
|
|
February 15, 2017
|
Stanley de J. Osborne
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey A. Ball
|
|
Director
|
|
February 15, 2017
|
Jeffrey A. Ball
|
|
|
|
|
|
|
|
|
|
/s/ John T. Raymond
|
|
Director
|
|
February 15, 2017
|
John T. Raymond
|
|
|
|
|
|
|
|
|
|
/s/ William R. Moler
|
|
Director
|
|
February 15, 2017
|
William R. Moler
|
|
|
|
|
|
|
|
|
|
/s/ Terrance D. Towner
|
|
Director
|
|
February 15, 2017
|
Terrance D. Towner
|
|
|
|
|
|
|
|
|
|
/s/ Roy N. Cook
|
|
Director
|
|
February 15, 2017
|
Roy N. Cook
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey R. Armstrong
|
|
Director
|
|
February 15, 2017
|
Jeffrey R. Armstrong
|
|
|
|
|
1.
|
Employment
. The Company agrees to continue to employ Dehaemers and Dehaemers agrees to continue to be employed by the Company as President and Chief Executive Officer upon the terms and conditions of this Agreement until such employment is terminated as provided in Section 7. So long as Dehaemers is employed by the Company as its President and Chief Executive Officer, each of the Partnership Entities agrees that Dehaemers will also serve as and be appointed President and Chief Executive Officer of each of the Partnership Entities.
|
2.
|
Compensation
. For all services rendered by Dehaemers to the Company, the Partnership Entities and each of the downstream affiliates of the Partnership Entities (the Partnership Entities and such downstream affiliates, the “Constituent Companies”), the Company will pay Dehaemers a base monthly salary of $25,000 ($300,000 if annualized), which will accrue and be payable monthly in arrears in accordance with the Company’s general payroll practices. All payments made and benefits provided by the Company to Dehaemers under this Agreement are subject to any applicable withholding and other applicable taxes.
|
3.
|
Additional Benefits; Expenses; Liability Insurance
.
|
(a)
|
Dehaemers will be eligible for additional benefits, by way of insurance, hospitalization and vacations normally provided to senior executives of the Company, pursuant to the terms of those plans, programs and policies of the Company in effect during his employment by the Company, and such additional benefits, if any, as determined by the Board of Managers of Holdings.
|
(b)
|
The Company will reimburse Dehaemers for all ordinary and necessary out-of-pocket expenses incurred and paid by Dehaemers in the course of the performance of his duties pursuant to this Agreement and
|
(c)
|
So long as Dehaemers is employed under this Agreement and thereafter so long as Dehaemers is subject to any possible claim, the Company and the Partnership Entities will purchase and maintain in effect for the benefit of Dehaemers one or more valid and enforceable policies of directors and officers liability insurance providing, in all respects, coverage at least as beneficial to Dehaemers as that provided pursuant to the insurance policies in place on the date hereof.
|
4.
|
Duties
. So long as Dehaemers is employed under this Agreement, Dehaemers will (a) devote his best efforts and his entire business time (other than as a result of illness or disability) to further the interests of the Company and the Constituent Companies, (b) carry out the reasonable and lawful instructions of the Board of Managers of Holdings (other than as a result of illness or disability) with respect to those matters reserved to the Board of Managers of Holdings pursuant to Section 8.1 of the Second Amended and Restated Limited Liability Company Agreement of Holdings, dated May 11, 2015 (as amended, restated or otherwise modified from time to time, the “
Holdings LLC Agreement
”), (c) truthfully and accurately maintain and preserve the records of the Company and the Constituent Companies and make all reports reasonably required by the Board of Managers of Holdings, and (d) fully account for all monies and other property of the Company or any of the Constituent Companies that he may from time to time have in his custody and deliver the same to the Company or its designee to the extent reasonably directed to do so; provided that, so long as it does not materially interfere with his duties, nothing herein will preclude Dehaemers from accepting appointment to or continuing to serve on any board of directors (or similar governing body) or as trustee of any business (not competing with any of the Constituent Companies) or any charitable organization, from engaging in charitable and community activities, from delivering lectures and fulfilling speaking engagements, or from directing and managing his personal investments and those of his family.
|
5.
