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ý
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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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47-3159268
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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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¨
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Accelerated filer
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¨
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Non-accelerated filer
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x
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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March 31, 2015
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December 31, 2014
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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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876
|
|
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$
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867
|
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Accounts receivable, net
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46,268
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|
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39,768
|
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||
Receivable from related party
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—
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|
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73,393
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|
||
Gas imbalances
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911
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|
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2,442
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|
||
Inventories
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12,679
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13,045
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Derivative assets at fair value
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90
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|
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—
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Prepayments and other current assets
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2,728
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|
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2,766
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Total Current Assets
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63,552
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132,281
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Property, plant and equipment, net
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1,921,676
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1,853,081
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Goodwill
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343,288
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343,288
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Intangible asset, net
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102,519
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104,538
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Deferred financing costs
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5,119
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5,528
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Deferred charges and other assets
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17,397
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18,481
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Total Assets
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$
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2,453,551
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$
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2,457,197
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LIABILITIES AND PARTNERS’ EQUITY
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||||
Current Liabilities:
|
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||||
Accounts payable
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$
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64,047
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$
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62,329
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Accounts payable to related parties
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3,000
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3,915
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Gas imbalances
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3,490
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3,611
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Accrued taxes
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15,308
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3,989
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Accrued liabilities
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6,447
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9,384
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Other current liabilities
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12,094
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13,340
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Total Current Liabilities
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104,386
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96,568
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Long-term debt
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698,000
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559,000
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Other long-term liabilities and deferred credits
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6,213
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6,478
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Total Long-term Liabilities
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704,213
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565,478
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Commitments and Contingencies
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|
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Equity:
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TEGP Predecessor
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112,982
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146,866
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Total Members’ Equity
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112,982
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146,866
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Noncontrolling interests
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1,531,970
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1,648,285
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Total Equity
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1,644,952
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$
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1,795,151
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Total Liabilities and Equity
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$
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2,453,551
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$
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2,457,197
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Three Months Ended March 31,
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||||||
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2015
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2014
|
||||
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(in thousands, except per unit amounts)
|
||||||
Revenues:
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|
||||
Natural gas liquids sales
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$
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21,025
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$
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48,907
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Natural gas sales
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844
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4,808
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|
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Natural gas transportation services
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32,148
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34,104
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Crude oil transportation services
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50,381
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—
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Processing and other revenues
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10,277
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6,960
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Total Revenues
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114,675
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94,779
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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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19,593
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48,206
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Cost of transportation services (exclusive of depreciation and amortization shown below)
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10,715
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5,117
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Operations and maintenance
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9,575
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8,013
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Depreciation and amortization
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20,605
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8,309
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General and administrative
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12,689
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6,649
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Taxes, other than income taxes
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11,297
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1,956
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Loss on sale of assets
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4,483
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—
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Total Operating Costs and Expenses
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88,957
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78,250
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Operating Income
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25,718
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16,529
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Other (Expense) Income:
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Interest expense, net
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(3,440
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)
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(1,296
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)
|
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Equity in earnings of unconsolidated investment
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—
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444
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|
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Other income, net
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712
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|
940
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Total Other (Expense) Income
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(2,728
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)
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88
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Net Income
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22,990
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16,617
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less: Net income attributable to noncontrolling interests
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(17,868
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)
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(13,979
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)
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Net income attributable to TEGP Predecessor
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$
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5,122
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$
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2,638
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Three Months Ended March 31,
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||||||
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2015
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2014
|
||||
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(in thousands)
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||||||
Cash Flows from Operating Activities:
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Net income
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$
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22,990
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$
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16,617
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Adjustments to reconcile net income to net cash flows from operating activities:
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Depreciation and amortization
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21,557
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8,638
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Noncash compensation expense
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1,527
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|
941
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Loss on sale of assets
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4,483
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—
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Changes in components of working capital:
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|
||||
Accounts receivable and other
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(5,678
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)
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1,356
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Gas imbalances
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143
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321
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Inventories
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(2,754
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)
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(887
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)
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Accounts payable and accrued liabilities
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6,546
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(6,623
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)
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Other operating, net
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(175
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)
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7,240
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Net Cash Provided by Operating Activities
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48,639
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27,603
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Cash Flows from Investing Activities:
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Capital expenditures
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(13,300
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)
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(209,111
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)
|
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Acquisition of additional 33.3% membership interest in Pony Express
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(700,000
|
)
|
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—
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|
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Other investing, net
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(311
|
)
|
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(1,910
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)
|
||
Net Cash Used in Investing Activities
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(713,611
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)
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(211,021
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)
|
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Cash Flows from Financing Activities:
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|
|
|
||||
Proceeds from TEP public offerings, net of offering costs
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551,949
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|
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—
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|
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Borrowings under TEP revolving credit facility, net
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139,000
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|
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—
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|
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Distributions to TEP unitholders
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(14,761
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)
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(6,457
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)
|
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(Distributions to) Contributions from TEGP Predecessor, net
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(13,533
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)
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|
188,674
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|
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Other financing, net
|
2,326
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|
1,201
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|
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Net Cash Provided by Financing Activities
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664,981
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|
183,418
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Net Change in Cash and Cash Equivalents
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9
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|
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—
|
|
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Cash and Cash Equivalents, beginning of period
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867
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|
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—
|
|
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Cash and Cash Equivalents, end of period
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$
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876
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$
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—
|
|
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|
||||
Schedule of Noncash Investing and Financing Activities:
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|
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Property, plant and equipment acquired via the cash management agreement with TD
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$
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72,407
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|
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$
|
—
|
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Increase in accrual for payment of property, plant and equipment
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$
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1,179
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|
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$
|
53,542
|
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TEGP Predecessor
|
|
Noncontrolling Interests
|
|
Total Equity
|
||||||
|
|
|
|||||||||
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(in thousands)
|
||||||||||
Balance at January 1, 2015
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$
|
146,866
|
|
|
$
|
1,648,285
|
|
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$
|
1,795,151
|
|
Net income
|
5,122
|
|
|
17,868
|
|
|
22,990
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|
|||
Issuance of TEP units to public, net of offering costs
|
63,548
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|
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488,401
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|
|
551,949
|
|
|||
Distributions to TEP unitholders
|
—
|
|
|
(14,761
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)
|
|
(14,761
|
)
|
|||
Distributions to TEGP Predecessor
|
(4,108
|
)
|
|
(9,425
|
)
|
|
(13,533
|
)
|
|||
Noncash compensation expense
|
—
|
|
|
2,933
|
|
|
2,933
|
|
|||
Contributions from noncontrolling interest
|
—
|
|
|
2,379
|
|
|
2,379
|
|
|||
Distributions to noncontrolling interest
|
—
|
|
|
(2,156
|
)
|
|
(2,156
|
)
|
|||
Acquisition of additional 33.3% membership interest in Pony Express
|
(98,446
|
)
|
|
(601,554
|
)
|
|
(700,000
|
)
|
|||
Balance at March 31, 2015
|
$
|
112,982
|
|
|
$
|
1,531,970
|
|
|
$
|
1,644,952
|
|
|
|
|
|
|
|
||||||
|
TEGP Predecessor
|
|
Noncontrolling Interests
|
|
Total Equity
|
||||||
|
|
|
|||||||||
|
(in thousands)
|
||||||||||
Balance at January 1, 2014
|
$
|
150,871
|
|
|
$
|
1,158,230
|
|
|
$
|
1,309,101
|
|
Net income
|
2,638
|
|
|
13,979
|
|
|
16,617
|
|
|||
Noncash compensation expense
|
—
|
|
|
2,176
|
|
|
2,176
|
|
|||
Distributions to TEP unitholders
|
—
|
|
|
(6,457
|
)
|
|
(6,457
|
)
|
|||
Contributions from TEGP Predecessor
|
7,652
|
|
|
181,022
|
|
|
188,674
|
|
|||
Balance at March 31, 2014
|
$
|
161,161
|
|
|
$
|
1,348,950
|
|
|
$
|
1,510,111
|
|
•
|
Tallgrass Equity distributed its interests in Tallgrass Energy Holdings, LLC ("Holdings") and Holdings distributed its existing limited partner interest in TEGP, respectively, to the owners of Tallgrass Equity that also collectively own
100%
of the voting power of Holdings, which are referred to as the “Exchange Right Holders;”
|
•
|
TEGP issued
47,725,000
Class A shares to the public for net proceeds of approximately
$1.3 billion
, including
6,225,000
Class A shares issued in connection with the underwriters' exercise of the overallotment option;
|
•
|
The existing limited partner interests in TEGP held by the Exchange Right Holders were converted into
115,729,440
Class B shares,
6,225,000
of which were automatically canceled in connection with the underwriters’ exercise of the overallotment option;
|
•
|
Tallgrass Equity issued
41,500,000
Tallgrass Equity units to TEGP in exchange for approximately
$1.1 billion
in net proceeds from the issuance of TEGP’s Class A shares to the public and amended the limited liability company agreement of Tallgrass Equity to, among other things, provide that TEGP is the managing member of Tallgrass Equity;
|
•
|
TEGP used the net proceeds from the purchase of the
6,225,000
overallotment option shares to purchase Tallgrass Equity units from the Exchange Right Holders; and
|
•
|
Tallgrass Equity entered into a
$150 million
revolving credit facility and borrowed
$150 million
thereunder, using the aggregate proceeds from such borrowings together with the net proceeds from the Offering that Tallgrass Equity received from TEGP, to purchase
20,000,000
TEP common units from Tallgrass Development, LP ("TD") at
$47.68
per TEP common unit (the “Acquired TEP Units”) and pay offering expenses and other transaction costs. Tallgrass Equity distributed the remaining proceeds to the Exchange Right Holders.
