Wells Fargo Pipeline, MLP and Utility Symposium. December 6 7, 2016

Transcription

1 Wells Fargo Pipeline, MLP and Utility Symposium December 6 7, 2016

2 Cautionary Statements This presentation contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results or the ability to generate revenues, income or cash flow or to make distributions or pay dividends are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations of Tallgrass Energy Partners, LP, Tallgrass Energy GP, LP or Rockies Express Pipeline LLC and their respective affiliates may differ materially from those expressed in these forwardlooking statements. Many of the factors that will determine these results are beyond Tallgrass Energy Partners, LP s, Tallgrass Energy GP, LP s and Rockies Express Pipeline LLC s ability to control or predict and are necessarily based upon various assumptions involving judgements with respect to the future. Forward-looking statements contained in this presentation specifically include, without limitation, the expected benefits to Tallgrass Energy Partners, LP as a result of its acquisition of a 25 percent interest in Rockies Express Pipeline LLC, the feasibility, cost, execution and in-service timing of capital and other growth projects at Rockies Express Pipeline LLC and Tallgrass Energy Partners, LP, and their respective affiliates, December 2016 nominations at Tallgrass Pony Express Pipeline, LLC, the stability of future cash flows at Tallgrass Energy Partners, LP, future liquidity at Tallgrass Energy Partners, LP and expectations regarding price and volume risk, future dropdown transactions, and assumptions about Tallgrass Energy Partners, LP and Rockies Express Pipeline LLC s future credit profile and operating and financial results. These statements also include, among others, Tallgrass Energy Partners, LP s, Tallgrass Energy GP, LP s and Rockies Express Pipeline LLC s respective ability to complete and integrate acquisitions, implement their respective business plans and complete internal growth projects; changes in general economic conditions; competitive conditions; actions taken by third-party operators, processors and transporters; demand for natural gas transportation, storage and processing services and crude oil transportation services; price and availability of debt and equity financing; availability and price of natural gas and crude oil compared to alternative fuels; energy efficiency and technology trends; operating hazards and other risks incidental to the business; natural disasters, weather-related delays and casualty losses; interest rates; labor relations; customer defaults; changes in tax status; effects of existing and future laws and governmental regulations; effects of future litigation; and other uncertainties. There is no assurance that any of the actions, events or results of the forward-looking statements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. Because of these uncertainties, you are cautioned not to put undue reliance on any forward-looking statement. This presentation does not constitute an offer to sell any securities of Tallgrass Energy Partners, LP, Tallgrass Energy GP, LP or their respective affiliates or a solicitation of an offer to buy any securities of Tallgrass Energy Partners, LP, Tallgrass Energy GP, LP, or their respective affiliates. 2

3 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 and financial statements of our subsidiaries and unconsolidated investments, 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. Management believes that the presentation of Adjusted EBITDA and Distributable Cash Flow in this presentation 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, net cash provided by operating activities 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 Tallgrass Energy Partners, LP s 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 generally define Adjusted EBITDA as net income excluding the impact of interest, income taxes, depreciation and amortization, noncash 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 generally define Distributable Cash Flow as Adjusted EBITDA, plus deficiency payments received from or utilized by our customers and preferred distributions received from Pony Express in excess of its distributable cash flow attributable to our net interest, less cash interest expense, maintenance capital expenditures, distributions to noncontrolling interests in excess of earnings allocated to noncontrolling interests, and certain cash reserves permitted by our partnership agreement. For a reconciliation of these non-gaap measures to their most directly comparable GAAP financial measures, please see Adjusted EBITDA and Distributable Cash Flow Reconciliation. 3

