x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 47-3159268 | |||
(State or other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number) | |||
4200 W. 115th Street, Suite 350 | ||||
Leawood, Kansas | 66211 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 5,031 | $ | 2,593 | |||
Accounts receivable, net | 213,973 | 118,615 | |||||
Receivable from related parties | 2,923 | 1,340 | |||||
Inventories | 21,063 | 21,609 | |||||
Prepayments and other current assets | 12,829 | 13,165 | |||||
Total Current Assets | 255,819 | 157,322 | |||||
Property, plant and equipment, net | 2,595,063 | 2,394,337 | |||||
Goodwill | 404,838 | 404,838 | |||||
Intangible assets, net | 134,663 | 97,731 | |||||
Unconsolidated investments | 1,475,056 | 909,531 | |||||
Deferred financing costs, net | 11,116 | 12,563 | |||||
Deferred tax asset | 298,112 | 312,997 | |||||
Deferred charges and other assets | 3,529 | 2,694 | |||||
Total Assets | $ | 5,178,196 | $ | 4,292,013 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 196,705 | $ | 98,882 | |||
Accounts payable to related parties | — | 5,342 | |||||
Accrued taxes | 19,221 | 19,272 | |||||
Accrued interest | 46,448 | 25,167 | |||||
Accrued liabilities | 14,653 | 10,540 | |||||
Deferred revenue | 99,991 | 88,471 | |||||
Other current liabilities | 11,937 | 11,202 | |||||
Total Current Liabilities | 388,955 | 258,876 | |||||
Long-term debt, net | 2,535,555 | 2,292,993 | |||||
Other long-term liabilities and deferred credits | 20,036 | 18,965 | |||||
Total Long-term Liabilities | 2,555,591 | 2,311,958 | |||||
Commitments and Contingencies | |||||||
Equity: | |||||||
Class A Shareholders (154,878,296 and 58,085,002 shares outstanding at June 30, 2018 and December 31, 2017, respectively) | 1,744,665 | 48,613 | |||||
Class B Shareholders (125,305,459 and 99,154,440 shares outstanding at June 30, 2018 and December 31, 2017, respectively) | — | — | |||||
Total Partners' Equity | 1,744,665 | 48,613 | |||||
Noncontrolling interests | 488,985 | 1,672,566 | |||||
Total Equity | 2,233,650 | 1,721,179 | |||||
Total Liabilities and Equity | $ | 5,178,196 | $ | 4,292,013 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except per unit amounts) | |||||||||||||||
Revenues: | |||||||||||||||
Crude oil transportation services | $ | 101,166 | $ | 89,855 | $ | 185,904 | $ | 174,186 | |||||||
Natural gas transportation services | 31,474 | 29,429 | 63,670 | 61,114 | |||||||||||
Sales of natural gas, NGLs, and crude oil | 37,250 | 22,918 | 75,395 | 38,299 | |||||||||||
Processing and other revenues | 23,699 | 18,661 | 47,714 | 31,664 | |||||||||||
Total Revenues | 193,589 | 160,863 | 372,683 | 305,263 | |||||||||||
Operating Costs and Expenses: | |||||||||||||||
Cost of sales | 27,694 | 19,386 | 54,045 | 31,756 | |||||||||||
Cost of transportation services | 12,664 | 14,758 | 23,084 | 28,261 | |||||||||||
Operations and maintenance | 18,440 | 15,254 | 34,839 | 28,157 | |||||||||||
Depreciation and amortization | 27,690 | 22,091 | 53,813 | 43,494 | |||||||||||
General and administrative | 19,085 | 15,334 | 37,511 | 29,551 | |||||||||||
Taxes, other than income taxes | 8,462 | 6,912 | 17,341 | 15,138 | |||||||||||
Loss (gain) on disposal of assets | 279 | 184 | (9,138 | ) | (1,264 | ) | |||||||||
Total Operating Costs and Expenses | 114,314 | 93,919 | 211,495 | 175,093 | |||||||||||
Operating Income | 79,275 | 66,944 | 161,188 | 130,170 | |||||||||||
Other Income (Expense): | |||||||||||||||
Equity in earnings of unconsolidated investments | 78,187 | 42,741 | 146,589 | 63,479 | |||||||||||
Interest expense, net | (31,282 | ) | (21,114 | ) | (61,043 | ) | (37,131 | ) | |||||||
Other income, net | 330 | 272 | 781 | 2,227 | |||||||||||
Total Other Income (Expense) | 47,235 | 21,899 | 86,327 | 28,575 | |||||||||||
Net income before tax | 126,510 | 88,843 | 247,515 | 158,745 | |||||||||||
Deferred income tax expense | (16,809 | ) | (9,676 | ) | (23,501 | ) | (12,340 | ) | |||||||
Net income | 109,701 | 79,167 | 224,014 | 146,405 | |||||||||||
Net income attributable to noncontrolling interests | (108,638 | ) | (70,414 | ) | (206,216 | ) | (125,623 | ) | |||||||
Net income attributable to TGE | $ | 1,063 | $ | 8,753 | $ | 17,798 | $ | 20,782 | |||||||
Net income per Class A share: | |||||||||||||||
Basic net income per Class A share | $ | 0.02 | $ | 0.15 | $ | 0.30 | $ | 0.36 | |||||||
Diluted net income per Class A share | $ | 0.02 | $ | 0.15 | $ | 0.30 | $ | 0.36 | |||||||
Basic average number of Class A shares outstanding | 59,397 | 58,075 | 58,745 | 58,075 | |||||||||||
Diluted average number of Class A shares outstanding | 59,397 | 58,192 | 58,745 | 58,187 |
Predecessor Equity | Partners' Capital | Noncontrolling Interests | Total Equity | ||||||||||||||||
Class A Shares | Class B Shares | ||||||||||||||||||
(in thousands) | |||||||||||||||||||
Balance at January 1, 2018 | $ | — | $ | 48,613 | $ | — | $ | 1,672,566 | $ | 1,721,179 | |||||||||
Cumulative effect of ASC 606 implementation | — | 4,588 | — | 39,543 | 44,131 | ||||||||||||||
Net income | — | 17,798 | — | 206,216 | 224,014 | ||||||||||||||
Dividends paid to Class A shareholders | — | (49,662 | ) | — | — | (49,662 | ) | ||||||||||||
Noncash compensation expense | — | 331 | — | 3,197 | 3,528 | ||||||||||||||
Acquisition of additional TEP common units from TD | — | (62,223 | ) | — | (189,520 | ) | (251,743 | ) | |||||||||||
Issuance of Tallgrass Equity units | — | — | — | 644,782 | 644,782 | ||||||||||||||
Acquisition of 25.01% membership interest in Rockies Express | — | 34,116 | — | 74,421 | 108,537 | ||||||||||||||
Acquisition of additional 2% membership interest in Pony Express | — | (5,268 | ) | — | (44,732 | ) | (50,000 | ) | |||||||||||
Consolidation of Deeprock North | — | — | — | 31,843 | 31,843 | ||||||||||||||
Contributions from noncontrolling interest | — | — | — | 183 | 183 | ||||||||||||||
Distributions to noncontrolling interest | — | — | — | (198,837 | ) | (198,837 | ) | ||||||||||||
Issuance of TEP common units to the public, net of offering costs | — | (27 | ) | — | (221 | ) | (248 | ) | |||||||||||
TEP LTIP units tendered by employees to satisfy tax withholding obligations | — | (190 | ) | — | (1,531 | ) | (1,721 | ) | |||||||||||
Conversion of Class B shares to Class A shares | — | (13,402 | ) | — | 13,402 | — | |||||||||||||
Deferred tax asset | — | 7,664 | — | — | 7,664 | ||||||||||||||
Acquisition of additional TEP common units | — | (351,431 | ) | — | (1,762,327 | ) | (2,113,758 | ) | |||||||||||
Issuance of Class A shares | — | 2,113,758 | — | — | 2,113,758 | ||||||||||||||
Balance at June 30, 2018 | $ | — | $ | 1,744,665 | $ | — | $ | 488,985 | $ | 2,233,650 | |||||||||
Predecessor Equity | Partners' Capital | Noncontrolling Interests | Total Equity | ||||||||||||||||
Class A Shares | Class B Shares | ||||||||||||||||||
(in thousands) | |||||||||||||||||||
Balance at January 1, 2017 | $ | 82,295 | $ | 250,967 | $ | — | $ | 1,596,152 | $ | 1,929,414 | |||||||||
Acquisition of Terminals and NatGas | (82,295 | ) | (21,314 | ) | — | (36,391 | ) | (140,000 | ) | ||||||||||
Net income | — | 20,782 | — | 125,623 | 146,405 | ||||||||||||||
Issuance of TEP common units to the public, net of offering costs | — | 11,387 | — | 101,375 | 112,762 | ||||||||||||||
Dividends paid to Class A shareholders | — | (32,813 | ) | — | — | (32,813 | ) | ||||||||||||
Noncash compensation expense | — | 763 | — | 3,647 | 4,410 | ||||||||||||||
TEP LTIP units tendered by employees to satisfy tax withholding obligations | — | (1,250 | ) | — | (11,023 | ) | (12,273 | ) | |||||||||||
Partial exercise of call option | — | (12,052 | ) | — | (72,890 | ) | (84,942 | ) | |||||||||||
Repurchase of TEP common units from TD | — | (3,618 | ) | — | (31,717 | ) | (35,335 | ) | |||||||||||
Acquisition of additional 24.99% membership interest in Rockies Express | — | 23,522 | — | 40,159 | 63,681 | ||||||||||||||
Contributions from TD | — | 850 | — | 1,451 | 2,301 | ||||||||||||||
Contributions from noncontrolling interest | — | — | — | 867 | 867 | ||||||||||||||
Distributions to noncontrolling interest | — | — | — | (145,109 | ) | (145,109 | ) | ||||||||||||
Balance at June 30, 2017 | $ | — | $ | 237,224 | $ | — | $ | 1,572,144 | $ | 1,809,368 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Cash Flows from Operating Activities: | |||||||
Net income | $ | 224,014 | $ | 146,405 | |||
Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||
Depreciation and amortization | 56,955 | 47,939 | |||||
Equity in earnings of unconsolidated investments | (146,589 | ) | (63,479 | ) | |||
Distributions from unconsolidated investments | 145,581 | 63,374 | |||||
Deferred income tax expense | 23,501 | 12,340 | |||||
Other noncash items, net | (6,504 | ) | (1,079 | ) | |||
Changes in components of working capital: | |||||||
Accounts receivable and other | (93,157 | ) | 2,067 | ||||
Accounts payable and accrued liabilities | 106,592 | 3,150 | |||||
Deferred revenue | 10,711 | 24,593 | |||||
Other current assets and liabilities | 7,631 | 2,241 | |||||
Other operating, net | 2,525 | 419 | |||||
Net Cash Provided by Operating Activities | 331,260 | 237,970 | |||||
Cash Flows from Investing Activities: | |||||||
Capital expenditures | (176,275 | ) | (53,995 | ) | |||
Acquisition of BNN North Dakota, net of cash acquired | (95,000 | ) | — | ||||
Sale of Tallgrass Crude Gathering | 50,046 | — | |||||
Distributions from unconsolidated investments in excess of cumulative earnings | 36,502 | 27,308 | |||||
Acquisition of Pawnee membership interest | (30,600 | ) | — | ||||
Contributions to unconsolidated investments | (22,513 | ) | (17,835 | ) | |||
Acquisition of 38% membership interest in Deeprock North | (19,500 | ) | — | ||||
Acquisition of Rockies Express membership interest | — | (400,000 | ) | ||||
Acquisition of Terminals and NatGas | — | (140,000 | ) | ||||
Acquisition of Douglas Gathering System | — | (128,526 | ) | ||||
Other investing, net | (12,521 | ) | (13,986 | ) | |||
Net Cash Used in Investing Activities | (269,861 | ) | (727,034 | ) | |||
Cash Flows from Financing Activities: | |||||||
Borrowings under revolving credit facilities, net | 242,000 | 332,000 | |||||
Distributions to noncontrolling interests | (198,837 | ) | (145,109 | ) | |||
Acquisition of Pony Express membership interest | (50,000 | ) | — | ||||
Dividends paid to Class A shareholders | (49,662 | ) | (32,813 | ) | |||
Proceeds from public offering of TEP common units, net of offering costs | — | 112,762 | |||||
Proceeds from issuance of long-term debt | — | 350,000 | |||||
Partial exercise of call option | — | (72,381 | ) | ||||
Repurchase of TEP common units from TD | — | (35,335 | ) | ||||
Other financing, net | (2,462 | ) | (21,646 | ) | |||
Net Cash (Used in) Provided by Financing Activities | (58,961 | ) | 487,478 | ||||
Net Change in Cash and Cash Equivalents | 2,438 | (1,586 | ) | ||||
Cash and Cash Equivalents, beginning of period | 2,593 | 2,459 | |||||
Cash and Cash Equivalents, end of period | $ | 5,031 | $ | 873 |
Schedule of Noncash Investing and Financing Activities: | |||||||
Acquisition of additional TEP common units | $ | (2,365,501 | ) | $ | — | ||
Issuance of Class A shares | $ | 2,113,758 | $ | — | |||
Issuance of Tallgrass Equity units | $ | 644,782 | $ | — | |||
Acquisition of Rockies Express membership interest | $ | (393,039 | ) | $ | — | ||
Contribution of 38% membership interest in Deeprock North to Deeprock Development | $ | (19,500 | ) | $ | — | ||
Issuance of noncontrolling interests in Deeprock Development in exchange for 62% membership interest in Deeprock North | $ | (31,843 | ) | $ | — | ||
Increase in accrual for payment of property, plant and equipment | $ | 5,276 | $ | — |
• | Natural Gas Transportation—the ownership and operation of FERC-regulated interstate natural gas pipelines and an integrated natural gas storage facility; |
• | Crude Oil Transportation—the ownership and operation of a FERC-regulated crude oil pipeline system; and |
• | Gathering, Processing & Terminalling—the ownership and operation of natural gas gathering and processing facilities; crude oil storage and terminalling facilities; the provision of water business services primarily to the oil and gas exploration and production industry; the transportation of NGLs; and the marketing of crude oil and NGLs. |
• | Gathering & Processing. We have determined that a number of our gathering & processing contracts at TMID do not represent customer arrangements under ASC 606. Instead, arrangements deemed to represent wellhead purchases of raw gas will be accounted for as supply arrangements pursuant to ASC 705. As a result, gathering & processing fees previously recognized in revenue will be reported as a reduction to cost of sales under ASC 606. |
• | Pipeline Loss Allowance. We have determined that pipeline loss allowance, or PLA, collected under certain crude oil transportation arrangements is a component of the transaction price where the PLA both significantly exceeds actual losses and was negotiated with the intent of providing a revenue stream to TEP. Under ASC 606, PLA barrels retained from customers will be subject to the guidance for noncash consideration and recognized in revenue at their contract inception fair value. |
• | Management has formed an implementation team that meets to discuss implementation challenges, technical interpretations, industry-specific treatment of certain contract types, and project status. |
• | Management is in the process of gathering data and reviewing contracts in order to identify all impacted contracts. |