|
Covenant Not to Compete
. Dehaemers acknowledges that, during his employment with the Company, he, at the expense of the Company and the Constituent Companies, will establish favorable relations with the customers to, and regulators of, the Company and the Constituent Companies and will receive and have access to the intellectual property and confidential information of the Company and the Constituent Companies. Therefore, in consideration of these relationships, his employment with the Company, and to further protect the intellectual property and confidential information of the Company and the Constituent Companies, Dehaemers agrees that, during the term of his employment by the Company and for a period of one year from and after the voluntary or involuntary termination of employment for any or no reason, he will not, directly or indirectly, without the express written consent of the Board of Managers of Holdings except when and as requested to do in and about the performance of his duties under this Agreement:
|
(a)
|
own, manage, operate, control or participate in the ownership, management, operation or control of, or have any interest, financial or otherwise, in or act as an officer, director, partner, principal, member, manager, shareholder, employee, agent, representative, consultant or independent contractor of, or in any way assist any person or entity in the conduct of, any business located in or doing business in the area where a Constituent Company is engaged or becomes engaged in any business competitive to any business engaged in by a Constituent Company during the term of his employment by the Company, including, but not limited to, any business that is engaged in the interstate transportation via pipeline of natural gas, petroleum or petroleum byproducts; provided, however, that notwithstanding the foregoing, Dehaemers may own up to 5% of the outstanding equity securities in any corporation or entity that is listed upon a national stock exchange or actively traded in the over-the-counter market; provided, further, that notwithstanding the foregoing, Dehaemers may own, directly or indirectly, an ownership interest in the general partner of Plains All American Pipeline, L.P. or their affiliates or successors; provided, further, that notwithstanding the foregoing, Dehaemers may place or invest money with one or more private equity firms (or related investment funds or vehicles) that compete (or own or invest in companies that compete) with a Constituent Company so long as Dehaemers does not control or otherwise direct the activities of the private equity firm (or related investment funds or vehicles) or control or otherwise direct the investment in the competing portfolio company; or
|
(b)
|
entice, induce or in any manner influence any person who has an employee or independent contractor relationship with the Company or any Constituent Company and with whom Dehaemers had contact, directly or indirectly, during the term of his employment to change or end such relationship for the purpose of engaging in a business in competition with any business engaged in by the Company or any Constituent Company during the term of his employment by the Company or hire any such person.
|
6.
|
Specific Performance
. Recognizing that irreparable damage will result to the Company and the Constituent Companies in the event of the breach of any of the foregoing covenants and assurances by Dehaemers contained in Section 5, and that the Company’s remedies at law for any such breach or threatened breach will be inadequate, the Company, in addition to such other remedies that may be available to it, will be entitled to an injunction, including a mandatory injunction, to be issued by any court of competent jurisdiction ordering compliance with this Agreement or enjoining and restraining Dehaemers, and each and every person and entity acting in concert or participation with him, from the continuation of the breach. The Company will not be required to obtain a bond in an amount greater than $1,000. The covenants and obligations of Dehaemers set forth in Section 5 are in addition to and not in lieu of or exclusive of any other obligations and duties of Dehaemers to the Company, whether express or implied in fact or in law.
|
7.
|
Termination
.
|
(a)
|
Dehaemers’s employment by the Company will terminate immediately (unless otherwise determined by the Board of Managers of Holdings) upon the occurrence of any of the following: (1) the death, mental or physical incapacity or inability to perform the essential functions of his job for a consecutive period of 90 days or a non-consecutive period of 120 days during any 12-month period, as reasonably determined by the Board of Managers of Holdings after consultation with an independent physician selected by the Company (such periods to be extended if appropriate as a reasonable accommodation for a disability); or (2) the winding up and final distribution of the assets of each of Development, the MLP and TEGP Partnership.
|
(b)
|
Dehaemers’s employment by the Company will terminate on the date specified in a notice of termination (which may not be less than 30 days after the date of the notice) from a majority of the members of the Board of Managers of Holdings (excluding Dehaemers or any of his designees), which may be sent at the discretion of a majority of the members of the Board of Managers of Holdings (excluding Dehaemers or any of his designees), as a result of the occurrence of any of the following: (1) Dehaemers and his Permitted Transferees (as defined in the Holdings LLC Agreement) cease to control Tallgrass KC, LLC; or (2) Dehaemers and his Permitted Transferees cease to have direct or indirect beneficial ownership of at least 12.5% of the total Common GP Interests (as such term is defined in the Holdings LLC Agreement).
