Tallgrass Energy Partners 8-K Tallgrass Energy Partners, LP Reports Third Quarter 2013 Results

Exhibit 99.1

Tallgrass Energy Partners, LP Reports Third Quarter 2013 Results

OVERLAND PARK, Kan.--(BUSINESS WIRE)--November 7, 2013--Tallgrass Energy Partners, LP (NYSE:TEP) (“Tallgrass” or the “Partnership”) today reported financial and operating results for the third quarter of 2013. The Partnership closed its initial public offering on May 17, 2013 and this earnings release relates to the financial and operating results of the Partnership, its Predecessor and Pre-Predecessor as described under “About Tallgrass Energy Partners, LP” below.

Summary Financial Information		Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except coverage and per unit data)		2013			2012			2013				2012
Net income		$	7,006		$	13,865		$	350			$	44,616
Add:
	Interest expense (income), net		1,422			(1,446	)		10,486				(1,446	)
	Depreciation and amortization expense		7,342			5,949			22,324				17,776
	Non-cash loss related to derivative instruments		112			-			183				-
	Texas Margin Tax		-			20			-				193
	Loss on early extinguishment of debt		-			-			17,526				-
	Non-cash compensation expense		863			-			948				-
Adjusted EBITDA		$	16,745		$	18,388		$	51,817			$	61,139
Less:
	Maintenance capital expenditures		(3,725	)					(5,670	)
	Cash interest cost		(1,559	)					(4,677	)	(a)
Distributable cash flow (DCF)			11,461						41,470		(a)
Less:
	Distributions		(12,295	)					(36,057	)	(a)
DCF in excess of pro forma distributions			(834	)					5,413		(a)
Distribution coverage		0.93x						1.15x			(a)
Limited partner units outstanding			40,500						40,500		(a)
Net income per limited partner unit		$	0.17					$	0.01		(a)
Distribution per unit		$	0.2975					$	0.8725		(a)

(a) Amounts presented for the nine months ended September 30, 2013 are on a pro forma basis, which assumes that our initial public offering and related formation transactions, including borrowings under our new $500 million revolving credit facility, had closed on January 1, 2013. In connection with the closing of Tallgrass' initial public offering, Tallgrass entered into a revised partnership agreement that requires that, within 45 days after the end of each quarter, beginning with the quarter ended June 30, 2013, the partnership distribute its available cash to unitholders of record on the applicable record date. 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 quarter. Actual cash distributions for the nine month period ending September 30, 2013, including the third quarter distribution to be paid on November 13, 2013, are 0.4397/unit. Pro forma interest expense (inclusive of commitment fees) for the nine months ended September 30, 2013 were calculated by annualizing actual amounts for the three months ended September 30, 2013. Actual cash interest cost for the nine month period ended September 30, 2013 was $2,322.

Management believes the pro forma presentation of distributable cash flow, distribution coverage and net income per limited partner unit provides investors with useful information to compare our historical financial results to future periods. These pro forma financial measures are presented for illustrative purposes only and are not necessarily indicative of the operating results or the financial position that would have been achieved had the initial public offering and related formation transactions been consummated on January 1, 2013 or of the results that may be obtained in the future.

Tallgrass President and CEO David G. Dehaemers, Jr. said, “As we had expected and previously communicated, our third quarter coverage was lower than either of our first or second quarter performance due to planned plant downtime at Tallgrass Midstream and increased maintenance capital expenditures. In particular, Tallgrass Midstream completed planned maintenance turnarounds at both the Casper and Douglas plants and substantially completed its expansion projects at these plants during the third quarter. The plants returned to service with expanded capacity in early October, and we are pleased to announce that the expanded capacity is fully contracted. After considering a number of factors, including the expected growth at Tallgrass Midstream in the fourth quarter and beyond, we increased our third quarter distribution to unitholders by 3.5% over the minimum quarterly distribution paid on a prorated basis for the second quarter. We are pleased to have our first full distribution be an increased distribution.”

