Acquisitions | Acquisition of an Additional 24.99% Membership Interest in Rockies Express On March 31, 2017, TEP, TD, and Rockies Express Holdings, LLC, entered into a definitive Purchase and Sale Agreement, pursuant to which TEP acquired an additional 24.99% membership interest in Rockies Express from TD in exchange for cash consideration of $400 million . Together with the 25% membership interest in Rockies Express that TEP acquired from a unit of Sempra U.S. Gas and Power on May 6, 2016, this transaction increases TEP’s aggregate membership interest in Rockies Express to 49.99% . The transfer of the Rockies Express membership interest between TD and the Partnership is considered a transaction between entities under common control, but does not represent a change in reporting entity. Our investment in Rockies Express is recorded under the equity method of accounting and is reported as "Unconsolidated investments" on our condensed consolidated balance sheets. As a result of the common control nature of the transaction, the 24.99% membership interest in Rockies Express was transferred to the Partnership at TD's historical carrying amount, including the remaining unamortized basis difference driven by the difference between the fair value of the investment and the book value of the underlying assets and liabilities on November 13, 2012, the date of acquisition by TD. For additional information, see Note 7 – Investments in Unconsolidated Affiliates . As of March 31, 2017, the negative basis difference carried over from TD was approximately $386.8 million . The amount of the basis difference allocated to property, plant and equipment is accreted over 35 years , which equates to the 2.86% composite depreciation rate utilized by Rockies Express to depreciate the underlying property, plant and equipment. The amount allocated to long-term debt is amortized over the remaining life of the various debt facilities. The basis difference associated with the recently acquired 24.99% membership interest in Rockies Express at March 31, 2017 was allocated as follows: Basis Difference Amortization Period (in thousands) Long-term debt $ 19,504 2 - 25 years Property, plant and equipment (406,301 ) 35 years Total basis difference $ (386,797 ) Acquisition of Tallgrass Terminals, LLC and Tallgrass NatGas Operator, LLC Effective January 1, 2017, we acquired 100% of the issued and outstanding membership interests in Terminals and 100% of the issued and outstanding membership interests in NatGas from TD for total cash consideration of $140 million . These acquisitions are considered transactions between entities under common control, and a change in reporting entity. Terminals owns several fully operational assets providing storage capacity and additional injection points for the Pony Express System, including the Sterling Terminal near Sterling, Colorado, the Buckingham Terminal in northeast Colorado, and a 20% interest in the Deeprock Development Terminal in Cushing, Oklahoma. The 20% interest in Deeprock Development is recorded under the equity method of accounting and reported as "Unconsolidated investments" on our condensed consolidated balance sheets. Terminals also owns acreage in Cushing, Oklahoma and Guernsey, Wyoming, which is under development to provide additional storage capacity, and other potential opportunities. NatGas is the operator of the Rockies Express Pipeline and receives a fee from Rockies Express as compensation for its services. Historical Financial Information The results of our acquisitions of Terminals and NatGas are included in the condensed consolidated balance sheets as of March 31, 2017 and December 31, 2016 . The following table presents our previously reported December 31, 2016 condensed consolidated balance sheet, adjusted for the acquisitions of Terminals and NatGas: December 31, 2016 TEP (As previously reported) Consolidate Terminals Consolidate NatGas TEP (As currently reported) (in thousands) ASSETS Current Assets: Cash and cash equivalents $ 1,873 $ — $ — $ 1,873 Accounts receivable, net 59,469 38 29 59,536 Gas imbalances 1,597 — — 1,597 Inventories 12,805 288 — 13,093 Derivative assets at fair value 10,967 — — 10,967 Prepayments and other current assets 6,820 808 — 7,628 Total Current Assets 93,531 1,134 29 94,694 Property, plant and equipment, net 2,012,263 66,969 — 2,079,232 Goodwill 343,288 — — 343,288 Intangible asset, net 93,522 — — 93,522 Unconsolidated investments 461,915 13,710 — 475,625 Deferred financing costs, net 4,815 — — 4,815 Deferred charges and other assets 9,637 1,400 — 11,037 Total Assets $ 3,018,971 $ 83,213 $ 29 $ 3,102,213 LIABILITIES AND EQUITY Current Liabilities: Accounts payable $ 24,076 $ 46 $ — $ 24,122 Accounts payable to related parties 5,879 56 — 5,935 Gas imbalances 1,239 — — 1,239 Derivative liabilities at fair value 556 — — 556 Accrued taxes 16,328 668 — 16,996 Accrued liabilities 16,525 177 — 16,702 Deferred revenue 60,757 — — 60,757 Other current liabilities 6,446 — — 6,446 Total Current Liabilities 131,806 947 — 132,753 Long-term debt, net 1,407,981 — — 1,407,981 Other long-term liabilities and deferred credits 7,063 — — 7,063 Total Long-term Liabilities 1,415,044 — — 1,415,044 Equity: Net Equity 1,472,121 82,266 29 1,554,416 Total Equity 1,472,121 82,266 29 1,554,416 Total Liabilities and Equity $ 3,018,971 $ 83,213 $ 29 $ 3,102,213 The results of our acquisitions of Terminals and NatGas are included in the condensed consolidated statements of income for the three months ended March 31, 2017 and 2016 . The following tables present the previously reported condensed consolidated statements of income for the three months ended March 31, 2016 , adjusted for the acquisitions of Terminals and NatGas: Three Months Ended March 31, 2016 TEP (As previously reported) Consolidate Terminals Consolidate NatGas Elimination (1) TEP (As currently reported) (in thousands) 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 2,909 1,681 (2,827 ) 9,390 Total Revenues 145,405 2,909 1,681 (2,827 ) 147,168 Operating Costs and Expenses: Cost of sales (exclusive of depreciation and amortization shown below) 13,568 — — — 13,568 Cost of transportation services (exclusive of depreciation and amortization shown below) 16,156 200 — (2,827 ) 13,529 Operations and maintenance 12,477 481 — — 12,958 Depreciation and amortization 21,692 315 — — 22,007 General and administrative 13,016 474 — — 13,490 Taxes, other than income taxes 7,506 144 — — 7,650 Total Operating Costs and Expenses 84,415 1,614 — (2,827 ) 83,202 Operating Income 60,990 1,295 1,681 — 63,966 Other Income (Expense): Interest expense, net (7,499 ) — — — (7,499 ) Unrealized loss on derivative instrument (8,946 ) — — — (8,946 ) Equity in earnings of unconsolidated investments — 709 — — 709 Other income, net 566 — — — 566 Total Other (Expense) Income (15,879 ) 709 — — (15,170 ) Net income 45,111 2,004 1,681 — 48,796 Net income attributable to noncontrolling interests (1,041 ) — — — (1,041 ) Net income attributable to partners $ 44,070 $ 2,004 $ 1,681 $ — $ 47,755 (1) Represents the elimination of revenue and cost of transportation services associated with the lease of the Sterling Terminal facilities by Pony Express. |