Tallgrass Energy Partners, LP Reports Strong Third Quarter 2014 Results

Tallgrass Energy Partners, LP (NYSE: TEP) ("TEP" or the "Partnership") today reported financial and operating results for the third quarter of 2014. In addition, TEP's financial results for the three and nine months ended September 30, 2013, have been recast to reflect the results of operations of Trailblazer Pipeline Company LLC ("Trailblazer") and Tallgrass Pony Express Pipeline LLC ("Pony Express"), which TEP acquired effective April 1, 2014, and September 1, 2014, respectively. The financial results for all periods presented in the table below include the results of operations of Trailblazer and Pony Express, except for periods under the column "As Reported in 2013."

Tallgrass President and CEO David G. Dehaemers, Jr. said, "TEP is proud to have increased its quarterly distribution per unit by another $0.03 to $0.41 for the third quarter of 2014. This represents a 38 percent increase from the third quarter of 2013. The distribution increases over the past year are the result of the accretive acquisitions of Trailblazer and a 33.3 percent interest in Pony Express and strong performance at Tallgrass Midstream and Tallgrass Interstate Gas Transmission. As we previously indicated, we expect to increase our quarterly distribution by at least $0.07 per unit for the fourth quarter of 2014 related to the Pony Express acquisition."

Segment Overview

The financial results for the Natural Gas Transportation & Logistics Segment for the three and nine months ended September 30, 2013, 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 and nine months ended September 30, 2013, under the column "As Reported in 2013" do not include Trailblazer's results of operations.

The segment reporting in the table above does not include public company costs or intersegment eliminations.

Adjusted EBITDA in the Natural Gas Transportation & Logistics segment for the third quarter of 2014 was $17.2 million, representing an increase of $2.8 million as compared to the recast third quarter of 2013, primarily due to lower operating costs and expenses. The most significant decrease in costs was a reduction in costs of sales and transportation services at Trailblazer resulting from the new tariff established in the rate case that provides for recovery of compression costs. Average firm contracted transportation capacity of 1,497 MMcf/d for the third quarter of 2014 was slightly higher than the 1,399 MMcf/d for the recast third quarter of 2013. When comparing the Natural Gas Transportation & Logistics segment's Adjusted EBITDA for the third quarter of 2014 to its $15.1 million of Adjusted EBITDA for the second quarter of 2014, the increase is primarily attributable to lower cost of sales and transportation services due to higher fuel recoveries and collections and lower cost of gas sales in the third quarter of 2014.

The Crude Oil Transportation & Logistics segment Adjusted EBITDA is not material in any period presented, but distributable cash flow for the third quarter of 2014 includes approximately $5.4 million of preferred distributions in excess of distributable cash flow from Pony Express. The segment did not generate revenue for the third quarter of 2014 or any prior periods as Pony Express was placed into service in early October 2014. The operating losses presented primarily include amortization and general and administrative expenses. (See Pony Express Acquisition below.)

The Processing & Logistics segment generated Adjusted EBITDA of $8.6 million for the third quarter of 2014, representing an increase of $5.0 million as compared to the third quarter of 2013. The increase was primarily due to plant downtime at both processing facilities in the third quarter of 2013, income in the third quarter of 2014 from the fresh water transportation pipeline and increased processing volumes during the third quarter of 2014. Approximate average inlet volumes were 153 MMcf/day for the third quarter of 2014 as compared to 120 MMcf/day for the third quarter of 2013, reflecting the impact of plant downtime in the third quarter of 2013. When comparing the Processing & Logistics segment's $8.6 million of Adjusted EBITDA for the third quarter of 2014 to its Adjusted EBITDA of $5.5 million for the second quarter of 2014, the increase is primarily attributable to the effects of plant downtime at Douglas associated with planned maintenance and off-spec deliveries and related costs experienced during the second quarter of 2014.

Pony Express Acquisition

As previously announced, we acquired a 33.3 percent interest in Pony Express effective September 1, 2014, with a minimum quarterly preference payment of $16.65 million through September 2015, of which we received a prorated payment of approximately $5.4 million for the third quarter of 2014. The mainline, described in more detail below, was placed into commercial service in early October and is transporting barrels on its uncommitted local tariff. We expect to activate our committed local tariff and one of our two committed joint tariffs on November 1, 2014, and expect to activate the other committed joint tariff when the associated upstream pipeline is placed into service.

Pony Express owns an approximately 690-mile crude oil pipeline commencing in Guernsey, Wyoming, and terminating in Cushing, Oklahoma, with delivery points at Ponca City Refinery and Deeprock in Cushing. Upon completion of ongoing construction, Pony Express will also own an approximate 66-mile lateral in Northeast Colorado that will commence in Weld County, Colorado and interconnect with the Pony Express mainline just east of Sterling, Colorado. The lateral in Northeast Colorado is expected to be in service sometime during the first half of 2015.

Third Quarter Distribution

As previously announced, the board of directors of TEP's general partner declared a quarterly cash distribution to partners of $0.41 per common unit for the third quarter of 2014. This quarterly distribution represents $1.64 on an annualized basis. The quarterly distribution will be paid on Friday, November 14, 2014, to unitholders of record as of the close of business on Friday, October 31, 2014.

Conference Call

Please join Tallgrass for a conference call and webcast to discuss third quarter 2014 results at 4:00 pm Central Time on Thursday, October 30, 2014. 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.

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 processing 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 through BNN Water Solutions. We also provide crude oil transportation to customers in Wyoming and the surrounding region, including servicing the Bakken production area of North Dakota and eastern Montana, through our 33.3 percent ownership interest in Tallgrass Pony Express Pipeline. Our operations are strategically located in and provide services to certain key United States hydrocarbon basins, including the Denver-Julesburg Basin, the Powder River Basin, the Wind River Basin and the Anadarko Basin and the Niobrara, Mississippi Lime 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 combined 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, less cash interest expense and maintenance capital expenditures. Neither Adjusted EBITDA nor distributable cash flow will be impacted by changes in working capital balances that are reflected in operating cash flow. 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 date on which the Northeast Colorado Lateral is expected to be placed in-service, the dates on which Pony Express may activate its committed local tariff or other committed joint tariffs and the earnings and distribution accretion that may be realized by Tallgrass Energy Partners as a result of the Pony Express acquisition. Forward looking statements may also include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of Tallgrass Energy Partners and its subsidiaries, including: the ability to pursue expansions and other opportunities for incremental volumes; natural gas production growth in Tallgrass Energy Partners' 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 Tallgrass Energy Partners 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 Tallgrass Energy Partners, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to Tallgrass Energy Partners’ 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 Tallgrass Energy Partners with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and Tallgrass Energy Partners 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