4 Tallgrass Energy Overview 4

5 Tallgrass Energy Overview Two operating partnerships with distinct functions make up the Tallgrass platform which allows Tallgrass to develop assets at TDEV TDEV Tallgrass Development (Private) TEP Tallgrass Energy Partners (NYSE:TEP) ASSET INCUBATOR Private partnership Formed by management, Kelso, and EMG Acquired assets from Kinder Morgan in November 2012 Current holdings 50% interest in Rockies Express Pipeline ( REX ) Receives REX management fee (1% of REX EBITDA) 2% interest in Pony Express Pipeline ( Pony ) 100% interest in Tallgrass Terminals ( Terminals ) ~8.1 million TEP units (3) LONG-TERM OPERATING VEHICLE Public partnership $313 million IPO in May 2013 ~$2.2 billion of dropdown acquisitions from TDEV ~$0.5 billion of 3 rd party acquisitions Current holdings Tallgrass Interstate Gas Transmission ( TIGT ) Tallgrass Midstream ( TMID ) Trailblazer Pipeline ( Trailblazer ) BNN Water Solutions ( BNN ) 98% interest in Pony Express Pipeline ( Pony ) 25% interest in Rockies Express Pipeline ( REX ) Consolidated Footprint Opal Kanda Wamsutter Casper Douglas Guernsey TALLGRASS DEVELOPMENT (TDEV, Private) REX Pipeline (50% ownership) Lease of Overthrust Pipeline Capacity (1) Pony Pipeline (2% ownership) Oil Storage Terminal Buckingham Oil Terminal Cheyenne Meeker Texas footprint BNN Water Solutions Sterling Terminal Beatrice Lebanon Clarington BNN Big Lake Project (Reagan County) BNN Effluent Business (Karnes City) Ponca City Refinery Cushing Terminal (2) TALLGRASS ENERGY PARTNERS (NYSE:TEP) Tallgrass Interstate Gas Transmission Trailblazer Pipeline Pony Pipeline (98% ownership) REX Pipeline (25% ownership) Lease of Overthrust Pipeline Capacity (1) Tallgrass Midstream BNN Water Solutions (1) Overthrust Pipeline is owned by Questar and consists of 255 miles of pipeline. (2) Tallgrass Terminals owns 20% of a joint venture, which owns and operates an oil terminal facility in Cushing, OK, and 100% of the Sterling and Buckingham Terminals. (3) As of 11/02/

6 Two Attractive Investment Opportunities TEP Master Limited Partnership Owns operating assets Investors receive K-1 Tallgrass Energy Partners Distribution growth: 177% DPU growth since IPO 27-30% expected DPU growth CAGR for 2016 (1) At least 20% projected DPU growth CAGR for 2017 and 2018 (1) Distribution coverage: 2013: ~1.22x 2014: ~1.15x 2015: ~1.14x 2016 guidance: 1.15x 1.20x Current yield: ~6.79% (2) Current distribution: $3.18 per common unit on an annualized basis (2) Enterprise Value: $4.8B Market Cap: $3.4B (2) Debt: $1.4B (3) TEGP Tallgrass Energy GP Pure-Play General Partner TEP Incentive Distribution Rights and GP interest 20 mm TEP LP units No operating assets Up-C Structure Limited partnership taxed as a C-Corp Investors receive 1099 Tax expectations through 12/31/2017 at a minimum: o TEGP will pay no income taxes o Distributions paid to investors should not be treated as taxable dividend income o If Class B shares are exchanged for Class A shares TEGP will receive a step-up in tax basis Distribution growth: 98% DPS growth since IPO TEGP continues to expect its cash distributions to Class A shareholders to grow at approximately two times the distribution growth rate of TEP s cash distributions in 2016 Current yield: ~4.34% (4) Current distribution: $1.05 per Class A share on an annualized basis (4) (1) Based on management s 2016 guidance. (2) Based on 11/30/2016 closing price and Q $0.795 distribution per unit annualized. (3) As of 9/30/2016. (4) Based on 11/30/2016 closing price and Q $ distribution per unit annualized. 6

