Tallgrass Energy Partners Reports Record First Quarter 2015 Results

LEAWOOD, Kan.--(BUSINESS WIRE)--Tallgrass Energy Partners, LP (NYSE: TEP) ("TEP" or the "Partnership") today reported financial and operating results for the first quarter of 2015. President and CEO David G. Dehaemers, Jr. said, "We are pleased to have closed on the acquisition of an additional interest in Pony Express and to have delivered another strong quarter which resulted in our seventh consecutive distribution increase. The quarterly distribution of $0.52 represents a 60 percent increase over the distribution paid for the first quarter of 2014. TEP has experienced tremendous growth over the past year and we expect to continue to deliver solid growth to our unitholders through our substantial portfolio of dropdown assets and other growth opportunities."

The financial results for all periods presented in the table below include the applicable results of operations of Trailblazer Pipeline Company LLC (“Trailblazer”), acquired by TEP effective April 1, 2014, and the initial 33.3 percent membership interest in Tallgrass Pony Express Pipeline, LLC (“Pony Express”), acquired by TEP effective September 1, 2014, except for the period under the column "As Reported in 2014." The acquisition of an additional 33.3 percent membership interest in Pony Express is presented prospectively from our acquisition on March 1, 2015, and as a result, financial information for periods prior to March 1, 2015 have not been recast to reflect the additional 33.3 percent membership interest.

Segment Overview

The financial results for the Natural Gas Transportation & Logistics Segment for the three months ended March 31, 2014 have been recast to reflect the results of operations of Trailblazer, which TEP acquired effective April 1, 2014. The financial results for the Natural Gas Transportation & Logistics Segment for the three months ended March 31, 2014, under the column "As Reported in 2014" do not include Trailblazer's results of operations.

^{The segment reporting in the table above does not include public company costs or intersegment eliminations. The Crude Oil Transportation & Logistics segment includes figures for 2014 although Pony Express Pipeline was not owned by TEP and did not generate revenue during Q1 2014.}

Adjusted EBITDA in the Natural Gas Transportation & Logistics segment for the first quarter of 2015 was $19.2 million, representing a slight decrease of $0.6 million as compared to the recast first quarter of 2014. Average firm contracted transportation capacity of 1,609 MMcf/d for the first quarter of 2015 was comparable to the 1,604 MMcf/d for the recast first quarter of 2014. When comparing the Natural Gas Transportation & Logistics segment's Adjusted EBITDA for the first quarter of 2015 to its $15.5 million of Adjusted EBITDA for the fourth quarter of 2014, the increase of $3.7 million is primarily attributable to higher transportation revenues, lower cost of sales and lower operating costs.

The Crude Oil Transportation & Logistics segment Adjusted EBITDA was $25.5 million for the first quarter of 2015, representing the operating results of Pony Express which was placed into service in October 2014. There were no operating results for the first quarter of 2014 as Pony Express had not yet commenced commercial operations. The Adjusted EBITDA for the first quarter of 2015 represents an increase of $9.8 million over the fourth quarter of 2014 which was primarily the result of Pony Express being placed into service in October 2014. Due to the in-service of the second of two joint tariff upstream pipelines and the lateral in Northeast Colorado in April 2015, it is expected that transportation volumes will continue to increase throughout the second quarter and into the third quarter.

With the acquisition of an additional 33.3 percent interest in Pony Express effective March 1, 2015, TEP received a prorated preference payment of approximately $23.5 million for the first quarter of 2015. For the remainder of 2015, TEP will receive at least the minimum quarterly preference payment of $36.65 million for its 66.7 percent interest. The distributable cash flow generated by Pony Express for the first quarter of 2015 was greater than the $23.5 million preference payment received by TEP for its interest in Pony Express.

The Processing & Logistics segment generated Adjusted EBITDA of $8.7 million for the first quarter of 2015, representing a decrease of $0.9 million as compared to the first quarter of 2014. The decrease was primarily due to lower commodity prices. Approximate average inlet volumes were 145 MMcf/day for the first quarter of 2015 as compared to 151 MMcf/day for the first quarter of 2014. When comparing the Processing & Logistics segment's $8.7 million of Adjusted EBITDA for the first quarter of 2015 to its Adjusted EBITDA of $9.4 million for the fourth quarter of 2014, the decrease is primarily attributable to lower average inlet volumes.

First Quarter Distribution

As previously announced, the board of directors of TEP's general partner declared a quarterly cash distribution to partners of $0.52 per common unit for the first quarter of 2015. This quarterly distribution represents $2.08 on an annualized basis. The quarterly distribution will be paid on Thursday, May 14, 2015, to unitholders of record as of the close of business on Friday, April 24, 2015.