|
•
|
100%
of the outstanding membership interests in Tallgrass MLP GP, LLC ("TEP GP"), which owns the general partner interest in TEP as well as all of the TEP incentive distribution rights ("IDRs"). The general partner interest in TEP is represented by
834,391
general partner units, representing a
1.37%
general partner interest in TEP at
March 31, 2015
.
|
•
|
20,000,000
common units of TEP, representing an approximately
32.75%
limited partner interest in TEP at March 31, 2015.
|
•
|
a significant decrease in the market value of a long-lived asset or group;
|
•
|
a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition;
|
•
|
a significant adverse change in legal factors or in the business climate could affect the value of long-lived asset or asset group, including an adverse action or assessment by a regulator which would exclude allowable costs from the rate-making process;
|
•
|
an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the long-lived asset or asset group;
|
•
|
a current period operating cash flow loss combined with a history of operating cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group; and
|
•
|
a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.
|
|
Range of Useful Lives
|
|
(in years)
|
Crude oil pipelines
|
35
|
Processing & Treating
|
30
|
Natural gas pipelines
(1)
|
10
|
General & Other
|
3-13 1/3
|
(1)
|
Includes the Replacement Gas Facilities as discussed in
Note 5
–
Related Party Transactions
and
Note 11
–
Regulatory Matters
.
|
•
|
Level 1 Inputs-quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;
|
•
|
Level 2 Inputs-inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and
|
•
|
Level 3 Inputs-unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances (which might include the reporting entity’s own data).
|
(a)
|
Reduction in net income attributable to TEGP Predecessor to remove equity in earnings of GWSI recorded for the period from January 1, 2014 to March 31, 2014.
|
(b)
|
Increase in revenue and net income attributable to TEGP Predecessor to reflect TEP's consolidated
80%
interest in the operations of GWSI for the period from January 1, 2014 to March 31, 2014.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Charges to TEGP Predecessor:
(1)
|
|
|
|
||||
Property, plant and equipment, net
|
$
|
1,307
|
|
|
$
|
3,400
|
|
Operation and maintenance
|
$
|
5,423
|
|
|
$
|
4,348
|
|
General and administrative
|
$
|
9,256
|
|
|
$
|
4,927
|
|
(1)
|
Charges to TEGP Predecessor, inclusive of TEP and Pony Express, include directly charged wages and salaries, other compensation and benefits, and shared services.
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Receivable from related party:
|
|
|
|
||||
Tallgrass Operations, LLC
|
$
|
—
|
|
|
$
|
73,393
|
|
Total receivable from related party
|
$
|
—
|
|
|
$
|
73,393
|
|
Accounts payable to related parties:
|
|
|
|
||||
Tallgrass Operations, LLC
|
$
|
2,980
|
|
|
$
|
3,894
|
|
Rockies Express Pipeline LLC
|
11
|
|
|
21
|
|
||
Deeprock Development, LLC
|
9
|
|
|
—
|
|
||
Total accounts payable to related parties
|
$
|
3,000
|
|
|
$
|
3,915
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Affiliate gas balance receivables
|
$
|
168
|
|
|
$
|
275
|
|
Affiliate gas balance payables
|
$
|
410
|
|
|
$
|
455
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Gas in underground storage
|
$
|
6,055
|
|
|
$
|
8,896
|
|
Materials and supplies
|
4,600
|
|
|
3,049
|
|
||
Crude oil
|
1,592
|
|
|
581
|
|
||
Natural gas liquids
|
432
|
|
|
519
|
|
||
Total inventory
|
$
|
12,679
|
|
|
$
|
13,045
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Crude oil pipelines
|
$
|
961,288
|
|
|
$
|
939,536
|
|
Natural gas pipelines
|
553,425
|
|
|
548,482
|
|
||
Processing and treating assets
|
237,049
|
|
|
241,671
|
|
||
General and other
|
52,666
|
|
|
42,719
|
|
||
Construction work in progress
|
194,638
|
|
|
139,873
|
|
||
Accumulated depreciation and amortization
|
(77,390
|
)
|
|
(59,200
|
)
|
||
Total property, plant and equipment, net
|
$
|
1,921,676
|
|
|
$
|
1,853,081
|
|
|
Balance Sheet
Location |
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
|
|
(in thousands)
|
||||||
Energy commodity derivative contracts
|
Current assets
|
|
$
|
90
|
|
|
$
|
—
|
|
|
Asset Position
|
||
|
(in thousands)
|
||
Gross
|
$
|
90
|
|
Netting agreement impact
|
—
|
|
|
Cash collateral held
|
—
|
|
|
Net Exposure
|
$
|
90
|
|
|
|
|
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 March 31, 2015
|
|
|
|
|
|
|
|
||||||||
Energy commodity derivative contracts
|
$
|
90
|
|
|
$
|
—
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Total capacity under the TEP revolving credit facility
|
$
|
850,000
|
|
|
$
|
850,000
|
|
Less: Outstanding borrowings under the TEP revolving credit facility
|
(698,000
|
)
|
|
(559,000
|
)
|
||
Available capacity under the TEP revolving credit facility
|
$
|
152,000
|
|
|
$
|
291,000
|
|
|
Fair Value
|
|
|
||||||||||||||||
|
Quoted prices
in active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
|
Total
|
|
Carrying
Amount |
||||||||||
|
(in thousands)
|
|
|
||||||||||||||||
March 31, 2015
|
$
|
—
|
|
|
$
|
698,000
|
|
|
$
|
—
|
|
|
$
|
698,000
|
|
|
$
|
698,000
|
|
December 31, 2014
|
$
|
—
|
|
|
$
|
559,000
|
|
|
$
|
—
|
|
|
$
|
559,000
|
|
|
$
|
559,000
|
|
|
Three Months Ended March 31, 2015
|
|
Three Months Ended March 31, 2014
|
||||||||||||||||||||
Revenue:
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
|
Total
Revenue |
|
Inter-
Segment |
|
External
Revenue |
||||||||||||
|
|
|
(in thousands)
|
|
|
|
|
|
(in thousands)
|
|
|
||||||||||||
Natural Gas Transportation & Logistics
|
$
|
33,610
|
|
|
$
|
(1,346
|
)
|
|
$
|
32,264
|
|
|
$
|
39,631
|
|
|
$
|
(1,255
|
)
|
|
$
|
38,376
|
|
Crude Oil Transportation & Logistics
|
50,381
|
|
|
—
|
|
|
50,381
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Processing & Logistics
|
32,030
|
|
|
—
|
|
|
32,030
|
|
|
56,403
|
|
|
—
|
|
|
56,403
|
|
||||||
Corporate and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total revenue
|
$
|
116,021
|
|
|
$
|
(1,346
|
)
|
|
$
|
114,675
|
|
|
$
|
96,034
|
|
|
$
|
(1,255
|
)
|
|
$
|
94,779
|
|
|
Three Months Ended March 31, 2015
|
|
Three Months Ended March 31, 2014
|
||||||||||||||||||||
Operating Income:
|
Total
Operating Income |
|
Inter-
Segment |
|
External