• | Management is evaluating the potential information technology and internal control changes that will be required for adoption based on the findings from its contract review process. |
• | Management plans to provide internal training and awareness related to the revised guidance to the key stakeholders throughout its organization. |
• | An entity may elect to not assess whether existing or expired land easements that were not previously accounted for as leases are or contain a lease under ASC 842. |
Basis Difference | Amortization Period | ||||
(in thousands) | |||||
Long-term debt | $ | 48,571 | 2 - 25 years | ||
Property, plant and equipment | (1,166,141 | ) | 35 years | ||
Total basis difference | $ | (1,117,570 | ) |
Accounts receivable | $ | 2,457 | ||
Inventory | 67 | |||
Property, plant and equipment | 48,900 | |||
Intangible asset | 46,800 | (1) | ||
Accounts payable and accrued liabilities | (3,224 | ) | ||
Net identifiable assets acquired (excluding cash) | $ | 95,000 |
(1) | The $46.8 million intangible asset acquired represents three major customer relationships. This intangible asset is amortized on a straight-line basis over a period of 8 - 14 years, the remaining terms of the underlying contracts at the time of acquisition. |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Revenue | $ | 373,111 | $ | 309,893 | |||
Net income attributable to TGE | $ | 17,824 | $ | 20,606 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Processing and other revenues (1) | $ | 1,869 | $ | 1,692 | $ | 3,765 | $ | 3,324 | |||||||
Cost of transportation services (2) | $ | — | $ | 4,907 | $ | — | $ | 9,414 | |||||||
Charges to TGE: (3) | |||||||||||||||
Property, plant and equipment, net | $ | — | $ | 510 | $ | — | $ | 803 | |||||||
Operations and maintenance | $ | — | $ | 7,430 | $ | — | $ | 13,707 | |||||||
General and administrative | $ | — | $ | 11,095 | $ | — | $ | 20,668 |
(1) | Reflects the fee that NatGas receives as the operator of the Rockies Express Pipeline. |
(2) | Reflects rent expense for the crude oil storage at the Deeprock Terminal prior to our consolidation of Deeprock Development during the third quarter of 2017. |
(3) | Charges to TGE, inclusive of Tallgrass Equity and TEP, include indirectly charged wages and salaries, other compensation and benefits, and shared services for periods prior to January 1, 2018. Effective January 1, 2018, these costs are incurred by TEP directly and, in the case of certain employee compensation and benefits, paid on TEP's behalf by its affiliate, Tallgrass Management, LLC, pursuant to the TEP Omnibus Agreement. |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Receivable from related parties: | |||||||
Rockies Express Pipeline LLC | $ | 2,686 | $ | 1,340 | |||
Iron Horse Pipeline, LLC | 120 | — | |||||
Pawnee Terminal, LLC | 117 | — | |||||
Total receivable from related parties | $ | 2,923 | $ | 1,340 | |||
Accounts payable to related parties: | |||||||
Tallgrass Operations, LLC (1) | $ | — | $ | 5,342 | |||
Total accounts payable to related parties | $ | — | $ | 5,342 |
(1) | Reflects accounts payable for charges to TGE, inclusive of Tallgrass Equity and TEP, including indirectly charged wages and salaries, other compensation and benefits, and shared services prior to January 1, 2018 as discussed above. |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Affiliate gas imbalance receivables | $ | 172 | $ | 18 | |||
Affiliate gas imbalance payables | $ | — | $ | 442 |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Crude oil | $ | 11,501 | $ | 12,792 | |||
Materials and supplies | 6,310 | 5,891 | |||||
Natural gas liquids | 471 | 942 | |||||
Gas in underground storage | 2,781 | 1,984 | |||||
Total inventory | $ | 21,063 | $ | 21,609 |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Crude oil pipelines | $ | 1,287,894 | $ | 1,220,379 | |||
Gathering, processing and terminalling assets (1) | 774,856 | 675,092 | |||||
Natural gas pipelines | 592,439 | 581,400 | |||||
General and other | 124,627 | 98,680 | |||||
Construction work in progress | 154,492 | 97,978 | |||||
Accumulated depreciation and amortization | (339,245 | ) | (279,192 | ) | |||
Total property, plant and equipment, net | $ | 2,595,063 | $ | 2,394,337 |
(1) | Includes approximately $46.2 million and $40.1 million of assets associated with the acquisitions of Deeprock North and BNN North Dakota, respectively, in January 2018. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Revenue | $ | 227,615 | $ | 207,149 | $ | 457,673 | $ | 408,487 | |||||||
Operating income | $ | 130,034 | $ | 112,703 | $ | 258,712 | $ | 220,072 | |||||||
Net income to Members | $ | 88,663 | $ | 70,945 | $ | 179,631 | $ | 137,195 |
Balance Sheet Location | June 30, 2018 | December 31, 2017 | |||||||
(in thousands) | |||||||||
Crude oil derivative contracts (1) | Current liabilities | $ | 1,143 | $ | 2,368 |
(1) | As of June 30, 2018, the fair value shown for crude oil derivative contracts represents the forward sale of 121,000 barrels which will settle throughout the third quarter of 2018. As of December 31, 2017, the fair value shown for crude oil derivative contracts represents the forward sale of 356,000 barrels of crude oil which settled in the first quarter of 2018. |
Location of gain (loss) recognized in income on derivatives | Amount of gain (loss) recognized in income on derivatives | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
(in thousands) | ||||||||||||||||||
Crude oil derivative contracts | Sales of natural gas, NGLs, and crude oil | $ | 2,935 | $ | 227 | $ | 7,230 | $ | 890 | |||||||||
Natural gas derivative contracts | Sales of natural gas, NGLs, and crude oil | $ | — | $ | (67 | ) | $ | — | $ | 106 | ||||||||
Call option derivative | Other income, net | $ | — | $ | — | $ | — | $ | 1,885 |
Liability Fair Value Measurements Using | |||||||||||||||
Total | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||
(in thousands) | |||||||||||||||
As of June 30, 2018: | |||||||||||||||
Crude oil derivative contracts | $ | 1,143 | $ | — | $ | 1,143 | $ | — | |||||||
As of December 31, 2017: | |||||||||||||||
Crude oil derivative contracts | $ | 2,368 | $ | — | $ | 2,368 | $ | — |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Tallgrass Equity revolving credit facility | $ | 125,000 | $ | 146,000 | |||
TEP revolving credit facility | 924,000 | 661,000 | |||||
TEP 5.50% senior notes due September 15, 2024 | 750,000 | 750,000 | |||||
TEP 5.50% senior notes due January 15, 2028 | 750,000 | 750,000 | |||||
Less: Deferred financing costs, net (1) | (17,000 | ) | (17,737 | ) | |||
Plus: Unamortized premium on 2028 Notes | 3,555 | 3,730 | |||||
Total long-term debt, net | $ | 2,535,555 | $ | 2,292,993 |
(1) | Deferred financing costs, net as presented above relate solely to the 2024 and 2028 Notes. Deferred financing costs associated with our revolving credit facilities are presented in noncurrent assets on our condensed consolidated balance sheets. |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Total capacity under the Tallgrass Equity revolving credit facility | $ | 150,000 | $ | 150,000 | |||
Less: Outstanding borrowings under the Tallgrass Equity revolving credit facility | (125,000 | ) | (146,000 | ) | |||
Available capacity under the Tallgrass Equity revolving credit facility | $ | 25,000 | $ | 4,000 |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Total capacity under the TEP revolving credit facility | $ | 1,750,000 | $ | 1,750,000 | |||
Less: Outstanding borrowings under the TEP revolving credit facility | (924,000 | ) | (661,000 | ) | |||
Less: Letters of credit issued under the TEP revolving credit facility | (94 | ) | (94 | ) | |||
Available capacity under the TEP revolving credit facility | $ | 825,906 | $ | 1,088,906 |
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 thousands) | |||||||||||||||||||
As of June 30, 2018: | |||||||||||||||||||
Revolving credit facilities | $ | — | $ | 1,049,000 | $ | — | $ | 1,049,000 | $ | 1,049,000 | |||||||||
2024 Notes | $ | — | $ | 764,783 | $ | — | $ | 764,783 | $ | 740,587 | |||||||||
2028 Notes | $ | — | $ | 741,053 | $ | — | $ | 741,053 | $ | 745,968 | |||||||||
As of December 31, 2017: | |||||||||||||||||||
Revolving credit facilities | $ | — | $ | 807,000 | $ | — | $ | 807,000 | $ | 807,000 | |||||||||
2024 Notes | $ | — | $ | 771,645 | $ | — | $ | 771,645 | $ | 739,824 | |||||||||
2028 Notes | $ | — | $ | 758,168 | $ | — | $ | 758,168 | $ | 746,169 |
Three Months Ended | Date Paid | Dividends to Class A Shareholders | Dividend per Class A Share | |||||||
(in thousands, except per share amounts) | ||||||||||
June 30, 2018 | August 14, 2018 (1) | $ | 77,052 | $ | 0.4975 | |||||
March 31, 2018 | May 15, 2018 | 28,316 | 0.4875 | |||||||
December 31, 2017 | February 14, 2018 | 21,346 | 0.3675 | |||||||
September 30, 2017 | November 14, 2017 | 20,617 | 0.3550 | |||||||
June 30, 2017 | August 14, 2017 | 19,891 | 0.3425 | |||||||
March 31, 2017 | May 15, 2017 | 16,697 | 0.2875 |
(1) | The dividend announced on July 9, 2018 for the second quarter of 2018 will be paid on August 14, 2018 to Class A shareholders of record at the close of business on July 31, 2018. |
Distributions | Distribution per Limited Partner Common Unit | |||||||||||||||||||||
Limited Partner Common Units | General Partner | |||||||||||||||||||||
Three Months Ended | Date Paid | Incentive Distribution Rights | General Partner Units | Total | ||||||||||||||||||
(in thousands, except per unit amounts) | ||||||||||||||||||||||
March 31, 2018 | May 15, 2018 | $ | 71,370 | $ | 39,816 | $ | 1,267 | $ | 112,453 | $ | 0.9750 | |||||||||||
December 31, 2017 | February 14, 2018 | 70,638 | 39,125 | 1,251 | 111,014 | 0.9650 | ||||||||||||||||
September 30, 2017 | November 14, 2017 | 69,174 | 37,744 | 1,219 | 108,137 | 0.9450 | ||||||||||||||||
June 30, 2017 | August 14, 2017 | 67,671 | 36,342 | 1,186 | 105,199 | 0.9250 | ||||||||||||||||
March 31, 2017 | May 15, 2017 | 60,486 | 29,840 | 1,040 | 91,366 | 0.8350 |
• | TGE was deemed to have made a noncash capital distribution of $198.0 million, which represents the excess purchase price over the $53.8 million carrying value of the 5,619,218 TEP common units acquired as of February 7, 2018; and |
• | TGE was deemed to have received a noncash capital contribution of $108.5 million, which represents the excess carrying value of the 25.01% membership interest in Rockies Express acquired as of February 7, 2018 over the fair value of the consideration paid. |
• | TEP received contributions from TD of $2.3 million primarily to indemnify TEP for costs associated with Trailblazer's Pipeline Integrity Management Program, as discussed in Note 14 – Legal and Environmental Matters. |
June 30, 2018 | ||||||||||||
As currently reported | Under previous guidance | Impact of ASC Topic 606 | ||||||||||
(in thousands) | ||||||||||||
Unconsolidated investments | $ | 1,475,056 | $ | 1,410,347 | $ | 64,709 | (1) |
Three Months Ended June 30, 2018 | ||||||||||||
As currently reported | Under previous guidance | Impact of ASC Topic 606 | ||||||||||
(in thousands) | ||||||||||||
Crude oil transportation services | $ | 101,166 | $ | 101,322 | $ | (156 | ) | (2) | ||||
Sales of natural gas, NGLs, and crude oil | $ | 37,250 | $ | 38,364 | $ | (1,114 | ) | (3) | ||||
Processing and other revenues | $ | 23,699 | $ | 24,691 | $ | (992 | ) | (1)(3) | ||||
Cost of sales | $ | 27,694 | $ | 29,753 | $ | (2,059 | ) | (2)(3) | ||||
Equity in earnings of unconsolidated investments | $ | 78,187 | $ | 66,623 | $ | 11,564 | (1) | |||||
Net income attributable to TGE | $ | 1,063 | $ | (718 | ) | $ | 1,781 | |||||
Basic net income per Class A share | $ | 0.02 | $ | (0.01 | ) | $ | 0.03 | |||||
Diluted net income per Class A share | $ | 0.02 | $ | (0.01 | ) | $ | 0.03 |
Six Months Ended June 30, 2018 | ||||||||||||
As currently reported | Under previous guidance | Impact of ASC Topic 606 | ||||||||||
(in thousands) | ||||||||||||
Crude oil transportation services | $ | 185,904 | $ | 185,788 | $ | 116 | (2) | |||||
Sales of natural gas, NGLs, and crude oil | $ | 75,395 | $ | 77,609 | $ | (2,214 | ) | (3) | ||||
Processing and other revenues | $ | 47,714 | $ | 50,216 | $ | (2,502 | ) | (1)(3) | ||||
Cost of sales | $ | 54,045 | $ | 58,598 | $ | (4,553 | ) | (2)(3) | ||||
Equity in earnings of unconsolidated investments | $ | 146,589 | $ | 124,746 | $ | 21,843 | (1) | |||||
Net income attributable to TGE | $ | 17,798 | $ | 14,335 | $ | 3,463 | ||||||
Basic net income per Class A share | $ | 0.30 | $ | 0.24 | $ | 0.06 | ||||||
Diluted net income per Class A share | $ | 0.30 | $ | 0.24 | $ | 0.06 |
(1) | Reflects the impact on our investment in Rockies Express and the management fee collected by NatGas of the cumulative effect adjustment at Rockies Express, which arose as a result of the allocation of the transaction price to a series of individual performance obligations in certain long-term transportation contracts with tiered-pricing arrangements. The adjustment increases the carrying amount of our investment in Rockies Express to reflect increased equity in earnings and establishes a receivable for the increased management fee revenue that would have been earned by NatGas. |
(2) | Reflects the impact to revenue and cost of sales to value PLA barrels collected under certain crude oil transportation arrangements at their contract inception fair value in revenue and record an associated lower of cost or net realizable value adjustment in cost of sales. |
(3) | Reflects the reclassification of certain gathering and processing fees collected under arrangements determined to be supply arrangements, rather than customer arrangements under ASC 606, to cost of sales and the reclassification of certain commodities retained as consideration for processing services to processing fee revenue. |
