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x
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QUARTERLY 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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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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Emerging growth company
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¨
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September 30, 2017
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December 31, 2016
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||||
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(in thousands)
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||||||
ASSETS
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||||||
Current Assets:
|
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||||
Cash and cash equivalents
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$
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2,998
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$
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1,873
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Accounts receivable, net
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95,629
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59,536
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Gas imbalances
|
1,020
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1,597
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Inventories
|
10,173
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13,093
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Derivative assets
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—
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10,967
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Prepayments and other current assets
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3,407
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7,628
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Total Current Assets
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113,227
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94,694
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Property, plant and equipment, net
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2,350,830
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2,079,232
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Goodwill
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404,838
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343,288
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Intangible assets, net
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98,876
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93,522
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Unconsolidated investments
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922,280
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475,625
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Deferred financing costs, net
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12,329
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4,815
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Deferred charges and other assets
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3,016
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11,037
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Total Assets
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$
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3,905,396
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$
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3,102,213
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LIABILITIES AND EQUITY
|
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|
||||
Current Liabilities:
|
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|
||||
Accounts payable
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$
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69,620
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$
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24,122
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Accounts payable to related parties
|
6,072
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5,935
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|
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Gas imbalances
|
1,119
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1,239
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Derivative liabilities
|
473
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556
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Accrued taxes
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22,890
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16,996
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|
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Accrued liabilities
|
11,154
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16,702
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|
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Deferred revenue
|
87,979
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60,757
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|
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Other current liabilities
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6,690
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6,446
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Total Current Liabilities
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205,997
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132,753
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|
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Long-term debt, net
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2,115,086
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1,407,981
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|
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Other long-term liabilities and deferred credits
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18,396
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7,063
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|
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Total Long-term Liabilities
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2,133,482
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1,415,044
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Commitments and Contingencies
|
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Equity:
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||||
Predecessor Equity
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—
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82,295
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Limited partners (73,176,516 and 72,485,954 common units issued and outstanding at September 30, 2017 and December 31, 2016, respectively)
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2,125,788
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2,070,495
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General partner (834,391 units issued and outstanding at September 30, 2017 and December 31, 2016)
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(626,704
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)
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(632,339
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)
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Total Partners' Equity
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1,499,084
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1,520,451
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Noncontrolling interests
|
66,833
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33,965
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|
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Total Equity
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1,565,917
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1,554,416
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Total Liabilities and Equity
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$
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3,905,396
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$
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3,102,213
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
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(in thousands, except per unit amounts)
|
||||||||||||||
Revenues:
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||||||||
Crude oil transportation services
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$
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86,180
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$
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91,387
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$
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260,366
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$
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279,281
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Natural gas transportation services
|
30,256
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31,444
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91,370
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89,406
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|
||||
Sales of natural gas, NGLs, and crude oil
|
32,215
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20,487
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70,514
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51,243
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|
||||
Processing and other revenues
|
27,218
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9,950
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58,882
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29,521
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|
||||
Total Revenues
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175,869
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153,268
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481,132
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449,451
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|
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Operating Costs and Expenses:
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||||||||
Cost of sales (exclusive of depreciation and amortization shown below)
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26,984
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18,319
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58,740
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47,845
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|
||||
Cost of transportation services (exclusive of depreciation and amortization shown below)
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10,538
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10,842
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38,799
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35,946
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|
||||
Operations and maintenance
|
17,412
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15,146
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45,569
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42,374
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|
||||
Depreciation and amortization
|
23,782
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21,177
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67,276
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65,074
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|
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General and administrative
|
15,925
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13,413
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44,362
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41,225
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|
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Taxes, other than income taxes
|
6,661
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6,860
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21,799
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20,293
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|
||||
Contract termination
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—
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—
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—
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8,061
