Delaware | 001-35917 | 46-1972941 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
4200 W. 115th Street, Suite 350 Leawood, Kansas | 66211 | |
(Address of Principal Executive Offices) | (Zip Code) |
Item 9.01. | Financial Statements and Exhibits. |
(a) | Financial Statements of Rockies Express Pipeline LLC |
(b) | Pro Forma Financial Information |
(d) | Exhibits |
99.1 | Audited Financial Statements of Rockies Express Pipeline LLC as of December 31, 2015 and 2014, and for the years ended December 31, 2015, 2014 and 2013, including the notes related thereto (incorporated by reference to Exhibit 99.2 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed on April 28, 2016). |
99.2 | Unaudited financial statements of Rockies Express Pipeline LLC as of March 31, 2016 and December 31, 2015, and for the three months ended March 31, 2016 and 2015, including the notes related thereto. |
99.3 | Unaudited Pro Forma Condensed Consolidated Financial Statements of Tallgrass Energy Partners, LP as of and for the year ended December 31, 2015, including the notes related thereto (incorporated by reference to Exhibit 99.3 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed on April 28, 2016). |
99.4 | Unaudited Pro Forma Condensed Consolidated Financial Statements of Tallgrass Energy Partners, LP as of and for the three months ended March 31, 2016, including the notes related thereto. |
TALLGRASS ENERGY PARTNERS, LP | ||||
By: | Tallgrass MLP GP, LLC | |||
its general partner | ||||
Date: | June 24, 2016 | By: | /s/ David G. Dehaemers, Jr. | |
David G. Dehaemers, Jr. | ||||
President and Chief Executive Officer |
Exhibit Number | Description | ||
99.1 | Audited Financial Statements of Rockies Express Pipeline LLC as of December 31, 2015 and 2014, and for the years ended December 31, 2015, 2014 and 2013, including the notes related thereto (incorporated by reference to Exhibit 99.2 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed on April 28, 2016). | ||
99.2 | Unaudited financial statements of Rockies Express Pipeline LLC as of March 31, 2016 and December 31, 2015, and for the three months ended March 31, 2016 and 2015, including the notes related thereto. | ||
99.3 | Unaudited Pro Forma Condensed Consolidated Financial Statements of Tallgrass Energy Partners, LP as of and for the year ended December 31, 2015, including the notes related thereto (incorporated by reference to Exhibit 99.3 to Tallgrass Energy Partners, LP’s Current Report on Form 8-K filed on April 28, 2016). | ||
99.4 | Unaudited Pro Forma Condensed Consolidated Financial Statements of Tallgrass Energy Partners, LP as of and for the three months ended March 31, 2016, including the notes related thereto. |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Revenues: | |||||||
Transportation services | $ | 216.5 | $ | 176.0 | |||
Natural gas sales | — | 2.1 | |||||
Total Revenues | 216.5 | 178.1 | |||||
Operating Costs and Expenses: | |||||||
Cost of natural gas sales (exclusive of depreciation and amortization shown below) | — | 2.3 | |||||
Cost of transportation services (exclusive of depreciation and amortization shown below) | 7.8 | 7.3 | |||||
Operations and maintenance | 5.6 | 3.9 | |||||
Depreciation and amortization | 50.3 | 49.5 | |||||
General and administrative | 18.7 | 5.9 | |||||
Taxes, other than income taxes | 18.0 | 19.8 | |||||
Total Operating Costs and Expenses | 100.4 | 88.7 | |||||
Operating Income | 116.1 | 89.4 | |||||
Other (Expense) Income: | |||||||
Interest expense, net | (40.5 | ) | (46.1 | ) | |||
Other income, net | 4.4 | 0.7 | |||||