Three Months Ended June 30, 2018 | |||||||||||||||||||
Natural Gas Transportation segment | Crude Oil Transportation segment | Gathering, Processing, & Terminalling segment | Corporate and Other | Total Revenue | |||||||||||||||
(in thousands) | |||||||||||||||||||
Crude oil transportation - committed shipper revenue | $ | — | $ | 101,242 | $ | — | $ | — | $ | 101,242 | |||||||||
Natural gas transportation - firm service | 31,762 | — | — | (1,398 | ) | 30,364 | |||||||||||||
Water business services | — | — | 12,205 | — | 12,205 | ||||||||||||||
Natural gas gathering & processing fees | — | — | 5,754 | — | 5,754 | ||||||||||||||
All other (1) | 3,059 | 9,484 | 6,394 | (13,108 | ) | 5,829 | |||||||||||||
Total service revenue | 34,821 | 110,726 | 24,353 | (14,506 | ) | 155,394 | |||||||||||||
Natural gas liquids sales | — | — | 27,477 | — | 27,477 | ||||||||||||||
Natural gas sales | 108 | — | 4,543 | — | 4,651 | ||||||||||||||
Crude oil sales | — | 2,066 | 121 | — | 2,187 | ||||||||||||||
Total commodity sales revenue | 108 | 2,066 | 32,141 | — | 34,315 | ||||||||||||||
Total revenue from contracts with customers | 34,929 | 112,792 | 56,494 | (14,506 | ) | 189,709 | |||||||||||||
Other revenue (2) | — | — | 7,118 | (3,238 | ) | 3,880 | |||||||||||||
Total revenue (3) | $ | 34,929 | $ | 112,792 | $ | 63,612 | $ | (17,744 | ) | $ | 193,589 |
Six Months Ended June 30, 2018 | |||||||||||||||||||
Natural Gas Transportation segment | Crude Oil Transportation segment | Gathering, Processing, & Terminalling segment | Corporate and Other | Total Revenue | |||||||||||||||
(in thousands) | |||||||||||||||||||
Crude oil transportation - committed shipper revenue | $ | — | $ | 185,980 | $ | — | $ | — | $ | 185,980 | |||||||||
Natural gas transportation - firm service | 65,096 | — | — | (3,281 | ) | 61,815 | |||||||||||||
Water business services | — | — | 25,409 | — | 25,409 | ||||||||||||||
Natural gas gathering & processing fees | — | — | 10,798 | — | 10,798 | ||||||||||||||
All other (1) | 5,689 | 12,803 | 12,100 | (19,196 | ) | 11,396 | |||||||||||||
Total service revenue | 70,785 | 198,783 | 48,307 | (22,477 | ) | 295,398 | |||||||||||||
Natural gas liquids sales | — | — | 51,086 | — | 51,086 | ||||||||||||||
Natural gas sales | 346 | — | 12,390 | — | 12,736 | ||||||||||||||
Crude oil sales | — | 3,975 | 368 | — | 4,343 | ||||||||||||||
Total commodity sales revenue | 346 | 3,975 | 63,844 | — | 68,165 | ||||||||||||||
Total revenue from contracts with customers | 71,131 | 202,758 | 112,151 | (22,477 | ) | 363,563 | |||||||||||||
Other revenue (2) | — | — | 15,299 | (6,179 | ) | 9,120 | |||||||||||||
Total revenue (3) | $ | 71,131 | $ | 202,758 | $ | 127,450 | $ | (28,656 | ) | $ | 372,683 |
(1) | Includes revenue from crude oil terminal services, interruptible natural gas transportation and storage, and natural gas park and loan service. |
(2) | Includes lease and derivative revenue not subject to ASC 606. |
(3) | Excludes $227.6 million and $457.7 million of revenue recognized at Rockies Express for the three and six months ended June 30, 2018, respectively. See Note 7 – Investments in Unconsolidated Affiliates for additional information about our investment in Rockies Express. |
Year | Estimated Revenue | |||
2018 | $ | 258,435 | ||
2019 | 490,392 | |||
2020 | 319,533 | |||
2021 | 140,627 | |||
2022 | 132,015 | |||
Thereafter | 276,818 | |||
Total | $ | 1,617,820 |
June 30, 2018 | January 1, 2018 | ||||||
(in thousands) | |||||||
Accounts receivable from contracts with customers | $ | 64,890 | $ | 61,888 | |||
Other accounts receivable | 149,083 | 56,727 | |||||
Accounts receivable, net | $ | 213,973 | $ | 118,615 | |||
Deferred revenue from contracts with customers (1) | $ | 99,991 | $ | 88,471 |
(1) | Revenue recognized during the three and six months ended June 30, 2018 that was included in the deferred revenue balance at the beginning of the period was $4.2 million and $7.3 million, respectively. This revenue primarily represented the utilization of shipper deficiencies at Pony Express. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands, except per unit amounts) | |||||||||||||||
Basic Net Income per Class A Share | |||||||||||||||
Net income attributable to TGE | $ | 1,063 | $ | 8,753 | $ | 17,798 | $ | 20,782 | |||||||
Basic weighted average Class A Shares outstanding | 59,397 | 58,075 | 58,745 | 58,075 | |||||||||||
Basic net income per Class A share | $ | 0.02 | $ | 0.15 | $ | 0.30 | $ | 0.36 | |||||||
Diluted Net Income per Class A Share | |||||||||||||||
Net income attributable to TGE | $ | 1,063 | $ | 8,753 | $ | 17,798 | $ | 20,782 | |||||||
Incremental net income attributable to TGE including the effect of the assumed issuance of Equity Participation Shares | — | 38 | — | 64 | |||||||||||
Net income attributable to TGE including incremental net income from assumed issuance of Equity Participation Shares | $ | 1,063 | $ | 8,791 | $ | 17,798 | $ | 20,846 | |||||||
Basic weighted average Class A Shares outstanding | 59,397 | 58,075 | 58,745 | 58,075 | |||||||||||
Equity Participation Shares equivalent shares | — | 117 | — | 112 | |||||||||||
Diluted weighted average Class A Shares outstanding | 59,397 | 58,192 | 58,745 | 58,187 | |||||||||||
Diluted net income per Class A Share | $ | 0.02 | $ | 0.15 | $ | 0.30 | $ | 0.36 |
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | ||||||||||||||||||||||
Revenue: | Total Revenue | Inter- Segment | External Revenue | Total Revenue | Inter- Segment | External Revenue | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Natural Gas Transportation | $ | 34,929 | $ | (1,462 | ) | $ | 33,467 | $ | 33,110 | $ | (1,442 | ) | $ | 31,668 | |||||||||
Crude Oil Transportation | 112,792 | (9,425 | ) | 103,367 | 95,745 | — | 95,745 | ||||||||||||||||
Gathering, Processing & Terminalling | 63,612 | (6,857 | ) | 56,755 | 36,372 | (2,922 | ) | 33,450 | |||||||||||||||
Corporate and Other | — | — | — | — | — | — | |||||||||||||||||
Total revenue | $ | 211,333 | $ | (17,744 | ) | $ | 193,589 | $ | 165,227 | $ | (4,364 | ) | $ | 160,863 |
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||||||||||||||
Revenue: | Total Revenue | Inter- Segment | External Revenue | Total Revenue | Inter- Segment | External Revenue | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Natural Gas Transportation | $ | 71,131 | $ | (3,320 | ) | $ | 67,811 | $ | 69,538 | $ | (2,887 | ) | $ | 66,651 | |||||||||
Crude Oil Transportation | 202,758 | (12,744 | ) | 190,014 | 180,739 | — | 180,739 | ||||||||||||||||
Gathering, Processing & Terminalling | 127,450 | (12,592 | ) | 114,858 | 63,679 | (5,806 | ) | 57,873 | |||||||||||||||
Corporate and Other | — | — | — | — | — | — | |||||||||||||||||
Total revenue | $ | 401,339 | $ | (28,656 | ) | $ | 372,683 | $ | 313,956 | $ | (8,693 | ) | $ | 305,263 |
Three Months Ended June 30, 2018 | Three Months Ended June 30, 2017 | ||||||||||||||||||||||
Tallgrass Equity Adjusted EBITDA: | Total Adjusted EBITDA | Inter- Segment | External Adjusted EBITDA | Total Adjusted EBITDA | Inter- Segment | External Adjusted EBITDA | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Natural Gas Transportation | $ | 61,084 | $ | (745 | ) | $ | 60,339 | $ | 39,356 | $ | (409 | ) | $ | 38,947 | |||||||||
Crude Oil Transportation | 28,505 | (235 | ) | 28,270 | 33,791 | 1,210 | 35,001 | ||||||||||||||||
Gathering, Processing & Terminalling | 6,167 | 980 | 7,147 | 6,683 | (801 | ) | 5,882 | ||||||||||||||||
Corporate and Other | (6,233 | ) | — | (6,233 | ) | (8,775 | ) | — | (8,775 | ) | |||||||||||||
Reconciliation to Net Income: | |||||||||||||||||||||||
Add: | |||||||||||||||||||||||
Equity in earnings of unconsolidated investments (1) | 44,554 | 12,122 | |||||||||||||||||||||
Less: | |||||||||||||||||||||||
Interest expense, net (1) | (12,403 | ) | (7,010 | ) | |||||||||||||||||||
Depreciation and amortization expense (1) | (9,942 | ) | (6,397 | ) | |||||||||||||||||||
Distributions from unconsolidated investments (1) | (53,808 | ) | (16,981 | ) | |||||||||||||||||||
Non-cash loss related to derivative instruments (1) | (559 | ) | (24 | ) | |||||||||||||||||||
Non-cash compensation expense (1) | (1,009 | ) | (483 | ) | |||||||||||||||||||
Loss on disposal of assets (1) | (103 | ) | (37 | ) | |||||||||||||||||||
Deficiency payments, net (1) | 43 | (2,347 | ) | ||||||||||||||||||||
Deferred income tax expense | (16,809 | ) | (9,676 | ) | |||||||||||||||||||
Net income attributable to Exchange Right Holders | (38,424 | ) | (31,469 | ) | |||||||||||||||||||
Net income attributable to TGE | $ | 1,063 | $ | 8,753 |
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||||||||||||||
Tallgrass Equity Adjusted EBITDA: | Total Adjusted EBITDA | Inter- Segment | External Adjusted EBITDA | Total Adjusted EBITDA | Inter- Segment | External Adjusted EBITDA | |||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Natural Gas Transportation | $ | 131,736 | $ | (1,480 | ) | $ | 130,256 | $ | 64,871 | $ | (819 | ) | $ | 64,052 | |||||||||
Crude Oil Transportation | 63,376 | 1,151 | 64,527 | 68,359 | 2,410 | 70,769 | |||||||||||||||||
Gathering, Processing & Terminalling | 16,323 | 329 | 16,652 | 11,834 | (1,591 | ) | 10,243 | ||||||||||||||||
Corporate and Other | (18,502 | ) | — | (18,502 | ) | (15,741 | ) | — | (15,741 | ) | |||||||||||||
Reconciliation to Net Income: | |||||||||||||||||||||||
Add: | |||||||||||||||||||||||
Equity in earnings of unconsolidated investments (1) | 76,967 | 18,012 | |||||||||||||||||||||
Gain on disposal of assets (1) | 3,109 | 376 | |||||||||||||||||||||
Non-cash gain related to derivative instruments (1) | 313 | 664 | |||||||||||||||||||||
Less: | |||||||||||||||||||||||
Interest expense, net (1) | (23,189 | ) | (12,510 | ) | |||||||||||||||||||
Depreciation and amortization expense (1) | (18,438 | ) | (12,607 | ) | |||||||||||||||||||
Distributions from unconsolidated investments (1) | (97,299 | ) | (25,730 | ) | |||||||||||||||||||
Non-cash compensation expense (1) | (1,971 | ) | (950 | ) | |||||||||||||||||||
Deficiency payments, net (1) | (3,737 | ) | (6,903 | ) | |||||||||||||||||||
Deferred income tax expense | (23,501 | ) | (12,340 | ) | |||||||||||||||||||
Net income attributable to Exchange Right Holders | (87,389 | ) | (56,553 | ) | |||||||||||||||||||
Net income attributable to TGE | $ | 17,798 | $ | 20,782 |
(1) | Net of noncontrolling interest associated with less than wholly-owned subsidiaries of Tallgrass Equity. |
Six Months Ended June 30, | |||||||
Capital Expenditures: | 2018 | 2017 | |||||
(in thousands) | |||||||
Natural Gas Transportation | $ | 72,882 | $ | 8,368 | |||
Crude Oil Transportation | 24,945 | 18,189 | |||||
Gathering, Processing & Terminalling | 76,342 | 27,438 | |||||
Corporate and Other | 2,106 | — | |||||
Total capital expenditures | $ | 176,275 | $ | 53,995 |
Assets: | June 30, 2018 | December 31, 2017 | |||||
(in thousands) | |||||||
Natural Gas Transportation | $ | 2,187,783 | $ | 1,606,666 | |||
Crude Oil Transportation | 1,419,144 | 1,407,758 | |||||
Gathering, Processing & Terminalling | 1,239,021 | 943,340 | |||||
Corporate and Other | 332,248 | 334,249 | |||||
Total assets | $ | 5,178,196 | $ | 4,292,013 |
• | our ability to pay dividends to our Class A shareholders; |
• | our expected receipt of, and amounts of, distributions from Tallgrass Equity; |
• | our ability to complete and integrate acquisitions, including integrating the acquisitions discussed in Note 3 – Acquisitions and Dispositions; |
• | the demand for our services, including crude oil transportation, storage, and terminalling services; natural gas transportation, storage, gathering and processing services; and water business services, as well as our ability to successfully contract or re-contract with our customers; |
• | large or multiple customer defaults, including defaults resulting from actual or potential insolvencies; |
• | our ability to successfully implement our business plan; |
• | changes in general economic conditions; |
• | competitive conditions in our industry; |
• | the effects of existing and future laws and governmental regulations; |
• | actions taken by governmental regulators of our assets, including the FERC; |
• | actions taken by third-party operators, processors and transporters; |
• | our ability to complete internal growth projects on time and on budget; |
• | the price and availability of debt and equity financing; |
• | the level of production of crude oil, natural gas and other hydrocarbons and the resultant market prices of crude oil, natural gas, natural gas liquids, and other hydrocarbons; |
• | the availability and price of natural gas and crude oil, and fuels derived from both, to the consumer compared to the price of alternative and competing fuels; |
• | competition from the same and alternative energy sources; |
• | energy efficiency and technology trends; |
• | operating hazards and other risks incidental to transporting, storing, and terminalling crude oil; transporting, storing, gathering and processing natural gas; and transporting, gathering and disposing of water produced in connection with hydrocarbon exploration and production activities; |
• | environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; |
• | natural disasters, weather-related delays, casualty losses and other matters beyond our control; |
• | interest rates; |
• | labor relations; |
• | changes in tax laws, regulations and status; |
• | the effects of future litigation; and |
• | certain factors discussed elsewhere in this Quarterly Report. |