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|
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(Gain) loss on disposal of assets
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—
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—
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(1,264
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)
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1,849
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|
||||
Total Operating Costs and Expenses
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101,302
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85,757
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275,281
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262,667
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|
||||
Operating Income
|
74,567
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67,511
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205,851
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186,784
|
|
||||
Other Income (Expense):
|
|
|
|
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|
||||||||
Interest expense, net
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(22,888
|
)
|
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(10,907
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)
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(57,265
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)
|
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(27,639
|
)
|
||||
Unrealized (loss) gain on derivative instrument
|
—
|
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(4,419
|
)
|
|
1,885
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|
|
5,588
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|
||||
Equity in earnings of unconsolidated investments
|
123,642
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12,764
|
|
|
187,121
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|
|
37,495
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|
||||
Gain on remeasurement of unconsolidated investment
|
9,728
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—
|
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9,728
|
|
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—
|
|
||||
Other income, net
|
454
|
|
|
480
|
|
|
796
|
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|
1,267
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|
||||
Total Other Income (Expense)
|
110,936
|
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(2,082
|
)
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|
142,265
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|
16,711
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|
||||
Net income
|
185,503
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|
|
65,429
|
|
|
348,116
|
|
|
203,495
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|
||||
Net income attributable to noncontrolling interests
|
(1,413
|
)
|
|
(1,084
|
)
|
|
(3,241
|
)
|
|
(3,235
|
)
|
||||
Net income attributable to partners
|
$
|
184,090
|
|
|
$
|
64,345
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|
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$
|
344,875
|
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$
|
200,260
|
|
Allocation of income to the limited partners:
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|
||||||||
Net income attributable to partners
|
$
|
184,090
|
|
|
$
|
64,345
|
|
|
$
|
344,875
|
|
|
$
|
200,260
|
|
Predecessor operations interest in net income
|
—
|
|
|
(3,611
|
)
|
|
—
|
|
|
(3,408
|
)
|
||||
General partner interest in net income
|
(39,809
|
)
|
|
(27,674
|
)
|
|
(107,693
|
)
|
|
(73,347
|
)
|
||||
Net income available to common unitholders
|
144,281
|
|
|
33,060
|
|
|
237,182
|
|
|
123,505
|
|
||||
Basic net income per common unit
|
$
|
1.97
|
|
|
$
|
0.45
|
|
|
$
|
3.26
|
|
|
$
|
1.75
|
|
Diluted net income per common unit
|
$
|
1.96
|
|
|
$
|
0.45
|
|
|
$
|
3.23
|
|
|
$
|
1.73
|
|
Basic average number of common units outstanding
|
73,138
|
|
|
73,089
|
|
|
72,769
|
|
|
70,686
|
|
||||
Diluted average number of common units outstanding
|
73,638
|
|
|
74,063
|
|
|
73,319
|
|
|
71,590
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
348,116
|
|
|
$
|
203,495
|
|
Adjustments to reconcile net income to net cash flows provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
72,732
|
|
|
70,269
|
|
||
Equity in earnings of unconsolidated investments
|
(187,121
|
)
|
|
(37,495
|
)
|
||
Distributions from unconsolidated investments
|
187,624
|
|
|
37,361
|
|
||
Gain on remeasurement of unconsolidated investment
|
(9,728
|
)
|
|
—
|
|
||
Changes in components of working capital:
|
|
|
|
||||
Accounts receivable and other
|
(34,197
|
)
|
|
8,204
|
|
||
Accounts payable and accrued liabilities
|
43,037
|
|
|
5,053
|
|
||
Deferred revenue
|
26,898
|
|
|
25,303
|
|
||
Other current assets and liabilities
|
5,032
|
|
|
(1,033
|
)
|
||
Other operating, net
|
3,755
|
|
|
(149
|
)
|
||
Net Cash Provided by Operating Activities
|
456,148
|
|
|
311,008
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Acquisition of Rockies Express membership interest
|
(400,000
|
)
|
|
(436,022
|
)
|
||
Acquisition of Terminals and NatGas
|
(140,000
|
)
|
|
—
|
|
||
Acquisition of Douglas Gathering System
|
(128,526
|
)
|
|
—
|
|
||
Capital expenditures
|
(88,050
|
)
|
|
(55,397
|
)
|
||
Acquisition of Deeprock Development
|
(57,202
|
)
|
|
—
|
|
||
Distributions from unconsolidated investments in excess of cumulative earnings
|
41,886
|
|
|
16,073
|
|
||
Acquisition of PRB Crude System
|
(36,030
|
)
|
|
—
|
|
||
Contributions to unconsolidated investments
|
(31,570
|
)
|
|
(35,515
|
)
|
||
Acquisition of Pony Express membership interest
|
—
|
|
|
(49,118
|
)
|
||
Other investing, net
|
(13,449
|
)
|
|
205
|
|
||
Net Cash Used in Investing Activities
|
(852,941
|
)
|
|
(559,774
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
850,000
|
|
|
400,000
|
|
||
Distributions to unitholders
|
(284,724
|
)
|
|
(207,539
|
)
|
||
(Repayments) borrowings under revolving credit facility, net
|
(134,000
|
)
|
|
252,000
|
|
||
Proceeds from public offering, net of offering costs
|
112,393
|
|
|
290,474
|
|
||
Partial exercise of call option
|
(72,381
|
)
|
|
(151,434
|
)
|
||
Repurchase of common units from TD
|
(35,335
|
)
|
|
—
|
|
||
Acquisition of Pony Express membership interest
|
—
|
|
|
(425,882
|
)
|
||
Proceeds from private placement, net of offering costs
|
—
|
|
|
90,009
|
|
||
Other financing, net
|
(38,035
|
)
|
|
(56
|
)
|
||
Net Cash Provided by Financing Activities
|
397,918
|
|
|
247,572
|
|
||
Net Change in Cash and Cash Equivalents
|
1,125
|
|
|
(1,194
|
)
|
||
Cash and Cash Equivalents, beginning of period
|
1,873
|
|
|
1,611
|
|
||
Cash and Cash Equivalents, end of period
|
$
|
2,998
|
|
|
$
|
417
|
|
|
|
|
|
Schedule of Noncash Investing and Financing Activities:
|
|
|
|
||||
Common units issued as partial consideration to acquire additional 9% membership interest in Deeprock Development
|
$
|
6,617
|
|
|
$
|
—
|
|
Increase in accrual for payment of property, plant and equipment
|
$
|
1,342
|
|
|
$
|
—
|
|
|
Predecessor Equity
|
|
Limited Partners
|
|
General Partner
|
|
Total Partners’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Balance at January 1, 2017
|
$
|
82,295
|
|
|
$
|
2,070,495
|
|
|
$
|
(632,339
|
)
|
|
$
|
1,520,451
|
|
|
$
|
33,965
|
|
|
$
|
1,554,416
|
|
Acquisition of Terminals and NatGas
|
(82,295
|
)
|
|
—
|
|
|
(57,705
|
)
|
|
(140,000
|
)
|
|
—
|
|
|
(140,000
|
)
|
||||||
Net income
|
—
|
|
|
237,182
|
|
|
107,693
|
|
|
344,875
|
|
|
3,241
|
|
|
348,116
|
|
||||||
Issuance of units to public, net of offering costs
|
—
|
|
|
112,393
|
|
|
—
|
|
|
112,393
|
|
|
—
|
|
|
112,393
|
|
||||||
Distributions to unitholders
|
—
|
|
|
(186,950
|
)
|
|
(97,774
|
)
|
|
(284,724
|
)
|
|
—
|
|
|
(284,724
|
)
|
||||||
Noncash compensation expense
|
—
|
|
|
6,169
|
|
|
—
|
|
|
6,169
|
|
|
—
|
|
|
6,169
|
|
||||||
LTIP units tendered by employees to satisfy tax withholding obligations
|
—
|
|
|
(12,402
|
)
|
|
—
|
|
|
(12,402
|
)
|
|
—
|
|
|
(12,402
|
)
|
||||||
Partial exercise of call option
|
—
|
|
|
(72,381
|
)
|
|
(12,561
|
)
|
|
(84,942
|
)
|
|
—
|
|
|
(84,942
|
)
|
||||||
Repurchase of common units from TD
|
—
|
|
|
(35,335
|
)
|
|
—
|
|
|
(35,335
|
)
|
|
—
|
|
|
(35,335
|
)
|
||||||
Acquisition of additional 24.99% membership interest in Rockies Express
|
—
|
|
|
—
|
|
|
63,681
|
|
|
63,681
|
|
|
—
|
|
|
63,681
|
|
||||||
Acquisition of additional 40% membership interest in Deeprock Development
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,869
|
|
|
45,869
|
|
||||||
Acquisition of noncontrolling interests
|
—
|
|
|
6,617
|
|
|
—
|
|
|
6,617
|
|
|
(13,057
|
)
|
|
(6,440
|
)
|
||||||
Contributions from TD
|
—
|
|
|
—
|
|
|
2,301
|
|
|
2,301
|
|
|
—
|
|
|
2,301
|
|
||||||
Contributions from noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,093
|
|
|
1,093
|
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,278
|
)
|
|
(4,278
|
)
|
||||||
Balance at September 30, 2017
|
$
|
—
|
|
|
$
|
2,125,788
|
|
|
$
|
(626,704
|
)
|
|
$
|
1,499,084
|
|
|
$
|
66,833
|
|
|
$
|
1,565,917
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Predecessor Equity
|
|
Limited Partners
|
|
General Partner
|
|
Total Partners’ Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Balance at January 1, 2016
|
$
|
71,564
|
|
|
$
|
1,618,766
|
|
|
$
|
(348,841
|
)
|
|
$
|
1,341,489
|
|
|
$
|
445,077
|
|
|
$
|
1,786,566
|
|
Net income
|
3,408
|
|
|
123,505
|
|
|
73,347
|
|
|
200,260
|
|
|
3,235
|
|
|
203,495
|
|
||||||
Issuance of units to public, net of offering costs
|
—
|
|
|
290,474
|
|
|
—
|
|
|
290,474
|
|
|
—
|
|
|
290,474
|
|
||||||
Issuance of units in a private placement, net of offering costs
|
—
|
|
|
90,009
|
|
|
—
|
|
|
90,009
|
|
|
—
|
|
|
90,009
|
|
||||||
Distributions to unitholders
|
—
|
|
|
(145,664
|
)
|
|
(61,875
|
)
|
|
(207,539
|
)
|
|
—
|
|
|
(207,539
|
)
|
||||||
Noncash compensation expense
|
—
|
|
|
5,931
|
|
|
—
|
|
|
5,931
|
|
|
—
|
|
|
5,931
|
|
||||||
Contributions from noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,700
|
|
|
8,700
|
|
||||||
Distributions to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,017
|
)
|
|
(5,017
|
)
|
||||||
Acquisition of additional 31.3% membership interest in Pony Express
|
—
|
|
|
268,607
|
|
|
(279,967
|
)
|
|
(11,360
|
)
|
|
(417,679
|
)
|
|
(429,039
|
)
|
||||||
Partial exercise of call option
|
—
|
|
|
(151,434
|
)
|
|
(25,858
|
)
|
|
(177,292
|
)
|
|
|
|
|
(177,292
|
)
|
||||||
Contributions from TD
|
—
|
|
|
|
|
|
5,308
|
|
|
5,308
|
|
|
|
|
|
5,308
|
|
||||||
Acquisition of noncontrolling interests
|
—
|
|
|
(5,373
|
)
|
|
(59
|
)
|
|
(5,432
|
)
|
|
(568
|
)
|
|
(6,000
|
)
|
||||||
Contribution from Predecessor Entities, net
|
5,116
|
|
|
|
|
|
|
|
|
5,116
|
|
|
|
|
|
5,116
|
|
||||||
Balance at September 30, 2016
|
$
|
80,088
|
|
|
$
|
2,094,821
|
|
|
$
|
(637,945
|
)
|
|
$
|
1,536,964
|
|
|
$
|
33,748
|
|
|
$
|
1,570,712
|
|
•
|
Natural Gas Transportation—the ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities;
|
•
|
Crude Oil Transportation—the ownership and operation of a FERC-regulated crude oil pipeline system; and
|
•
|
Gathering, Processing & Terminalling—the ownership and operation of natural gas gathering, processing, treating and fractionation facilities; crude oil gathering, storage and terminalling 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
|
|
47,557,298
|
|
|
—
|
|
|
64.99
|
%
|
|
64.26
|
%
|
Tallgrass Equity, LLC
|
|
20,000,000
|
|
|
—
|
|
|
27.33
|
%
|
|
27.02
|
%
|
Tallgrass Development, LP
|
|
5,619,218
|
|
|
—
|
|
|
7.68
|
%
|
|
7.59
|
%
|
Tallgrass MLP GP, LLC
(1)
|
|
—
|
|
|
834,391
|
|
|
—
|
%
|
|
1.13
|
%
|
Total
|
|
73,176,516
|
|
|
834,391
|
|
|
100.00
|
%
|
|
100.00
|
%
|
(1)
|
Tallgrass MLP GP, LLC (the "general partner") also holds all of TEP's incentive distribution rights.
|
•
|
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 have reviewed contracts for each revenue stream identified within each of our business segments and we are currently determining and documenting expected changes in revenue recognition upon adoption of the revised guidance.
|
•
|
We are evaluating 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.
|
Accounts receivable
|
$
|
117
|
|
|
Property, plant and equipment
|
29,306
|
|
|
|
Intangible asset
|
6,694
|
|
(1)
|
|
Accounts payable and accrued liabilities
|
(87
|
)
|
|
|
Net identifiable assets acquired
|
$
|
36,030
|
|
|
(1)
|
The
$6.7 million
intangible asset acquired represents a major customer contract. This intangible asset is amortized on a straight-line basis over a period of
8 years
, the remaining term of the contract at the time of acquisition.