7 Summary Ownership Structure TEP Owners LP Ownership % (3) Management, EMG & Kelso (1) Public 61% TDEV 11% Tallgrass Equity 28% Class B Shares Tallgrass Equity Ownership % (4) Public (TEGP) 37% Management 17% EMG 23% Tallgrass Development, LP Tallgrass Development or TDEV 50% (2) REX Tallgrass Equity Units Tallgrass Energy GP, LP NYSE: TEGP Tallgrass Equity Units Class A Shares Kelso 23% Public TEGP Shareholders (Form 1099; No K-1s) 100% Terminals LP Units Tallgrass Equity, LLC Tallgrass Equity 2% Pony 20 million LP Units GP interest and IDRs Tallgrass Energy Partners, LP NYSE: TEP LP Units Public TEP Unitholders 98% Crude Oil Transportation and Logistics Segment Pony 100% Natural Gas Transportation and Logistics Segment TIGT Processing and Logistics Segment TMID 100% 100% Trailblazer BNN 100% 25% (2) REX (1) Kelso & Company ( Kelso ), the Energy & Minerals Group ( EMG ) and Tallgrass KC, LLC, an entity owned by management, hold an exchange right which allows them to exchange one Tallgrass Equity unit and one Class B share for one Class A share. An affiliate of Magnetar Capital also owns an approximate 10% limited partner interest in TDEV. (2) Phillips 66 owns the remaining 25% of REX. (3) As of 11/02/2016. (4) As of 11/22/

8 Tallgrass Execution 8

9 At IPO Q Q Q Q Q Q Q Q Q Q Q Q At IPO Q Q Q Q Q Exceptional Financial Performance TEP Annualized LP Distribution TEGP Annualized Distribution $3.02 $3.18 $2.82 $2.32 $2.40 $2.56 $1.94 $2.08 $0.53 $0.58 $0.69 $0.84 $0.98 $1.05 $1.52 $1.64 $1.15 $1.26 $1.30 TEP Guidance Outperformance TEP has consistently met or exceeded guidance At IPO FY2013 FY2014 FY2015 S-1 (1) Adjusted EBITDA Maintenance Capex N/A Coverage DPU TEP Total Unit Holder Return Since IPO (2)(3) $280 $ $260 $ $ $ $240 $ $ $220 $ $ $ $200 $ $ $180 $160 $140 $ $120 $97.67 $ $ $100 $80 $60 Exceeded Guidance Met Guidance NYSE Composite Index (NYATR) Alerian MLP Index (AMZX) Tallgrass Energy Partners, LP (TEP) (1) Represents 12 month period ending 6/30/2014. (2) As of 9/30/2016. (3) Distributions are assumed to be reinvested in units of TEP at the closing price on the ex-dividend date. 9

10 Tallgrass Energy Accomplishments TEP IPO TMID Casper Expansion TMID Keep Whole Contract Conversion TIGT West End Expansion TMID Douglas Expansion Revolver Upsize to $850mm Water Business Acquisition Trailblazer Acquisition TMID POP Contract Conversion Commence At-the-Market Equity Program Pony Expansion Open Season ~$330mm TEP follow-on Equity Offering 33.3% Pony Acquisition TEGP IPO ~$570mm TEP follow-on Equity Offering 33.3% Pony Acquisition TEP increases Revolver to $1.1 bn Whiting Water Business Acquisition Pony Expansion Project placed into service $400mm TEP Senior Notes Offering TEP increases Revolver to $1.75bn 31.3% Pony Acquisition 25.0% REX Acquisition Acquire Assets REX Refinances Notes File REX PDO For Zone 3 East-to-West Transportation Contract REX s Seneca Lateral Contract Trailblazer s Redtail Lateral Pony Northeast Colorado Lateral Open Season REX Receives Favorable PDO Ruling REX Seneca Lateral Expansion Open Season REX E2W Open Season Settle Trailblazer Rate Case REX Signs E2W PAs REX Expansion Open Season REX Settles with 3 MFN Shippers Prairie State Pipeline Open Season with AGL Resources REX Signs Expansion PAs REX Repays $450mm 2015 Notes Seneca Lateral Achieves Full Capacity REX Zone 3 E2W Project placed into service 7(c) FERC application filed for REX Expansion REX Settles with final MFN Shipper REX modifies Encana contract Receives 7(c) approval for REX Expansion Constructs Buckingham Terminal REX Capacity Enhancement Project Fully Contracted DEVELOPMENT Financing Project Acquisition Other 10