|
(c)
|
The Company may terminate Dehaemers’s employment for Cause or without Cause. “Cause” means: (1) his conviction of, or plea of nolo contendere to, any crime or offense constituting a felony under applicable law, other than any motor vehicle violations for which no custodial penalty is imposed; (2) his commission of fraud or embezzlement against the Company or any Constituent Company; (3) gross neglect by Dehaemers of, or gross or willful misconduct by Dehaemers in connection with the performance of, his duties to the Company that, if curable, is not cured within 30 days after a written notice of such gross neglect, or gross or willful misconduct, specifically identifying the gross neglect or misconduct, is delivered by a majority of the members of the Board of Managers of Holdings (excluding Dehaemers or any of his designees) to Dehaemers; (4) Dehaemers willfully fails or refuses to carry out the reasonable and lawful instructions of the Board of Managers of Holdings (other than as a result of illness or disability) with respect to those matters reserved to the Board of Managers of Holdings pursuant to Section 8.1 of the Holdings LLC Agreement, and, in each case, such failure or refusal has continued for a period of 30 calendar days following written notice from the majority of the members of the Board of Managers of Holdings (excluding Dehaemers or any of his designees); (5) his failure to perform the duties and responsibilities of his office as his primary business activity, provided that, so long as it does not materially interfere with his duties on behalf of the Company, nothing herein will preclude Dehaemers from accepting appointment to or continuing to serve on any board of directors (or similar governing body) or as trustee of any business corporation (not competing with any Constituent Company) or any charitable organization, from engaging in charitable and community activities, from delivering lectures and fulfilling speaking engagements, or from directing and managing his personal investments and those of his family; (6) a judicial determination that he has breached his fiduciary duties with respect to the Company or any Constituent Company; or (7) his willful and material breach of his obligations in the Holdings LLC Agreement (in his capacity as an officer and not in his capacity as a Member), his obligations in the Second Amended and Restated Limited Liability Company Agreement of Tallgrass Equity, dated as of May 12, 2015, as amended, restated or otherwise modified from time to time (in his capacity as an officer and not in his capacity as a Member), his obligations in the Second Amended and Restated Limited Liability Company Agreement of MLP GP, dated as of May 17, 2013, as amended, restated or otherwise modified from time to time (in his capacity as an officer and not in his capacity as a Member), or his obligations in the Amended and Restated Limited Liability Company Agreement of TEGP Management, dated May 12, 2015, as amended, restated or otherwise modified from time to time (in his capacity as an officer and not in his capacity as a Member) (such agreements, collectively, the “Organizational Documents”), including
|
(d)
|
Dehaemers may terminate his employment with the Company with good reason or without good reason. A “Resignation for Good Reason” means his resignation for good reason (as defined below) if (x) he provides written notice to the Company describing in reasonable detail the event and stating that his employment will terminate upon a specified date in such notice (“Good Reason Termination Date”), which date is not earlier than 30 days after the date such notice is provided to the Company (“Notice Delivery Date”) and not later than 90 days after the Notice Delivery Date and (y) the Company does not remedy the event prior to the Good Reason Termination Date. For purposes of this Agreement, Dehaemers has “good reason” if there occurs without his prior written consent:
|
(1)
|
a material diminution of his duties and responsibilities to the Company or any Constituent Company to a level inconsistent with those of a chief executive officer;
|
(2)
|
a material reduction in his cash compensation or a material reduction in the aggregate welfare benefits provided to him (not including any reduction related to a broader compensation or benefit reduction that is not limited to him specifically);
|
(3)
|
a willful or intentional breach of this Agreement by the Company; or
|
(4)
|
a willful or intentional breach of a material provision of any of the Organizational Documents by any Partnership Entity or the Primary Investors (as defined in the Holdings LLC Agreement) that has a material and adverse effect on Dehaemers.
|
(e)
|
If (1) Dehaemers’s employment with the Company is terminated pursuant to Sections 7(a) or 7(b), (2) the Company terminates his employment for Cause or (3) Dehaemers terminates his employment other than as a result of a Resignation for Good Reason, the Company will pay or provide to him:
|
(i)
|
such unpaid salary as Dehaemers has earned up to the date of his termination; and
|
(ii)
|
the other benefits and other amounts due him under Section 3 or as otherwise required by applicable law, as he has earned up to the date of his termination.