|
Accounts receivable
|
$
|
968
|
|
Other current assets
|
598
|
|
|
Property, plant and equipment
|
70,148
|
|
|
Accounts payable
|
(712
|
)
|
|
Deferred revenue
|
(6,546
|
)
|
|
Net identifiable assets acquired
|
64,456
|
|
|
Goodwill
|
61,550
|
|
|
Net assets acquired (excluding cash)
|
$
|
126,006
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue
|
$
|
177,022
|
|
|
$
|
158,642
|
|
|
$
|
492,625
|
|
|
$
|
465,232
|
|
Net income attributable to partners
|
$
|
174,587
|
|
|
$
|
65,644
|
|
|
$
|
338,407
|
|
|
$
|
204,197
|
|
|
Basis Difference
|
|
Amortization Period
|
||
|
(in thousands)
|
|
|
||
Long-term debt
|
$
|
19,078
|
|
|
2 - 25 years
|
Property, plant and equipment
|
(399,667
|
)
|
|
35 years
|
|
Total basis difference
|
$
|
(380,589
|
)
|
|
|
|
December 31, 2016
|
||||||||||||||
|
TEP (As previously reported)
|
|
Consolidate Terminals
|
|
Consolidate NatGas
|
|
TEP (As currently reported)
|
||||||||
|
(in thousands)
|
||||||||||||||
ASSETS
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
1,873
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,873
|
|
Accounts receivable, net
|
59,469
|
|
|
38
|
|
|
29
|
|
|
59,536
|
|
||||
Gas imbalances
|
1,597
|
|
|
—
|
|
|
—
|
|
|
1,597
|
|
||||
Inventories
|
12,805
|
|
|
288
|
|
|
—
|
|
|
13,093
|
|
||||
Derivative assets
|
10,967
|
|
|
—
|
|
|
—
|
|
|
10,967
|
|
||||
Prepayments and other current assets
|
6,820
|
|
|
808
|
|
|
—
|
|
|
7,628
|
|
||||
Total Current Assets
|
93,531
|
|
|
1,134
|
|
|
29
|
|
|
94,694
|
|
||||
Property, plant and equipment, net
|
2,012,263
|
|
|
66,969
|
|
|
—
|
|
|
2,079,232
|
|
||||
Goodwill
|
343,288
|
|
|
—
|
|
|
—
|
|
|
343,288
|
|
||||
Intangible assets, net
|
93,522
|
|
|
—
|
|
|
—
|
|
|
93,522
|
|
||||
Unconsolidated investments
|
461,915
|
|
|
13,710
|
|
|
—
|
|
|
475,625
|
|
||||
Deferred financing costs, net
|
4,815
|
|
|
—
|
|
|
—
|
|
|
4,815
|
|
||||
Deferred charges and other assets
|
9,637
|
|
|
1,400
|
|
|
—
|
|
|
11,037
|
|
||||
Total Assets
|
$
|
3,018,971
|
|
|
$
|
83,213
|
|
|
$
|
29
|
|
|
$
|
3,102,213
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable
|
$
|
24,076
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
24,122
|
|
Accounts payable to related parties
|
5,879
|
|
|
56
|
|
|
—
|
|
|
5,935
|
|
||||
Gas imbalances
|
1,239
|
|
|
—
|
|
|
—
|
|
|
1,239
|
|
||||
Derivative liabilities
|
556
|
|
|
—
|
|
|
—
|
|
|
556
|
|
||||
Accrued taxes
|
16,328
|
|
|
668
|
|
|
—
|
|
|
16,996
|
|
||||
Accrued liabilities
|
16,525
|
|
|
177
|
|
|
—
|
|
|
16,702
|
|
||||
Deferred revenue
|
60,757
|
|
|
—
|
|
|
—
|
|
|
60,757
|
|
||||
Other current liabilities
|
6,446
|
|
|
—
|
|
|
—
|
|
|
6,446
|
|
||||
Total Current Liabilities
|
131,806
|
|
|
947
|
|
|
—
|
|
|
132,753
|
|
||||
Long-term debt, net
|
1,407,981
|
|
|
—
|
|
|
—
|
|
|
1,407,981
|
|
||||
Other long-term liabilities and deferred credits
|
7,063
|
|
|
—
|
|
|
—
|
|
|
7,063
|
|
||||
Total Long-term Liabilities
|
1,415,044
|
|
|
—
|
|
|
—
|
|
|
1,415,044
|
|
||||
Equity:
|
|
|
|
|
|
|
|
||||||||
Net Equity
|
1,472,121
|
|
|
82,266
|
|
|
29
|
|
|
1,554,416
|
|
||||
Total Equity
|
1,472,121
|
|
|
82,266
|
|
|
29
|
|
|
1,554,416
|
|
||||
Total Liabilities and Equity
|
$
|
3,018,971
|
|
|
$
|
83,213
|
|
|
$
|
29
|
|
|
$
|
3,102,213
|
|
|
Three Months Ended September 30, 2016
|
||||||||||||||||||
|
TEP (As previously reported)
|
|
Consolidate Terminals
|
|
Consolidate NatGas
|
|
Elimination
|
|
TEP (As currently reported)
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Crude oil transportation services
|
$
|
91,387
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
91,387
|
|
Natural gas transportation services
|
31,444
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,444
|
|
|||||
Sales of natural gas, NGLs, and crude oil
|
20,758
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
(1)
|
20,487
|
|
|||||
Processing and other revenues
|
8,536
|
|
|
3,116
|
|
|
1,182
|
|
|
(2,884
|
)
|
(2)
|
9,950
|
|
|||||
Total Revenues
|
152,125
|
|
|
3,116
|
|
|
1,182
|
|
|
(3,155
|
)
|
|
153,268
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
18,590
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
(1)
|
18,319
|
|
|||||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
13,528
|
|
|
198
|
|
|
—
|
|
|
(2,884
|
)
|
(2)
|
10,842
|
|
|||||
Operations and maintenance
|
14,714
|
|
|
432
|
|
|
—
|
|
|
—
|
|
|
15,146
|
|
|||||
Depreciation and amortization
|
20,831
|
|
|
346
|
|
|
—
|
|
|
—
|
|
|
21,177
|
|
|||||
General and administrative
|
13,147
|
|
|
266
|
|
|
—
|
|
|
—
|
|
|
13,413
|
|
|||||
Taxes, other than income taxes
|
6,717
|
|
|
143
|
|
|
—
|
|
|
—
|
|
|
6,860
|
|
|||||
Total Operating Costs and Expenses
|
87,527
|
|
|
1,385
|
|
|
—
|
|
|
(3,155
|
)
|
|
85,757
|
|
|||||
Operating Income (Loss)
|
64,598
|
|
|
1,731
|
|
|
1,182
|
|
|
—
|
|
|
67,511
|
|
|||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(10,907
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,907
|
)
|
|||||
Unrealized loss on derivative instrument
|
(4,419
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,419
|
)
|
|||||
Equity in earnings of unconsolidated investments
|
12,066
|
|
|
698
|
|
|
—
|
|
|
—
|
|
|
12,764
|
|
|||||
Other income, net
|
480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
480
|
|
|||||
Total Other (Expense) Income
|
(2,780
|
)
|
|
698
|
|
|
—
|
|
|
—
|
|
|
(2,082
|
)
|
|||||
Net income
|
61,818
|
|
|
2,429
|
|
|
1,182
|
|
|
—
|
|
|
65,429
|
|
|||||
Net income attributable to noncontrolling interests
|
(1,084
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,084
|
)
|
|||||
Net income attributable to partners
|
$
|
60,734
|
|
|
$
|
2,429
|
|
|
$
|
1,182
|
|
|
$
|
—
|
|
|
$
|
64,345
|
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||
|
TEP (As previously reported)
|
|
Consolidate Terminals
|
|
Consolidate NatGas
|
|
Elimination
|
|
TEP (As currently reported)
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Crude oil transportation services
|
$
|
279,281
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
279,281
|
|
Natural gas transportation services
|
89,406
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89,406
|
|
|||||
Sales of natural gas, NGLs, and crude oil
|
51,514
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
(1)
|
51,243
|
|
|||||
Processing and other revenues
|
24,260
|
|
|
8,982
|
|
|
4,855
|
|
|
(8,576
|
)
|
(2)
|
29,521
|
|
|||||
Total Revenues
|
444,461
|
|
|
8,982
|
|
|
4,855
|
|
|
(8,847
|
)
|
|
449,451
|
|
|||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
48,116
|
|
|
—
|
|
|
—
|
|
|
(271
|
)
|
(1)
|
47,845
|
|
|||||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
43,924
|
|
|
598
|
|
|
—
|
|
|
(8,576
|
)
|
(2)
|
35,946
|
|
|||||
Operations and maintenance
|
41,055
|
|
|
1,319
|
|
|
—
|
|
|
—
|
|
|
42,374
|
|
|||||
Depreciation and amortization
|
64,099
|
|
|
975
|
|
|
—
|
|
|
—
|
|
|
65,074
|
|
|||||
General and administrative
|
40,072
|
|
|
1,153
|
|
|
—
|
|
|
—
|
|
|
41,225
|
|
|||||
Taxes, other than income taxes
|
19,862
|
|
|
431
|
|
|
—
|
|
|
—
|
|
|
20,293
|
|
|||||
Contract termination
|
—
|
|
|
8,061
|
|
(3)
|
—
|
|
|
—
|
|
|
8,061
|
|
|||||
Loss on disposal of assets
|
1,849
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,849
|
|
|||||
Total Operating Costs and Expenses
|
258,977
|
|
|
12,537
|
|
|
—
|
|
|
(8,847
|
)
|
|
262,667
|
|
|||||
Operating Income
|
185,484
|
|
|
(3,555
|
)
|
|
4,855
|
|
|
—
|
|
|
186,784
|
|
|||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
(27,639
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,639
|
)
|
|||||
Unrealized gain on derivative instrument
|
5,588
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,588
|
|
|||||
Equity in earnings of unconsolidated investments
|
35,387
|
|
|
2,108
|
|
|
—
|
|
|
—
|
|
|
37,495
|
|
|||||
Other income, net
|
1,267
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,267
|
|
|||||
Total Other Income
|
14,603
|
|
|
2,108
|
|
|
—
|
|
|
—
|
|
|
16,711
|
|
|||||
Net income (loss)
|
200,087
|
|
|
(1,447
|
)
|
|
4,855
|
|
|
—
|
|
|
203,495
|
|
|||||
Net income attributable to noncontrolling interests
|
(3,235
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,235
|
)
|
|||||
Net income (loss) attributable to partners
|
$
|
196,852
|
|
|
$
|
(1,447
|
)
|
|
$
|
4,855
|
|
|
$
|
—
|
|
|
$
|
200,260
|
|
(1)
|
Represents the elimination of revenue and cost of sales associated with the purchase of crude oil from Pony Express by Terminals.
|
(2)
|
Represents the elimination of revenue and cost of transportation services associated with the lease of the Sterling Terminal facilities by Pony Express.
|
(3)
|
Represents a one-time charge related to the termination of an operating agreement at the Sterling Terminal.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Processing and other revenues
(1)
|
$
|
3,338
|
|
|
$
|
1,182
|
|
|
$
|
6,662
|
|
|
$
|
4,855
|
|
Cost of transportation services
(2)
|
$
|
1,062
|
|
|
$
|
4,630
|
|
|
$
|
10,476
|
|
|
$
|
13,888
|
|
Charges to TEP:
(3)
|
|
|
|
|
|
|
|
||||||||
Property, plant and equipment, net
|
$
|
765
|
|
|
$
|
688
|
|
|
$
|
1,568
|
|
|
$
|
2,255
|
|
Operations and maintenance
|
$
|
7,973
|
|
|
$
|
6,560
|
|
|
$
|
21,680
|
|
|
$
|
19,117
|
|
General and administrative
|
$
|
11,817
|
|
|
$
|
9,838
|
|
|
$
|
32,129
|
|
|
$
|
29,489
|
|
(1)
|
Reflects the fee that NatGas receives as the operator of the Rockies Express Pipeline.
|
(2)
|
Reflects rent expense for the crude oil storage at the Deeprock Terminal prior to our consolidation of Deeprock Development during the third quarter of 2017, as discussed in
Note 3
–
Acquisitions
.
|
(3)
|
Charges to TEP include directly charged wages and salaries, other compensation and benefits, and shared services.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Receivable from related parties:
|
|
|
|
||||
Rockies Express Pipeline LLC
|
$
|
1,052
|
|
|
$
|
590
|
|
Total receivable from related parties
|
$
|
1,052
|
|
|
$
|
590
|
|
Accounts payable to related parties:
|
|
|
|
||||
Tallgrass Operations, LLC
|
$
|
5,994
|
|
|
$
|
5,854
|
|
Tallgrass Equity, LLC
|
78
|
|
|
68
|
|
||
Deeprock Development, LLC
|
—
|
|
|
13
|
|
||
Total accounts payable to related parties
|
$
|
6,072
|
|
|
$
|
5,935
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Affiliate gas imbalance receivables
|
$
|
17
|
|
|
$
|
177
|
|
Affiliate gas imbalance payables
|
$
|
43
|
|
|
$
|
—
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Crude oil
|
$
|
2,115
|
|
|
$
|
5,462
|
|
Materials and supplies
|
5,993
|
|
|
6,383
|
|
||
Natural gas liquids
|
543
|
|
|
265
|
|
||
Gas in underground storage
|
1,522
|
|
|
983
|
|
||
Total inventory
|
$
|
10,173
|
|
|
$
|
13,093
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Crude oil pipelines
|
$
|
1,219,913
|
|
|
$
|
1,202,125
|
|
Gathering, processing and terminalling assets
(1)
|
667,379
|
|
|
397,701
|
|
||
Natural gas pipelines
|
577,343
|
|
|
572,150
|
|
||
General and other
|
98,860
|
|
|
82,510
|
|
||
Construction work in progress
|
45,223
|
|
|
20,606
|
|
||
Accumulated depreciation and amortization
|
(257,888
|
)
|
|
(195,860
|
)
|
||
Total property, plant and equipment, net
|
$
|
2,350,830
|
|
|
$
|
2,079,232
|
|
(1)
|
Includes approximately
$138.2 million
of assets associated with the Douglas Gathering System acquired in June 2017, approximately
$68.4 million
of assets associated with the acquisition of the aggregate additional
49%
membership interest in Deeprock Development in July 2017, and approximately
$29.3 million
of assets associated with the PRB Crude System acquired in August 2017.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue
|
$
|
216,756
|
|
|
$
|
159,421
|
|
|
$
|
625,243
|
|
|
$
|
551,323
|
|
Operating income
|
$
|
123,965
|
|
|
$
|
66,436
|
|
|
$
|
344,037
|
|
|
$
|
267,847
|
|
Net income to Members
|
$
|
233,990
|
|
|
$
|
34,184
|
|
|
$
|
371,185
|
|
|
$
|
226,847
|
|
|
Three and Nine Months Ended September 30,
|
||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||
|
Natural Gas Transportation
|
|
Gathering, Processing & Terminalling
|
|
Total
|
|
Natural Gas Transportation
|
|
Gathering, Processing & Terminalling
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Balance at beginning of period
|
$
|
255,558
|
|
|
$
|
87,730
|
|
|
$
|
343,288
|
|
|
$
|
255,558
|
|
|
$
|
87,730
|
|
|
$
|
343,288
|
|
Goodwill acquired
|
—
|
|
|
61,550
|
|
(1)
|
61,550
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at end of period
|
$
|
255,558
|
|
|
$
|
149,280
|
|
|
$
|
404,838
|
|
|
$
|
255,558
|
|
|
$
|
87,730
|
|
|
$
|
343,288
|
|
(1)
|
The
$61.6 million
of goodwill was recorded in connection with the acquisition of a controlling interest in Deeprock Development on July 20, 2017 as discussed further in
Note 3
–
Acquisitions
.