Operating Income |
|
Total
Operating Income |
|
Inter-
Segment |
|
External
Operating Income |
||||||||||||
|
|
|
(in thousands)
|
|
|
|
|
|
(in thousands)
|
|
|
||||||||||||
Natural Gas Transportation & Logistics
|
$
|
12,553
|
|
|
$
|
(1,346
|
)
|
|
$
|
11,207
|
|
|
$
|
12,966
|
|
|
$
|
(1,255
|
)
|
|
$
|
11,711
|
|
Crude Oil Transportation & Logistics
|
14,273
|
|
|
1,346
|
|
|
15,619
|
|
|
(757
|
)
|
|
—
|
|
|
(757
|
)
|
||||||
Processing & Logistics
|
1,054
|
|
|
—
|
|
|
1,054
|
|
|
7,141
|
|
|
—
|
|
|
7,141
|
|
||||||
Corporate and Other
|
(2,162
|
)
|
|
—
|
|
|
(2,162
|
)
|
|
(1,566
|
)
|
|
—
|
|
|
(1,566
|
)
|
||||||
Total Operating Income
|
$
|
25,718
|
|
|
$
|
—
|
|
|
$
|
25,718
|
|
|
$
|
17,784
|
|
|
$
|
(1,255
|
)
|
|
$
|
16,529
|
|
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense, net
|
|
|
|
|
(3,440
|
)
|
|
|
|
|
|
(1,296
|
)
|
||||||||||
Equity in earnings of unconsolidated investment
|
|
|
|
|
—
|
|
|
|
|
|
|
444
|
|
||||||||||
Other income, net
|
|
|
|
|
712
|
|
|
|
|
|
|
940
|
|
||||||||||
Net Income
|
|
|
|
|
$
|
22,990
|
|
|
|
|
|
|
$
|
16,617
|
|
|
Three Months Ended March 31,
|
||||||
Capital Expenditures:
|
2015
|
|
2014
|
||||
|
|
|
(in thousands)
|
||||
Natural Gas Transportation & Logistics
|
$
|
3,865
|
|
|
$
|
9,626
|
|
Crude Oil Transportation & Logistics
|
6,480
|
|
|
196,437
|
|
||
Processing & Logistics
|
2,955
|
|
|
3,048
|
|
||
Corporate and Other
|
—
|
|
|
—
|
|
||
Total capital expenditures
|
$
|
13,300
|
|
|
$
|
209,111
|
|
Assets:
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Natural Gas Transportation & Logistics
|
$
|
719,510
|
|
|
$
|
716,106
|
|
Crude Oil Transportation & Logistics
|
1,391,417
|
|
|
1,394,793
|
|
||
Processing & Logistics
|
337,303
|
|
|
340,620
|
|
||
Corporate and Other
|
5,321
|
|
|
5,678
|
|
||
Total assets
|
$
|
2,453,551
|
|
|
$
|
2,457,197
|
|
•
|
our ability to complete and integrate acquisitions from TD or from third parties, including our acquisition of an additional 33.3% interest in Pony Express that was completed in March 2015;
|
•
|
changes in general economic conditions;
|
•
|
competitive conditions in our industry;
|
•
|
actions taken by third-party operators, processors and transporters;
|
•
|
the demand for natural gas transportation, storage and processing services and crude oil transportation services;
|
•
|
our ability to successfully implement our business plan;
|
•
|
our ability to complete internal growth projects on time and on budget;
|
•
|
the price and availability of debt and equity financing;
|
•
|
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 crude oil and transporting, storing and processing natural gas;
|
•
|
natural disasters, weather-related delays, casualty losses and other matters beyond our control;
|
•
|
interest rates;
|
•
|
labor relations;
|
•
|
large customer defaults;
|
•
|
changes in tax status;
|
•
|
the effects of existing and future laws and governmental regulations;
|
•
|
the effects of future litigation; and
|
•
|
certain factors discussed elsewhere in this Quarterly Report.
|
•
|
Natural Gas Transportation & Logistics—the ownership and operation of FERC-regulated interstate natural gas pipelines and integrated natural gas storage facilities;
|
•
|
Crude Oil Transportation & Logistics—the ownership and operation of a crude oil pipeline system; and
|
•
|
Processing & Logistics—the ownership and operation of natural gas processing, treating and fractionation facilities, as well as water business services provided primarily to the oil and gas exploration and production industry.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands, except operating data)
|
||||||
Revenues:
|
|
|
|
||||
Natural gas liquids sales
|
$
|
21,025
|
|
|
$
|
48,907
|
|
Natural gas sales
|
844
|
|
|
4,808
|
|
||
Natural gas transportation services
|
32,148
|
|
|
34,104
|
|
||
Crude oil transportation services
|
50,381
|
|
|
—
|
|
||
Processing and other revenues
|
10,277
|
|
|
6,960
|
|
||
Total Revenues
|
114,675
|
|
|
94,779
|
|
||
Operating Costs and Expenses:
|
|
|
|
||||
Cost of sales
|
19,593
|
|
|
48,206
|
|
||
Cost of transportation services
|
10,715
|
|
|
5,117
|
|
||
Operations and maintenance
|
9,575
|
|
|
8,013
|
|
||
Depreciation and amortization
|
20,605
|
|
|
8,309
|
|
||
General and administrative
|
12,689
|
|
|
6,649
|
|
||
Taxes, other than income taxes
|
11,297
|
|
|
1,956
|
|
||
Loss on sale of assets
|
4,483
|
|
|
—
|
|
||
Total Operating Costs and Expenses
|
88,957
|
|
|
78,250
|
|
||
Operating Income
|
25,718
|
|
|
16,529
|
|
||
Other (Expense) Income:
|
|
|
|
||||
Interest expense, net
|
(3,440
|
)
|
|
(1,296
|
)
|
||
Equity in earnings of unconsolidated investment
|
—
|
|
|
444
|
|
||
Other income, net
|
712
|
|
|
940
|
|
||
Total Other (Expense) Income
|
(2,728
|
)
|
|
88
|
|
||
Net Income
|
22,990
|
|
|
16,617
|
|
||
less: Net income attributable to noncontrolling interests
|
(17,868
|
)
|
|
(13,979
|
)
|
||
Net income attributable to TEGP Predecessor
|
$
|
5,122
|
|
|
$
|
2,638
|
|
Operating Data
|
|
|
|
||||
Gas transportation firm contracted capacity (MMcf/d)
|
1,609
|
|
|
1,604
|
|
||
Crude oil transportation average throughput (Bbls/d)
|
165
|
|
|
N/A
|
|
||
Natural gas processing inlet volumes (MMcf/d)
|
145
|
|
|
151
|
|
Segment Financial Data - Natural Gas Transportation & Logistics
(1)
|
Three Months Ended March 31,
|
||||||
2015
|
|
2014
|
|||||
|
(in thousands)
|
||||||
Revenues:
|
|
|
|
||||
Natural gas sales
|
$
|
105
|
|
|
$
|
4,116
|
|
Natural gas transportation services
|
33,494
|
|
|
35,359
|
|
||
Processing and other revenues
|
11
|
|
|
156
|
|
||
Total revenues
|
33,610
|
|
|
39,631
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Cost of sales
|
74
|
|
|
3,827
|
|
||
Cost of transportation services
|
3,316
|
|
|
5,117
|
|
||
Operations and maintenance
|
5,740
|
|
|
6,049
|
|
||
Depreciation and amortization
|
6,071
|
|
|
5,605
|
|
||
General and administrative
|
4,261
|
|
|
4,192
|
|
||
Taxes, other than income taxes
|
1,595
|
|
|
1,875
|
|
||
Total operating costs and expenses
|
21,057
|
|
|
26,665
|
|
||
Operating income
|
$
|
12,553
|
|
|
$
|
12,966
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the combined financial data, see
Note 13
–
Reporting Segments
to the accompanying condensed combined financial statements.