11 TEP Highlights 11

12 Q Financial and Operational Update TEP Financial Update Q Adjusted EBITDA $109 M Distributable Cash Flow $105 M Coverage Ratio 1.23x Leverage Ratio 3.0x (1) Senior Notes Offering TEP closed an offering of $400mm of 5.50% senior unsecured notes due 2024 on September 1, 2016 Operational Update Rockies Express Pipeline First quarter with 25% interest in REX in TEP for entire quarter Capacity Enhancement Project completely contracted up to 800 MMcf/d design capacity for 15 years at an average rate of approximately $0.50 as of November 2, 2016 Tallgrass Interstate Gas Transmission TIGT reached a rate case settlement with customers and expects annualized revenue to increase by ~$13 million Settlement approved and final as of November 2, 2016 Pony Express Average volumes for Q3 were ~276k bbl/d October average daily volumes were ~282k bbl/d November shipper nominations were ~299k bbl/d Preliminary December shipper nominations indicate ~303k bbl/d Tallgrass Terminals Truck unloading terminal at Buckingham in-service August 2016 Pursuing two additional projects within the existing Tallgrass footprint (1) Based on TEP revolver covenant calculations. 12

13 TEP is a High-Growth Traditional Midstream MLP Crude Oil Transportation and Logistics 764-mile FERC regulated crude oil pipeline from Guernsey, WY / NE Colorado to Cushing, OK ~320,000 bbl/d of transportation design capacity Take or Pay contracts for ~300,000 bbl/d Low-cost, competitive base load positioning relative to alternatives (e.g., rail) Access to Bakken Shale, DJ, and Powder River production Access to refinery and Cushing, OK oil hub Processing and Logistics Processing and treating ~190 MMcf/d of processing capacity in the Powder River and Wind River s in Wyoming 3,500 bbl/d fractionator at the Casper plant Water business services Fresh water transportation and salt water gathering and disposal systems in the DJ Effluent management operations in the Eagle Ford Shale and Permian Effluent / fresh water system in Permian and growing Permian disposal opportunities Water recycling services Natural Gas Transportation and Logistics Consists of 3 FERC-regulated natural gas transportation & storage systems (REX, TIGT, and Trailblazer) REX Pipeline (1) 1,712-mile FERC regulated bidirectional natural gas pipeline with up to 1.8 Bcf/d of capacity that transports Rocky Mountain and Appalachian natural gas o Capacity Enhancement Project to increase Zone 3 east-towest capacity to 2.6 Bcf/d TIGT and Trailblazer: ~5,109 miles of pipeline ~2.0 Bcf/d of transportation design capacity ~72% of capacity under firm contract (2) Tallgrass Energy Footprint Tallgrass Interstate Gas Transmission Trailblazer Pipeline Pony Express Pipeline Pony Express Joint Tariff Pipelines Tallgrass Midstream BNN Water Solutions Pipeline Rockies Express Pipeline Lease of Overthrust Pipeline Capacity Oil Storage Terminal (1) TEP owns a 25% membership interest in REX. TDev owns a 50% membership interest and Phillips 66 owns the remaining 25% membership interest in REX. (2) As of 12/31/