|
|
Balance Sheet
Location |
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
(in thousands)
|
||||||
Natural gas derivative contracts
(1)
|
Current assets
|
|
$
|
—
|
|
|
$
|
291
|
|
Call option derivative
(2)
|
Current assets
|
|
$
|
—
|
|
|
$
|
10,676
|
|
Crude oil derivative contracts
(3)
|
Current liabilities
|
|
$
|
472
|
|
|
$
|
440
|
|
Natural gas derivative contracts
(1)
|
Current liabilities
|
|
$
|
1
|
|
|
$
|
116
|
|
(1)
|
As of
September 30, 2017
, the fair value shown for natural gas derivative contracts was comprised of derivative volumes for long natural gas fixed-price swaps totaling
0.1
Bcf. 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.
|
(2)
|
As discussed below, 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.
|
(3)
|
As of
September 30, 2017
, the fair value shown for crude oil derivative contracts represents the purchase and sale of
323,620
barrels which will settle throughout 2017 and the first quarter of 2018. As of
December 31, 2016
, the fair value shown for crude oil derivative contracts represents the sale of
125,000
barrels of crude oil which settled throughout 2017.
|
Contract Type
|
|
Location of gain (loss) recognized
in income on derivatives |
|
Amount of gain (loss) recognized in income on derivatives
|
||||||||||||||
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||||
|
|
|
|
(in thousands)
|
||||||||||||||
Crude oil derivative contracts
|
|
Sales of natural gas, NGLs, and crude oil
|
|
$
|
175
|
|
|
$
|
318
|
|
|
$
|
1,065
|
|
|
$
|
466
|
|
Natural gas derivative contracts
|
|
Sales of natural gas, NGLs, and crude oil
|
|
$
|
(22
|
)
|
|
$
|
161
|
|
|
$
|
84
|
|
|
$
|
(190
|
)
|
Call option derivative
|
|
Unrealized (loss) gain on derivative instrument
|
|
$
|
—
|
|
|
$
|
(4,419
|
)
|
|
$
|
1,885
|
|
|
$
|
5,588
|
|
|
|
|
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 September 30, 2017:
|
|
|
|
|
|
|
|
||||||||
Crude oil derivative contracts
|
$
|
472
|
|
|
$
|
—
|
|
|
$
|
472
|
|
|
$
|
—
|
|
Natural gas derivative contracts
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
As of December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Crude oil derivative contracts
|
$
|
440
|
|
|
$
|
—
|
|
|
$
|
440
|
|
|
$
|
—
|
|
Natural gas derivative contracts
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Revolving credit facility
|
$
|
881,000
|
|
|
$
|
1,015,000
|
|
5.50% senior notes due September 15, 2024
|
750,000
|
|
|
400,000
|
|
||
5.50% senior notes due January 15, 2028
|
500,000
|
|
|
—
|
|
||
Less: Deferred financing costs, net
(1)
|
(15,914
|
)
|
|
(7,019
|
)
|
||
Total long-term debt, net
|
$
|
2,115,086
|
|
|
$
|
1,407,981
|
|
(1)
|
Deferred financing costs, net as presented above relate solely to the 2024 and 2028 Notes. Deferred financing costs associated with our revolving credit facility are presented in noncurrent assets on our condensed consolidated balance sheets.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Total capacity under the revolving credit facility
|
$
|
1,750,000
|
|
|
$
|
1,750,000
|
|
Less: Outstanding borrowings under the revolving credit facility
|
(881,000
|
)
|
|
(1,015,000
|
)
|
||
Less: Letters of credit issued under the revolving credit facility
|
(3,094
|
)
|
|
—
|
|
||
Available capacity under the revolving credit facility
|
$
|
865,906
|
|
|
$
|
735,000
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Quoted prices
in active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
|
Total
|
|
Carrying
Amount |
||||||||||
|
(in thousands)
|
||||||||||||||||||
As of September 30, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revolving credit facility
|
$
|
—
|
|
|
$
|
881,000
|
|
|
$
|
—
|
|
|
$
|
881,000
|
|
|
$
|
881,000
|
|
2024 Notes
|
$
|
—
|
|
|
$
|
772,028
|
|
|
$
|
—
|
|
|
$
|
772,028
|
|
|
$
|
739,444
|
|
2028 Notes
|
$
|
—
|
|
|
$
|
508,660
|
|
|
$
|
—
|
|
|
$
|
508,660
|
|
|
$
|
494,642
|
|
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
|
|
|
|
|
|
Distributions
|
|
|
||||||||||||||||
|
|
|
|
Limited Partner
Common Units |
|
General Partner
|
|
|
|
Distributions
per Limited Partner Common Unit |
||||||||||||
Three Months Ended
|
|
Date Paid
|
|
Incentive Distribution Rights
|
|
General Partner Units
|
|
Total
|
|
|||||||||||||
|
|
|
|
(in thousands, except per unit amounts)
|
|
|
||||||||||||||||
September 30, 2017
|
|
November 14, 2017
(1)
|
|
$
|
69,174
|
|
|
$
|
37,744
|
|
|
$
|
1,219
|
|
|
$
|
108,137
|
|
|
$
|
0.9450
|
|
June 30, 2017
|
|
August 14, 2017
|
|
67,671
|
|
|
36,342
|
|
|
1,186
|
|
|
105,199
|
|
|
0.9250
|
|
|||||
March 31, 2017
|
|
May 15, 2017
|
|
60,486
|
|
|
29,840
|
|
|
1,040
|
|
|
91,366
|
|
|
0.8350
|
|
|||||
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
|
|
(1)
|
The distribution announced on
October 10, 2017
for the
third quarter
of
2017
will be paid on
November 14, 2017
to unitholders of record at the close of business on
October 31, 2017
.
|
•
|
TEP was deemed to have made a noncash capital distribution of
$57.7 million
to the general partner, which represents the excess purchase price over the carrying value of the Terminals and NatGas net assets acquired January 1, 2017;
|
•
|
TEP was deemed to have made a noncash capital distribution of
$12.6 million
to the general partner, which represents the derecognition of a portion of the derivative asset associated with the partial exercise of the call option;
|
•
|
TEP was deemed to have received a noncash capital contribution of
$63.7 million
from the general partner, which represents the excess carrying value of the additional
24.99%
membership interest in Rockies Express acquired March 31, 2017 over the fair value of the consideration paid;
|
•
|
TEP received contributions from TD of
$2.3 million
, primarily to indemnify TEP for costs associated with Trailblazer's Pipeline Integrity Management Program, as discussed in
Note 14
–
Legal and Environmental Matters
; and
|
•
|
TEP recognized contributions from and distributions to noncontrolling interests of
$1.1 million
and
$4.3 million
, respectively, which primarily consisted of activity associated with TD's
2%
noncontrolling interest in Pony Express.
|
•
|
TEP was deemed to have made noncash capital distributions of
$280.0 million
and
$25.9 million
to the general partner, which represent the excess purchase price over the carrying value of the additional
31.3%
membership interest in Pony Express acquired effective January 1, 2016 and the derecognition of a portion of the derivative asset associated with the partial exercise of the call option, respectively;
|
•
|
TEP received contributions of
$5.3 million
from TD to indemnify TEP for costs associated with Trailblazer's Pipeline Integrity Management Program, as discussed above; and
|
•
|
TEP recognized contributions from and distributions to noncontrolling interests of
$8.7 million
and
$5.0 million
, respectively, which primarily consisted of activity associated with TD's
2%
noncontrolling interest in Pony Express.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Net income
|
$
|
185,503
|
|
|
$
|
65,429
|
|
|
$
|
348,116
|
|
|
$
|
203,495
|
|
Net income attributable to noncontrolling interests
|
(1,413
|
)
|
|
(1,084
|
)
|
|
(3,241
|
)
|
|
(3,235
|
)
|
||||
Net income attributable to partners
|
184,090
|
|
|
64,345
|
|
|
344,875
|
|
|
200,260
|
|
||||
Predecessor operations interest in net income
|
—
|
|
|
(3,611
|
)
|
|
—
|
|
|
(3,408
|
)
|
||||
General partner interest in net income
|
(39,809
|
)
|
|
(27,674
|
)
|
|
(107,693
|
)
|
|
(73,347
|
)
|
||||
Net income available to common unitholders
|
$
|
144,281
|
|
|
$
|
33,060
|
|
|
$
|
237,182
|
|
|
$
|
123,505
|
|
Basic net income per common unit
|
$
|
1.97
|
|
|
$
|
0.45
|
|
|
$
|
3.26
|
|
|
$
|
1.75
|
|
Diluted net income per common unit
|
$
|
1.96
|
|
|
$
|
0.45
|
|
|
$
|
3.23
|
|
|
$
|
1.73
|
|
Basic average number of common units outstanding
|
73,138
|
|
|
73,089
|
|
|
72,769
|
|
|
70,686
|
|
||||
Equity Participation Unit equivalent units
|
500
|
|
|
974
|
|
|
550
|
|
|
904
|
|
||||
Diluted average number of common units outstanding
|
73,638
|
|
|
74,063
|
|
|
73,319
|
|
|
71,590
|
|
|
Three Months Ended September 30, 2017
|
|
Three Months Ended September 30, 2016
|
||||||||||||||||||||
Revenue:
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Natural Gas Transportation
|
$
|
36,084
|
|
|
$
|
(1,883
|
)
|
|
$
|
34,201
|
|
|
$
|
34,994
|
|
|
$
|
(1,427
|
)
|
|
$
|
33,567
|
|
Crude Oil Transportation
|
93,029
|
|
|
(6,947
|
)
|
|
86,082
|
|
|
95,826
|
|
|
(271
|
)
|
|
95,555
|
|
||||||
Gathering, Processing & Terminalling
|
57,736
|
|
|
(2,150
|
)
|
|
55,586
|
|
|
27,030
|
|
|
(2,884
|
)
|
|
24,146
|
|
||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total revenue
|
$
|
186,849
|
|
|
$
|
(10,980
|
)
|
|
$
|
175,869
|
|
|
$
|
157,850
|
|
|
$
|
(4,582
|
)
|
|
$
|
153,268
|
|
|
Nine Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||||
Revenue:
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Natural Gas Transportation
|
$
|
105,622
|
|
|
$
|
(4,770
|
)
|
|
$
|
100,852
|
|
|
$
|
99,804
|
|
|
$
|
(4,192
|
)
|
|
$
|
95,612
|
|
Crude Oil Transportation
|
273,768
|
|
|
(6,947
|
)
|
|
266,821
|
|
|
283,868
|
|
|
(271
|
)
|
|
283,597
|
|
||||||
Gathering, Processing & Terminalling
|
121,415
|
|
|
(7,956
|
)
|
|
113,459
|
|
|
78,818
|
|
|
(8,576
|
)
|
|