|
(f)
|
If (1) the Company terminates Dehaemers’s employment without Cause or (2) Dehaemers terminates his employment as a result of a Resignation for Good Reason, the Company will pay or provide to him:
|
(i)
|
such unpaid salary as Dehaemers has earned up to the date of his termination;
|
(ii)
|
an amount equal to $900,000, payable as a lump sum within 60 days after the termination of employment; and
|
(iii)
|
such other benefits and other amounts due him under Section 3 or as otherwise required by applicable law, as he has earned up to the date of his termination.
|
(g)
|
As a condition to receiving the termination payments and benefits provided in this Section 7, Dehaemers will execute and deliver to the Company a release, in a form reasonably satisfactory to the Company, releasing all claims arising out of his employment (other than enforcement of this Agreement, his rights under any of the Company’s incentive compensation and employee benefit plans and programs to which Dehaemers is entitled under this Agreement, and any claim for any tort for personal injury not arising out of or related to this termination).
|
(h)
|
So long as Dehaemers is an employee of the Company and thereafter (including after the termination of his employment), he will not make any disparaging comment in any format, whether written, electronic or oral, to any client, customer, account, supplier, service provider, agency, regulator, employee, the media, or any other person or entity regarding the Company or any Constituent Company or any of their clients, customers, accounts, suppliers, service providers, employees, agents, regulators, officers or directors or otherwise relating to the business of the Company or any Constituent Company.
|
(i)
|
If Dehaemers is a “Specified Employee” (as defined under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”)) as of the date of his termination of employment, as determined by the Company, and any equity security of the Company or any Constituent Company is publicly traded on an established securities market or otherwise, the payment of any amount under this Agreement on account of his Section 409A Separation that is deferred compensation subject to the provisions of Code Section 409A and not otherwise excluded from Code Section 409A, will not be paid until the later of the first business day that is six months after the date after his Section 409A Separation or the date the payment is otherwise payable under this Agreement (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed will be paid or reimbursed to Dehaemers in a lump sum, without interest, and any remaining payments due under this Agreement will be paid or provided in accordance with the normal payment dates specified herein.
|
(j)
|
All reimbursement and in-kind benefits provided pursuant to this Agreement will be made in accordance with Treas. Reg. § 1 .409A-3(i)(1)(iv) such that any reimbursement or in-kind benefits will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event. Specifically, (1) the amounts reimbursed and in-kind benefits provided under this Agreement, other than with respect to medical benefits, during Dehaemers’s taxable year may not affect the amount reimbursed or in-kind benefit provided in any other taxable year, (2) the reimbursement of an eligible expense will be made on or before the last day of his taxable year following the taxable year in which the expense was incurred, and (3) the right to reimbursement or an in-kind benefit is not subject to liquidation or exchange for another benefit.
|
8.
|
Cooperation Regarding Litigation
. So long as Dehaemers is an employee of the Company and thereafter for a period of five years (including after the termination of his employment), Dehaemers will reasonably cooperate with the Company and any Constituent Company by making himself available to testify on behalf of the Company or any Constituent Company, in any action, suit, or proceeding (whether civil, criminal, administrative or investigative) and reasonably assist the Company or any Constituent Company in any such action, suit, or proceeding, by providing information and meeting and consulting with the Board of Managers of Holdings or its representatives or counsel, or representatives or counsel to the Company or any Constituent Company, as requested. The Company will promptly reimburse Dehaemers for all reasonable expenses incurred by Dehaemers in connection with his provision of testimony or assistance.
|
9.
|
No Conflict
. Dehaemers represents and warrants to the Company and each Partnership Entity that neither the execution nor delivery of this Agreement, nor the performance of his obligations under this Agreement will conflict with, or result in a breach of, any term, condition, or provision of, or constitute a default under, any obligation, contract, agreement, covenant or instrument to which he is a party or under which he is bound, including, without limitation, the breach by Dehaemers of a fiduciary duty to any former employers.
|
10.
|
Waiver of Breach
. Failure of the Company or any Partnership Entity to demand strict compliance with any of the terms, covenants or conditions hereof will not be deemed a waiver of the term, covenant or condition, nor will any waiver or relinquishment by the Company or any Partnership Entity of any right or power under this Agreement at any one time or more times be deemed a waiver or relinquishment of the right or power at any other time or times.
|
11.