|
Segment Financial Data - Crude Oil Transportation & Logistics
(1)
|
Three Months Ended March 31,
|
||||||
2015
|
|
2014
|
|||||
|
(in thousands)
|
||||||
Revenues:
|
|
|
|
||||
Crude Oil transportation services
|
$
|
50,381
|
|
|
$
|
—
|
|
Total revenues
|
50,381
|
|
|
—
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Cost of transportation services
|
8,709
|
|
|
—
|
|
||
Operations and maintenance
|
1,415
|
|
|
—
|
|
||
Depreciation and amortization
|
11,233
|
|
|
757
|
|
||
General and administrative
|
5,155
|
|
|
—
|
|
||
Taxes, other than income taxes
|
9,596
|
|
|
—
|
|
||
Total operating costs and expenses
|
36,108
|
|
|
757
|
|
||
Operating income (loss)
|
$
|
14,273
|
|
|
$
|
(757
|
)
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the combined financial data, see
Note 13
–
Reporting Segments
to the accompanying condensed combined financial statements.
|
Segment Financial Data - Processing & Logistics
(1)
|
Three Months Ended March 31,
|
||||||
2015
|
|
2014
|
|||||
|
(in thousands)
|
||||||
Revenues:
|
|
|
|
||||
Natural gas liquids sales
|
$
|
21,025
|
|
|
$
|
48,907
|
|
Natural gas sales
|
739
|
|
|
692
|
|
||
Processing and other revenues
|
10,266
|
|
|
6,804
|
|
||
Total revenues
|
32,030
|
|
|
56,403
|
|
||
Operating costs and expenses:
|
|
|
|
||||
Cost of sales
|
19,519
|
|
|
44,379
|
|
||
Cost of transportation services
|
36
|
|
|
—
|
|
||
Operations and maintenance
|
2,420
|
|
|
1,964
|
|
||
Depreciation and amortization
|
3,301
|
|
|
1,947
|
|
||
General and administrative
|
1,111
|
|
|
891
|
|
||
Taxes, other than income taxes
|
106
|
|
|
81
|
|
||
Loss on sale of assets
|
4,483
|
|
|
—
|
|
||
Total operating costs and expenses
|
30,976
|
|
|
49,262
|
|
||
Operating income
|
$
|
1,054
|
|
|
$
|
7,141
|
|
(1)
|
Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the combined financial data, see
Note 13
–
Reporting Segments
to the accompanying condensed combined financial statements.
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Cash on hand
|
$
|
876
|
|
|
$
|
867
|
|
Total capacity under the TEP revolving credit facility
|
850,000
|
|
|
850,000
|
|
||
Less: Outstanding borrowings under the TEP revolving credit facility
|
(698,000
|
)
|
|
(559,000
|
)
|
||
Less: Letters of credit issued under the TEP revolving credit facility
|
—
|
|
|
—
|
|
||
Available capacity under the TEP revolving credit facility
|
152,000
|
|
|
291,000
|
|
||
Total liquidity
|
$
|
152,876
|
|
|
$
|
291,867
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
48,639
|
|
|
$
|
27,603
|
|
Investing activities
|
$
|
(713,611
|
)
|
|
$
|
(211,021
|
)
|
Financing activities
|
$
|
664,981
|
|
|
$
|
183,418
|
|
•
|
maintenance capital expenditures, which are cash expenditures incurred (including expenditures for the construction or development of new capital assets) that we expect to maintain our long-term operating income or operating capacity. These expenditures typically include certain system integrity, compliance and safety improvements; and
|
•
|
expansion capital expenditures, which are cash expenditures to increase our operating income or operating capacity over the long term. Expansion capital expenditures include acquisitions or capital improvements (such as additions to or improvements on the capital assets owned, or acquisition or construction of new capital assets).
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Maintenance capital expenditures
|
$
|
1,511
|
|
|
$
|
941
|
|
Expansion capital expenditures
|
80,996
|
|
|
261,711
|
|
||
Total capital expenditures incurred
|
$
|
82,507
|
|
|
$
|
262,652
|
|
•
|
Tallgrass Equity’s payment of costs and expenses associated with our, our general partner's, Holdings', and Tallgrass Equity’s respective operations, including expenses we incur as a result of being a public company, which costs and expenses are not subject to a limit pursuant to the Omnibus Agreement, dated May 12, 2015 (the “TEGP Omnibus Agreement”);
|
•
|
our payment of any income taxes;
|
•
|
interest expense and principal payments on any indebtedness incurred by TEP, Tallgrass Equity, TEP GP or us;
|
•
|
restrictions on distributions contained in Tallgrass Equity’s and TEP’s respective revolving credit facilities and any future debt agreements entered into by Tallgrass Equity, TEP, TEP GP or us;
|
•
|
reserves created by our general partner as necessary to permit Tallgrass Equity to make required capital contributions to TEP GP for it to maintain or attain up to a 2.0% general partner interest in TEP; and
|
•
|
reserves our general partner or TEP GP establish for the proper conduct of our, Tallgrass Equity’s or TEP’s business, including reserves to comply with applicable law or any agreement binding on us, our subsidiaries, Tallgrass Equity, Tallgrass Equity’s subsidiaries, TEP and TEP’s subsidiaries, which reserves are not subject to a limit pursuant to our partnership agreement, TEP’s partnership agreement or Tallgrass Equity’s limited liability company agreement.
|
•
|
each shareholder’s proportionate ownership interest in us may decrease;
|
•
|
the amount of cash available for distribution on each Class A share may decrease;
|
•
|
the relative voting strength of each previously outstanding Class A share may be diminished;
|
•
|
the ratio of taxable income to distributions may increase; and
|
•
|
the market price of the Class A shares may decline.
|
•
|
TEP’s cash distributions to its common unitholders have a priority over distributions on its IDRs;
|
•
|
we participate in the distributions on the IDRs and general partner interest in TEP while TEP’s common unitholders do not;
|
•
|
we expect to pay federal income taxes in the future; and
|
•
|
we may pursue business opportunities separate and apart from TEP or any of its affiliates.
|
•
|
how to allocate business opportunities among us and its affiliates;
|
•
|
whether to exercise its limited call right;
|
•
|
whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
|
•
|
how to exercise its voting rights with respect to the units it owns; and
|
•
|
whether or not to consent to any merger, consolidation or conversion of the partnership or amendment to the partnership agreement.