14 Highly Stable Cash Flow Profile 95% of TEP s 2015 Adjusted EBITDA was from firm fee / Take or Pay contracts and has been further strengthened by the acquisition of 31.3% of PXP in January 2016 and the acquisition of 25% of REX in May 2016 Contract Structure Weighted Average Remaining Life (WARL) (1) Crude Oil Transport & Logistics Segment Take or Pay contracts for ~300,000 bbl/d ~4 years Processing & Logistics Segment ~92% of TEP s reserved processing capacity subject to fee-based processing contracts Majority of BNN cash flow is Take or Pay based NGL pipeline supported by a 10-year Lease for 100% of its capacity Processing: ~3 years Freshwater Transportation: ~5 years Water Gathering and Disposal: ~9 years Natural Gas Transport & Logistics Segment (2) Contract Structure Weighted Average Remaining Life (WARL) (1) Majority of transportation cash flow is Take or Pay TIGT & Trailblazer Transportation: 2 years REX West-to-East Transportation: 5 years REX East-to-West Transportation: 17 years Storage: ~6 years Adjusted EBITDA by Contract Type (3) Volumetric Fee 4% Commodity Exposed 1% Firm Fee 95% (1) As of 12/31/2015. (2) PF for the REX acquisition and REX s Encana contract extension. (3) For the year ended 12/31/

15 Attractive Business Model Stable Operations Crude Oil Transportation & Logistics Segment Firm commitments totaling ~300,000 bbl/d ~4-year WARL (1) Pony provides baseload Rockies takeaway Diversified Supply o Bakken Shale, DJ and Powder River s Diversified Market o Cushing, OK and direct refinery connections Natural Gas Transportation & Logistics Segment Majority of revenue is Take or Pay Attractive future dropdown potential at REX o 17-year WARL on newly contracted 2.5 Bcf/d for REX Zone 3 transportation (1) Access to both Appalachia and Rockies production Strong Financial Profile $1,750mm revolver provides TEP substantial liquidity Raised >$1 billion of capital through public equity issuances since IPO >70% of TEP s PF top 15 customer revenue in 4Q2015 derived from BB+ or better customers Opportunistic ATM equity program Dual public equity currencies and Up-C structure provide increased flexibility Access to public debt markets ($ in millions) Total Debt as of 9/30/16 $1,398 9/30/2016 LTM Adjusted EBITDA (2) 466 Debt / Adjusted EBITDA 3.0x 4.0x 3.0x 2.0x 1.0x 0.0x 1.7x Historical Leverage and Coverage Leverage (2) 3.3x 2.8x 3.0x Q x 1.30x 1.25x 1.20x 1.15x 1.10x 1.05x 1.00x Coverage 1.22x 1.15x 1.14x 1.28x (3) YTD 2016 (1) As of 12/31/15. WARL s based on capacity. (2) Based on TEP revolver covenant calculations. (3) For the 9 months ended 9/30/16. 15

16 Appendix 16

17 Segment and Asset Overview 17

18 Crude Oil Transportation & Logistics Overview Asset Overview Current Footprint 764-mile FERC regulated crude oil pipeline from Guernsey, WY / NE Colorado to Cushing, OK Total transportation design capacity of ~320,000 bbl/d Take or Pay contracts for a total of ~300,000 bbl/d Powder River Guernsey WY Pawnee NE Pony Pipeline Pony Crude Receipt Pony Pump Station Oil Storage Terminal Refinery s Active Shale Drilling New Supply Connections DJ Diverse Supply Bakken Powder River Additional Common Streams Buckingham Sterling Terminal Niobrara KS CO Mississippi Lime Ponca City Competitive Rates All-in rate to market (gathering, transportation, etc.) is competitive against competing pipelines and rail Batch System Multiple common streams transported in batches preserves value of crude OK Cushing Terminal Operational Update Transported ~285,000 bbl/d for the nine months ended September 30, 2016 At least one shipper has transported incremental barrels every month since December 2015 Growth Opportunities New Refinery Connections Refinery Cushing Multiple Demand Markets Gulf Coast Additional direct refinery connections Up to an additional ~100,000 bbl/d of capacity can be added with minimal capital expenditure Additional laterals into the DJ 18