• | Natural Gas Transportation—the ownership and operation of FERC-regulated interstate natural gas pipelines and an integrated natural gas storage facility; |
• | Crude Oil Transportation—the ownership and operation of a FERC-regulated crude oil pipeline system; and |
• | Gathering, Processing & Terminalling—the ownership and operation of natural gas gathering and processing facilities; crude oil storage and terminalling facilities; the provision of water business services primarily to the oil and gas exploration and production industry; the transportation of NGLs; and the marketing of crude oil and NGLs. |
• | our operating performance as compared to other publicly traded midstream infrastructure companies, 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 dividends to our shareholders; |
• | 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. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Reconciliation of Tallgrass Equity Adjusted EBITDA to Net Income | |||||||||||||||
Net income attributable to TGE | $ | 1,063 | $ | 8,753 | $ | 17,798 | $ | 20,782 | |||||||
Add: | |||||||||||||||
Interest expense, net (1) | 12,403 | 7,010 | 23,189 | 12,510 | |||||||||||
Depreciation and amortization expense (1) | 9,942 | 6,397 | 18,438 | 12,607 | |||||||||||
Distributions from unconsolidated investments (1) | 53,808 | 16,981 | 97,299 | 25,730 | |||||||||||
Deficiency payments, net (1) | (43 | ) | 2,347 | 3,737 | 6,903 | ||||||||||
Non-cash compensation expense (1)(2) | 1,009 | 483 | 1,971 | 950 | |||||||||||
Deferred income tax expense | 16,809 | 9,676 | 23,501 | 12,340 | |||||||||||
Net income attributable to Exchange Right Holders | 38,424 | 31,469 | 87,389 | 56,553 | |||||||||||
Less: | |||||||||||||||
Equity in earnings of unconsolidated investments (1) | (44,554 | ) | (12,122 | ) | (76,967 | ) | (18,012 | ) | |||||||
Loss (gain) on disposal of assets (1) | 103 | 37 | (3,109 | ) | (376 | ) | |||||||||
Non-cash loss (gain) related to derivative instruments (1) | 559 | 24 | (313 | ) | (664 | ) | |||||||||
Gain on remeasurement of unconsolidated investment (1) | — | — | — | — | |||||||||||
Tallgrass Equity Adjusted EBITDA | $ | 89,523 | $ | 71,055 | $ | 192,933 | $ | 129,323 | |||||||
Reconciliation of Tallgrass Equity Adjusted EBITDA and Cash Available for Dividends to Net Cash Provided by Operating Activities | |||||||||||||||
Net cash provided by operating activities | $ | 179,660 | $ | 135,804 | $ | 331,260 | $ | 237,970 | |||||||
Add: | |||||||||||||||
Interest expense, net (1) | 12,403 | 7,010 | 23,189 | 12,510 | |||||||||||
Other, including changes in operating working capital (1) | (102,540 | ) | (71,759 | ) | (161,516 | ) | (121,157 | ) | |||||||
Tallgrass Equity Adjusted EBITDA | $ | 89,523 | $ | 71,055 | $ | 192,933 | $ | 129,323 | |||||||
Less: | |||||||||||||||
Cash interest cost (1) | (11,899 | ) | (6,579 | ) | (22,181 | ) | (11,642 | ) | |||||||
Maintenance capital expenditures, net (1) | (2,745 | ) | (1,133 | ) | (3,771 | ) | (1,150 | ) | |||||||
Tallgrass Equity Cash Available for Dividends | $ | 74,879 | $ | 63,343 | $ | 166,981 | $ | 116,531 |
(1) | Net of noncontrolling interest associated with less than wholly-owned subsidiaries of Tallgrass Equity. |
(2) | Represents TGE's portion of non-cash compensation expense related to Equity Participation Shares and TEP's Equity Participation Units, excluding amounts allocated to TD prior to the merger of TD into Tallgrass Development Holdings, LLC, a wholly-owned subsidiary of Tallgrass Equity, on February 7, 2018. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Reconciliation of Tallgrass Equity Adjusted EBITDA to Operating Income in the Natural Gas Transportation Segment (1) | |||||||||||||||
Operating income | $ | 16,882 | $ | 14,726 | $ | 36,266 | $ | 32,894 | |||||||
Add: | |||||||||||||||
Depreciation and amortization expense (2) | 1,767 | 1,359 | 3,338 | 2,718 | |||||||||||
Distributions from unconsolidated investment (2) | 52,913 | 16,818 | 96,404 | 25,369 | |||||||||||
Other, net (2) | 471 | 282 | 1,047 | 352 | |||||||||||
Less: | |||||||||||||||
Adjusted EBITDA attributable to noncontrolling interests | (10,949 | ) | 6,171 | (5,319 | ) | 3,571 | |||||||||
Non-cash gain related to derivative instruments (2) | — | — | — | (33 | ) | ||||||||||
Tallgrass Equity Segment Adjusted EBITDA | $ | 61,084 | $ | 39,356 | $ | 131,736 | $ | 64,871 | |||||||
Reconciliation of Tallgrass Equity Adjusted EBITDA to Operating Income in the Crude Oil Transportation Segment (1) | |||||||||||||||
Operating income | $ | 65,714 | $ | 50,259 | $ | 112,241 | $ | 93,984 | |||||||
Add: | |||||||||||||||
Depreciation and amortization expense (2) | 4,953 | 3,790 | 9,301 | 7,561 | |||||||||||
Deficiency payments, net (2) | (393 | ) | 1,987 | 2,248 | 5,866 | ||||||||||
Less: | |||||||||||||||
Adjusted EBITDA attributable to noncontrolling interests | (41,769 | ) | (22,250 | ) | (60,414 | ) | (38,872 | ) | |||||||
Non-cash loss (gain) related to derivative instruments (2) | — | 5 | — | (180 | ) | ||||||||||
Tallgrass Equity Segment Adjusted EBITDA | $ | 28,505 | $ | 33,791 | $ | 63,376 | $ | 68,359 | |||||||
Reconciliation of Tallgrass Equity Adjusted EBITDA to Operating Income in the Gathering, Processing & Terminalling Segment (1) | |||||||||||||||
Operating income | $ | 5,722 | $ | 6,777 | $ | 29,027 | $ | 11,883 | |||||||
Add: | |||||||||||||||
Depreciation and amortization expense (2) | 2,794 | 1,248 | 5,148 | 2,328 | |||||||||||
Non-cash loss (gain) related to derivative instruments (2) | 559 | 19 | (313 | ) | 79 | ||||||||||
Distributions from unconsolidated investments (2) | 895 | 163 | 895 | 361 | |||||||||||
Deficiency payments, net (2) | 209 | 360 | 1,223 | 1,037 | |||||||||||
Other, net (2) | — | 143 | — | 143 | |||||||||||
Less: | |||||||||||||||
Loss (gain) on disposal of assets (2) | 103 | 37 | (3,109 | ) | (376 | ) | |||||||||
Adjusted EBITDA attributable to noncontrolling interests | (4,115 | ) | (2,064 | ) | (16,548 | ) | (3,621 | ) | |||||||
Tallgrass Equity Segment Adjusted EBITDA | $ | 6,167 | $ | 6,683 | $ | 16,323 | $ | 11,834 | |||||||
Total Tallgrass Equity Segment Adjusted EBITDA | $ | 95,756 | $ | 79,830 | $ | 211,435 | $ | 145,064 | |||||||
Corporate general and administrative costs | (6,233 | ) | (8,775 | ) | (18,502 | ) | (15,741 | ) | |||||||
Total Tallgrass Equity Adjusted EBITDA | $ | 89,523 | $ | 71,055 | $ | 192,933 | $ | 129,323 |
(1) | Segment results as presented represent total operating income and Adjusted EBITDA, including intersegment activity, for the Natural Gas Transportation, Crude Oil Transportation, and Gathering, Processing & Terminalling segments. For reconciliations to the consolidated financial data, see Note 15 – Reportable Segments to the accompanying condensed consolidated financial statements. |
(2) | Net of noncontrolling interest associated with less than wholly-owned subsidiaries of Tallgrass Equity. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Natural Gas Transportation Segment: | |||||||||||
Gas transportation average firm contracted volumes (MMcf/d) (1) | 1,563 | 1,495 | 1,704 | 1,603 | |||||||
Crude Oil Transportation Segment: | |||||||||||
Crude oil transportation average contracted capacity (Bbls/d) | 307,096 | 301,932 | 305,348 | 300,265 | |||||||
Crude oil transportation average throughput (Bbls/d) | 348,220 | 273,732 | 319,141 | 267,851 | |||||||
Gathering, Processing & Terminalling Segment: | |||||||||||
Natural gas processing inlet volumes (MMcf/d) | 119 | 105 | 118 | 104 | |||||||
Freshwater average volumes (Bbls/d) | 25,203 | 107,776 | 35,357 | 86,265 | |||||||
Produced water gathering and disposal average volumes (Bbls/d) | 91,984 | 16,561 | 88,695 | 13,161 |
(1) | Volumes transported under firm fee contracts, excluding Rockies Express. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues: | |||||||||||||||
Crude oil transportation services | $ | 101,166 | $ | 89,855 | $ | 185,904 | $ | 174,186 | |||||||
Natural gas transportation services | 31,474 | 29,429 | 63,670 | 61,114 | |||||||||||
Sales of natural gas, NGLs, and crude oil | 37,250 | 22,918 | 75,395 | 38,299 | |||||||||||
Processing and other revenues | 23,699 | 18,661 | 47,714 | 31,664 | |||||||||||
Total Revenues | 193,589 | 160,863 | 372,683 | 305,263 | |||||||||||
Operating Costs and Expenses: | |||||||||||||||
Cost of sales | 27,694 | 19,386 | 54,045 | 31,756 | |||||||||||
Cost of transportation services | 12,664 | 14,758 | 23,084 | 28,261 | |||||||||||
Operations and maintenance | 18,440 | 15,254 | 34,839 | 28,157 | |||||||||||
Depreciation and amortization | 27,690 | 22,091 | 53,813 | 43,494 | |||||||||||
General and administrative | 19,085 | 15,334 | 37,511 | 29,551 | |||||||||||
Taxes, other than income taxes | 8,462 | 6,912 | 17,341 | 15,138 | |||||||||||
Loss (gain) on disposal of assets | 279 | 184 | (9,138 | ) | (1,264 | ) | |||||||||
Total Operating Costs and Expenses | 114,314 | 93,919 | 211,495 | 175,093 | |||||||||||
Operating Income | 79,275 | 66,944 | 161,188 | 130,170 | |||||||||||
Other Income (Expense): | |||||||||||||||
Equity in earnings of unconsolidated investments | 78,187 | 42,741 | 146,589 | 63,479 | |||||||||||
Interest expense, net | (31,282 | ) | (21,114 | ) | (61,043 | ) | (37,131 | ) | |||||||
Other income, net | 330 | 272 | 781 | 2,227 | |||||||||||
Total Other Income (Expense) | 47,235 | 21,899 | 86,327 | 28,575 | |||||||||||
Net income before tax | 126,510 | 88,843 | 247,515 | 158,745 | |||||||||||
Deferred income tax expense | (16,809 | ) | (9,676 | ) | (23,501 | ) | (12,340 | ) | |||||||
Net income | 109,701 | 79,167 | 224,014 | 146,405 | |||||||||||
Net income attributable to noncontrolling interests | (108,638 | ) | (70,414 | ) | (206,216 | ) | (125,623 | ) | |||||||
Net income attributable to TGE | $ | 1,063 | $ | 8,753 | $ | 17,798 | $ | 20,782 |
Segment Financial Data - Natural Gas Transportation (1) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues: | |||||||||||||||
Natural gas transportation services | $ | 32,936 | $ | 30,871 | $ | 66,990 | $ | 64,001 | |||||||
Sales of natural gas, NGLs, and crude oil | 108 | 539 | 345 | 2,190 | |||||||||||
Processing and other revenues | 1,885 | 1,700 | 3,796 | 3,347 | |||||||||||
Total revenues | 34,929 | 33,110 | 71,131 | 69,538 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of sales | 88 | 521 | 431 | 1,591 | |||||||||||
Cost of transportation services | 822 | 482 | 954 | 1,242 | |||||||||||
Operations and maintenance | 7,324 | 7,910 | 13,487 | 14,388 | |||||||||||
Depreciation and amortization | 4,851 | 4,792 | 9,678 | 9,575 | |||||||||||
General and administrative | 3,957 | 3,560 | 7,891 | 7,354 | |||||||||||
Taxes, other than income taxes | 1,005 | 1,119 | 2,424 | 2,494 | |||||||||||
Total operating costs and expenses | 18,047 | 18,384 | 34,865 | 36,644 | |||||||||||
Operating income | $ | 16,882 | $ | 14,726 | $ | 36,266 | $ | 32,894 |
(1) | Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see Note 15 – Reportable Segments to the accompanying condensed consolidated financial statements. |
Segment Financial Data - Crude Oil Transportation (1) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues: | |||||||||||||||
Crude oil transportation services | $ | 110,591 | $ | 89,855 | $ | 198,648 | $ | 174,186 | |||||||
Sales of natural gas, NGLs, and crude oil | 2,066 | 5,890 | 3,975 | 6,553 | |||||||||||
Processing and other revenues | 135 | — | 135 | — | |||||||||||
Total revenues | 112,792 | 95,745 | 202,758 | 180,739 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of sales | 2,029 | 5,335 | 3,995 | 5,335 | |||||||||||
Cost of transportation services | 17,647 | 13,869 | 32,034 | 27,751 | |||||||||||
Operations and maintenance | 3,010 | 3,194 | 5,880 | 6,072 | |||||||||||
Depreciation and amortization | 13,593 | 13,088 | 26,959 | 26,103 | |||||||||||
General and administrative | 4,320 | 4,804 | 8,812 | 9,998 | |||||||||||
Taxes, other than income taxes | 6,479 | 5,196 | 12,837 | 11,496 | |||||||||||
Total operating costs and expenses | 47,078 | 45,486 | 90,517 | 86,755 | |||||||||||
Operating income | $ | 65,714 | $ | 50,259 | $ | 112,241 | $ | 93,984 |
(1) | Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see Note 15 – Reportable Segments to the accompanying condensed consolidated financial statements. |
Segment Financial Data - Gathering, Processing & Terminalling (1) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Revenues: | |||||||||||||||
Sales of natural gas, NGLs, and crude oil | $ | 35,076 | $ | 16,489 | $ | 71,075 | $ | 29,556 | |||||||
Processing and other revenues | 28,536 | 19,883 | 56,375 | 34,123 | |||||||||||
Total revenues | 63,612 | 36,372 | 127,450 | 63,679 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of sales | 25,698 | 13,627 | 50,264 | 25,028 | |||||||||||
Cost of transportation services | 11,818 | 4,674 | 18,107 | 7,763 | |||||||||||
Operations and maintenance | 8,106 | 4,150 | 15,472 | 7,697 | |||||||||||
Depreciation and amortization | 8,070 | 4,211 | 15,364 | 7,816 | |||||||||||
General and administrative | 2,941 | 2,152 | 6,274 | 3,608 | |||||||||||
Taxes, other than income taxes | 978 | 597 | 2,080 | 1,148 | |||||||||||
Loss (gain) on disposal of assets | 279 | 184 | (9,138 | ) | (1,264 | ) | |||||||||
Total operating costs and expenses | 57,890 | 29,595 | 98,423 | 51,796 | |||||||||||
Operating income | $ | 5,722 | $ | 6,777 | $ | 29,027 | $ | 11,883 |
(1) | Segment results as presented represent total revenue and operating income, including intersegment activity. For reconciliations to the consolidated financial data, see Note 15 – Reportable Segments to the accompanying condensed consolidated financial statements. |