70,242
|
|
||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total revenue
|
$
|
500,805
|
|
|
$
|
(19,673
|
)
|
|
$
|
481,132
|
|
|
$
|
462,490
|
|
|
$
|
(13,039
|
)
|
|
$
|
449,451
|
|
|
Three Months Ended September 30, 2017
|
|
Three Months Ended September 30, 2016
|
||||||||||||||||||||
Adjusted EBITDA:
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Natural Gas Transportation
|
$
|
160,397
|
|
|
$
|
(1,883
|
)
|
|
$
|
158,514
|
|
|
$
|
42,435
|
|
|
$
|
(1,427
|
)
|
|
$
|
41,008
|
|
Crude Oil Transportation
|
63,683
|
|
|
(441
|
)
|
|
63,242
|
|
|
65,431
|
|
|
4,230
|
|
|
69,661
|
|
||||||
Gathering, Processing & Terminalling
|
15,488
|
|
|
2,324
|
|
|
17,812
|
|
|
6,145
|
|
|
(2,803
|
)
|
|
3,342
|
|
||||||
Corporate and Other
|
(837
|
)
|
|
—
|
|
|
(837
|
)
|
|
(1,368
|
)
|
|
—
|
|
|
(1,368
|
)
|
||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Add:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity in earnings of unconsolidated investments
|
|
|
|
|
123,642
|
|
|
|
|
|
|
12,764
|
|
||||||||||
Gain on remeasurement of unconsolidated investment
|
|
|
|
|
9,728
|
|
|
|
|
|
|
—
|
|
||||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net of noncontrolling interest
|
|
|
|
|
(22,888
|
)
|
|
|
|
|
|
(10,907
|
)
|
||||||||||
Depreciation and amortization expense, net of noncontrolling interest
|
|
|
|
|
(23,472
|
)
|
|
|
|
|
|
(21,648
|
)
|
||||||||||
Distributions from unconsolidated investments
|
|
|
|
|
(138,828
|
)
|
|
|
|
|
|
(22,462
|
)
|
||||||||||
Non-cash loss related to derivative instruments, net of noncontrolling interest
|
|
|
|
|
(688
|
)
|
|
|
|
|
|
(4,410
|
)
|
||||||||||
Non-cash compensation expense
|
|
|
|
|
(2,135
|
)
|
|
|
|
|
|
(1,635
|
)
|
||||||||||
Net income attributable to partners
|
|
|
|
|
$
|
184,090
|
|
|
|
|
|
|
$
|
64,345
|
|
|
Nine Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2016
|
||||||||||||||||||||
Adjusted EBITDA:
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
|
Total
Adjusted EBITDA |
|
Inter-
Segment |
|
External
Adjusted EBITDA |
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Natural Gas Transportation
|
$
|
292,517
|
|
|
$
|
(4,770
|
)
|
|
$
|
287,747
|
|
|
$
|
109,023
|
|
|
$
|
(4,192
|
)
|
|
$
|
104,831
|
|
Crude Oil Transportation
|
181,808
|
|
|
8,054
|
|
|
189,862
|
|
|
195,732
|
|
|
12,613
|
|
|
208,345
|
|
||||||
Gathering, Processing & Terminalling
|
35,984
|
|
|
(3,284
|
)
|
|
32,700
|
|
|
10,104
|
|
|
(8,421
|
)
|
|
1,683
|
|
||||||
Corporate and Other
|
(5,515
|
)
|
|
—
|
|
|
(5,515
|
)
|
|
(3,809
|
)
|
|
—
|
|
|
(3,809
|
)
|
||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Add:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity in earnings of unconsolidated investments
|
|
|
|
|
187,121
|
|
|
|
|
|
|
37,495
|
|
||||||||||
Gain on remeasurement of unconsolidated investment
|
|
|
|
|
9,728
|
|
|
|
|
|
|
—
|
|
||||||||||
Non-cash gain related to derivative instruments, net of noncontrolling interests
|
|
|
|
|
1,669
|
|
|
|
|
|
|
5,391
|
|
||||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net of noncontrolling interest
|
|
|
|
|
(57,265
|
)
|
|
|
|
|
|
(27,639
|
)
|
||||||||||
Depreciation and amortization expense, net of noncontrolling interest
|
|
|
|
|
(67,894
|
)
|
|
|
|
|
|
(66,484
|
)
|
||||||||||
Distributions from unconsolidated investments
|
|
|
|
|
(229,510
|
)
|
|
|
|
|
|
(53,434
|
)
|
||||||||||
Non-cash compensation expense
|
|
|
|
|
(5,087
|
)
|
|
|
|
|
|
(4,270
|
)
|
||||||||||
Gain (loss) on disposal of assets
|
|
|
|
|
1,319
|
|
|
|
|
|
|
(1,849
|
)
|
||||||||||
Net income attributable to partners
|
|
|
|
|
|
|
$
|
344,875
|
|
|
|
|
|
|
|
|
$
|
200,260
|
|
|
Nine Months Ended September 30,
|
||||||
Capital Expenditures:
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Natural Gas Transportation
|
$
|
9,829
|
|
|
$
|
11,146
|
|
Crude Oil Transportation
|
28,785
|
|
|
25,985
|
|
||
Gathering, Processing & Terminalling
|
49,436
|
|
|
18,266
|
|
||
Corporate and Other
|
—
|
|
|
—
|
|
||
Total capital expenditures
|
$
|
88,050
|
|
|
$
|
55,397
|
|
Assets:
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Natural Gas Transportation
|
$
|
1,618,828
|
|
|
$
|
1,176,147
|
|
Crude Oil Transportation
|
1,384,981
|
|
|
1,410,695
|
|
||
Gathering, Processing & Terminalling
|
887,089
|
|
|
495,170
|
|
||
Corporate and Other
|
14,498
|
|
|
20,201
|
|
||
Total assets
|
$
|
3,905,396
|
|
|
$
|
3,102,213
|
|
•
|
our ability to complete and integrate acquisitions from TD or from third parties, including our acquisitions of the PRB Crude System in August 2017, an additional 49% membership interest in Deeprock Development in July 2017, the Douglas Gathering System in June 2017, an additional 24.99% membership interest in Rockies Express from TD in March 2017 and a 100% membership interest in NatGas and Terminals from TD in January 2017;
|
•
|
the demand for our services, including crude oil transportation, storage, gathering and terminalling services; natural gas transportation, storage, gathering and processing services; and water business services, as well as our ability to successfully contract or re-contract with our customers;
|
•
|
large or multiple customer defaults, including defaults resulting from actual or potential insolvencies;
|
•
|
our ability to successfully implement our business plan;
|
•
|
changes in general economic conditions;
|
•
|
competitive conditions in our industry;
|
•
|
the effects of existing and future laws and governmental regulations;
|
•
|
actions taken by third-party operators, processors and transporters;
|
•
|
our ability to complete internal growth projects on time and on budget;
|
•
|
the price and availability of debt and equity financing;
|
•
|
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;
|
•
|
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;
|
•
|
competition from the same and alternative energy sources;
|
•
|
energy efficiency and technology trends;
|
•
|
operating hazards and other risks incidental to transporting, storing, gathering 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;
|
•
|
environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves;
|
•
|
natural disasters, weather-related delays, casualty losses and other matters beyond our control;
|
•
|
interest rates;
|
•
|
labor relations;
|
•
|
changes in tax status;
|
•
|
the effects of future litigation; and
|
•
|
certain factors discussed elsewhere in this Quarterly Report.
|
•
|
Natural Gas Transportation—the ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities;
|
•
|
Crude Oil Transportation—the ownership and operation of a FERC-regulated crude oil pipeline system; and
|
•
|
Gathering, Processing & Terminalling—the ownership and operation of natural gas gathering, processing, treating and fractionation facilities; crude oil gathering, storage and terminalling 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.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Reconciliation of Adjusted EBITDA to Net Income
|
|
|
|
|
|
|
|
||||||||
Net income attributable to partners
|
$
|
184,090
|
|
|
$
|
64,345
|
|
|
$
|
344,875
|
|
|
$
|
200,260
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net of noncontrolling interest
|
22,888
|
|
|
10,907
|
|
|
57,265
|
|
|
27,639
|
|
||||
Depreciation and amortization expense, net of noncontrolling interest
|
23,472
|
|
|
21,648
|
|
|
67,894
|
|
|
66,484
|
|
||||
Distributions from unconsolidated investments
|
138,828
|
|
|
22,462
|
|
|
229,510
|
|
|
53,434
|
|
||||
Non-cash loss (gain) related to derivative instruments, net of noncontrolling interest
|
688
|
|
|
4,410
|
|
|
(1,669
|
)
|
|
(5,391
|
)
|
||||
Non-cash compensation expense
(1)
|
2,135
|
|
|
1,635
|
|
|
5,087
|
|
|
4,270
|
|
||||
(Gain) loss from disposal of assets
|
—
|
|
|
—
|
|
|
(1,319
|
)
|
|
1,849
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated investments
|
(123,642
|
)
|
|
(12,764
|
)
|
|
(187,121
|
)
|
|
(37,495
|
)
|
||||
Gain on remeasurement of unconsolidated investment
|
(9,728
|
)
|
|
—
|
|
|
(9,728
|
)
|
|
—
|
|
||||
Adjusted EBITDA
|
$
|
238,731
|
|
|
$
|
112,643
|
|
|
$
|
504,794
|
|
|
$
|
311,050
|
|
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities
|
$
|
214,297
|
|
|
$
|
105,501
|
|
|
$
|
456,148
|
|
|
$
|
311,008
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net of noncontrolling interest
|
22,888
|
|
|
10,907
|
|
|
57,265
|
|
|
27,639
|
|
||||
Other, including changes in operating working capital
|
1,546
|
|
|
(3,765
|
)
|
|
(8,619
|
)
|
|
(27,597
|
)
|
||||
Adjusted EBITDA
|
$
|
238,731
|
|
|
$
|
112,643
|
|
|
$
|
504,794
|
|
|
$
|
311,050
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Deficiency payments received, net
|
2,288
|
|
|
9,114
|
|
|
26,639
|
|
|
24,892
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Cash interest cost
|
(21,814
|
)
|
|
(9,950
|
)
|
|
(53,973
|
)
|
|
(25,183
|
)
|
||||
Maintenance capital expenditures, net
|
(3,689
|
)
|
|
(2,828
|
)
|
|
(7,746
|
)
|
|
(7,085
|
)
|
||||
Cash flow attributable to predecessor operations
|
—
|
|
|
(4,117
|
)
|
|
—
|
|
|
(4,849
|
)
|
||||
Distributable Cash Flow
|
$
|
215,516
|
|
|
$
|
104,862
|
|
|
$
|
469,714
|
|
|
$
|
298,825
|
|
(1)
|
Represents TEP's portion of non-cash compensation expense related to Equity Participation Units, excluding amounts allocated to TD