|
Entire Agreement; Amendment
. This Agreement cancels and supersedes all previous agreements other than the Confidentiality Agreement and Assignment of Inventions, by and between Dehaemers and the Company, entered into in connection with his employment by the Company (the “
Confidentiality Agreement
”) relating to the subject matter of this Agreement, written or oral, between the parties, including, without limitation, the Prior Agreement. This Agreement and the Confidentiality Agreement contain the entire understanding of the parties with respect to the subject matter hereof and may not be amended, modified or supplemented in any manner whatsoever except as otherwise provided herein or in writing signed by each of the parties.
|
12.
|
Potential Unenforceability of any Provision
. If a final judicial determination is made that any provision of this Agreement is an unenforceable restriction against Dehaemers, the provisions of this Agreement will be rendered void only to the extent that a judicial determination finds the provisions unenforceable, and the unenforceable provisions will automatically be reconstituted and become a part of this Agreement, effective as of the date of this Agreement, to the maximum extent in favor of the Company and the Partnership Entities that is lawfully enforceable. A judicial determination that any provision of this Agreement is unenforceable will not render the entire Agreement unenforceable, but rather this Agreement will continue in full force and effect absent any unenforceable provision to the maximum extent permitted by law.
|
13.
|
Headings
. The headings of the sections of this Agreement have been inserted for convenience of reference only and do not restrict or otherwise modify any of the terms or provisions of this Agreement.
|
14.
|
Governing Law
. This Agreement is governed by the laws of the State of Kansas applicable to agreements made and to be performed entirely within the State, including all matters of enforcement, validity and performance.
|
15.
|
Notice
. Any notice, request, consent or communication under this Agreement is effective only if it is in writing any (a) personally delivered or (b) sent by a nationally recognized overnight delivery service, with delivery confirmed, addressed as follows:
|
16.
|
Assignment
. This Agreement is personal and not assignable by Dehaemers. This Agreement may be assigned by the Company or any Partnership Entity without notice to or consent of any other party of this Agreement; provided that, such assignment must be to a Constituent Company. Except as described in the preceding sentence, this Agreement is not assignable by any party hereto without the consent of all the parties to this Agreement.
|
17.
|
Survival of Obligations
. All obligations of Dehaemers that by their nature involve performance, in any particular, after the expiration or termination of this Agreement, or that cannot be ascertained to have been fully performed until after the expiration or termination of this Agreement, will survive the expiration or termination of this Agreement.
|
18.
|
Counterparts
. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which constitute one agreement that is binding upon each of the parties, notwithstanding that all parties are not signatories to the same counterpart.
|
19.
|
Consent to Jurisdiction and Venue
. The parties hereby submit to the exclusive jurisdiction of the District Court for Johnson County, Kansas or the United States District Court for the District of Kansas in any action or proceeding arising out of or relating to this Agreement, including any appeal and any action for enforcement or recognition of any judgment relating thereto, and the parties hereby irrevocably agree that all claims in respect of such action or proceeding may not be heard or determined in any court or before any panel other than the District Court for Johnson County, Kansas or the United States District Court for the District of Kansas. A final judgment in any such action or proceeding will be conclusive and may be enforced in any other jurisdictions by suit on the judgment or in any manner provided by law. The parties hereby irrevocably waive, to the fullest extent they may legally and effectively do so, any objection they may have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in the District Court for Johnson County, Kansas or the United States District Court for the District of Kansas. The parties hereby irrevocably waive, to the fullest extent they may legally and effectively do so, the defense of an inconvenient forum to the maintenance of any suit, action or proceeding in any such court. The parties irrevocably consent to service of process in any suit, action or proceeding in any manner provided by law.
|
20.
|
Expenses
. If either party brings any legal action or other proceeding to enforce or interpret any of the rights, obligations or provisions of this Agreement, or because of a dispute, breach or default in connection with any of the provisions of this Agreement, the prevailing party is entitled to recover from the non-prevailing party reasonable attorneys’ fees and all other costs in such action or proceeding in addition to, but without duplication, any other relief to which the prevailing party may be entitled.
|
21.
|
No Mitigation; No Offset
. If Dehaemers’s employment is terminated, he will be under no obligation to seek other employment and amounts due him under this Agreement will not be offset by any remuneration attributable to any subsequent employment that he may obtain.
|
22.