19 Natural Gas Transportation & Logistics Overview Asset Overview Consists of 3 FERC-regulated natural gas transportation & storage systems (REX, TIGT, and Trailblazer) ~6,821 miles of pipelines ~5.6 Bcf/d of transportation design capacity Access to multiple high-growth basins in the Rockies and Appalachia, and multiple large demand centers across the northern US Stable Cash Flow ~95% of PF 2015 segment revenue was Take-or-Pay (1) Volumetric Fee 3% Commodity Exposed 2% Organic Projects REX is adding 0.8 Bcf/d of Zone 3 East-to-West capacity through its Capacity Enhancement Project, expected in-service around year-end 2016 Trailblazer to construct a lateral for demand customer in 2H 2016 Firm Fee 95% Current Footprint ID Greater Green River Big Horn WY Powder River Niobrara SD HUNTSMAN (Gas storage) NE MN IA WI Michigan MI TIGT Pipeline Trailblazer Pipeline Rex Pipeline Lease Overthrust Capacity TIGT Compressor Station Trailblazer Compressor Station REX Compressor Station s UT Uinta/ Piceance Paradox Niobrara CO KS Mississippi Lime Cherokee Platform Forest City MO IL Illinois IN KY Active Shale Drilling OH Appalachian WV (1) PF 2015 segment revenue includes 25% of 2015 REX revenue for purposes of this calculation. 19

20 Rockies Express Pipeline Overview Prominent pipeline providing natural gas transportation service to North American energy markets REX is becoming the nation s northernmost natural gas header system Attractive access to both supply basins and large end user markets Currently moving both Rocky Mountain and Appalachian production Opal Wamsutter Shale to Shining Shale Zone 1 Zone 2 Zone 3 Kanda Meeker Cheyenne Clarington ROCKIES EXPRESS PIPELINE SENECA LATERAL LEASE OF OVERTHRUST CAPACITY REX COMPRESSOR STATION Lebanon Asset Overview Highlights Placed in service in November 2009 ~1,712 miles of 42 and 36 pipeline ~1.8 Bcf/d of West-to-East capacity ~2.6 Bcf/d of Zone 3 East-to West-capacity (1) Contracted capacity supports stable cash flow Access to substantially all major natural gas supply basins in the Rocky Mountain region, Ohio and Pennsylvania corridors Favorable proximity to numerous major enduse markets Encana s contract Extended through 2024 ~0.5 Bcf/d of west-end volume contracted through 2024 Zone 3 for bidirectional flows 2.6 Bcf/d Zone 3 East-to-West capacity fully contracted First East-to-West volumes flowed in June 2014 Majority of contracts are year terms REX repaid $450 million of bond maturities in 2015 >75% of the 2019 recontracting risk has been mitigated, as it relates to FY2013 Revenue 98% of 2015 revenue was Take or Pay Weighted Average Contract Life (2) East-to-West Contracts: ~17 years West-to-East Contracts: ~5 years Partners will fund ~$750 million of capital projects from with 100% equity and no debt Note: Overthrust Pipeline is owned by Questar and consists of ~255 miles of pipeline. (1) Pro forma for Capacity Enhancement project in-service. (2) Calculation date of 12/31/

21 Recontracting REX Securing Long-Term Revenue Revenue as of 2013 Revenue as of 2015 Revenue as of Today Original Contracts Only Contracted revenue expired late 2019, future revenue was unknown ($ in millions) $1,000 $750 $500 $250 ($ in millions) $1,000 $750 $500 $250 ($ in millions) $1,000 $750 $500 $250 Historic Encana Other West End Contracts 2013 Revenue East-End Secured Addition of East-end contracts extended the contracted revenue Historic Forecast Forecast East End Encana Other West End Contracts 2013 Revenue Encana Extension Securing an extended Encana contract levelizes REX s contracted revenue, and significantly reduces future recontracting risk Historic Forecast (1) East End Encana Other West End Contracts 2013 Revenue (1) >75% of the 2019 cash flow risk has been mitigated with current contracts (1) Forecast assumes no Ultra or LINN revenues. 21