.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Reconciliation of Adjusted EBITDA to Operating Income in the Natural Gas Transportation Segment (1)
|
|
|
|
|
|
|
|
||||||||
Operating income
|
$
|
17,016
|
|
|
$
|
15,436
|
|
|
$
|
49,910
|
|
|
$
|
39,873
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense
|
4,794
|
|
|
4,876
|
|
|
14,369
|
|
|
16,233
|
|
||||
Distributions from unconsolidated investment
|
138,132
|
|
|
21,804
|
|
|
227,547
|
|
|
51,460
|
|
||||
Other income, net
|
455
|
|
|
480
|
|
|
807
|
|
|
1,267
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Non-cash (gain) loss related to derivative instruments
|
$
|
—
|
|
|
$
|
(161
|
)
|
|
$
|
(116
|
)
|
|
$
|
190
|
|
Segment Adjusted EBITDA
|
$
|
160,397
|
|
|
$
|
42,435
|
|
|
$
|
292,517
|
|
|
$
|
109,023
|
|
Reconciliation of Adjusted EBITDA to Operating Income in the Crude Oil Transportation Segment (1)
|
|
|
|
|
|
|
|
||||||||
Operating income
|
$
|
51,478
|
|
|
$
|
53,227
|
|
|
$
|
145,462
|
|
|
$
|
159,619
|
|
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense, net of noncontrolling interest
|
13,027
|
|
|
13,112
|
|
|
39,673
|
|
|
39,276
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA attributable to noncontrolling interests
|
(1,024
|
)
|
|
(1,060
|
)
|
|
(2,895
|
)
|
|
(3,170
|
)
|
||||
Non-cash loss (gain) related to derivative instruments, net of noncontrolling interest
|
202
|
|
|
152
|
|
|
(432
|
)
|
|
7
|
|
||||
Segment Adjusted EBITDA
|
$
|
63,683
|
|
|
$
|
65,431
|
|
|
$
|
181,808
|
|
|
$
|
195,732
|
|
Reconciliation of Adjusted EBITDA to Operating Income (Loss) in the Gathering, Processing & Terminalling Segment (1)
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
$
|
9,045
|
|
|
$
|
1,851
|
|
|
$
|
20,928
|
|
|
$
|
(4,629
|
)
|
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense, net of noncontrolling interest
|
5,651
|
|
|
3,660
|
|
|
13,852
|
|
|
10,975
|
|
||||
Non-cash loss related to derivative instruments
|
486
|
|
|
—
|
|
|
764
|
|
|
—
|
|
||||
Distributions from unconsolidated investment
|
696
|
|
|
658
|
|
|
1,963
|
|
|
1,974
|
|
||||
Other (expense) income, net
|
(1
|
)
|
|
—
|
|
|
142
|
|
|
—
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||||
(Gain) loss on disposal of assets
|
—
|
|
|
—
|
|
|
(1,319
|
)
|
|
1,849
|
|
||||
Adjusted EBITDA attributable to noncontrolling interests
|
(389
|
)
|
|
(24
|
)
|
|
(346
|
)
|
|
(65
|
)
|
||||
Segment Adjusted EBITDA
|
$
|
15,488
|
|
|
$
|
6,145
|
|
|
$
|
35,984
|
|
|
$
|
10,104
|
|
Total Segment Adjusted EBITDA
|
$
|
239,568
|
|
|
$
|
114,011
|
|
|
$
|
510,309
|
|
|
$
|
314,859
|
|
Corporate general and administrative costs
|
(837
|
)
|
|
(1,368
|
)
|
|
(5,515
|
)
|
|
(3,809
|
)
|
||||
Total Adjusted EBITDA
|
$
|
238,731
|
|
|
$
|
112,643
|
|
|
$
|
504,794
|
|
|
$
|
311,050
|
|
(1)
|
Segment results as presented represent total operating income and Adjusted EBITDA, including intersegment activity, for the Natural Gas Transportation, Crude Oil Transportation, and Gathering, Processing & Terminalling segments. For reconciliations to the consolidated financial data, see
Note 15
–
Reportable Segments
to the accompanying condensed consolidated financial statements.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Natural Gas Transportation Segment:
|
|
|
|
|
|
|
|
||||
Gas transportation average firm contracted volumes (MMcf/d)
(1)
|
1,646
|
|
|
1,601
|
|
|
1,737
|
|
|
1,625
|
|
Crude Oil Transportation Segment:
|
|
|
|
|
|
|
|
||||
Crude oil transportation average contracted capacity (Bbls/d)
|
306,916
|
|
|
298,580
|
|
|
302,476
|
|
|
294,364
|
|
Crude oil transportation average throughput (Bbls/d)
|
269,585
|
|
|
276,138
|
|
|
268,435
|
|
|
284,512
|
|
Gathering, Processing & Terminalling Segment:
|
|
|
|
|
|
|
|
||||
Natural gas processing inlet volumes (MMcf/d)
|
111
|
|
|
103
|
|
|
106
|
|
|
102
|
|
Freshwater average volumes (Bbls/d)
|
109,988
|
|
|
31,656
|
|
|
93,885
|
|
|
31,291
|
|
Produced water gathering and disposal average volumes (Bbls/d)
|
43,924
|
|
|
23,784
|
|
|
23,405
|
|
|
18,176
|
|
(1)
|
Volumes transported under firm fee contracts, excluding Rockies Express.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Crude oil transportation services
|
$
|
86,180
|
|
|
$
|
91,387
|
|
|
$
|
260,366
|
|
|
$
|
279,281
|
|
Natural gas transportation services
|
30,256
|
|
|
31,444
|
|
|
91,370
|
|
|
89,406
|
|
||||
Sales of natural gas, NGLs, and crude oil
|
32,215
|
|
|
20,487
|
|
|
70,514
|
|
|
51,243
|
|
||||
Processing and other revenues
|
27,218
|
|
|
9,950
|
|
|
58,882
|
|
|
29,521
|
|
||||
Total Revenues
|
175,869
|
|
|
153,268
|
|
|
481,132
|
|
|
449,451
|
|
||||
Operating Costs and Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales (exclusive of depreciation and amortization shown below)
|
26,984
|
|
|
18,319
|
|
|
58,740
|
|
|
47,845
|
|
||||
Cost of transportation services (exclusive of depreciation and amortization shown below)
|
10,538
|
|
|
10,842
|
|
|
38,799
|
|
|
35,946
|
|
||||
Operations and maintenance
|
17,412
|
|
|
15,146
|
|
|
45,569
|
|
|
42,374
|
|
||||
Depreciation and amortization
|
23,782
|
|
|
21,177
|
|
|
67,276
|
|
|
65,074
|
|
||||
General and administrative
|
15,925
|
|
|
13,413
|
|
|
44,362
|
|
|
41,225
|
|
||||
Taxes, other than income taxes
|
6,661
|
|
|
6,860
|
|
|
21,799
|
|
|
20,293
|
|
||||
Contract termination
|
—
|
|
|
—
|
|
|
—
|
|
|
8,061
|
|
||||
(Gain) loss on disposal of assets
|
—
|
|
|
—
|
|
|
(1,264
|
)
|
|
1,849
|
|
||||
Total Operating Costs and Expenses
|
101,302
|
|
|
85,757
|
|
|
275,281
|
|
|
262,667
|
|
||||
Operating Income
|
74,567
|
|
|
67,511
|
|
|
205,851
|
|
|
186,784
|
|
||||
Other Income (Expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(22,888
|
)
|
|
(10,907
|
)
|
|
(57,265
|
)
|
|
(27,639
|
)
|
||||
Unrealized (loss) gain on derivative instrument
|
—
|
|
|
(4,419
|
)
|
|
1,885
|
|
|
5,588
|
|
||||
Equity in earnings of unconsolidated investments
|
123,642
|
|
|
12,764
|
|
|
187,121
|
|
|
37,495
|
|
||||
Gain on remeasurement of unconsolidated investment
|
9,728
|
|
|
—
|
|
|
9,728
|
|
|
—
|
|
||||
Other income, net
|
454
|
|
|
480
|
|
|
796
|
|
|
1,267
|
|
||||
Total Other Income (Expense)
|
110,936
|
|
|
(2,082
|
)
|
|
142,265
|
|
|
16,711
|
|
||||
Net income
|
185,503
|
|
|
65,429
|
|
|
348,116
|
|
|
203,495
|
|
||||
Net income attributable to noncontrolling interests
|
(1,413
|
)
|
|
(1,084
|
)
|
|
(3,241
|
)
|
|
(3,235
|
)
|
||||
Net income attributable to partners
|
$
|
184,090
|
|
|
$
|
64,345
|
|
|
$
|
344,875
|
|
|
$
|
200,260
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
(1)
|
$
|
238,731
|
|
|
$
|
112,643
|
|
|
$
|
504,794
|
|
|
$
|
311,050
|
|
(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.
|
Segment Financial Data - Natural Gas Transportation
(1)
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
|
(in thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Natural gas transportation services
|
$
|
32,139
|
|
|
$
|
32,871
|
|
|
$
|
96,140
|
|
|
$
|
93,598
|
|
Sales of natural gas, NGLs, and crude oil
|
603
|
|
|
935
|
|
|
2,793
|
|
|
1,331
|
|
||||
Processing and other revenues
|
3,342
|
|
|
1,188
|
|
|
6,689
|
|
|
4,875
|
|
||||
Total revenues
|
36,084
|
|
|
34,994
|
|
|
105,622
|
|
|
99,804
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
586
|
|
|
749
|
|
|
2,177
|
|
|
2,268
|
|
||||
Cost of transportation services
|
1,489
|
|
|
874
|
|
|
2,731
|
|
|
4,171
|
|
||||
Operations and maintenance
|
7,114
|
|
|
8,025
|
|
|
21,502
|
|
|
21,711
|
|
||||
Depreciation and amortization
|
4,794
|
|
|
4,876
|
|
|
14,369
|
|
|
16,233
|
|
||||
General and administrative
|
4,180
|
|
|
3,872
|
|
|
11,534
|
|
|
12,068
|
|
||||
Taxes, other than income taxes
|
905
|
|
|
1,162
|
|
|
3,399
|
|
|
3,480
|
|
||||
Total operating costs and expenses
|
19,068
|
|
|
19,558
|
|
|
55,712
|
|
|
59,931
|
|
||||
Operating income
|
$
|
17,016
|
|
|
$
|
15,436
|
|
|
$
|
49,910
|
|
|
$
|
39,873
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 15
–
Reportable Segments
to the accompanying condensed consolidated financial statements.
|
Segment Financial Data - Crude Oil Transportation
(1)
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
|
(in thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Crude oil transportation services
|
$
|
90,113
|
|
|
$
|
91,387
|
|
|
$
|
264,299
|
|
|
$
|
279,281
|
|
Sales of natural gas, NGLs, and crude oil
|
2,916
|
|
|
4,439
|
|
|
9,469
|
|
|
4,587
|
|
||||
Total revenues
|
93,029
|
|
|
95,826
|
|
|
273,768
|
|
|
283,868
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
2,819
|
|
|
3,487
|
|
|
8,154
|
|
|
3,487
|
|
||||
Cost of transportation services
|
11,957
|
|
|
12,939
|
|
|
39,708
|
|
|
41,586
|
|
||||
Operations and maintenance
|
2,976
|
|
|
3,203
|
|
|
9,048
|
|
|
10,244
|
|
||||
Depreciation and amortization
|
13,127
|
|
|
12,836
|
|
|
39,230
|
|
|
38,448
|
|
||||
General and administrative
|
5,320
|
|
|
4,866
|
|
|
15,318
|
|
|
15,236
|
|
||||
Taxes, other than income taxes
|
5,352
|
|
|
5,268
|
|
|
16,848
|
|
|
15,248
|
|
||||
Total operating costs and expenses
|
41,551
|
|
|
42,599
|
|
|
128,306
|
|
|
124,249
|
|
||||
Operating income
|
$
|
51,478
|
|
|
$
|
53,227
|
|
|
$
|
145,462
|
|
|
$
|
159,619
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 15
–
Reportable Segments
to the accompanying condensed consolidated financial statements.