Total Other (Expense) Income, net | (36.1 | ) | (45.4 | ) | |||
Net Income to Members | $ | 80.0 | $ | 44.0 |
March 31, 2016 | December 31, 2015 | ||||||
(in millions) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 86.3 | $ | 48.0 | |||
Accounts receivable, net | 74.0 | 87.6 | |||||
Gas imbalances | 0.8 | 1.7 | |||||
Other current assets | 4.9 | 2.6 | |||||
Total Current Assets | 166.0 | 139.9 | |||||
Property, plant and equipment, net | 5,975.3 | 5,941.0 | |||||
Deferred charges and other assets | 17.4 | 19.0 | |||||
Total Noncurrent Assets | 5,992.7 | 5,960.0 | |||||
Total Assets | $ | 6,158.7 | $ | 6,099.9 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 31.7 | $ | 29.0 | |||
Gas imbalances | 0.9 | 1.5 | |||||
Accrued interest | 53.4 | 56.3 | |||||
Accrued taxes | 59.8 | 68.2 | |||||
Construction advances | 13.9 | 12.3 | |||||
Accrued other current liabilities | 16.7 | 12.5 | |||||
Total Current Liabilities | 176.4 | 179.8 | |||||
Long-term Liabilities and Deferred Credits: | |||||||
Long-term debt | 2,558.7 | 2,557.9 | |||||
Other long-term liabilities and deferred credits | 76.0 | 44.0 | |||||
Total Long-term Liabilities and Deferred Credits | 2,634.7 | 2,601.9 | |||||
Commitments and Contingencies | |||||||
Members' Equity: | |||||||
Members' equity | 3,347.6 | 3,318.2 | |||||
Total Liabilities and Members' Equity | $ | 6,158.7 | $ | 6,099.9 |
Three Months Ended March 31, 2016 | |||||||||||||||
Total | Rockies Express Holdings, LLC | Sempra REX Holdings, LLC | P66 REX LLC | ||||||||||||
(in millions) | |||||||||||||||
Members' Equity | |||||||||||||||
Beginning Balance | $ | 3,318.2 | $ | 1,659.0 | $ | 829.6 | $ | 829.6 | |||||||
Net Income to Members | 80.0 | 40.0 | 20.0 | 20.0 | |||||||||||
Contributions from Members | 74.9 | 37.5 | 18.7 | 18.7 | |||||||||||
Distributions to Members | (125.5 | ) | (62.7 | ) | (31.4 | ) | (31.4 | ) | |||||||
Ending Balance | $ | 3,347.6 | $ | 1,673.8 | $ | 836.9 | $ | 836.9 | |||||||
Three Months Ended March 31, 2015 | |||||||||||||||
Total | Rockies Express Holdings, LLC | Sempra REX Holdings, LLC | P66 REX LLC | ||||||||||||
(in millions) | |||||||||||||||
Members' Equity | |||||||||||||||
Beginning Balance | $ | 2,820.2 | $ | 1,410.0 | $ | 705.1 | $ | 705.1 | |||||||
Net Income to Members | 44.0 | 22.0 | 11.0 | 11.0 | |||||||||||
Contributions from Members | 81.1 | 40.7 | 20.2 | 20.2 | |||||||||||
Distributions to Members | (99.0 | ) | (49.6 | ) | (24.7 | ) | (24.7 | ) | |||||||
Ending Balance | $ | 2,846.3 | $ | 1,423.1 | $ | 711.6 | $ | 711.6 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Cash Flows from Operating Activities: | |||||||
Net income to Members | $ | 80.0 | $ | 44.0 | |||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||||
Depreciation and amortization | 51.7 | 51.0 | |||||
Changes in components of working capital: | |||||||
Accounts receivable | 13.6 | (2.7 | ) | ||||
Current regulatory assets and liabilities, net | (0.8 | ) | 2.2 | ||||
Other current assets and liabilities | (0.9 | ) | 0.3 | ||||
Accounts payable | 13.4 | 1.8 | |||||
Accrued taxes | (8.4 | ) | (5.2 | ) | |||
Customer deposits | 33.9 | 12.9 | |||||
Other operating, net | 1.2 | (1.7 | ) | ||||
Net Cash Provided by Operating Activities | 183.7 | 102.6 | |||||
Cash Flows from Investing Activities: | |||||||
Capital expenditures | (92.8 | ) | (59.0 | ) | |||
Other investing, net | (2.0 | ) | (2.0 | ) | |||
Net Cash Used in Investing Activities | (94.8 | ) | (61.0 | ) | |||
Cash Flows from Financing Activities: | |||||||