|
•
|
the level of firm transportation and storage capacity sold, the volume of natural gas and crude oil TEP transports and the volume of natural gas TEP stores, processes and treats;
|
•
|
the level of production of crude oil and natural gas and the resultant market prices of natural gas, NGLs and crude oil;
|
•
|
regional, domestic and foreign supply and perceptions of supply of natural gas and crude oil; the level of demand and perceptions of demand in its end-user markets; and actual and anticipated future prices of natural gas, crude oil and other commodities (and the volatility thereof), all of which may impact its ability to renew and replace firm transportation, storage and processing agreements;
|
•
|
regulatory action affecting the supply of, or demand for, natural gas and crude oil, the rates TEP can charge on its assets, how TEP contracts for services, its existing contracts, its operating costs or its operating flexibility;
|
•
|
changes in the fees TEP charges for its services;
|
•
|
the effect of seasonal variations in temperature on the amount of natural gas and crude oil that TEP transports and the amount of natural gas that TEP stores, processes and treats;
|
•
|
the realized pricing impacts on revenues and expenses that are directly related to commodity prices;
|
•
|
the level of competition from other midstream energy companies in its geographic markets;
|
•
|
the creditworthiness of its customers;
|
•
|
the level of its operating and maintenance costs;
|
•
|
damages to pipelines, facilities, related equipment and surrounding properties caused by earthquakes, floods, fires, severe weather, explosions and other natural disasters or acts of terrorism;
|
•
|
outages in its pipeline systems or at its processing facilities;
|
•
|
the relationship between natural gas and NGL prices and resulting effect on processing margins;
|
•
|
leaks or accidental releases of hazardous materials into the environment, whether as a result of human error or otherwise; and
|
•
|
prevailing economic conditions.
|
•
|
the level and timing of capital expenditures TEP makes;
|
•
|
the level of its general and administrative expenses, including reimbursements to its general partner and its affiliates, including Tallgrass Development, for services provided to TEP;
|
•
|
the cost of pursuing and completing acquisitions, if any;
|
•
|
its debt service requirements and other liabilities;
|
•
|
fluctuations in its working capital needs;
|
•
|
its ability to borrow funds and access capital markets;
|
•
|
restrictions contained in its debt agreements;
|
•
|
the amount of cash reserves established by its general partner; and
|
•
|
other business risks affecting its cash levels.
|
•
|
the level of existing and new competition to provide transportation, storage and processing services to its markets;
|
•
|
the macroeconomic factors affecting crude oil and natural gas gathering economics for its current and potential customers;
|
•
|
the balance of supply and demand for natural gas and crude oil, on a short-term, seasonal and long-term basis, in the markets it serves;
|
•
|
the extent to which the customers in its markets are willing to contract on a long-term basis; and
|
•
|
the effects of federal, state or local laws or regulations on the contracting practices of its customers.
|
•
|
mistaken assumptions about volumes, revenue and costs, including synergies and potential growth;
|
•
|
an inability to maintain or secure adequate customer commitments to use the acquired systems or facilities;
|
•
|
an inability to integrate successfully the assets or businesses TEP acquires;
|
•
|
the assumption of unknown liabilities for which TEP is not indemnified or for which its indemnity is inadequate;
|
•
|
the diversion of management’s and employees’ attention from other business concerns;
|
•
|
unforeseen difficulties operating in new geographic areas or business lines; and
|
•
|
a decrease in liquidity and increased leverage as a result of using significant amounts of available cash or debt to finance an acquisition.
|
•
|
rates, operating terms and conditions of service;
|
•
|
the form of tariffs governing service;
|
•
|
the types of services TEP may offer to its customers;
|
•
|
the certification and construction of new, or the expansion of existing, facilities;
|
•
|
the acquisition, extension, disposition or abandonment of facilities;
|
•
|
creditworthiness and credit support requirements;
|
•
|
the maintenance of accounts and records;
|
•
|
relationships among affiliated companies involved in certain aspects of the natural gas business;
|
•
|
depreciation and amortization policies; and
|
•
|
the initiation and discontinuation of services.
|
•
|
rates, operating terms and conditions of service;
|
•
|
the form of tariffs governing service;
|
•
|
the maintenance of accounts and records;
|
•
|
relationships among affiliated transporters and shippers; and
|
•
|
depreciation and amortization policies.
|
•
|
adverse changes in general global economic conditions;
|
•
|
adverse changes in domestic regulations;
|
•
|
technological advancements that may drive further increases in production and reduction in costs of developing natural gas shales;
|
•
|
the price and availability of other forms of energy;
|
•
|
prices for natural gas, crude oil and NGLs;
|
•
|
decisions of the members of the OPEC regarding price and production controls;
|
•
|
increased costs to explore for, develop, produce, gather, process and transport natural gas or to transport crude oil;
|
•
|
weather conditions, seasonal trends and hurricane disruptions;
|
•
|
the nature and extent of, and changes in, governmental regulation, for example greenhouse gas legislation, taxation and hydraulic fracturing;
|
•
|
perceptions of customers on the availability and price volatility of its services and natural gas and crude oil prices, particularly customers’ perceptions on the volatility of natural gas and crude oil prices over the long term;
|
•
|
capacity and transportation service into, or out of, its markets; and
|
•
|
petrochemical demand for NGLs.
|
•
|
damage to pipelines, facilities, equipment and surrounding properties caused by hurricanes, earthquakes, tornadoes, floods, fires or other adverse weather conditions and other natural disasters and acts of terrorism;
|
•
|
inadvertent damage from construction, vehicles, farm and utility equipment;
|
•
|
uncontrolled releases of crude oil, natural gas and other hydrocarbons;
|
•
|
leaks, migrations or losses of natural gas and crude oil as a result of the malfunction of equipment or facilities;
|
•
|
outages at its processing facilities;
|
•
|
ruptures, fires, leaks and explosions; and
|
•
|
other hazards that could also result in personal injury and loss of life, pollution and other environmental risks, and suspension of operations.
|
•
|
reauthorizing funding for federal pipeline safety programs, increasing penalties for safety violations and establishing additional safety requirements for newly constructed pipelines;
|
•
|
requiring PHMSA to adopt appropriate regulations within two years and requiring the use of automatic or remote- controlled shutoff valves on new or rebuilt pipeline facilities;
|
•
|
requiring operators of pipelines to verify maximum allowable operating pressure and report exceedances within five days; and
|
•
|
requiring studies of certain safety issues that could result in the adoption of new regulatory requirements for new and existing pipelines, including changes to integrity management requirements for HCAs, and expansion of those requirements to areas outside of HCAs.
|
•
|
CAA and analogous state laws, which impose obligations related to air emissions;
|
•
|
Clean Water Act (“CWA”) and analogous state laws, which regulate discharge of pollutants (Section 402) or fill material (Section 404) from TEP’s facilities to state and federal waters, including wetlands;
|
•
|
Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and analogous state laws, which regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by TEP or locations to which TEP has sent wastes for disposal;
|
•
|
Resource Conservation and Recovery Act (“RCRA”) and analogous state laws, which impose requirements for the handling and discharge of hazardous and nonhazardous solid waste from TEP’s facilities;
|
•
|
Occupational Safety and Health Act (“OSHA”) which establishes workplace standards for the protection of the health and safety of employees, including the implementation of hazard communications programs designed to inform employees about hazardous substances in the workplace, potential harmful effects of these substances, and appropriate control measures;
|
•
|
The National Environmental Policy Act (“NEPA”) which requires federal agencies to evaluate major agency actions having the potential to significantly impact the environment and which may require the preparation of Environmental Assessments and more detailed Environmental Impact Statements that may be made available for public review and comment;
|
•
|
The Migratory Bird Treaty Act (“MBTA”) which implements various treaties and conventions between the United States and certain other nations for the protection of migratory birds and, pursuant to which the taking, killing or possessing of migratory birds is unlawful without a permit, thereby potentially requiring the implementation of operating restrictions or a temporary, seasonal, or permanent ban in affected areas;
|
•
|
Endangered Species Act (“ESA”) and analogous state laws, which seek to ensure that activities do not jeopardize endangered or threatened animals, fish and plant species, nor destroy or modify the critical habitat of such species;
|
•
|
Bald and Golden Eagle Protection Act (“BGEPA”) prohibits anyone, without a permit issued by the Secretary of the Interior, from “taking” bald or golden eagles, including their parts, nests, or eggs. The Act defines “take” as “pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, molest or disturb;”
|
•
|
The Oil Pollution Act (“OPA”) and analogous laws, which imposes liability for discharges of oil into waters of the United States and requires facilities which could be reasonably expected to discharge oil into waters of the United States to maintain and implement appropriate spill contingency plans; and
|
•
|
National Historic Preservation Act (“NHPA”) and analogous state laws, which is intended to preserve and protect historical and archeological sites.