22 Processing & Logistics Overview Asset Overview Processing Footprint Processing and treating ~190 MMcf/d of processing capacity in the Powder River (PRB) and Wind River basins in Wyoming 3,500 bbl/d fractionator at the Casper plant Water business services Fresh water transportation and salt water gathering and disposal system in the DJ Effluent management operations in the Eagle Ford Shale and Permian NGL Pipeline Provides NGL takeaway from the Redtail processing plant in Weld County, Colorado to an interconnect with Overland Pass Pipeline Supported by a ten year lease for 100% of the pipeline capacity Big Horn Greater Green River Uinta/ Piceance Powder River Niobrara Niobrara WY TIGT Pipeline s Active Shale Drilling CO NE West Frenchie Draw Douglas Casper Processing and Logistics Growth Opportunities Processing and Treating Contract Mix (1) Processing and treating Additional processing capacity in the PRB is permitted Discussing the construction of gathering lines to service multiple customers in the PRB Water business services Additional water management services to meet the full spectrum of producers needs (fresh water, recycling, waste water disposal) Constructing NGL takeaway pipeline from Douglas to ONEOK s Bakken Express pipeline (1) As of 12/31/2015. Percentages based on contracted capacity. POP / KW 8% Fee-Based 92% 22

23 Drop Down Opportunity: Tallgrass Terminals (1) Tallgrass Energy is utilizing the Pony system as an entry point into the terminals business Located at the intersection of the Guernsey to Sterling and NECL line segments of Pony Provides over 1 million bbls of operational storage for Pony Pursuing growth opportunities to expand business into nearby areas and operations Tallgrass Development acquired a 20% interest in the Deeprock Development Cushing Terminal (2) Storage capacity of ~2.3 million bbls Offers pump over services to numerous terminals and pipeline takeaway options Provides Tallgrass Energy a presence in the nation s largest oil hub to source new projects Pony Pipeline Pony Crude Receipt Buckingham Oil Terminal and Crude Receipt Pony Pump Station Oil Storage Terminal Refinery s Active Shale Drilling Other Acquired 550 acres in Cushing, OK and commercializing additional storage in Cushing Constructed Buckingham terminal at a NECL receipt point Kansas terminal opportunities (1) Tallgrass Terminals is not a Tallgrass Development Retained Asset under the Omnibus Agreement between TEP and TDEV and is not a part of Pony. (2) Tallgrass Terminals owns 20% of a joint venture, which owns and operates an oil terminal facility in Cushing, OK. 23

24 EBITDA and DCF Reconciliations 24

25 TEP Revolver Covenant Compliance EBITDA Reconciliation For the Four Quarters Ended September 30, 2016 LTM ($ in millions) 9/30/2016 Consolidated Net Income (1) $ Consolidated Interest Expense Depreciation & Amortization, Net of NCI Expenses related to equity-related benefit plans 5.4 Total Consolidated EBITDA $ (1) Consolidated Net Income shall mean, as of any Date of Determination for the Applicable Period related thereto, the net income (or loss) of the Borrower and its Restricted Subsidiaries on a consolidated basis in accordance with GAAP; provided, however, that Consolidated Net Income shall exclude (a) extraordinary gains, losses, charges or expenses for such Applicable Period, (b) the net income of any Restricted Subsidiary during such Applicable Period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such income is not permitted on such Date of Determination by operation of the terms of its Organizational Documents or any agreement, instrument or law applicable to such Restricted Subsidiary, except that the Borrower s equity in any net loss of any such Restricted Subsidiary for such Applicable Period shall be included in determining Consolidated Net Income, (c) any income (or loss) for such Applicable Period of any Person if such Person is not a Restricted Subsidiary of the Borrower, except that the aggregate amount of cash actually distributed by such Person during such Applicable Period to the Borrower or a Restricted Subsidiary of the Borrower as a dividend or other distribution (as long as, in the case of a dividend or other distribution to a Restricted Subsidiary of the Borrower, such Restricted Subsidiary is not precluded from further distributing such amount to the Borrower as described in clause (b) of this proviso) shall be included in Consolidated Net Income, (d) non-cash gains and losses attributable to movement in the mark-to-market valuation of Hedging Agreements pursuant to Financial Standards Accounting Board ( FASB ) Accounting Standards Codification ( ASC 815 ), (e) the cumulative effect of a change in accounting principles, (f) any charges or expenses relating to severance, relocation and one-time compensation charges, (g) gain or loss realized upon the sale or other disposition of assets, (h) deferred financing costs written off and premiums paid in connection with any early extinguishment of Indebtedness or any Hedging Agreement, (i) non-cash charges, expenses or other impacts of purchase or recapitalization accounting, including, to the extent applicable, any accruals and reserves established under purchase or recapitalization accounting as a result of the Transactions in accordance with GAAP, (j) non-cash impairment charges or asset write-offs, and any amortization of intangibles, (k) cash charges or costs in connection with any investment, sale or other disposition of assets, issuance of Equity Interests or Indebtedness, or amendment relating to any Indebtedness (in each case, whether or not completed), and (l) to the extent covered by insurance and actually reimbursed, any expenses with respect to liability or casualty events or business interruption. 25