• | cash generated from our operations; |
• | borrowing capacity available under TEP's revolving credit facility; and |
• | future issuances of additional equity and/or debt securities. |
June 30, 2018 | December 31, 2017 | ||||||
(in thousands) | |||||||
Cash on hand | $ | 5,031 | $ | 2,593 | |||
Total capacity under the TEP revolving credit facility (1) | 1,750,000 | 1,750,000 | |||||
Less: Outstanding borrowings under the TEP revolving credit facility (2) | (924,000 | ) | (661,000 | ) | |||
Less: Letters of credit issued under the TEP revolving credit facility | (94 | ) | (94 | ) | |||
Available capacity under the TEP revolving credit facility | 825,906 | 1,088,906 | |||||
Total capacity under the Tallgrass Equity revolving credit facility | $ | 150,000 | $ | 150,000 | |||
Less: Outstanding borrowings under the Tallgrass Equity revolving credit facility (3) | (125,000 | ) | (146,000 | ) | |||
Available capacity under the Tallgrass Equity revolving credit facility | $ | 25,000 | $ | 4,000 | |||
Total liquidity | $ | 855,937 | $ | 1,095,499 |
(1) | In July 2018, the TEP revolving credit facility was amended, increasing the total capacity to $2.25 billion. See Note 9 – Long-term Debt for additional information. |
(2) | As of July 27, 2018, outstanding borrowings under the TEP revolving credit facility were approximately $1.466 billion. The increase in outstanding borrowings from June 30, 2018 was primarily driven by increased borrowings to fund our portion of the repayment of senior notes at Rockies Express, as discussed in Note 7 - Investments in Unconsolidated Affiliates, as well as the repayment of the outstanding borrowings under the Tallgrass Equity revolving credit facility. |
(3) | On July 26, 2018, Tallgrass Equity repaid all outstanding borrowings and terminated its revolving credit facility. |
• | an increase in accounts payable of $97.8 million primarily due to crude oil purchases at Stanchion, as well as payables related to BNN North Dakota acquired in January 2018; |
• | an increase in accrued interest of $21.3 million primarily due to increased borrowings under the revolving credit facilities and timing of interest payments; and |
• | an increase in deferred revenue of $11.5 million primarily from deficiency payments collected by Pony Express and deferred revenue at BNN North Dakota, acquired in January 2018. |
• | an increase in accounts receivable of $95.4 million primarily due to crude oil sales at Stanchion, as well as receivables related to BNN North Dakota acquired in January 2018; and |
• | a decrease in accounts payable of $5.3 million to related parties, as payroll and other administrative activity was moved to TEP from TD during the first quarter of 2018. |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 331,260 | $ | 237,970 | |||
Investing activities | $ | (269,861 | ) | $ | (727,034 | ) | |
Financing activities | $ | (58,961 | ) | $ | 487,478 |
• | capital expenditures of $176.3 million, primarily due to spending on the Cheyenne Connector, a new 70-mile natural gas pipeline located in Colorado, additional water gathering infrastructure located in North Dakota, a 55-mile extension on the Pony Express system, construction of the Buckingham Terminal expansion, and construction of the Guernsey, Natoma, and Grasslands Terminals; |
• | cash outflows of $95.0 million for the acquisition of BNN North Dakota; |
• | cash outflows of $30.6 million for the acquisition of a 51% membership interest in Pawnee; |
• | contributions to unconsolidated investments in the amount of $22.5 million, primarily to fund our share of capital projects at Iron Horse and BNN Colorado; and |
• | cash outflows of $19.5 million for the acquisition of a 38% membership interest in Deeprock North. |
• | $50.0 million from the sale of TCG; and |
• | $36.5 million of distributions received from Rockies Express in excess of cumulative earnings recognized. |
• | cash outflows of $400.0 million for the acquisition of an additional 24.99% membership interest in Rockies Express; |
• | cash outflows of $140.0 million for the acquisition of Terminals and NatGas; |
• | cash outflows of $128.5 million for the acquisition of the Douglas Gathering System; |
• | capital expenditures of $54.0 million, primarily due to spending on an additional freshwater connection at Water Solutions and remediation digs on the Pony Express System as discussed in Note 14 – Legal and Environmental Matters; and |
• | contributions to Rockies Express in the amount of $17.8 million, primarily to fund remaining costs associated with the Zone 3 Capacity Enhancement project at Rockies Express. |
• | distributions to noncontrolling interests of $198.8 million, consisting of distributions to TEP unitholders of $97.7 million, Tallgrass Equity distributions to the Exchange Right Holders of $98.2 million, and distributions to Deeprock Development and Pony Express noncontrolling interests of $2.9 million; |
• | cash outflows of $50.0 million for the acquisition of an additional 2% membership interest in Pony Express; and |
• | proceeds from TEP's issuance of $350.0 million in aggregate principal amount of 5.50% Senior Notes due 2024; |
• | net borrowings under the revolving credit facilities of $332.0 million; and |
• | net cash proceeds of $112.8 million from the issuance of 2,341,061 TEP common units under the Equity Distribution Agreements. |
• | distributions to noncontrolling interests of $145.1 million, which consisted of distributions to TEP unitholders of $86.3 million, Tallgrass Equity distributions to the Exchange Right Holders of $56.0 million, and distributions to Pony Express noncontrolling interests of $2.8 million; |
• | $72.4 million for TEP's partial exercise of the call option granted by TD covering 1,703,094 common units; |
• | $35.3 million for TEP's 736,262 common units repurchased from TD; and |
• | dividends paid to Class A shareholders of $32.8 million. |
• | maintenance capital expenditures, which are cash expenditures incurred (including expenditures for the construction or development of new capital assets) that we expect to maintain our long-term operating income or operating capacity. These expenditures typically include certain system integrity, compliance and safety improvements; and |
• | expansion capital expenditures, which are cash expenditures we expect will increase our operating income or operating capacity over the long-term. Expansion capital expenditures include acquisitions or capital improvements (such as additions to or improvements on the capital assets owned, or acquisition or construction of new capital assets). |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(in thousands) | |||||||
Maintenance capital expenditures | $ | 10,551 | $ | 4,057 | |||
Expansion capital expenditures | 171,000 | 44,227 | |||||
Total capital expenditures incurred | $ | 181,551 | $ | 48,284 |
Description | Judgments and Uncertainties | Effect if Actual Results Differ from Assumptions | ||
Revenue Recognition | ||||
The majority of our revenue is derived from long-term contracts that can span several years. Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and determine the timing of revenue recognition. We periodically evaluate our estimates with respect to the probability of our customers exercising their rights and recognize revenue associated with contract liabilities when the probability becomes remote that the customer will exercise its remaining rights. | We review our deferred revenue (contract liabilities) at each balance sheet date to determine the probability that our customers will exercise their remaining rights. We recognize revenue when the probability becomes remote that the customer will exercise its remaining rights. Our evaluation requires management to apply judgment in estimating future system capacity and the ability of our customers to utilize that capacity. | If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information, the timing of our revenue recognition with respect to deferred revenue could be impacted and we may experience material changes in revenue. |
Fair Value | Effect of 10% Price Increase | Effect of 10% Price Decrease | |||||||||
(in thousands) | |||||||||||
Crude oil derivative contracts (1) | $ | 1,143 | $ | (897 | ) | $ | 897 |
(1) | Represents the forward sale of 121,000 barrels of crude oil in our Gathering, Processing & Terminalling segment which will settle throughout the third quarter of 2018. |
Exhibit No. | Description | |
101.INS* | XBRL Instance Document. | |
101.SCH* | XBRL Taxonomy Extension Schema Document. | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. |
* - | filed herewith |
Tallgrass Energy, LP | |||||||
(registrant) | |||||||
By: | Tallgrass Energy GP, LLC, its general partner | ||||||
Date: | August 2, 2018 | By: | /s/ Gary J. Brauchle | ||||
Name: | Gary J. Brauchle | ||||||
Title: | Executive Vice President and Chief Financial Officer | ||||||
(Duly Authorized Officer and Principal Financial Officer) |
TALLGRASS ENERGY GP, LLC | ||||
Date: | By: | |||
Name: | ||||
Title: |
PARTICIPANT: | ||||
Date: | ||||
[NAME] |
TGE (1) | |||||||||||||||||||||||
Six Months Ended June 30, 2018 | Year Ended December 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Earnings from continuing operations before fixed charges: | |||||||||||||||||||||||
Pre-tax income from continuing operations before earnings from unconsolidated affiliates | $ | 100,926 | $ | 195,333 | $ | 213,249 | $ | 190,312 | $ | 64,169 | $ | 12,971 | |||||||||||
Fixed charges | 62,634 | 93,596 | 56,218 | 28,254 | 11,626 | 13,360 | |||||||||||||||||
Amortization of capitalized interest | 55 | 80 | 65 | 66 | 35 | — | |||||||||||||||||
Distributed earnings from unconsolidated affiliates | 145,581 | 237,192 | 54,449 | 3,096 | 1,280 | — | |||||||||||||||||
less: Capitalized interest | (1,115 | ) | (964 | ) | (471 | ) | (811 | ) | (1,025 | ) | (242 | ) | |||||||||||
Earnings from continuing operations before fixed charges | $ | 308,081 | $ | 525,237 | $ | 323,510 | $ | 220,917 | $ | 76,085 | $ | 26,089 | |||||||||||
Fixed charges: | |||||||||||||||||||||||
Interest expense, net of capitalized interest | 58,881 | 84,500 | 41,668 | 16,824 | 7,648 | 11,264 | |||||||||||||||||
Capitalized interest | 1,115 | 964 | 471 | 811 | 1,025 | 242 | |||||||||||||||||
Estimate of interest within rental expense (33.3%) | 160 | 3,148 | 10,032 | 8,615 | 1,574 | 109 | |||||||||||||||||
Amortization of debt costs | 2,478 | 4,984 | 4,047 | 2,004 | 1,379 | 1,745 | |||||||||||||||||
Total fixed charges | $ | 62,634 | $ | 93,596 | $ | 56,218 | $ | 28,254 | $ | 11,626 | $ | 13,360 | |||||||||||
Ratio of earnings to fixed charges (2) | 4.92 | 5.61 | 5.75 | 7.82 | 6.54 | 1.95 |
(1) | TGE, through its interest in TEP, closed the acquisitions of Terminals and NatGas effective January 1, 2017. As these acquisitions were considered transactions between entities under common control, and changes in reporting entity, financial information presented prior to January 1, 2017 has been recast to include Terminals and NatGas. |
(2) | For purposes of determining the ratio of earnings to fixed charges, earnings are defined as pre-tax income or loss from continuing operations before earnings from unconsolidated affiliates, plus fixed charges, plus distributed earnings from unconsolidated affiliates, less capitalized interest. Fixed charges consist of interest expense, capitalized interest, amortization of deferred loan costs, and an estimate of the interest within rental expense. |
1. | I have reviewed this Quarterly Report on Form 10-Q of Tallgrass Energy, LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ David G. Dehaemers, Jr. | |
David G. Dehaemers, Jr. | ||
President and Chief Executive Officer of Tallgrass Energy GP, LLC (the general partner of Tallgrass Energy, LP) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Tallgrass Energy, LP; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Gary J. Brauchle | |
Gary J. Brauchle | ||
Executive Vice President and Chief Financial Officer of Tallgrass Energy GP, LLC (the general partner of Tallgrass Energy, LP) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. |
By: | /s/ David G. Dehaemers, Jr. | |
David G. Dehaemers, Jr. | ||
President and Chief Executive Officer of Tallgrass Energy GP, LLC (the general partner of Tallgrass Energy, LP) |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. |
By: | /s/Gary J. Brauchle | |
Gary J. Brauchle | ||
Executive Vice President and Chief Financial Officer of Tallgrass Energy GP, LLC (the general partner of Tallgrass Energy, LP) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 02, 2018 |
|
Document Information [Line Items] | ||
Entity Registrant Name | TALLGRASS ENERGY, LP | |
Entity Central Index Key | 0001633651 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q2 | |
Trading Symbol | TGE | |
Amendment Flag | false | |
Capital Unit, Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 154,878,296 | |
Capital Unit, Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 125,305,459 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Common Class A | ||
Shares, Outstanding | 154,878,296 | 58,085,002 |
Common Class B | ||
Shares, Outstanding | 125,305,459 | 99,154,440 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues: | ||||
Crude oil transportation services | $ 101,166 | $ 89,855 | $ 185,904 | $ 174,186 |
Natural gas transportation services | 31,474 | 29,429 | 63,670 | 61,114 |
Sales of natural gas, NGLs, and crude oil | 37,250 | 22,918 | 75,395 | 38,299 |
Processing and other revenues | 23,699 | 18,661 | 47,714 | 31,664 |
Total Revenues | 193,589 | 160,863 | 372,683 | 305,263 |