Segment Overview

The third quarter 2013 results by segment are summarized below:

		Three Months Ended September 30, 2013									Three Months Ended September 30, 2012
Summary Financial Information		Gas Transportation				Corporate					Gas Transportation					Corporate
(in thousands)		and Storage		Processing		and Other			Total		and Storage			Processing		and Other		Total
Operating Income (Loss)		$	6,988	$	1,874	$	(1,488	)	$	7,374	$	9,450		$	2,902	$	-	$	12,352
Add:
	Depreciation and amortization expense		5,693		1,649		-			7,342		5,140			809		-		5,949
	Non-cash loss related to derivative instruments		112		-		-			112		-			-		-		-
	Other income (expense)		940		121		(7	)		1,054		87			-		-		87
	Non-cash compensation expense		-		-		863			863		-			-		-		-
Segment Adjusted EBITDA		$	13,733	$	3,644	$	(632	)	$	16,745	$	14,677		$	3,711	$	-	$	18,388
		Nine Months Ended September 30, 2013									Nine Months Ended September 30, 2012
		Gas Transportation				Corporate					Gas Transportation					Corporate
		and Storage		Processing		and Other			Total		and Storage			Processing		and Other		Total
Operating Income (Loss)		$	17,751	$	10,667	$	(1,878	)	$	26,540	$	30,288		$	13,169	$	-	$	43,457
Add:
	Depreciation and amortization expense		17,399		4,925		-			22,324		15,409			2,367		-		17,776
	Non-cash loss related to derivative instruments		183		-		-			183		-			-		-		-
	Other income (expense)		1,710		121		(9	)		1,822		(94	)		-		-		(94	)
	Non-cash compensation expense		-		-		948			948		-			-		-		-
Segment Adjusted EBITDA		$	37,043	$	15,713	$	(939	)	$	51,817	$	45,603		$	15,536	$	-	$	61,139

Adjusted EBITDA in the Gas Transportation and Storage segment for the third quarter of 2013 was $13.7 million. Average firm contracted transportation capacity declined when compared to the third quarter of 2012, but remained constant when compared to the second quarter of 2013. “Our team continues to focus on our customers by renewing existing volumes and connecting new volumes to the system,” Dehaemers noted. “For example, since last quarter when we discussed a west-end expansion project that will connect an additional 80,000 Dth/day in late 2013 or early 2014, we have contracted an additional 30,000 Dth/day on that project.”

The Processing segment generated Adjusted EBITDA of $3.6 million for the third quarter of 2013, which is comparable to the third quarter of 2012. The effects of increased planned downtime at both plants during the third quarter of 2013 were partially offset by increased NGL prices and higher average inlet volumes while the plants were operating. NGL prices averaged $0.97/gallon for the third quarter of 2013 as compared to $0.83/gallon for the second quarter of 2013. Approximate average inlet volumes were 120 MMcf/day for the three-month period ended September 30, 2013, as compared to 124 MMcf/day for the three-month period ended September 30, 2012 and 137 MMcf/day for the three-month period ended June 30, 2013. “The expansion projects and efficiency upgrades at Tallgrass Midstream were successful and we look forward to increased processing volumes,” Dehaemers noted. “We are optimistic about our Processing segment and its growth opportunities in the region.”

Conference Call

Please join Tallgrass for a conference call and webcast related to its third quarter 2013 results at 4:00 pm Central Daylight Time on Thursday, November 7, 2013. A link posted in the Investor Relations section of our website will allow interested parties to listen and the replay will be available on our website for a limited time following the end of the live call.

About Tallgrass Energy Partners, LP

Tallgrass Energy Partners, LP (NYSE:TEP) is a publicly traded, growth-oriented master 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 system and provide processing services for customers in Wyoming through our Casper and Douglas natural gas processing and West Frenchie Draw natural gas treating facilities. We believe we are well positioned to capture growing natural gas volumes produced in the Denver-Julesburg Basin and the Niobrara and Mississippi Lime shale formations.