Distributions to Members | (125.5 | ) | (99.0 | ) | |||
Contributions from Members | 74.9 | 81.1 | |||||
Net Cash Used in Financing Activities | (50.6 | ) | (17.9 | ) | |||
Net Change in Cash and Cash Equivalents | 38.3 | 23.7 | |||||
Cash and Cash Equivalents, beginning of period | 48.0 | 78.0 | |||||
Cash and Cash Equivalents, end of period | $ | 86.3 | $ | 101.7 | |||
Schedule of Noncash Investing and Financing Activities: | |||||||
Increase in accrual for payment of property, plant and equipment | $ | — | $ | 6.1 |
• | 50% - Rockies Express Holdings, LLC ("REX Holdings"), an indirect wholly owned subsidiary of Tallgrass Development, LP ("TD"); |
• | 25% - Sempra REX Holdings, LLC ("Sempra"), a wholly owned subsidiary of Sempra Energy and the successor-in-interest to P&S Project I, LLC; and |
• | 25% - P66REX LLC, formerly known as COPREX LLC, a wholly owned subsidiary of Phillips 66. |
March 31, 2016 | December 31, 2015 | ||||||
(in millions) | |||||||
Natural gas pipelines | $ | 6,970.8 | $ | 6,972.8 | |||
General and other | 99.9 | 99.0 | |||||
Construction work in progress | 287.7 | 202.0 | |||||
Accumulated depreciation and amortization | (1,383.1 | ) | (1,332.8 | ) | |||
Total property, plant and equipment, net | $ | 5,975.3 | $ | 5,941.0 |
March 31, 2016 | December 31, 2015 | |||||||
(in millions) | ||||||||
6.85% senior notes due July 15, 2018 | $ | 550.0 | $ | 550.0 | ||||
6.00% senior notes due January 15, 2019 | 525.0 | 525.0 | ||||||
5.625% senior notes due April 15, 2020 | 750.0 | 750.0 | ||||||
7.50% senior notes due July 15, 2038 | 250.0 | 250.0 | ||||||
6.875% senior notes due April 15, 2040 | 500.0 | 500.0 | ||||||
Less: Unamortized debt discount and debt issuance costs | (16.3 | ) | (17.1 | ) | ||||
Total long-term debt | $ | 2,558.7 | $ | 2,557.9 |
Fair Value | |||||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Total | Carrying Amount | |||||||||||||||
(in millions) | |||||||||||||||||||
March 31, 2016 | $ | — | $ | 2,405.7 | $ | — | $ | 2,405.7 | $ | 2,558.7 | |||||||||
December 31, 2015 | $ | — | $ | 2,412.6 | $ | — | $ | 2,412.6 | $ | 2,557.9 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Revenues: Transportation services (1) | $ | 4.6 | $ | 2.6 | |||
Charges from TD: | |||||||
Compensation, benefits and other charges | $ | 4.9 | $ | 4.3 | |||
General and administrative charges from affiliate | $ | 2.2 | $ | 2.0 | |||
Oversight Fees: | |||||||
Tallgrass NatGas Operator, LLC | $ | 1.7 | $ | 1.4 |
(1) | Transportation services revenue for the three months ended March 31, 2016 and 2015 is primarily from Sempra Energy. |
March 31, 2016 | December 31, 2015 | ||||||
(in millions) | |||||||
Receivables from affiliated companies: | |||||||
Sempra Energy | $ | 2.5 | $ | 1.2 | |||
Total receivables from affiliated companies | $ | 2.5 | $ | 1.2 | |||
Payables to affiliated companies: | |||||||
TD | $ | 2.8 | 2.8 | ||||
Total payables to affiliated companies | $ | 2.8 | $ | 2.8 |
March 31, 2016 | December 31, 2015 | ||||||
(in millions) | |||||||
Affiliate gas balance receivables | $ | 0.1 | $ | 0.2 | |||
Affiliate gas balance payables | $ | — | $ | 0.1 |
Pro Forma Adjustments | |||||||||||||||
TEP Historical | Issuance of Common Units | Rockies Express Acquisition and Financing | TEP Pro Forma | ||||||||||||
(in thousands) | |||||||||||||||
ASSETS | |||||||||||||||
Current Assets: | |||||||||||||||
Cash and cash equivalents | $ | 2,885 | $ | — | 90,009 | (b) | $ | 2,885 | |||||||
347,551 | (c) | ||||||||||||||
(1,538 | ) | (c) | |||||||||||||
(436,022 | ) | (d) | |||||||||||||
Accounts receivable, net | 53,330 | — | — | 53,330 | |||||||||||