Operating Costs and Expenses: | ||||
Cost of sales | 27,694 | 19,386 | 54,045 | 31,756 |
Cost of transportation services | 12,664 | 14,758 | 23,084 | 28,261 |
Operations and maintenance | 18,440 | 15,254 | 34,839 | 28,157 |
Depreciation and amortization | 27,690 | 22,091 | 53,813 | 43,494 |
General and administrative | 19,085 | 15,334 | 37,511 | 29,551 |
Taxes, other than income taxes | 8,462 | 6,912 | 17,341 | 15,138 |
Loss (gain) on disposal of assets | (279) | (184) | 9,138 | 1,264 |
Total Operating Costs and Expenses | 114,314 | 93,919 | 211,495 | 175,093 |
Operating Income | 79,275 | 66,944 | 161,188 | 130,170 |
Other Income (Expense): | ||||
Equity in earnings of unconsolidated investments | 78,187 | 42,741 | 146,589 | 63,479 |
Interest expense, net | (31,282) | (21,114) | (61,043) | (37,131) |
Other income, net | 330 | 272 | 781 | 2,227 |
Total Other Income (Expense) | 47,235 | 21,899 | 86,327 | 28,575 |
Net income before tax | 126,510 | 88,843 | 247,515 | 158,745 |
Deferred income tax expense | 16,809 | 9,676 | 23,501 | 12,340 |
Net income | 109,701 | 79,167 | 224,014 | 146,405 |
Net income attributable to noncontrolling interests | (108,638) | (70,414) | (206,216) | (125,623) |
Net income attributable to TGE | $ 1,063 | $ 8,753 | $ 17,798 | $ 20,782 |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Basic net income per Class A share | $ 0.02 | $ 0.15 | $ 0.30 | $ 0.36 |
Diluted net income per Class A share | $ 0.02 | $ 0.15 | $ 0.30 | $ 0.36 |
Basic average number of Class A shares outstanding | 59,397 | 58,075 | 58,745 | 58,075 |
Diluted average number of Class A shares outstanding | 59,397 | 58,192 | 58,745 | 58,187 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) - USD ($) $ in Thousands |
Total |
Tallgrass Energy Partners |
Pony Express Pipeline |
Noncontrolling Interest |
Noncontrolling Interest
Tallgrass Energy Partners
|
Noncontrolling Interest
Pony Express Pipeline
|
Noncontrolling Interest
Terminals and NatGas
|
Noncontrolling Interest
Rockies Express Pipeline LLC
|
Noncontrolling Interest
Deeprock Development, LLC
|
Total Partner Equity Including Portion Attributable to Noncontrolling Interest |
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
Tallgrass Energy Partners
|
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
Pony Express Pipeline
|
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
Terminals and NatGas
|
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
Rockies Express Pipeline LLC
|
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
Deeprock Development, LLC
|
Predecessor Equity |
Predecessor Equity
Tallgrass Energy Partners
|
Predecessor Equity
Pony Express Pipeline
|
Predecessor Equity
Terminals and NatGas
|
Predecessor Equity
Rockies Express Pipeline LLC
|
Predecessor Equity
Deeprock Development, LLC
|
Capital Unit, Class B
Noncontrolling Interest
|
Capital Unit, Class B
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
|
Capital Unit, Class A
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
|
Common Class A |
Common Class A
Tallgrass Energy Partners
|
Common Class A
Pony Express Pipeline
|
Common Class A
Terminals and NatGas
|
Common Class A
Rockies Express Pipeline LLC
|
Common Class A
Deeprock Development, LLC
|
Common Class A
Capital Unit, Class A
|
Common Class B |
Common Class B
Tallgrass Energy Partners
|
Common Class B
Pony Express Pipeline
|
Common Class B
Terminals and NatGas
|
Common Class B
Rockies Express Pipeline LLC
|
Tallgrass Development LP
Noncontrolling Interest
Tallgrass Energy Partners
|
Tallgrass Development LP
Total Partner Equity Including Portion Attributable to Noncontrolling Interest
Tallgrass Energy Partners
|
Tallgrass Development LP
Common Class A
Tallgrass Energy Partners
|
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Partners' Capital, Including Portion Attributable to Noncontrolling Interest | $ 1,596,152 | $ 1,929,414 | $ 82,295 | $ 250,967 | $ 0 | ||||||||||||||||||||||||||||||||||
Increase (Decrease) in Partners' Capital [Roll Forward] | |||||||||||||||||||||||||||||||||||||||
Net income | $ 146,405 | 125,623 | 146,405 | 0 | 20,782 | 0 | |||||||||||||||||||||||||||||||||
Dividends paid to Class A shareholders | 0 | (32,813) | 0 | (32,813) | 0 | ||||||||||||||||||||||||||||||||||
Noncash compensation expense | 3,647 | 4,410 | 0 | 763 | 0 | ||||||||||||||||||||||||||||||||||
Acquisitions | $ (36,391) | $ 40,159 | $ (140,000) | $ 63,681 | $ (82,295) | $ 0 | $ (21,314) | $ 23,522 | $ 0 | $ 0 | |||||||||||||||||||||||||||||
Contributions from noncontrolling interest | 900 | 867 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest | (145,109) | $ 0 | (145,100) | (145,109) | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Issuance of TEP common units to the public, net of offering costs | $ 112,800 | $ 101,375 | $ 112,762 | $ 0 | $ 11,387 | $ 0 | |||||||||||||||||||||||||||||||||
TEP LTIP units tendered by employees to satisfy tax withholding obligations | (11,023) | (12,273) | 0 | (1,250) | 0 | ||||||||||||||||||||||||||||||||||
Partial exercise of call option | (72,890) | (84,942) | 0 | (12,052) | 0 | ||||||||||||||||||||||||||||||||||
Payments for Repurchase of Common Stock | 35,335 | (31,717) | (35,335) | 0 | (3,618) | 0 | |||||||||||||||||||||||||||||||||
Contributions from TD | 1,451 | 2,301 | 0 | 850 | 0 | ||||||||||||||||||||||||||||||||||
Partners' Capital, Including Portion Attributable to Noncontrolling Interest | 1,572,144 | 1,809,368 | 0 | 237,224 | 0 | ||||||||||||||||||||||||||||||||||
Partners' Capital, Including Portion Attributable to Noncontrolling Interest | 1,721,179 | 1,672,566 | 1,721,179 | 0 | 48,613 | 0 | |||||||||||||||||||||||||||||||||
Cumulative effect of ASC 606 implementation | Accounting Standards Update 2014-09 | 39,543 | 44,131 | 0 | 4,588 | 0 | ||||||||||||||||||||||||||||||||||
Net income | 224,014 | 206,216 | 224,014 | 0 | 17,798 | 0 | |||||||||||||||||||||||||||||||||
Dividends paid to Class A shareholders | 0 | (49,662) | 0 | (49,662) | 0 | ||||||||||||||||||||||||||||||||||
Noncash compensation expense | 3,197 | 3,528 | 0 | 331 | 0 | ||||||||||||||||||||||||||||||||||
Issuance of Tallgrass Equity units | $ 644,782 | $ 644,782 | |||||||||||||||||||||||||||||||||||||
Acquisitions | $ (44,732) | $ 74,421 | $ (50,000) | $ 108,537 | $ 0 | $ 0 | $ (5,268) | $ 34,116 | $ 0 | $ 0 | |||||||||||||||||||||||||||||
Consolidation of Deeprock North | $ 31,843 | $ 31,843 | $ 0 | $ 0 | |||||||||||||||||||||||||||||||||||
Contributions from noncontrolling interest | 183 | 183 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest | (198,837) | $ (50,000) | (198,837) | (198,837) | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Issuance of TEP common units to the public, net of offering costs | (221) | (248) | $ 0 | (27) | 0 | ||||||||||||||||||||||||||||||||||
TEP LTIP units tendered by employees to satisfy tax withholding obligations | 1,531 | (1,721) | 190 | $ 0 | |||||||||||||||||||||||||||||||||||
Conversion of Class B shares to Class A shares | 13,402 | $ (13,402) | |||||||||||||||||||||||||||||||||||||
Deferred tax asset | 0 | 7,664 | 7,664 | 0 | |||||||||||||||||||||||||||||||||||
Other Significant Noncash Transaction, Payments to Acquire Units | $ 1,762,327 | $ 2,113,758 | $ 351,431 | $ 189,520 | $ 251,743 | $ 62,223 | |||||||||||||||||||||||||||||||||
Issuance of Class A shares | $ 2,113,758 | $ 2,113,758 | |||||||||||||||||||||||||||||||||||||
Payments for Repurchase of Common Stock | $ 0 | ||||||||||||||||||||||||||||||||||||||
Partners' Capital, Including Portion Attributable to Noncontrolling Interest | $ 2,233,650 | $ 488,985 | $ 2,233,650 | $ 0 | $ 1,744,665 | $ 0 |
Description of Business |
6 Months Ended | ||||||||||||
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Jun. 30, 2018 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Description of Business | Tallgrass Energy, LP ("TGE"), formerly known as Tallgrass Energy GP, LP, is a limited partnership that owns, operates, acquires and develops midstream energy assets in North America and has elected to be treated as a corporation for U.S. federal income tax purposes. "We," "us," "our" and similar terms refer to TGE together with its consolidated subsidiaries. Our operations are conducted through, and our operating assets are owned by, our direct and indirect subsidiaries, including Tallgrass Equity, LLC ("Tallgrass Equity"), in which we directly own an approximate 55.28% membership interest as of June 30, 2018. We are located in and provide services to certain key United States hydrocarbon basins, including the Denver-Julesburg, Powder River, Wind River, Permian and Hugoton-Anadarko Basins and the Niobrara, Mississippi Lime, Eagle Ford, Bakken, Marcellus, and Utica shale formations. Our reportable business segments are:
Natural Gas Transportation. We provide natural gas transportation and storage services for customers in the Rocky Mountain, Midwest and Appalachian regions of the United States through: (1) our 75% membership interest in Rockies Express Pipeline LLC ("Rockies Express"), which owns the Rockies Express Pipeline, a FERC-regulated natural gas pipeline system extending from Opal, Wyoming and Meeker, Colorado to Clarington, Ohio (the "Rockies Express Pipeline"), and our 100% membership interest in Tallgrass NatGas Operator, LLC ("NatGas"), which operates the Rockies Express Pipeline, (2) the Tallgrass Interstate Gas Transmission system, a FERC-regulated natural gas transportation and storage system located in Colorado, Kansas, Missouri, Nebraska and Wyoming (the "TIGT System"), and (3) the Trailblazer Pipeline system, a FERC-regulated natural gas pipeline system extending from the Colorado and Wyoming border to Beatrice, Nebraska (the "Trailblazer Pipeline"). Crude Oil Transportation. We provide crude oil transportation to customers in Wyoming, Colorado, Kansas, and the surrounding regions through Tallgrass Pony Express Pipeline, LLC ("Pony Express"), which owns a FERC-regulated crude oil pipeline commencing in both Guernsey, Wyoming and Weld County, Colorado and terminating in Cushing, Oklahoma (the "Pony Express System"). In the second quarter of 2018, Pony Express placed into service an extension of the system from an additional origin point in Weld County, Colorado located near Platteville, Colorado. Gathering, Processing & Terminalling. We provide natural gas gathering and processing services for customers in Wyoming through: (1) a natural gas gathering system in the Powder River Basin (the "Douglas Gathering System"), (2) natural gas processing facilities in Casper and Douglas, and (3) a natural gas treating facility at West Frenchie Draw. We also provide NGL transportation services in Northeast Colorado and Wyoming. We perform water business services, including freshwater transportation and produced water gathering and disposal, in Colorado, Texas, Wyoming, and North Dakota through BNN Water Solutions, LLC ("Water Solutions"), and crude oil storage and terminalling services through our 100% membership interest in Tallgrass Terminals, LLC ("Terminals"), which owns and operates crude oil terminals in Colorado, Oklahoma, and Kansas. The Gathering, Processing & Terminalling segment also includes Stanchion Energy, LLC ("Stanchion"), which transacts in crude oil. The term "Terminals Predecessor" refers to Terminals and the term "NatGas Predecessor" refers to NatGas prior to their acquisition by TEP on January 1, 2017. Terminals Predecessor and NatGas Predecessor are collectively referred to as the Predecessor Entities. Financial results for all prior periods have been recast to reflect the operations of the Predecessor Entities. Predecessor Equity as presented in the condensed consolidated financial statements represents the capital account activity of Terminals Predecessor and NatGas Predecessor prior to January 1, 2017. Merger Agreement with Tallgrass Energy Partners, LP TGE previously entered into a definitive Agreement and Plan of Merger, dated as of March 26, 2018 (the "Merger Agreement"), with Tallgrass Equity, Tallgrass Energy Partners, LP, a Delaware limited partnership ("TEP"), Tallgrass MLP GP, LLC, a Delaware limited liability company and the general partner of TEP ("TEP GP"), and Razor Merger Sub, LLC, a Delaware limited liability company. The merger transaction contemplated by the Merger Agreement (the "TEP Merger") was completed effective June 30, 2018, and as a result, 47,693,097 TEP common units held by the public were converted into the right to receive Class A shares of TGE at an exchange ratio of 2.0 Class A shares for each outstanding TEP common unit, TEP's incentive distribution rights were cancelled, TEP's common units are no longer publicly traded, and 100% of TEP's equity interests are now owned by Tallgrass Equity and its subsidiaries. The TEP Merger was accounted for as an acquisition of noncontrolling interest. Following consummation of the TEP Merger, TGE changed its name from "Tallgrass Energy GP, LP" to "Tallgrass Energy, LP" and began trading on the New York Stock Exchange under the ticker symbol "TGE" on July 2, 2018. |