|
•
|
incur or guarantee additional debt;
|
•
|
redeem or repurchase units or make distributions under certain circumstances;
|
•
|
make certain investments and acquisitions;
|
•
|
incur certain liens or permit them to exist;
|
•
|
enter into certain types of transactions with affiliates;
|
•
|
merge or consolidate with another company; and
|
•
|
transfer, sell or otherwise dispose of assets.
|
•
|
its ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or such financing may not be available on favorable terms;
|
•
|
its funds available for operations, future business opportunities and distributions to unitholders will be reduced by that portion of its cash flow required to make interest payments on its debt;
|
•
|
it may be more vulnerable to competitive pressures or a downturn in its business or the economy generally; and
|
•
|
its flexibility in responding to changing business and economic conditions may be limited.
|
Exhibit No.
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Limited Partnership of Tallgrass Energy GP, LP, dated February 10, 2015 (incorporated by reference to Exhibit 3.1 to Tallgrass Energy GP, LP’s Registration Statement on Form S-1 filed February 24, 2015).
|
|
|
|
3.2
|
|
Amended and Restated Limited Partnership Agreement of Tallgrass Energy GP, LP, dated May 12, 2015 (incorporated by reference to Exhibit 3.1 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
3.3
|
|
Certificate of Formation of TEGP Management, LLC, dated February 10, 2015 (incorporated by reference to Exhibit 3.3 to Tallgrass Energy GP, LP’s Registration Statement on Form S-1 filed February 24, 2015).
|
|
|
|
3.4
|
|
Amended and Restated Limited Liability Company Agreement of TEGP Management, LLC, dated May 12, 2015 (incorporated by reference to Exhibit 3.2 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
3.5
|
|
Certificate of Formation of Tallgrass GP Holdings, LLC, dated March 28, 2013 (now known as Tallgrass Equity, LLC) (incorporated by reference to Exhibit 3.5 to Tallgrass Energy GP, LP’s Registration Statement on Form S-1 filed February 24, 2015).
|
|
|
|
3.6
|
|
Certificate of Amendment to Certificate of Formation of Tallgrass GP Holdings, LLC, dated February 20, 2015 (now known as Tallgrass Equity, LLC) (incorporated by reference to Exhibit 3.6 to Tallgrass Energy GP, LP’s Registration Statement on Form S-1 filed February 24, 2015).
|
|
|
|
3.7*
|
|
Second Amended and Restated Limited Liability Company Agreement of Tallgrass Equity, LLC, dated May 12, 2015.
|
|
|
|
3.8
|
|
Certificate of Limited Partnership of Tallgrass MLP, LP, dated as of February 6, 2013 (now known as Tallgrass Energy Partners, LP) (incorporated by reference to Exhibit 3.1 to Tallgrass Energy Partners, LP’s Registration Statement on Form S-1 filed March 28, 2013).
|
|
|
|
3.9
|
|
Certificate of Amendment to Certificate of Limited Partnership of Tallgrass MLP, LP, dated as of February 7, 2013 (now known as Tallgrass Energy Partners, LP) (incorporated by reference to Exhibit 3.2 to Tallgrass Energy Partners, LP’s Registration Statement on Form S-1 filed March 28, 2013).
|
|
|
|
3.10
|
|
Amended and Restated Agreement of Limited Partnership of Tallgrass Energy Partners, LP, dated as of May 17, 2013 (incorporated by reference to Exhibit 3.2 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed May 17, 2013).
|
|
|
|
3.11
|
|
Certificate of Formation of Tallgrass MLP GP, LLC, dated as of February 6, 2013 (incorporated by reference to Exhibit 3.4 to Tallgrass Energy Partners, LP’s Registration Statement on Form S-1 filed March 28, 2013).
|
|
|
|
3.12
|
|
Second Amended and Restated Limited Liability Company Agreement of Tallgrass MLP GP, LLC dated May 17, 2013 (incorporated by reference to Exhibit 3.4 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed May 17, 2013).
|
|
|
|
3.13
|
|
Amendment No. 1, dated February 19, 2015, to Second Amended and Restated Limited Liability Company Agreement of Tallgrass MLP GP, LLC, dated May 17, 2013 (incorporated by reference to Exhibit 3.8 to Tallgrass Energy Partners Annual Report on Form 10-K/A filed June 4, 2015).
|
|
|
|
4.1
|
|
Specimen certificate representing Class A Shares (incorporated by reference to Exhibit 4.1 to Tallgrass Energy GP, LP’s Registration Statement on Form S-1/A filed April 20, 2015).
|
|
|
|
4.2*
|
|
Registration Rights Agreement, dated May 12, 2015, by and among Tallgrass Energy GP, LP and each of the Initial Holders listed on an annex thereto.
|
|
|
|
10.1
|
|
Omnibus Agreement, dated May 12, 2015, by and among Tallgrass Energy Holdings, LLC, Tallgrass Energy GP, LP, TEGP Management, LLC and Tallgrass Equity, LLC (incorporated by reference to Exhibit 10.1 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
10.2
|
|
Tallgrass Equity Credit Agreement, dated May 12, 2015, by and among Tallgrass Equity, LLC, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.2 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
10.3
|
|
TEGP Management, LLC Long-Term Incentive Plan (incorporated by reference to Exhibit 10.5 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
10.4
|
|
Distribution, Assignment and Assumption Agreement (interest in Tallgrass Energy GP, LP), dated May 11, 2015, by and among Tallgrass Holdings, LLC and the Assignees listed therein (incorporated by reference to Exhibit 10.3 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
10.5
|
|
Tallgrass Equity Unit Issuance Agreement, dated May 12, 2015, by and among Tallgrass Equity, LLC and Tallgrass Energy GP, LP (incorporated by reference to Exhibit 10.4 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
10.6
|
|
Conveyance Agreement (Common Units of Tallgrass Energy Partners, LP), dated May 12, 2015, by and among Tallgrass Operations, LLC and Tallgrass Equity, LLC (incorporated by reference to Exhibit 10.6 to Tallgrass Energy GP, LP’s Current Report on Form 8-K filed May 12, 2015).
|
|
|
|
10.7
|
|
Amended and Restated Employment Agreement between Tallgrass Management, LLC, Tallgrass Development GP, LLC, Tallgrass GP Holdings, LLC, Tallgrass MLP GP, LLC and David G. Dehaemers, Jr. (incorporated by reference to Exhibit 10.5 to Amendment No. 2 to Tallgrass Energy Partners, LP’s Registration Statement on Form S-1 filed April 18, 2013).
|
|
|
|
10.8
|
|
Purchase and Sale Agreement, dated August 1, 2012, between Kinder Morgan Interstate Gas Transmission LLC and Kinder Morgan Pony Express Pipeline LLC (incorporated by reference to Exhibit 10.7 to Amendment No. 1 to Tallgrass Energy Partners, LP’s Registration Statement on Form S-1 filed April 8, 2013).
|
|
|
|
10.9
|
|
Contribution, Conveyance and Assumption Agreement, dated May 17, 2013, by and among Tallgrass Energy Partners, LP, Tallgrass MLP GP, LLC, Tallgrass Development, LP, Tallgrass Development GP, LLC, Tallgrass GP Holdings, LLC, Tallgrass Operations, LLC, Tallgrass Interstate Gas Transmission, LLC, Tallgrass Midstream, LLC and Tallgrass MLP Operations, LLC (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed May 17, 2013).