Other current assets | 17,174 | — | — | 17,174 | |||||||||||
Total Current Assets | 73,389 | — | — | 73,389 | |||||||||||
Property, plant and equipment, net | 2,017,138 | — | — | 2,017,138 | |||||||||||
Goodwill | 343,288 | — | — | 343,288 | |||||||||||
Intangible asset, net | 95,795 | — | — | 95,795 | |||||||||||
Investment in unconsolidated affiliate | — | — | 436,022 | (d) | 436,022 | ||||||||||
Deferred charges and other assets | 57,162 | — | 1,538 | (c) | 58,700 | ||||||||||
Total Assets | $ | 2,586,772 | $ | — | $ | 437,560 | $ | 3,024,332 | |||||||
LIABILITIES AND PARTNERS' EQUITY | |||||||||||||||
Current Liabilities: | |||||||||||||||
Accounts payable | $ | 22,229 | $ | — | $ | — | $ | 22,229 | |||||||
Accrued and other current liabilities | 67,741 | — | — | 67,741 | |||||||||||
Total Current Liabilities | 89,970 | — | — | 89,970 | |||||||||||
Long-term debt | 1,200,000 | (81,895 | ) | (a) | 347,551 | (c) | 1,465,656 | ||||||||
Other long-term liabilities and deferred credits | 4,904 | — | — | 4,904 | |||||||||||
Total Long-term Liabilities | 1,204,904 | (81,895 | ) | 347,551 | 1,470,560 | ||||||||||
Commitments and Contingencies | |||||||||||||||
Equity: | |||||||||||||||
Common unitholders | 1,882,611 | 81,895 | (a) | 90,009 | (b) | 2,054,515 | |||||||||
General partner | (624,511 | ) | — | — | (624,511 | ) | |||||||||
Total Partners' Equity | 1,258,100 | 81,895 | 90,009 | 1,430,004 | |||||||||||
Noncontrolling interests | 33,798 | — | — | 33,798 | |||||||||||
Total Equity | 1,291,898 | 81,895 | 90,009 | 1,463,802 | |||||||||||
Total Liabilities and Equity | $ | 2,586,772 | $ | — | $ | 437,560 | $ | 3,024,332 |
Pro Forma Adjustments | |||||||||||||||
TEP Historical | Issuance of Common Units | Rockies Express Acquisition and Financing | TEP Pro Forma | ||||||||||||
(in thousands, except per unit amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Crude oil transportation services | $ | 94,572 | $ | — | $ | — | $ | 94,572 | |||||||
Natural gas transportation services | 29,280 | — | — | 29,280 | |||||||||||
Sales of natural gas, NGLs, and crude oil | 13,926 | — | — | 13,926 | |||||||||||
Processing and other revenues | 7,627 | — | — | 7,627 | |||||||||||
Total Revenues | 145,405 | — | — | 145,405 | |||||||||||
Operating Costs and Expenses: | |||||||||||||||
Cost of sales | 13,568 | — | — | 13,568 | |||||||||||
Cost of transportation services | 16,156 | — | — | 16,156 | |||||||||||
Operations and maintenance | 12,477 | — | — | 12,477 | |||||||||||
Depreciation and amortization | 21,692 | — | — | 21,692 | |||||||||||
General and administrative | 13,016 | — | — | 13,016 | |||||||||||
Taxes, other than income taxes | 7,506 | — | — | 7,506 | |||||||||||
Total Operating Costs and Expenses | 84,415 | — | — | 84,415 | |||||||||||
Operating Income | 60,990 | — | — | 60,990 | |||||||||||
Other (Expense) Income: | |||||||||||||||
Interest expense, net | (7,499 | ) | 488 | (a) | (171 | ) | (c) | (9,441 | ) | ||||||
(2,259 | ) | (c) | |||||||||||||
Equity in earnings of unconsolidated affiliate | — | — | 21,564 | (d) | 21,564 | ||||||||||
Other income, net | (8,380 | ) | — | — | (8,380 | ) | |||||||||
Total Other (Expense) Income, net | (15,879 | ) | 488 | 19,134 | 3,743 | ||||||||||
Net income | 45,111 | 488 | 19,134 | 64,733 | |||||||||||
Net income attributable to noncontrolling interests | (1,041 | ) | — | — | (1,041 | ) | |||||||||
Net income attributable to partners | $ | 44,070 | $ | 488 | $ | 19,134 | $ | 63,692 | |||||||
Allocation of income to the limited partners: | |||||||||||||||