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Basis of Presentation These condensed consolidated financial statements and related notes for the three and six months ended June 30, 2018 and 2017 were prepared in accordance with the accounting principles contained in the Financial Accounting Standards Board's Accounting Standards Codification, the single source of accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP for annual periods. The condensed consolidated financial statements for the three and six months ended June 30, 2018 and 2017 include all normal, recurring adjustments and disclosures that we believe are necessary for a fair statement of the results for the interim periods. In this report, the Financial Accounting Standards Board is referred to as the FASB and the FASB Accounting Standards Codification is referred to as the Codification or ASC. Certain prior period amounts have been reclassified to conform to the current presentation. Our financial results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018. The accompanying condensed consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 ("2017 Form 10-K") filed with the SEC on February 13, 2018. The condensed consolidated financial statements include the accounts of TGE and its subsidiaries and controlled affiliates. Significant intra-entity items have been eliminated in the presentation. Net income or loss from consolidated subsidiaries that are not wholly-owned by TGE is attributed to TGE and noncontrolling interests in accordance with the respective ownership interests. A variable interest entity ("VIE") is a legal entity that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity owners who do not have the obligation to absorb expected losses or the right to receive the expected residual returns of the entity. Companies are required to consolidate a VIE if they are its primary beneficiary, which is the enterprise that has a variable interest that could be significant to the VIE and the power to direct the activities that most significantly impact the entity's economic performance. We have presented separately in our condensed consolidated balance sheets, to the extent material, the liabilities of our consolidated VIEs for which creditors do not have recourse to our general credit. Our consolidated VIEs do not have material assets that can only be used to settle specific obligations of the consolidated VIEs. Prior to June 29, 2018, both Tallgrass Equity and TEP were considered to be VIEs under the applicable authoritative guidance and included in our consolidated results. As a result of the TEP Merger, and changes in ownership and their respective partnership arrangements, Tallgrass Equity and TEP are no longer considered to be VIEs. We continue to consolidate our membership interests in Tallgrass Equity and TEP through the voting interest model. Use of Estimates Certain amounts included in or affecting these condensed consolidated financial statements and related disclosures must be estimated, requiring management to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts reported for assets, liabilities, revenues, and expenses during the reporting period, and the disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates these estimates on an ongoing basis, utilizing historical experience, consultation with experts and other methods it considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from these estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Accounting Pronouncement Recently Adopted Revenue Recognition In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a comprehensive and converged set of principles-based revenue recognition guidelines which supersede the existing industry and transaction-specific standards. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, entities must apply a five-step process to (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 also mandates disclosure of sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The disclosure requirements include qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Management has completed its evaluation and implemented the revised guidance using the modified retrospective method as of January 1, 2018. This approach allows us to apply the new standard to (i) all new contracts entered into after January 1, 2018 and (ii) all existing contracts for which all (or substantially all) of the revenue has not been recognized under legacy revenue guidance as of January 1, 2018 through a cumulative adjustment to members' equity. Consolidated revenues presented in the comparative consolidated financial statements for periods prior to January 1, 2018 have not been revised. On January 1, 2018, we recorded a cumulative effect adjustment to equity of $44.1 million, increased the carrying amount of our investment in Rockies Express by $42.8 million, and recognized a receivable from Rockies Express of $1.3 million. These adjustments relate to the cumulative effect adjustment recorded by Rockies Express of $125.2 million upon adoption of ASC 606. The cumulative effect adjustment at Rockies Express arose as a result of the allocation of the transaction price to a series of individual performance obligations in certain long-term transportation contracts with tiered-pricing arrangements. The adjustment increases the carrying amount of our investment in Rockies Express to reflect increased equity in earnings and establishes a receivable for the increased management fee revenue that would have been earned by NatGas during the periods prior to implementation. Through our review process, we also identified the following changes to our revenue recognition policies that did not result in a cumulative effect adjustment on January 1, 2018:
See Note 11 – Revenue from Contracts with Customers for revenue disclosures related to both the implementation and the additional requirements prescribed by the standard. These new disclosures include information regarding the significant judgments used in evaluating when and how revenue is (or will be) recognized and data related to contract assets and liabilities. Accounting Pronouncements Not Yet Adopted ASU No. 2016-02, "Leases (Topic 842)" In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 provides a comprehensive update to the lease accounting topic in the Codification intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in ASU 2016-02 include a revised definition of a lease as well as certain scope exceptions. The changes primarily impact lessee accounting, while lessor accounting is largely unchanged from previous GAAP. Management is currently evaluating the impact of our pending adoption of ASC 842. The status of our implementation is as follows:
The amendments in ASU 2016-02 are effective for public entities for annual reporting periods beginning after December 15, 2018, and for interim periods within that reporting period. Early application is permitted. We plan to adopt ASU 2016-02 on January 1, 2019 using the modified retrospective method. ASC 842 provides for a number of practical expedients. We intend to elect the following practical expedients upon adoption of ASC 842: •An entity need not reassess whether any expired or existing contracts are or contain leases. •An entity need not reassess the lease classification for any expired or existing leases. •An entity need not reassess initial direct costs for any existing leases.
We are in the process of quantifying the impact of adoption, but we cannot reasonably estimate the full impact of the standard at this time. Additionally, we are currently evaluating our business processes, systems, and controls to ensure the accuracy and timeliness of the recognition and disclosure requirements under the new lease guidance. |
Acquisitions & Dispositions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisition of Pawnee On January 2, 2018, we entered into an agreement to acquire a 51% membership interest in the Pawnee, Colorado crude oil terminal ("Pawnee") from Zenith Energy Terminals Holdings, LLC for cash consideration of approximately $30.6 million. The transaction closed on April 1, 2018. As the 51% membership interest does not represent a controlling interest in Pawnee, our investment in Pawnee is recorded under the equity method of accounting and reported as "Unconsolidated investments" on the condensed consolidated balance sheets. Acquisition of an Additional 25.01% Membership Interest in Rockies Express and Additional TEP Common Units In February 2018, Tallgrass Development, LP ("TD") merged into Tallgrass Development Holdings, LLC, a wholly-owned subsidiary of Tallgrass Equity ("Tallgrass Development Holdings"), and as a result of the merger, Tallgrass Equity acquired a 25.01% membership interest in Rockies Express and an additional 5,619,218 TEP common units. As consideration for the acquisition, TGE and Tallgrass Equity issued 27,554,785 unregistered TGE Class B shares and Tallgrass Equity units, valued at approximately $644.8 million based on the closing price on February 6, 2018, to the limited partners of TD. Subsequent to the closing of the transaction, our aggregate membership interest in Rockies Express is 75%. The transfer of the Rockies Express membership interest between TD and Tallgrass Equity is considered a transaction between entities under common control, but does not represent a change in reporting entity. As a result of the common control nature of the transaction, the acquisition resulted in the recognition of a noncash deemed contribution representing the excess carrying value of the 25.01% membership interest in Rockies Express acquired over the fair value of the consideration paid. For further discussion, see Note 10 - Partnership Equity. As the aggregate 75% membership interest does not represent a controlling interest in Rockies Express, TGE's 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 25.01% membership interest in Rockies Express was transferred to Tallgrass Equity 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. The acquisition of an additional 5,619,218 TEP common units is considered an acquisition of noncontrolling interest and resulted in the recognition of a noncash deemed distribution representing the excess purchase price over the $53.8 million carrying value of the 5,619,218 TEP common units acquired as of February 7, 2018. For further discussion, see Note 10 - Partnership Equity. As of February 7, 2018, the negative basis difference in Rockies Express carried over from TD was approximately $376.5 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. At June 30, 2018, the basis difference for our membership interests in Rockies Express was allocated as follows:
Sale of Tallgrass Crude Gathering In February 2018, we entered into an agreement with an affiliate of Silver Creek Midstream, LLC ("Silver Creek") to sell our 100% membership interest in Tallgrass Crude Gathering, LLC ("TCG"), which owns a 50-mile crude oil gathering system in the Powder River Basin, for approximately $50.0 million. The sale of TCG closed on February 23, 2018. During the six months ended June 30, 2018, we recognized a gain of $9.4 million on the sale which is presented in the line item "Gain on disposal of assets" in the condensed consolidated statements of income. Iron Horse Joint Venture In February 2018, we entered into an agreement with Silver Creek to form Iron Horse Pipeline, LLC ("Iron Horse"), a new joint venture pipeline to transport crude oil from the Powder River Basin. During the six months ended June 30, 2018, we contributed an initial $3.5 million and committed to funding our proportionate share of the remaining costs of construction in exchange for a 75% membership interest in Iron Horse. As the 75% membership interest does not represent a controlling interest in Iron Horse, our investment in Iron Horse is accounted for under the equity method of accounting and reported as "Unconsolidated investments" on the condensed consolidated balance sheets. Acquisition of Additional 2% Membership Interest in Pony Express In February 2018, we acquired the remaining 2% membership interest in Pony Express, along with administrative assets consisting primarily of information technology assets, from TD for cash consideration of approximately $60 million, bringing our aggregate membership interest in Pony Express to 100%. The acquisition of the remaining 2% membership interest in Pony Express represents a transaction between entities under common control and an acquisition of noncontrolling interests. As a result, financial information for periods prior to the transaction has not been recast to reflect the additional 2% membership interest. Acquisition of BNN North Dakota In January 2018, we acquired 100% of the membership interests in Buckhorn Energy Services, LLC and Buckhorn SWD Solutions, LLC, which were subsequently merged and renamed BNN North Dakota, LLC ("BNN North Dakota"), for approximately $95.0 million, net of cash acquired. BNN North Dakota owns a produced water gathering and disposal system in the Bakken basin with approximately 133,000 acres under dedication. The transaction qualifies as an acquisition of a business and is accounted for as a business combination under ASC 805. The following represents the fair value of assets acquired and liabilities assumed (in thousands):
At March 31, 2018, the assets acquired and liabilities assumed in the acquisition were recorded at provisional amounts based on the preliminary purchase price allocation. No adjustments were made to these provisional amounts and the allocation of assets acquired and liabilities assumed in the acquisition was considered final as of June 30, 2018. Actual revenue and net income attributable to TGE from BNN North Dakota of $6.4 million and $0.3 million, respectively, was recognized in the accompanying condensed consolidated statements of income for the period from January 12, 2018 to June 30, 2018. Pro Forma Financial Information Unaudited pro forma revenue and net income attributable to TGE for the six months ended June 30, 2018 and 2017 is presented below as if the acquisition of BNN North Dakota had been completed on January 1, 2017.