|
|
|
|
10.10
|
|
Omnibus Agreement, dated May 17, 2013, by and among Tallgrass Development, LP, Tallgrass Energy Partners, LP, Tallgrass MLP GP, LLC and Tallgrass Development GP, LLC (incorporated by reference to Exhibit 10.2 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed May 17, 2013).
|
|
|
|
10.11
|
|
Revolving Credit Agreement, dated May 17, 2013, by and among Tallgrass Energy Partners, LP, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.3 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed May 17, 2013).
|
|
|
|
10.12
|
|
Tallgrass MLP GP, LLC Long-Term Incentive Plan (incorporated by reference to Exhibit 10.4 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed May 17, 2013).
|
|
|
|
10.13
|
|
Contribution and Sale Agreement, dated as of April 1, 2014, by and among Tallgrass Energy Partners, LP, Tallgrass Operations, LLC and Tallgrass Development, LP (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed April 2, 2014).
|
|
|
|
10.14
|
|
Amendment No. 1, dated as of June 25, 2014, to the Revolving Credit Agreement by and among Tallgrass Energy Partners, LP, Barclays Bank PLC, as administrative agent, and a syndicate of lenders named therein (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed June 30, 2014).
|
|
|
|
10.15
|
|
Contribution and Transfer Agreement, dated as of September 1, 2014, by and among Tallgrass Energy Partners, LP, Tallgrass Pony Express Pipeline, LLC, Tallgrass Operations, LLC and Tallgrass Development, LP (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed September 8, 2014).
|
|
|
|
10.16
|
|
Amendment No. 1 to Second Amended and Restated Limited Liability Company Agreement of Tallgrass Pony Express Pipeline, LLC, dated as of September 29, 2014, by and among Tallgrass Pony Express Pipeline, LLC, Tallgrass Operations, LLC, and Tallgrass PXP Holdings, LLC (incorporated by reference to Exhibit 10.3 to Tallgrass Energy Partners, LP’s Quarterly Report on Form 10-Q filed October 30, 2014).
|
|
|
|
10.17
|
|
Purchase and Sale Agreement, dated as of March 1, 2015, by and among Tallgrass Energy Partners, LP, Tallgrass Operations, LLC and Tallgrass Development, LP (incorporated by reference to Exhibit 10.1 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed March 2, 2015).
|
|
|
|
10.18
|
|
Third Amended and Restated Limited Liability Company Agreement of Tallgrass Pony Express Pipeline, LLC, dated as of March 1, 2015, by and among Tallgrass Pony Express Pipeline, LLC, Tallgrass Operations, LLC, and Tallgrass PXP Holdings, LLC (incorporated by reference to Exhibit 10.2 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed March 2, 2015).
|
|
|
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of David G. Dehaemers, Jr.
|
|
|
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Gary J. Brauchle.
|
|
|
|
32.1*
|
|
Section 1350 Certification of David G. Dehaemers, Jr.
|
|
|
|
32.2*
|
|
Section 1350 Certification of Gary J. Brauchle.
|
|
|
|
101.INS*
|
|
XBRL Instance Document.
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
* -
|
filed herewith
|
|
|
|
Tallgrass Energy GP, LP
|
||||
|
|
|
(registrant)
|
||||
|
|
|
By:
|
TEGP Management, LLC, its general partner
|
|||
|
|
|
|
|
|
|
|
Date:
|
June 18, 2015
|
By:
|
/s/ Gary J. Brauchle
|
|
|||
|
|
|
|
Name:
|
Gary J. Brauchle
|
|
|
|
|
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
PAGE
|
||
ARTICLE I DEFINITIONS
|
2
|
|
||||
1.1
|
|
Definitions
|
2
|
|
||
1.2
|
|
Interpretative Matters
|
11
|
|
||
ARTICLE II ORGANIZATIONAL MATTERS
|
12
|
|
||||
2.1
|
|
Formation of the Company
|
12
|
|
||
2.2
|
|
Second Amended and Restated Limited Liability Company Agreement
|
12
|
|
||
2.3
|
|
Name
|
12
|
|
||
2.4
|
|
Purpose; Powers
|
12
|
|
||
2.5
|
|
Principal Office; Registered Office
|
12
|
|
||
2.6
|
|
Term
|
13
|
|
||
2.7
|
|
Foreign Qualification
|
13
|
|
||
2.8
|
|
No State Law Partnership
|
13
|
|
||
ARTICLE III CAPITALIZATION; ADMISSION OF MEMBERS; CAPITAL ACCOUNTS
|
13
|
|
||||
3.1
|
|
Capitalization
|
13
|
|
||
3.2
|
|
Admission of Members; Additional Members
|
15
|
|
||
3.3
|
|
Capital Accounts
|
15
|
|
||
3.4
|
|
Negative Capital Accounts
|
16
|
|
||
3.5
|
|
No Withdrawal
|
16
|
|
||
3.6
|
|
Loans From Unitholders
|
16
|
|
||
3.7
|
|
No Right of Partition
|
16
|
|
||
3.8
|
|
Non‑Certification of Units; Legend; Units Are Securities
|
16
|
|
||
ARTICLE IV DISTRIBUTIONS
|
17
|
|
||||
4.1
|
|
Distributions
|
17
|
|
||
4.2
|
|
Successors
|
17
|
|
||
4.3
|
|
Distributions In‑Kind
|
17
|
|
||
ARTICLE V ALLOCATIONS
|
17
|
|
||||
5.1
|
|
Allocations
|
17
|
|
||
5.2
|
|
Special Allocations
|
18
|
|
||
5.3
|
|
Tax Allocations
|
19
|
|
||
5.4
|
|
Determination of Tax Items
|
20
|
|
||
5.5
|
|
Unitholders’ Tax Reporting
|
20
|
|
||
5.6
|
|
Indemnification and Reimbursement for Payments on Behalf of a Unitholder
|
20
|
|
||
ARTICLE VI RIGHTS AND DUTIES OF MEMBERS; OFFICERS
|
20
|
|
||||
6.1
|
|
Management
|
20
|
|
||
6.2
|
|
Liability of Unitholders
|
21
|
|
||
6.3
|
|
Non-Disclosure
|
22
|
|
||
6.4
|
|
Non-Competition
|
23
|
|
||
6.5
|
|
Damages
|
23
|
|
||
6.7
|
|
Meetings
|
23
|
|
||
6.8
|
|
Actions Requiring Member Approval
|
24
|
|
6.9
|
|
Officers
|
24
|
|
||
ARTICLE VII INDEMIFICATION
|
25
|
|
||||
7.1
|
|
Indemnification
|
25
|
|
||
ARTICLE VIII TAX MATTERS
|
26
|
|
||||
8.1
|
|
Preparation of Tax Returns
|
26
|
|
||
8.2
|
|
Tax Elections
|
26
|
|
||
8.3
|
|
Tax Controversies
|
26
|
|
||
8.4
|
|
Tax Allocations
|
27
|
|
||
8.5
|
|
Fiscal Year; Taxable Year
|
27
|
|
||
ARTICLE IX TRANSFER OF UNITS; SUBSTITUTE MEMBERS; EXCHANGE
|
27
|
|
||||
9.1
|
|
Restrictions on Transfers
|
27
|
|
||
9.2
|
|
Recognition of Transfer; Substituted and Additional Members
|
27
|
|
||
9.3
|
|
Expense of Transfer; Indemnification
|
29
|
|
||
9.4
|
|
Exchange of Units for Class A Shares
|
29
|
|
||
9.5
|
|
Adjustment
|
30
|
|
||
ARTICLE X DISSOLUTION AND LIQUIDATION
|
31
|
|
||||
10.1
|
|
Dissolution
|
31
|
|
||
10.2
|
|
Liquidation and Termination
|
31
|
|
||
10.3
|
|
Complete Distribution
|
32
|
|
||
10.4
|
|
Cancellation of Certificate
|
32
|
|
||
10.5
|
|
Reasonable Time for Winding Up
|
32
|
|
||
10.6
|
|
Return of Capital
|
32
|
|
||
10.7
|
|
HSR Act
|
32
|
|
||
ARTICLE XI GENERAL PROVISIONS
|
33
|
|
||||
11.1
|
|
Power of Attorney
|
33
|
|
||
11.2
|
|
Books and Records
|
33
|
|
||
11.3
|
|
Amendments
|
33
|
|
||
11.4
|
|
Remedies
|
34
|
|
||
11.5
|
|
Successors and Assigns
|
34
|
|
||
11.6
|
|
Severability
|
34
|
|
||
11.7
|
|
Counterparts
|
34
|
|
||
11.8
|
|
Applicable Law
|
34
|
|
||
11.9
|
|
Forum; Venue and Jurisdiction; Waiver of Trial by Jury
|
34
|
|
||
11.10
|
|
Notices
|
35
|
|
||
11.11
|
|
Creditors
|
35
|
|
||
11.12
|
|
Waiver
|
36
|
|
||
11.13
|
|
Further Action
|
36
|
|
||
11.14
|
|
Nature of Interest in the Company
|
36
|
|
||
11.15
|
|
Partition
|
36
|
|
||
11.16
|
|
Binding Agreement
|
36
|
|
||
11.17
|
|
Headings
|
36
|
|
||
11.18
|
|
Entire Agreement
|
36
|
|
11.19
|
|
Delivery by Facsimile or Email
|
36
|
|
||
11.20
|
|
Survival
|
36
|
|
||
11.21
|
|
Confidentiality
|
36
|
|
||
|
|
|
|
|
||
SCHEDULE A
|
Schedule of Members
|
|
|
|
||
EXHIBIT A
|
Form of Exchange Notice
|
|
|
|
COMPANY:
|
||
TALLGRASS EQUITY, LLC
|
||
By:
|
|
Tallgrass Energy GP, LP, its managing member
|
|
|
|
By:
|
|
TEGP Management, LLC, its general partner
|
|
|
|
By:
|
|
/s/ David G. Dehaemers, Jr.