|
Segment Financial Data - Gathering, Processing & Terminalling
(1)
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
|
(in thousands)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Sales of natural gas, NGLs, and crude oil
|
$
|
28,696
|
|
|
$
|
15,384
|
|
|
$
|
58,252
|
|
|
$
|
45,596
|
|
Processing and other revenues
|
29,040
|
|
|
11,646
|
|
|
63,163
|
|
|
33,222
|
|
||||
Total revenues
|
57,736
|
|
|
27,030
|
|
|
121,415
|
|
|
78,818
|
|
||||
Operating costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
24,120
|
|
|
14,435
|
|
|
49,148
|
|
|
42,516
|
|
||||
Cost of transportation services
|
7,531
|
|
|
1,259
|
|
|
15,294
|
|
|
2,802
|
|
||||
Operations and maintenance
|
7,322
|
|
|
3,918
|
|
|
15,019
|
|
|
10,419
|
|
||||
Depreciation and amortization
|
5,861
|
|
|
3,465
|
|
|
13,677
|
|
|
10,393
|
|
||||
General and administrative
|
3,453
|
|
|
1,672
|
|
|
7,061
|
|
|
5,842
|
|
||||
Contract termination
|
—
|
|
|
—
|
|
|
—
|
|
|
8,061
|
|
||||
Taxes, other than income taxes
|
404
|
|
|
430
|
|
|
1,552
|
|
|
1,565
|
|
||||
(Gain) loss on disposal of assets
|
—
|
|
|
—
|
|
|
(1,264
|
)
|
|
1,849
|
|
||||
Total operating costs and expenses
|
48,691
|
|
|
25,179
|
|
|
100,487
|
|
|
83,447
|
|
||||
Operating income (loss)
|
$
|
9,045
|
|
|
$
|
1,851
|
|
|
$
|
20,928
|
|
|
$
|
(4,629
|
)
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see
Note 15
–
Reportable Segments
to the accompanying condensed consolidated financial statements.
|
•
|
cash generated from our operations;
|
•
|
borrowing capacity available under our revolving credit facility; and
|
•
|
future issuances of additional partnership units and/or debt securities.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Cash on hand
|
$
|
2,998
|
|
|
$
|
1,873
|
|
|
|
|
|
||||
Total capacity under the revolving credit facility
|
1,750,000
|
|
|
1,750,000
|
|
||
Less: Outstanding borrowings under the revolving credit facility
|
(881,000
|
)
|
|
(1,015,000
|
)
|
||
Less: Letters of credit issued under the revolving credit facility
|
(3,094
|
)
|
|
—
|
|
||
Available capacity under the revolving credit facility
|
865,906
|
|
|
735,000
|
|
||
Total liquidity
|
$
|
868,904
|
|
|
$
|
736,873
|
|
•
|
an increase
in accounts payable of
$45.5 million
primarily due to crude oil purchases at Stanchion, as well as increased volumes at TMID and Water Solutions;
|
•
|
an increase
in deferred revenue of
$27.2 million
primarily from deficiency payments collected by Pony Express;
|
•
|
a decrease
in derivative assets at fair value of
$11.0 million
as we exercised the remainder of the call option granted by TD; and
|
•
|
an increase
in accrued taxes of
$5.9 million
as a result of increased tax assessments on Pony Express assets placed in service during 2016.
|
•
|
an increase
in accounts receivable of
$36.1 million
primarily due to crude oil sales at Stanchion; and
|
•
|
a decrease
in accrued liabilities of
$5.5 million
primarily due to a decrease in interest accrued at September 30, 2017 compared to December 31, 2016 due to the timing of interest payments in September 2017.
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
456,148
|
|
|
$
|
311,008
|
|
Investing activities
|
$
|
(852,941
|
)
|
|
$
|
(559,774
|
)
|
Financing activities
|
$
|
397,918
|
|
|
$
|
247,572
|
|
•
|
cash outflows of
$400.0 million
for the acquisition of an additional 24.99% membership interest in Rockies Express;
|
•
|
cash outflows of
$140.0 million
for the acquisition of Terminals and NatGas;
|
•
|
cash outflows of
$128.5 million
for the acquisition of the Douglas Gathering System;
|
•
|
capital expenditures of
$88.1 million
, primarily due to spending on an additional freshwater connection at Water Solutions and on a connection to a refinery complex on the Pony Express System and remediation digs on the Pony Express System as discussed in
Note 14
–
Legal and Environmental Matters
;
|
•
|
cash outflows of
$57.2 million
for the acquisition of an additional 40% membership interest in Deeprock Development;
|
•
|
cash outflows of
$36.0 million
for the acquisition of the PRB Crude System; and
|
•
|
contributions to unconsolidated investments in the amount of
$31.6 million
, primarily to fund remaining costs associated with the Zone 3 Capacity Enhancement project at Rockies Express.
|
•
|
capital expenditures of
$55.4 million
, primarily due to post in-service spending on Pony Express System projects and costs associated with construction of the Buckingham Terminal;
|
•
|
cash outflows of
$49.1 million
for a portion of the acquisition of an additional 31.3% membership interest in Pony Express, the remainder of which is classified as a financing activity as discussed below; and
|
•
|
contributions to Rockies Express in the amount of
$35.5 million
.
|
•
|
proceeds from the issuance of
$850.0 million
in aggregate principal amount of 2024 Notes and 2028 Notes; and
|
•
|
net cash proceeds of
$112.4 million
from the issuance of
2,341,061
common units under our Equity Distribution Agreements.
|
•
|
distributions to unitholders of
$284.7 million
;
|
•
|
net repayments under the revolving credit facility of
$134.0 million
;
|
•
|
$72.4 million
for the exercise of the remainder of the call option granted by TD covering
1,703,094
common units; and
|
•
|
$35.3 million
for the
736,262
common units repurchased from TD.
|
•
|
proceeds from the issuance of
$400.0 million
in aggregate principal amount of 5.50% Senior Notes due 2024;
|
•
|
net cash proceeds of
$290.5 million
from the issuance of 6,703,984 common units under the Equity Distribution Agreements;
|
•
|
net borrowings under the revolving credit facility of
$252.0 million
; and
|
•
|
net cash proceeds of
$90.0 million
from the issuance of 2,416,987 common units representing limited partnership interests in a private placement transaction.
|
•
|
$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
$207.5 million
; and
|
•
|
$151.4 million
for the partial exercise of the call option granted by TD covering 3,563,146 common units.
|
•
|
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 we expect will 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).
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Maintenance capital expenditures
|
$
|
7,746
|
|
|
$
|
7,085
|
|
Expansion capital expenditures
|
78,448
|
|
|
29,452
|
|
||
Total capital expenditures incurred
|
$
|
86,194
|
|
|
$
|
36,537
|
|
|
Fair Value
|
|
Effect of 10% Price Increase
|
|
Effect of 10% Price Decrease
|
||||||
|
(in thousands)
|
||||||||||
Natural gas derivative contracts
(1)
|
$
|
1
|
|
|
$
|
29
|
|
|
$
|
(29
|
)
|
Crude oil derivative contracts
(2)
|
$
|
472
|
|
|
$
|
(875
|
)
|
|
$
|
875
|
|
(1)
|
Represents long natural gas swaps outstanding with a notional volume of approximately
0.1
Bcf covering a portion of the natural gas that is expected to be purchased by our Gathering, Processing & Terminalling segment throughout 2017.
|
(2)
|
Represents the purchase and sale of
323,620
barrels of crude oil by our Gathering, Processing & Terminalling segment which will settle throughout 2017 and the first quarter of 2018.
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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
|
|
|
|
Tallgrass Energy Partners, LP
|
||||
|
|
|
(registrant)
|
||||
|
|
|
By:
|
Tallgrass MLP GP, LLC, its general partner
|
|
||
|
|
|
|
|
|
|
|
Date:
|
November 2, 2017
|
By:
|
/s/ Gary J. Brauchle
|
|
|||
|
|
|
|
Name:
|
Gary J. Brauchle
|
|
|
|
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
||
|
|
|
|
|
(Duly Authorized Officer and Principal Financial Officer)
|
1.
|
Relationship to Plan
. This Award is subject to all of the terms, conditions and provisions of the Plan and administrative interpretations thereunder, if any, which have been adopted by the Board or the Committee thereunder and are in effect on the date hereof. Except as otherwise provided herein, capitalized terms shall have the same meanings ascribed to them under the Plan.
|
2.
|
Vesting Schedule; Settlement
.
|
(a)
|
General
. Except as otherwise provided Section 2(b) or the Plan, all of the Equity Participation Units subject to this Award shall vest, if at all, on the Distribution Hurdle Date;
provided, however,
that (i) the Participant remains in continuous employment with the Company or its Affiliates during the period beginning on the Grant Date and ending on the Distribution Hurdle Date and (ii) such Equity Participation Units have not previously been forfeited prior to such date pursuant to Section 3. If the Distribution Hurdle Date does not occur by the seventh anniversary of the Grant Date, then as of the seventh anniversary of the Grant Date, this Award will expire, terminate and be immediately forfeited by the Participant.
|
(b)
|
Accelerated Vesting
. If prior to the vesting of the Equity Participation Units under Section 2(a) and the seventh anniversary of the Grant Date:
|
(i)
|
both (A) a Qualifying Transaction occurs and (B) David G. Dehaemers, Jr. ceases to be the Chief Executive Officer of Tallgrass Energy Holdings, LLC, TEGP Management, LLC or the Company, then all unvested Equity Participation Units shall vest as of the later date of (A) or (B) above (the "
Qualifying Transaction Acceleration Date
")
; provided, however
, that (x) the Participant remains in continuous employment with the Company or its Affiliates through such Qualifying Transaction Acceleration Date and (y) such Equity Participation Units have not previously been forfeited prior to such Qualifying Transaction Acceleration Date pursuant to Section 3; or
|
(ii)
|
(A) David G. Dehaemers, Jr. ceases to be the Chief Executive Officer of Tallgrass Energy Holdings, LLC, TEGP Management, LLC or the Company other than in connection with a Qualifying Transaction and (B) after the occurrence of the event in (A), Participant's employment with the Company or its Affiliates is thereafter terminated without Cause, then all unvested Equity Participation Units shall vest as of the date of such termination of Participant’s employment.
|
(c)
|
Settlement of Vested Equity Participation Units
. Within 60 days following the Vesting Date of the Equity Participation Units, the Participant shall receive the number of Units equal to the number of vested Equity Participation Units. Units will be evidenced, at the sole option and in the sole discretion of the Committee, either (i) in book-entry form in the Participant's name in the Unit register of the Partnership maintained by the Partnership's transfer agent or (ii) a unit certificate issued in the Participant's name. Upon delivery of a Unit in respect of an Equity Participation Unit, such Equity Participation Unit shall cease to be outstanding in the Participant's notional account described in Section 4.
|
(d)
|
Definitions
. For purposes of this Agreement, the following terms shall have the meanings set forth below:
|
3.
|
Forfeiture of Award
. Except as set forth in Section 2(b)(ii), upon termination of the Participant's employment with the Company or any of its Affiliates for any reason prior to the Vesting Date, all Equity Participation Units that have not vested in accordance with Section 2 as of such termination date shall be immediately forfeited by the Participant on such termination date.
|
4.
|
Bookkeeping Account
.