Net income attributable to partners | $ | 44,070 | $ | 63,692 | |||||||||||
General partner interest in net income | (20,353 | ) | (21,880 | ) | |||||||||||
Common and subordinated unitholders' interest in net income | $ | 23,717 | $ | 41,812 | |||||||||||
Basic net income per common and subordinated unit | $ | 0.35 | $ | 0.58 | |||||||||||
Diluted net income per common and subordinated unit | $ | 0.35 | $ | 0.58 | |||||||||||
Basic average number of common and subordinated units outstanding | 66,967 | 71,565 | |||||||||||||
Diluted average number of common and subordinated units outstanding | 67,807 | 72,405 |
• | the effect of the issuance of 2,180,681 common units under our Equity Distribution Agreement during the period between April 1, 2016 to May 6, 2016, the proceeds of which were used to reduce borrowings under our revolving credit facility; |
• | the effect of financing transactions related to our acquisition of a 25% membership interest in Rockies Express, including (i) the issuance of 2,416,987 common units in a private placement, and (ii) additional borrowings under our revolving credit facility to fund the remaining portion of the $436.0 million cash consideration paid; and |
• | the acquisition of a 25% membership interest in Rockies Express, which will be accounted for as an unconsolidated affiliate. |
(a) | Reflects proceeds from the issuance of 2,180,681 limited partner common units under our Equity Distribution Agreement at an average price of $37.93 during the period between April 1, 2016 and May 5, 2016, for aggregate net cash proceeds of $81.9 million, which was used to reduce borrowings under the revolving credit facility, and the associated decrease in interest expense associated with the borrowings based on our current incremental borrowing rate using a floating 30-day LIBOR rate and a borrowing spread over LIBOR of 2.25%. We used our current borrowing rate of 2.685%. |
(b) | Reflects proceeds from the private issuance of 2,416,987 common units, for net cash proceeds of $90.0 million, to fund a portion of our acquisition of a 25% membership interest in Rockies Express. |
(c) | Reflects the fees associated with the required amendment to increase the total capacity available under the revolving credit facility from $1.5 billion to $1.75 billion and borrowings of $347.6 million under our revolving credit facility to fund a portion of the acquisition of a 25% membership interest in Rockies Express and an increase in interest expense associated with the borrowings based on our current incremental borrowing rate using a floating 30-day LIBOR rate and a borrowing spread over LIBOR of 2.25%. We used our current borrowing rate of 2.685%. |
(d) | Reflects our acquisition of a 25% membership interest in Rockies Express for total cash consideration of $436.0 million, as adjusted under the Purchase Agreement, at its fair value on the date of acquisition, accounted for under the equity method of accounting, including the associated equity in earnings of Rockies Express. The $440 million consideration was adjusted as follows (in thousands): |
Base consideration for 25% membership interest in Rockies Express | $ | 440,000 | |
Plus: Additional consideration if entire 25% membership interest is acquired | 2,500 | ||
Total consideration for 25% membership interest in Rockies Express | 442,500 | ||
Plus: Cash contributions received from Sempra | 14,310 | ||
Less: Cash distributions paid to Sempra | (20,788 | ) | |
Total purchase price as adjusted under the Purchase Agreement | $ | 436,022 |