|
Deferred Compensation
. This Agreement is intended to meet the requirements of Section 409A of the Code and will be administered in a manner that is intended to meet those requirements and will be construed and interpreted in accordance with such intent. To the extent that an award or payment, or the settlement or deferral thereof, is subject to Section 409A of the Code, except as Dehaemers and the Board of Managers of Holdings otherwise determine in writing, the award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A of the Code, including regulations or other guidance issued with respect thereto, such that the grant, payment, settlement or deferral will not be subject to the excise tax applicable under Section 409A of the Code. Any provision of this Agreement that would cause the award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code will be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.
|
|
|
|
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
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
|
|
||||||||||||||
Earnings from continuing operations before fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pre-tax income from continuing operations before earnings from unconsolidated affiliates
(2)
|
$
|
216,114
|
|
|
$
|
184,814
|
|
|
$
|
58,612
|
|
|
$
|
7,624
|
|
|
$
|
(2,618
|
)
|
|
|
$
|
51,775
|
|
Fixed charges
|
51,306
|
|
|
25,437
|
|
|
11,626
|
|
|
13,360
|
|
|
3,450
|
|
|
|
69
|
|
||||||
Amortization of capitalized interest
|
65
|
|
|
66
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
Distributed earnings from unconsolidated affiliates
|
51,780
|
|
|
—
|
|
|
717
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||||||
less: Capitalized interest
|
(471
|
)
|
|
(811
|
)
|
|
(1,025
|
)
|
|
(242
|
)
|
|
—
|
|
|
|
—
|
|
||||||
Earnings from continuing operations before fixed charges
|
$
|
318,794
|
|
|
$
|
209,506
|
|
|
$
|
69,965
|
|
|
$
|
20,742
|
|
|
$
|
832
|
|
|
|
$
|
51,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net of capitalized interest
|
37,189
|
|
|
14,226
|
|
|
7,648
|
|
|
11,264
|
|
|
3,040
|
|
|
|
—
|
|
||||||
Capitalized interest
|
471
|
|
|
811
|
|
|
1,025
|
|
|
242
|
|
|
—
|
|
|
|
—
|
|
||||||
Estimate of interest within rental expense (33.3%)
|
10,032
|
|
|
8,615
|
|
|
1,574
|
|
|
109
|
|
|
14
|
|
|
|
69
|
|
||||||
Amortization of debt costs
|
3,614
|
|
|
1,785
|
|
|
1,379
|
|
|
1,745
|
|
|
396
|
|
|
|
—
|
|
||||||
Total fixed charges
|
$
|
51,306
|
|
|
$
|
25,437
|
|
|
$
|
11,626
|
|
|
$
|
13,360
|
|
|
$
|
3,450
|
|
|
|
$
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
|
6.21
|
|
|
8.24
|
|
|
6.02
|
|
|
1.55
|
|
|
—
|
(3)
|
|
751.36
|
|
(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
|
Delaware
|
Tallgrass Energy Investments, LLC
|
Delaware
|
Trailblazer Pipeline Company LLC
|
Delaware
|
Tallgrass PXP Holdings, LLC
|
Delaware
|
Tallgrass Pony Express Pipeline, LLC
|
Delaware
|
Tallgrass Colorado Pipeline, Inc.
|
Colorado
|
TEP REX Holdings, LLC
|
Delaware
|
Tallgrass NatGas Operator, LLC
|
Delaware
|
Tallgrass Terminals, LLC
|
Delaware
|
Tallgrass Sterling Terminal, LLC
|
Delaware
|
BNN Water Solutions, LLC
|
Delaware
|
BNN Redtail, LLC
|
Delaware
|
Alpha Reclaim Technology, LLC
|
Texas
|
BNN Western, LLC
|
Delaware
|
BNN South Texas, LLC
|
Delaware
|
BNN West Texas, LLC
|
Delaware
|
BNN Recycle, LLC
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K of Tallgrass Energy Partners, LP;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
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;
|
b)
|
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;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
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)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Tallgrass Energy Partners, LP;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
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;
|
b)
|
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;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
By:
|
|
/s/ Gary J. Brauchle
|
|
|
Gary J. Brauchle
|
|
|
Executive Vice President and Chief Financial Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
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)
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.
|
By:
|
|
/s/Gary J. Brauchle
|
|
|
Gary J. Brauchle
|
|
|
Executive Vice President and Chief Financial Officer of Tallgrass MLP GP, LLC (the general partner of Tallgrass Energy Partners, LP)
|