26 TEP Adjusted EBITDA & DCF Reconciliation Three Months Ended September 30, Year Ended December 31, (in millions) Net income attributable to partners $ 60.7 $ $ 70.7 $ 9.7 Add: Interest expense, net of noncontrolling interest Depreciation and amortization expense, net of noncontrolling interest Loss on extinguisment of debt Non-cash loss (gain) related to derivative instruments, net of noncontrolling interest 4.4 (0.2) 0.4 Non-cash compensation expense Non-cash loss from disposal of assets 4.8 Distributions from unconsolidated investment Less: Non-cash loss allocated to noncontrolling interest (9.4) (10.2) Gain on remeasurement of unconsolidated investment (9.4) Equity in earnings of unconsolidated investment (12.1) (0.7) Adjusted EBITDA $ $ $ $ 78.4 Add: Pony Express preferred distributions in excess of distributable cash flow attributable to Pony Express 5.4 Deficiency payments received, net Less: Cash interest cost (9.9) (13.7) (6.3) (5.9) (2) Maintenance capital expenditures, net (2.8) (12.1) (9.9) (16.0) Distributions to noncontrolling interest in excess of earnings (22.5) (5.4) Cash flow attributable to predecessor operations (3.1) 3.4 Distributable Cash Flow (2) Less: Distributions (85.3) (192.6) (83.3) (49.1) (2) Amounts in excess of distributions $ 19.6 $ 27.9 $ 12.7 $ 10.8 Distribution coverage (2) (1) (2) (1) The financial results for the year ended December 31, 2013 have been recast to reflect the results of operations of Trailblazer Pipeline Company LLC, which TEP acquired effective April 1, 2014, and the 33.3% membership interest in Tallgrass Pony Express Pipeline, LLC, which TEP acquired effective September 1, (2) Indicated amounts presented for the year ended December 31, 2013 are on a pro forma basis, which assumes that our initial public offering and related formation transactions, including borrowings under our revolving credit facility, had closed on January 1, No cash distributions were paid with respect to the first quarter of 2013, and a prorated distribution of available cash was paid for the period from the closing of the IPO (May 17, 2013) through the end of the second quarter. Pro forma distributions were calculated using the minimum quarterly distribution for the first two quarters of 2013 and the increased distribution for the third and fourth quarters. Actual cash distributions for the twelve month period ending December 31, 2013,were $0.7547/unit. Pro forma interest expense (inclusive of commitment fees) for the twelve months ended December 31, 2013, was calculated by multiplying the actual cash interest cost for the third quarter by three and adding the actual cash interest cost for the fourth quarter. Actual cash interest cost for the twelve month period ended December 31, 2013, was $3,555,