Conference Call

Please join Tallgrass for a conference call and webcast to discuss first quarter 2015 results at 4:00 pm Central Time on Monday, May 11, 2015. Interested parties may listen via a link posted on the Investor Relations section of our website and the replay will be available on our website for a limited time following the live call.

Annual Report

TEP filed its 2014 Annual Report on Form 10-K with the Securities and Exchange Commission (“SEC”) on February 19, 2015. A copy of the report can be viewed through a link on the TEP website at www.tallgrassenergy.com or on the SEC’s website at www.sec.gov.

Unitholders may request a hard copy of the annual report on form 10-K (including complete audited financial statements) free of charge. Requests should be communicated in writing to Tallgrass Energy Partners, LP, Attention: Investor Relations, 4200 W. 115^th Street, Suite 350, Leawood, KS 66211.

About Tallgrass Energy Partners, LP

Tallgrass Energy Partners, LP (NYSE: TEP) is a publicly traded, growth-oriented limited partnership formed to own, operate, acquire and develop midstream energy assets in North America. We currently provide natural gas transportation and storage services for customers in the Rocky Mountain and Midwest regions of the United States through our Tallgrass Interstate Gas Transmission and Trailblazer Pipeline systems. We provide crude oil transportation to customers in Wyoming and the surrounding region, servicing the Bakken oil production area of North Dakota and eastern Montana through our membership interest in Tallgrass Pony Express Pipeline. We also provide services for customers in Wyoming through Tallgrass Midstream at our Casper and Douglas natural gas processing and our West Frenchie Draw natural gas treating facilities and we provide water business services to customers in Colorado and Texas through BNN Water Solutions. Our operations are strategically located in and provide services to certain key United States hydrocarbon basins, including the Denver-Julesburg, Powder River, Wind River, Permian and Hugoton-Anadarko Basins and the Niobrara, Mississippi Lime, Eagle Ford and Bakken shale formations.

To learn more, please visit our website at www.tallgrassenergy.com.

Non-GAAP Measures

Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

• our operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing methods;

• the ability of our assets to generate sufficient cash flow to make distributions to our unitholders;

• our ability to incur and service debt and fund capital expenditures; and

• the viability of acquisitions and other capital expenditure projects and the returns on investment of various expansion and growth opportunities.

We believe that the presentation of Adjusted EBITDA and distributable cash flow provides useful information to investors in assessing our financial condition and results of operations. Adjusted EBITDA and distributable cash flow should not be considered alternatives to net income, operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with GAAP, nor should Adjusted EBITDA and distributable cash flow be considered alternatives to available cash, operating surplus, distributions of available cash from operating surplus or other definitions in our partnership agreement. Adjusted EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some but not all items that affect net income and net cash provided by operating activities. Additionally, because Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definition of Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

We define Adjusted EBITDA as net income excluding the impact of interest, income taxes, depreciation and amortization, non-cash income or loss related to derivative instruments, non-cash long-term compensation expense, impairment losses, gains or losses on asset or business disposals or acquisitions, gains or losses on the repurchase, redemption or early retirement of debt, and earnings from unconsolidated investments, but including the impact of distributions from unconsolidated investments. We define distributable cash flow as Adjusted EBITDA, plus preferred distributions received from Pony Express in excess of its distributable cash flow attributable to our net interest and adjusted for deficiency payments received from or utilized by Pony Express shippers, less cash interest expense, maintenance capital expenditures, and distributions to noncontrolling interests in excess of earnings allocated to noncontrolling interests. For a reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, please see "Summary Financial Information" above.

Cautionary Note Concerning Forward-Looking Statements

Disclosures in this press release contain “forward-looking statements.” All statements, other than statements of historical facts, included in this press release that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expected increase in volumes transported on the Pony Express System and expectations regarding future growth from TEP's dropdown portfolio and other growth opportunities. Forward looking statements may also include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of TEP and its subsidiaries, including: the ability to pursue expansions and other opportunities for incremental volumes; natural gas and crude oil production growth in TEP's operating areas; expected future benefits of acquisitions or expansion projects; timing of anticipated spending on planned expenses and maintenance capital projects; and distribution rate and growth, including variability of quarterly distribution coverage. These statements are based on certain assumptions made by TEP based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of TEP, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to TEP’s financial performance and results, availability of sufficient cash flow to pay distributions and execute its business plan, the demand for natural gas storage, processing and transportation services and for crude oil transportation services, operating hazards, the effects of government regulation, tax position and other risks incidental to transporting, storing and processing natural gas or transporting crude oil and other important factors that could cause actual results to differ materially from those projected, including those set forth in reports filed by TEP with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and TEP does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Financial Statements