|
|
|
David G. Dehaemers, Jr.
|
|
|
President and Chief Executive Officer
|
|
|
|
MEMBERS:
|
||
|
||
|
||
TALLGRASS ENERGY GP, LP
|
||
|
|
|
By:
|
|
TEGP Management, LLC, its general partner
|
|
|
|
By:
|
|
/s/ David G. Dehaemers, Jr.
|
|
|
David G. Dehaemers, Jr.
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
KIA VIII (Rubicon), L.P.
|
||
|
|
|
By:
|
|
KIA VIII (Rubicon) GP, L.P.,
its general partner
|
|
|
|
By:
|
|
Kelso GP VIII, LLC,
its general partner
|
|
|
|
By:
|
|
/s/ James J. Connors, II
|
|
|
James J. Connors, II
|
|
|
Managing Member
|
|
|
|
|
|
|
KEP VI AIV (Rubicon), LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ James J. Connors, II
|
|
|
James J. Connors, II
|
|
|
Managing Member
|
TALLGRASS HOLDINGS LLC
|
||
By:
|
|
EMG Fund II Management, LP,
its manager
|
|
|
|
By:
|
|
EMG Fund II Management LLC,
its general partner
|
|
|
|
By:
|
|
/s/ John T. Raymond
|
|
|
John T. Raymond
|
|
|
Chief Executive Officer
|
TALLGRASS KC, LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ David G. Dehaemers, Jr.
|
|
|
David G. Dehaemers, Jr.
|
|
|
Manager
|
WYLIE VENTURES, LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ Forrest E. Wylie
|
|
|
Forrest E. Wylie
|
|
|
Sole Member
|
HOBBS VENTURES LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ Charles Scott Hobbs
|
|
|
Charles Scott Hobbs
|
|
|
Member/Manager
|
Name and Address of Member
|
Number of
Units |
Percentage Interest*
|
||
Tallgrass Energy GP, LP
|
41,500,000
|
|
26.39
|
%
|
KIA VIII (Rubicon), L.P.
|
36,130,552
|
|
22.98
|
%
|
KEP VI AIV (Rubicon), LLC
|
6,290,969
|
|
4.00
|
%
|
Tallgrass Holdings LLC
|
43,398,540
|
|
27.60
|
%
|
Tallgrass KC, LLC
|
28,932,360
|
|
18.40
|
%
|
Wylie Ventures, LLC
|
477,382
|
|
0.30
|
%
|
Hobbs Ventures LLC
|
499,637
|
|
0.32
|
%
|
TOTAL
|
157,229,440
|
|
100
|
%
|
|
||
Name:
|
||
|
|
|
Dated:
|
|
|
COMPANY:
|
||
TALLGRASS ENERGY GP, LP
|
||
By:
|
|
TEGP Management, LLC, its general partner
|
|
|
|
By:
|
|
/s/ David G. Dehaemers, Jr.
|
Name:
|
|
David G. Dehaemers, Jr.
|
Title:
|
|
President and Chief Executive Officer
|
HOLDERS:
|
||
TALLGRASS HOLDINGS LLC
|
||
|
|
|
By:
|
|
EMG Fund II Management, LP,
its manager
|
|
|
|
By:
|
|
EMG Fund II Management LLC
its general partner
|
|
|
|
By:
|
|
/s/ John T. Raymond
|
|
|
John T. Raymond
|
|
|
Chief Executive Officer
|
KIA VIII (Rubicon), L.P.
|
||
|
|
|
By:
|
|
KIA VIII (Rubicon) GP, L.P.,
its general partner
|
|
|
|
By:
|
|
Kelso GP VIII, LLC,
its general partner
|
|
|
|
By:
|
|
/s/ James J. Connors, II
|
|
|
James J. Connors, II
|
|
|
Managing Member
|
KEP VI AIV (Rubicon), LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ James J. Connors, II
|
|
|
James J. Connors, II
|
|
|
Managing Member
|
TALLGRASS KC, LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ David G. Dehaemers, Jr.
|
|
|
David G. Dehaemers, Jr.
|
|
|
Manager
|
WYLIE VENTURES, LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ Forrest E. Wylie
|
|
|
Forrest E. Wylie
|
|
|
Sole Member
|
HOBBS VENTURES, LLC
|
||
|
|
|
|
|
|
By:
|
|
/s/ Charles Scott Hobbs
|
|
|
Charles Scott Hobbs
|
|
|
Member/Manager
|
Contributing Party
|
Registrable Securities (Exchangeable TEGP Class A Shares)*
|
Tallgrass Holdings, LLC
KIA VIII (Rubicon), L.P.
KEP VI AIV (Rubicon), LLC
Tallgrass KC, LLC
Wylie Ventures, LLC
Hobbs Ventures, LLC
|
41,064,165
34,187,117
5,952,582
27,376,110
451,704
472,762
|
|
|
|
109,504,440
|
Total
|
|
*
|
After giving effect to the closing of the underwriters option to purchase an additional 6,225,000 Class A Shares in connection with the IPO.
|
1.
|
I have reviewed this
Quarterly
Report on Form
10-Q
of Tallgrass Energy GP, 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)) 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)
|
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
|
c)
|
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 TEGP Management, LLC (the general partner of Tallgrass Energy GP, LP)
|
1.
|
I have reviewed this
Quarterly
Report on Form
10-Q
of Tallgrass Energy GP, 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)) 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)
|
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
|
c)
|
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 TEGP Management, LLC (the general partner of Tallgrass Energy GP, 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 TEGP Management, LLC (the general partner of Tallgrass
Energy GP, 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 TEGP Management, LLC (the general partner of Tallgrass Energy GP, LP)
|