Until vesting, termination or forfeiture, the Award of Equity Participation Units hereunder shall be evidenced by entry in a bookkeeping account maintained by the Partnership or its transfer agent.
|
5.
|
Rights as Unitholder; Delivery of Units
.
Until delivery of Units as described in Section 2(c), the Participant shall have no rights as a unitholder as a result of the grant of Equity Participation Units hereunder, including the right to vote the Equity Participation Units. The Participant shall not be entitled to receive any distributions with respect to the Equity Participation Units unless the Participant receives a separate grant of Distribution Equivalent Rights. The Company shall not be obligated to deliver any Units if counsel to the Company determines that such sale or delivery would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Partnership with, any securities exchange or association upon which the
|
6.
|
Assignment of Award
. The Participant's rights under this Agreement and the Plan are personal; no assignment or transfer of the Participant's rights under and interest in this Award may be made by the Participant.
|
7.
|
Withholding
. No Units shall be delivered hereunder to or in respect of a Participant unless the amount of all federal, state and other governmental withholding tax requirements imposed upon the Company or an Affiliate with respect to the issuance of such Units has been remitted to the Company or an Affiliate or unless provisions to pay such withholding requirements have been made to the satisfaction of the Committee. The Participant shall satisfy such tax withholding by having the Company or an Affiliate withhold Units otherwise deliverable hereunder, having a Fair Market Value equal to the minimum required tax withholding rate. The Committee may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with this Award.
|
8.
|
Restrictive Covenants
.
|
(a)
|
Definitions.
For purposes of this Agreement, the following terms shall have the meanings set forth below:
|
(b)
|
Noncompetition; Nonsolicitation.
The Participant acknowledges and recognizes his status as a key executive and management employee of the Company, his possession of the Company’s trade secret and confidential and/or proprietary information which would be valuable or useful to the Company’s competitors, and the highly competitive nature of the business of the Company and the other members of the Tallgrass Group. Participant further acknowledges that the restrictions contained in this Section are reasonable and necessary for the protection of the immediate interests of the Company and the other members of the Tallgrass Group in that any violation of these restrictions would cause substantial injury to the Company and the other members of the Tallgrass Group. Therefore, in consideration of the Participant’s continued employment with the Company or any Affiliate and the benefits provided to Participant under this Award, and to further protect the proprietary, trade secret, and confidential information of the Tallgrass Group, the Participant agrees that, during the Prohibited Period the Participant will not:
|
(i)
|
engage in a Prohibited Activity; or
|
(ii)
|
solicit, entice, induce or in any manner influence any person who has an employee or independent contractor relationship with any member of the Tallgrass Group and with whom the Participant had contact, directly or indirectly, during the term of the Participant's employment, to change or end such relationship or hire, recruit, or attempt to hire or recruit, any such person to provide services for an affiliate of the Participant.
|
(c)
|
Non-disparagement.
So long as the Participant is an employee of the Company or any Affiliate and thereafter (including after the termination of the Participant's employment), the Participant will not make any comments, in any format, whether written, electronic or oral, disparaging of any member of the Tallgrass Group or critical of the business performance, methods, practices, operations, decisions or plans of any member of the Tallgrass Group to any third party.
|
(d)
|
Protected Disclosures.
Notwithstanding any provision to the contrary in this Agreement, nothing in this Agreement prohibits the Participant from reporting possible violations of law or regulation to any
|
(e)
|
Specific Performance.
Recognizing that irreparable damage will result to the Company and the Tallgrass Group in the event of the breach of any of the foregoing covenants and assurances by the Participant contained in Section 8, 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 the Participant, 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 the Participant set forth in Section 8 are in addition to and not in lieu of or exclusive of any other obligations and duties of the Participant to the Company or any member of the Tallgrass Group, whether express or implied in fact or in law.
|
(f)
|
Reformation.
The Company and the Participant agree that the foregoing geographic, duration and other restrictions contained in this Agreement are fair, reasonable, and necessary to protect the Company’s legitimate business interests, given the geographic scope of the Company’s business operations, the competitive and specialized nature of the Company’s business, and the nature of Participant’s position with the Company and that any breach of the covenants contained in this Section 8 would cause irreparable injury to the Tallgrass Group. The Participant expressly represents that enforcement of the restrictive covenants set forth in this Section 8 will not impose an undue hardship upon the Participant or any person or entity affiliated with the Participant. The Participant understands that the foregoing restrictions may limit the Participant’s ability to engage in Prohibited Activities during the Prohibited Period, but acknowledges that the Participant will receive sufficiently high remuneration and other benefits from the Company to justify such restriction. Further, the Participant acknowledges that the Participant’s skills are such that the Participant can be gainfully employed in non-competitive employment, and that the restrictive covenants will not prevent the Participant from earning a living. Nevertheless, if any of the aforesaid restrictions are found by a court of competent jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the parties intend for the restrictions herein set forth to be modified by the court making such determination so as to be reasonable and enforceable and, as so modified, to be fully enforced.
|
9.
|
No Employment Guaranteed
. No provision of this Agreement shall confer any right upon the Participant to continued employment with the Company or any Affiliate, and Participant acknowledges that Participant's employment with the Company or any Affiliate is on an at-will basis.
|
10.
|
Governing Law
. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, except with respect to Section 8, which shall be governed by, construed, and enforced in accordance with the laws of the State of Kansas.
|
11.
|
Amendment
. This Agreement cannot be modified, altered or amended, except by an agreement, in writing, signed by both the Company and the Participant.
|
12.
|
Continuing Obligations; Entire Agreement
. Participant acknowledges and agrees that Participant continues to remain bound by, and is required to continue to comply with, the (i) Confidentiality Agreement and Assignment of Inventions dated [________] between Participant and the Company (the "Confidentiality Agreement") and (ii) Acceptance Statement dated [________] (the "Acceptance Agreement") and that such agreements remain in full force and effect, unchanged by the execution, delivery and performance of this Agreement. This Agreement, together with the Confidentiality Agreement and the Acceptance Agreement, constitutes and expresses the entire agreement of the parties with respect to the subject matter hereof, and may be modified only by written agreement signed by the parties.
|
13.
|
Section 409A
. The Equity Participation Units granted pursuant to this Agreement are intended to be exempt from Code Section 409A, as a "short-term deferral," and ambiguous provisions hereof, if any, shall be construed and interpreted in a manner consistent with such intent. No payment, benefit or consideration shall be substituted for the Equity Participation Units if such action would result in the imposition of taxes under Code Section 409A.
|
|
|
|
TALLGRASS MLP GP, LLC
|
|
Date:
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
PARTICIPANT:
|
|
Date:
|
|
|
|
|
|
|
|
[Name]
|
|
TEP
(1)
|
|
|
TEP Pre-Predecessor
|
||||||||||||||||||||||||
|
Nine Months Ended September 30, 2017
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
|
Year Ended December 31, 2013
|
|
Period from November 12, 2012 to December 31, 2012
|
|
|
Period from January 1, 2012 to November 12, 2012
|
||||||||||||||
Earnings from continuing operations before fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pre-tax income from continuing operations before earnings from unconsolidated affiliates
|
$
|
160,995
|
|
|
$
|
220,358
|
|
|
$
|
194,413
|
|
|
$
|
64,169
|
|
|
$
|
12,971
|
|
|
$
|
(1,889
|
)
|
|
|
$
|
51,775
|
|
Fixed charges
|
61,565
|
|
|
51,306
|
|
|
25,437
|
|
|
11,626
|
|
|
13,360
|
|
|
3,450
|
|
|
|
69
|
|
|||||||
Amortization of capitalized interest
|
59
|
|
|
65
|
|
|
66
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||
Distributed earnings from unconsolidated affiliates
|
187,624
|
|
|
54,449
|
|
|
3,096
|
|
|
1,280
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||
less: Capitalized interest
|
(522
|
)
|
|
(471
|
)
|
|
(811
|
)
|
|
(1,025
|
)
|
|
(242
|
)
|
|
—
|
|
|
|
—
|
|
|||||||
Earnings from continuing operations before fixed charges
|
$
|
409,721
|
|
|
$
|
325,707
|
|
|
$
|
222,201
|
|
|
$
|
76,085
|
|
|
$
|
26,089
|
|
|
$
|
1,561
|
|
|
|
$
|
51,844
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense, net of capitalized interest
|
54,015
|
|
|
37,189
|
|
|
14,226
|
|
|
7,648
|
|
|
11,264
|
|
|
3,040
|
|
|
|
—
|
|
|||||||
Capitalized interest
|
522
|
|
|
471
|
|
|
811
|
|
|
1,025
|
|
|
242
|
|
|
—
|
|
|
|
—
|
|
|||||||
Estimate of interest within rental expense (33.3%)
|
3,707
|
|
|
10,032
|
|
|
8,615
|
|
|
1,574
|
|
|
109
|
|
|
14
|
|
|
|
69
|
|
|||||||
Amortization of debt costs
|
3,321
|
|
|
3,614
|
|
|
1,785
|
|
|
1,379
|
|
|
1,745
|
|
|
396
|
|
|
|
—
|
|
|||||||
Total fixed charges
|
$
|
61,565
|
|
|
$
|
51,306
|
|
|
$
|
25,437
|
|
|
$
|
11,626
|
|
|
$
|
13,360
|
|
|
$
|
3,450
|
|
|
|
$
|
69
|
|
Ratio of earnings to fixed charges
(2)
|
6.66
|
|
|
6.35
|
|
|
8.74
|
|
|
6.54
|
|
|
1.95
|
|
|
—
|
|
(3)
|
|
751.36
|
|
(1)
|
TEP closed the acquisition of Trailblazer on April 1, 2014, the acquisition of a controlling 33.3% membership interest in Pony Express effective September 1, 2014, and the acquisitions of Terminals and NatGas effective January 1, 2017. As these acquisitions 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, the initial 33.3% of Pony Express, and Terminals and NatGas. TEP closed the acquisitions of an additional 33.3% and 31.3% membership interests in Pony Express effective March 1, 2015 and January 1, 2016, respectively, which represent transactions between entities under common control and acquisitions of noncontrolling interests. As a result, financial information for periods prior to March 1, 2015 and January 1, 2016 has not been recast to reflect the additional 33.3% and 31.3% membership interests.
|
(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 $1.9 million to achieve an earnings to fixed charges ratio of 1:1 for the period from November 12, 2012 to December 31, 2012.
|
1.
|
I have reviewed this
Quarterly
Report on Form
10-Q
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
Quarterly
Report on Form
10-Q
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)
|