Tallgrass closed its initial public offering on May 17, 2013 and the earnings release relates to the financial information of the Partnership, “TEP Predecessor” and “TEP Pre-Predecessor.” TEP Predecessor refers to the ownership of Tallgrass Interstate Gas Transmission LLC (TIGT) and Tallgrass Midstream LLC (TMID) by Tallgrass Development from November 13, 2012 to the closing of the initial public offering (IPO) on May 17, 2013. TEP Pre-Predecessor refers to the ownership of TIGT and TMID by Kinder Morgan Energy Partners, LP (KMP) prior to November 13, 2012. TEP, or the Partnership, as used herein refers to the consolidated financial results and operations for TEP Predecessor from its inception through its contribution to TEP and thereafter.

In connection with the closing of the initial public offering, Tallgrass entered into a revised partnership agreement which requires it to pay distributions, subject to certain limitations more fully described in the “Our Cash Distribution Policy and Restrictions on Distributions” section in Tallgrass’ prospectus, within 45 days after the end of each quarter, beginning with the second quarter of 2013. As previously announced, the board of directors of Tallgrass’ general partner declared a quarterly cash distribution to partners of $0.2975 per common unit for the third quarter of 2013, or $1.19 on an annualized basis. The quarterly distribution will be paid on Wednesday, November 13, 2013 to unitholders of record as of the close of business on Friday, November 1, 2013.

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. 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.

Adjusted EBITDA, a non-GAAP measure, is defined as net income before 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 disposals and gains or losses on the repurchase, redemption or early retirement of debt. We define distributable cash flow as Adjusted EBITDA less cash interest cost 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. Distributable cash flow and Adjusted EBITDA are not presentations made in accordance with GAAP.

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 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 expansion projects; distribution rate and growth, including variability of quarterly distribution coverage; ability to renew contracts; and expected reductions in commodity price exposure. 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 and transportation services, operating hazards, the effects of government regulation, tax position and other risks incidental to transporting, storing and processing natural gas and other important factors that could cause actual results to differ materially from those projected, including those set forth under Item 1A, "Risk Factors" of Tallgrass Energy Partners' Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, as updated by any subsequent reports filed 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.

Financial Statements

TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
		September 30, 2013		December 31, 2012
ASSETS		(in thousands)
Current Assets:
	Cash and cash equivalents	$	620	$	-
	Accounts receivable, net		22,238		17,848
	Accounts receivable from related parties		1,672		6,463
	Gas imbalances		1,496		1,282
	Inventories		2,670		2,204
	Derivative assets at fair value		24		224
	Prepayments and other current assets		377		47
	Total Current Assets		29,097		28,068
Property, plant and equipment, net			671,720		669,476
Goodwill			302,916		301,852
Deferred financing costs			4,774		-
Deferred financing costs allocated from TD			-		13,352
Other deferred charges			17,729		23,066
Total Assets		$	1,026,236	$	1,035,814
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
	Accounts payable	$	33,602	$	35,496
	Accounts payable to related parties		1,353		-
	Notes payable to related parties		-		1,387
	Gas imbalances		2,287		1,250
	Derivative liabilities at fair value		5		23
	Accrued taxes		4,796		3,465
	Current portion of long-term debt allocated from TD		-		4,000
	Accrued other current liabilities		13,633		26,233
	Total Current Liabilities		55,676		71,854
Long-term debt			226,000		-
Long-term debt allocated from TD			-		390,491
Other long-term liabilities and deferred credits			4,215		1,635
	Total Long-term Liabilities		230,215		392,126
Partners' Capital:
	Common unitholders (24,300,000 units issued and outstanding at September 30, 2013)		452,273		-
	Subordinated unitholder (16,200,000 units issued and outstanding at September 30, 2013)		274,088		-
	General partner (826,531 units issued and outstanding at September 30, 2013)		13,984		-
	Member's Capital		-		571,834
	Total Partners' Capital		740,345		571,834
Total Liabilities and Partners' Capital		$	1,026,236	$	1,035,814

TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND TALLGRASS ENERGY PARTNERS PRE-PREDECESSOR
CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
			TEP			TEP Pre- Predecessor		TEP			TEP Pre- Predecessor
			Three Months			Three Months		Nine Months			Nine Months
			Ended			Ended		Ended			Ended
			September 30, 2013			September 30, 2012		September 30, 2013			September 30, 2012
			(in thousands, except per unit amounts)			(in thousands, except per unit amounts)		(in thousands, except per unit amounts)			(in thousands, except per unit amounts)
Revenues:
	Natural gas liquids sales		$	32,216		$	28,519	$	97,307		$	91,257
	Natural gas sales			3,053			7,705		7,242			13,118
	Transportation services			23,785			26,801		73,446			81,565
	Other operating revenues			4,205			1,453		8,924			4,586
		Total Revenues		63,259			64,478		186,919			190,526
Operating Costs and Expenses:
	Cost of sales and transportation services (exclusive of depreciation and amortization shown below)			31,465			31,060		91,850			85,393
	Operations and maintenance			9,430			10,146		25,713			28,154
	Depreciation and amortization			7,342			5,949		22,324			17,776
	General and administrative			6,071			2,894		15,744			9,593
	Taxes, other than income taxes			1,577			2,077		4,748			6,153
		Total Operating Costs and Expenses		55,885			52,126		160,379			147,069
Operating Income				7,374			12,352		26,540			43,457
Other Income (Expense):
	Interest (expense) income, net			(1,422	)		1,446		(1,458	)		1,446
	Interest expense allocated from TD			-			-		(9,028	)		-
	Loss on extinguishment of debt			-			-		(17,526	)		-
	Other income (expense), net			1,054			87		1,822			(94	)
		Total Other (Expense) Income		(368	)		1,533		(26,190	)		1,352
Income Before Income Taxes				7,006			13,885		350			44,809
Texas Margin Taxes				-			20		-			193
Net Income			$	7,006		$	13,865	$	350		$	44,616

TALLGRASS ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
AND TALLGRASS ENERGY PARTNERS PRE-PREDECESSOR
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
	September 30, 2013			September 30, 2012
	(in thousands)			(in thousands)
Cash Flows from Operating Activities:
Net income	$	350		$	44,616
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization		23,802			17,776
Loss on extinguishment of debt		17,526			-
Noncash compensation expense		948			-
Changes in components of working capital:
Accounts receivable and other		8,614			4,843
Gas imbalances		823			3,821
Inventories		(185	)		(91	)
Accounts payable and accrued liabilities		(630	)		(4,476	)
Regulatory assets		(111	)		-
Other, net		(209	)		618
Net Cash Provided by Operating Activities		50,928			67,107
Cash Flows from Investing Activities:
Capital expenditures		(37,718	)		(12,566	)
Net cash paid for purchase and sale of gas in underground storage		-			(1,147	)
Disposal of property, plant and equipment (net of removal costs)		(274	)		145
Net Cash Used in Investing Activities		(37,992	)		(13,568	)
Cash Flows from Financing Activities:
Repayment of debt assumed from TD		(400,000	)		-
Borrowings under revolving credit facility, net		226,000			-
Payments for deferred financing costs		(5,157	)		-
Proceeds from initial public offering, net of offering costs		290,498			-
Distributions to Member, net		(118,538	)		(53,539	)
Distributions to unitholders		(5,877	)		-
Reimbursement of stock compensation expense from TD		758			-
Net Cash Used in Financing Activities		(12,316	)		(53,539	)
Net Change in Cash and Cash Equivalents		620			-
Cash and Cash Equivalents, beginning of period		-			-
Cash and Cash Equivalents, end of period	$	620		$	-

CONTACT:
Tallgrass Energy Partners, LP
Investor Relations
Nate Lien, (913) 928-6012
investor.relations@tallgrassenergylp.com