The pro forma financial information is not necessarily indicative of what the actual results of operations or financial position of TGE would have been if the transaction had in fact occurred on the date or for the period indicated, nor does it purport to project the results of operations or financial position of TGE for any future periods or as of any date. The pro forma financial information does not give effect to any cost savings, operating synergies, or revenue enhancements expected to result from the transaction or the costs to achieve these cost savings, operating synergies, and revenue enhancements. Acquisition of Deeprock North and Merger with Deeprock Development In January 2018, we acquired an approximate 38% membership interest in Deeprock North, LLC ("Deeprock North") from Kinder Morgan Deeprock North Holdco LLC for cash consideration of $19.5 million. Immediately following the acquisition, Deeprock North was merged into Deeprock Development, LLC ("Deeprock Development"), and the members of Deeprock North and Deeprock Development received adjusted membership interests in the combined entity. As a result, we recognized additional noncontrolling interests in Deeprock Development of $31.8 million. The acquisition of Deeprock North by Deeprock Development has been accounted for as an asset acquisition, with substantially all of the fair value allocated to the long-lived assets acquired based on their relative fair values. After the acquisition and merger, we own an approximate 60% membership interest in the combined entity. |
Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | As a result of our relationship with Tallgrass Energy Holdings, LLC ("Tallgrass Energy Holdings") and its affiliates, we have entered into a number of related party transactions. The following disclosure includes those related party transactions which are not otherwise disclosed in these notes to our condensed consolidated financial statements. Prior to July 1, 2018, we had no employees, as all of our employees were employed by Tallgrass Management, LLC ("Tallgrass Management"), a wholly-owned subsidiary of Tallgrass Energy Holdings. In connection with the closing of the TEP initial public offering on May 17, 2013, TEP and TEP GP entered into an Omnibus Agreement with Tallgrass Energy Holdings and certain of its affiliates (the "TEP Omnibus Agreement"). The TEP Omnibus Agreement provides that, among other things, TEP will reimburse Tallgrass Energy Holdings and its affiliates for all expenses they incur and payments they make on TEP's behalf, including the costs of employee and director compensation and benefits as well as the cost of the provision of certain centralized corporate functions performed by Tallgrass Energy Holdings and its affiliates, including legal, accounting, cash management, insurance administration and claims processing, risk management, health, safety and environmental, information technology and human resources in each case to the extent reasonably allocable to TEP. In addition, in connection with the closing of the TGE initial public offering on May 12, 2015 (the "TGE IPO"), TGE entered into an Omnibus Agreement (the "TGE Omnibus Agreement") with Tallgrass Energy GP, LLC (formerly known as TEGP Management, LLC), Tallgrass Equity and Tallgrass Energy Holdings. Effective July 1, 2018, Tallgrass Management was contributed to Tallgrass Equity following the TEP Merger. As a result, the costs of employer and director compensation and benefits are now incurred directly by Tallgrass Equity. Totals of transactions with affiliated companies, excluding transactions disclosed elsewhere in these notes, are as follows:
Details of balances with affiliates included in "Receivable from related parties" and "Accounts payable to related parties" in the condensed consolidated balance sheets are as follows:
Gas imbalances with affiliated shippers are as follows:
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Inventory |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | The components of inventory at June 30, 2018 and December 31, 2017 consisted of the following:
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Property, Plant and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | A summary of net property, plant and equipment by classification is as follows:
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Investments in Unconsolidated Affiliates - (Notes) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures Disclosure | 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. During the six months ended June 30, 2018, we recognized equity in earnings associated with our aggregate 75% membership interest in Rockies Express of $143.3 million, inclusive of the amortization of the negative basis difference, and received distributions from and made contributions to Rockies Express of $179.6 million and $4.5 million, respectively. As discussed in Note 3 – Acquisitions and Dispositions, we acquired an additional 25.01% membership interest in Rockies Express in February 2018. In July 2018, we made a special contribution of approximately $412.5 million to fund our portion of the repayment of Rockies Express' $550 million of 6.85% senior notes due July 15, 2018. Summarized financial information for Rockies Express is as follows:
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Risk Management |
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Risk Management | We enter into derivative contracts with third parties for the purpose of hedging exposures that accompany our normal business activities. Our normal business activities directly and indirectly expose us to risks associated with changes in the market price of crude oil and natural gas, among other commodities. For example, the risks associated with changes in the market price of crude oil and natural gas include, among others (i) pre-existing or anticipated physical crude oil and natural gas sales, (ii) natural gas purchases and (iii) natural gas system use and storage. We have elected not to apply hedge accounting and changes in the fair value of all derivative contracts are recorded in earnings in the period in which the change occurs. Fair Value of Derivative Contracts The following table summarizes the fair values of our derivative contracts included in the condensed consolidated balance sheets:
Effect of Derivative Contracts in the Statements of Income The following table summarizes the impact of derivative contracts not designated as hedging contracts for the three and six months ended June 30, 2018 and 2017:
Call Option Derivative As part of our acquisition of an additional 31.3% membership interest in Pony Express effective January 1, 2016, TD granted TEP an 18 month call option at an exercise price of $42.50 per TEP common unit covering the 6,518,000 TEP common units issued to TD as a portion of the consideration. On February 1, 2017, we exercised the remainder of the call option covering an additional 1,703,094 TEP common units for a cash payment of $72.4 million. These TEP common units were deemed canceled upon the exercise of the call option and as of the applicable exercise date were no longer issued and outstanding. Credit Risk We have counterparty credit risk as a result of our use of derivative contracts. Counterparties to our commodity derivatives consist of market participants and major financial institutions. This concentration of counterparties may impact our overall exposure to credit risk, either positively or negatively, in that the counterparties may be similarly affected by changes in economic, regulatory or other conditions. The counterparty to our call option derivative was TD. Our derivative contracts are entered into with counterparties through central trading organizations such as futures, options or stock exchanges or counterparties outside of central trading organizations. While we typically enter into derivative transactions with investment grade counterparties and actively monitor their credit ratings, it is nevertheless possible that from time to time losses will result from counterparty credit risk in the future. As of June 30, 2018, the fair value of our crude oil derivative contracts were in a liability position resulting in no credit exposure from our counterparties as of that date. As of June 30, 2018 and December 31, 2017, we had $1.1 million and $3.0 million, respectively, of cash in margin accounts and outstanding letters of credit in support of our commodity derivative contracts. Fair Value Derivative assets and liabilities are measured and reported at fair value. Derivative contracts can be exchange-traded or over-the-counter ("OTC"). OTC commodity derivatives are valued using models utilizing a variety of inputs including contractual terms and commodity and interest rate curves. The selection of a particular model and particular inputs to value an OTC derivative contract depends upon the contractual terms of the instrument as well as the availability of pricing information in the market. We use similar models to value similar instruments. For OTC derivative contracts that trade in liquid markets, such as generic forwards and swaps, model inputs can generally be verified and model selection does not involve significant management judgment. Such contracts are typically classified within Level 2 of the fair value hierarchy. The call option granted by TD was valued using a Black-Scholes option pricing model. Key inputs to the valuation model included the term of the option, risk free rate, the exercise price and current market price, expected volatility and expected distribution yield of the underlying units. The call option valuation was classified within Level 2 of the fair value hierarchy as the value was based on significant observable inputs. The following table summarizes the fair value measurements of our derivative contracts as of June 30, 2018 and December 31, 2017, based on the fair value hierarchy:
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Long-term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term debt consisted of the following at June 30, 2018 and December 31, 2017:
TEP Senior Unsecured Notes due 2028 On September 15, 2017, TEP and Tallgrass Energy Finance Corp. (the "Co-Issuer" and together with TEP, the "Issuers"), the Guarantors named therein and U.S. Bank, National Association, as trustee, entered into an Indenture dated September 15, 2017 (the "2028 Indenture") pursuant to which the Issuers issued $500 million in aggregate principal amount of 5.50% senior notes due 2028 (the "2028 Notes"). On December 11, 2017, the Issuers issued an additional $250 million in aggregate principal amount of the 2028 Notes, which are also governed by the 2028 Indenture. The notes issued on September 15, 2017 and December 11, 2017 are treated as a single class of debt securities and have identical terms, other than the issue date and offering price. The 2028 Indenture contains covenants that, among other things, limit TEP's ability and the ability of its restricted subsidiaries to: (i) create liens to secure indebtedness; (ii) enter into sale-leaseback transactions; and (iii) consolidate with or merge with or into, or sell substantially all TEP's properties to, another person. As of June 30, 2018, TEP was in compliance with the covenants required under the 2028 Notes. TEP Senior Unsecured Notes due 2024 On September 1, 2016, the Issuers, the Guarantors named therein and U.S. Bank, National Association, as trustee, entered into an Indenture dated September 1, 2016 (the "2024 Indenture"), pursuant to which the Issuers issued $400 million in aggregate principal amount of 5.50% senior notes due 2024 (the "2024 Notes"). On May 16, 2017, the Issuers issued an additional $350 million in aggregate principal amount of the 2024 Notes which are also governed by the 2024 Indenture. The notes issued on September 1, 2016 and May 16, 2017 are treated as a single class of debt securities and have identical terms, other than the issue date, offering price and first interest payment date. The 2024 Indenture contains covenants that, among other things, limit TEP's ability and the ability of its restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue preferred units; (ii) create liens to secure indebtedness; (iii) pay distributions on equity interests in the event of default or noncompliance with the covenants required, repurchase equity securities or redeem subordinated securities; (iv) make investments; (v) restrict distributions, loans or other asset transfers from TEP's restricted subsidiaries; (vi) consolidate with or merge with or into, or sell substantially all of TEP's properties to, another person; (vii) sell or otherwise dispose of assets, including equity interests in subsidiaries; and (viii) enter into transactions with affiliates. As of June 30, 2018, TEP was in compliance with the covenants required under the 2024 Notes. Tallgrass Equity Revolving Credit Facility The following table sets forth the available borrowing capacity under the Tallgrass Equity revolving credit facility as of June 30, 2018 and December 31, 2017:
In connection with the TGE IPO, Tallgrass Equity entered into a $150 million senior secured revolving credit facility with Barclays Bank PLC, as administrative agent, and a syndicate of lenders, which will mature on May 12, 2020. Among various other covenants and restrictive provisions, Tallgrass Equity is required to maintain a total leverage ratio of not more than 3.00 to 1.00. As of June 30, 2018, Tallgrass Equity was in compliance with the covenants required under the revolving credit facility. The unused portion of the revolving credit facility is subject to a commitment fee of 0.50%. As of June 30, 2018, the weighted average interest rate on outstanding borrowings under the Tallgrass Equity revolving credit facility was 4.59%. During the six months ended June 30, 2018, Tallgrass Equity's weighted average effective interest rate, including the interest on outstanding borrowings, commitment fees, and amortization of deferred financing costs, was 4.74%. On July 26, 2018, Tallgrass Equity repaid all outstanding borrowings and terminated its revolving credit facility. TEP Revolving Credit Facility The following table sets forth the available borrowing capacity under the TEP revolving credit facility as of June 30, 2018 and December 31, 2017:
On July 26, 2018, TEP and certain of its subsidiaries entered into Amendment No. 1 (the "Amendment") to its existing revolving credit facility with Wells Fargo Bank, National Association, as administrative agent and collateral agent, and a syndicate of lenders (the "Credit Agreement"). The Amendment modified certain provisions of the Credit Agreement to, among other things, (i) increase the available amount of the TEP revolving credit facility to $2.25 billion, (ii) reduce certain applicable margins in the pricing grids used to determine the interest rate and revolving credit commitment fees, (iii) modify the use of proceeds to allow TEP to pay off the Tallgrass Equity revolving credit facility, and (iv) increase the maximum total leverage ratio to 5.50 to 1.00. TEP's revolving credit facility contains various covenants and restrictive provisions that, among other things, limit or restrict TEP's ability (as well as the ability of its restricted subsidiaries) to incur or guarantee additional debt, incur certain liens on assets, dispose of assets, make certain distributions, including distributions from available cash, if a default or event of default under the credit agreement then exists or would result therefrom, change the nature of its business, engage in certain mergers or make certain investments and acquisitions, enter into non-arms-length transactions with affiliates and designate certain subsidiaries as "Unrestricted Subsidiaries." In addition, TEP is required to maintain a consolidated leverage ratio of not more than 5.50 to 1.00 (5.00 to 1.00 prior to the Amendment), a consolidated senior secured leverage ratio of not more than 3.75 to 1.00 and a consolidated interest coverage ratio of not less than 2.50 to 1.00. As of June 30, 2018, TEP was in compliance with the covenants required under its revolving credit facility. The unused portion of TEP's revolving credit facility is subject to a commitment fee, which ranges from 0.250% to 0.375% (0.250% to 0.500% prior to the Amendment), based on TEP's total leverage ratio. As of June 30, 2018, the weighted average interest rate on outstanding borrowings under the TEP revolving credit facility was 3.84%. During the six months ended June 30, 2018, the weighted average effective interest rate under the TEP revolving credit facility, including the interest on outstanding borrowings under TEP's revolving credit facility, commitment fees, and amortization of deferred financing costs, was 4.05%. Fair Value The following table sets forth the carrying amount and fair value of our long-term debt, which is not measured at fair value in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017, but for which fair value is disclosed:
The long-term debt borrowed under the revolving credit facilities is carried at amortized cost. As of June 30, 2018 and December 31, 2017, the fair value of borrowings under the revolving credit facilities approximates the carrying amount of the borrowings using a discounted cash flow analysis. The 2024 and 2028 Notes are carried at amortized cost, net of deferred financing costs. The estimated fair value of the 2024 and 2028 Notes is based upon quoted market prices adjusted for illiquid markets. We are not aware of any factors that would significantly affect the estimated fair value subsequent to June 30, 2018. |
Partnership Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Partnership Equity | TGE Dividends to Holders of Class A Shares The following table details the dividends for the periods indicated:
Subsidiary Distributions TEP Distributions. The following table shows the distributions for the periods indicated:
As a result of the TEP Merger, Tallgrass Equity and its wholly-owned subsidiary, Tallgrass Equity Investments, LLC, will receive all distributions paid by TEP for the second quarter of 2018 and subsequent periods. Exchange Rights Our current Class B shareholders (collectively, the "Exchange Right Holders") own an equal number of Tallgrass Equity units. The Exchange Right Holders, and any permitted transferees of their Tallgrass Equity units, each have the right to exchange all or a portion of their Tallgrass Equity units for Class A shares at an exchange ratio of one Class A share for each Tallgrass Equity unit exchanged, which we refer to as the Exchange Right. The Exchange Right may be exercised only if, simultaneously therewith, an equal number of our Class B shares are transferred by the exercising party to us. Upon such exchange, we will cancel the Class B shares received from the exercising party. TEP Equity Distribution Agreements TEP was previously a party to equity distribution agreements pursuant to which it sold from time to time through a group of managers, as its sales agents, TEP common units representing limited partner interests. Following the TEP Merger, these agreements were terminated effective July 2, 2018. During the six months ended June 30, 2018, TEP did not issue any common units under its equity distribution agreements. During the six months ended June 30, 2017, TEP issued and sold 2,341,061 common units with a weighted average sales price of $48.82 per unit under its equity distribution agreements for net cash proceeds of approximately $112.8 million (net of approximately $1.5 million in commissions and professional service expenses). Repurchase of TEP Common Units Owned by TD Following an offer received from TD with respect to TEP common units owned by TD not subject to the call option, TEP repurchased 736,262 TEP common units from TD at an aggregate price of approximately $35.3 million, or $47.99 per common unit, on February 1, 2017, which was approved by the conflicts committee of the board of directors of TEP's general partner. These common units were deemed canceled upon TEP's purchase and as of such transaction date were no longer issued and outstanding. Noncontrolling Interests As of June 30, 2018, noncontrolling interests in our subsidiaries consisted of a 44.72% interest in Tallgrass Equity held by the Exchange Right Holders and an approximate 40% membership interest in Deeprock Development. During the six months ended June 30, 2018, we recognized contributions from and distributions to noncontrolling interests of $0.2 million and $198.8 million, respectively. Contributions from noncontrolling interests consisted primarily of contributions from TD to Pony Express. Distributions to noncontrolling interests consisted of distributions to TEP unitholders of $97.7 million, Tallgrass Equity distributions to the Exchange Right Holders of $98.2 million, and distributions to Deeprock and Pony Express noncontrolling interests of $2.9 million. During the six months ended June 30, 2017, we recognized contributions from and distributions to noncontrolling interests of $0.9 million and $145.1 million, respectively. Contributions from noncontrolling interests consisted primarily of contributions from TD to Pony Express. Distributions to noncontrolling interests consisted of distributions to TEP unitholders of $86.3 million, Tallgrass Equity distributions to the Exchange Right Holders of $56.0 million and distributions to Pony Express noncontrolling interests of $2.8 million. Other Contributions and Distributions During the six months ended June 30, 2018, TGE recognized the following other contributions and distributions:
During the six months ended June 30, 2017, TGE recognized the following other contributions and distributions:
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Revenue from Contracts with Customers |
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Revenue from Contract with Customers | Implementation of ASC Topic 606 As discussed in Note 2 – Summary of Significant Accounting Policies, we adopted the guidance in ASC Topic 606 effective January 1, 2018 using the modified retrospective method of adoption. As a result, revenue reported for the three months ended June 30, 2017 has not been revised. The following tables provide the impact of the guidance on our condensed consolidated balance sheet as of June 30, 2018 and the condensed consolidated statements of income for the three and six months ended June 30, 2018:
Disaggregated Revenue A summary of our revenue by line of business is as follows:
Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC Topic 606. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation and are billed and collected monthly. All of our segments engage in commodity sales, in which our performance obligations include an obligation to deliver the specified volume of a commodity to the designated receipt point. Revenue from commodity sales is recognized at a point in time when the customer obtains control of the commodity, typically upon delivery to the designated delivery point when the customer accepts and takes possession of the commodity. In the Natural Gas Transportation segment, our performance obligations typically include an obligation to stand ready to provide natural gas transportation, storage, or an integrated transportation and storage service over the life of the contract, which is a series. These performance obligations are satisfied over time using each day of service to measure progress toward satisfaction of the performance obligation. In the Crude Oil Transportation segment, our performance obligations typically include an obligation to provide crude oil transportation services over the life of the contract, which is a series. These performance obligations are satisfied over time using barrels delivered to measure progress toward satisfaction of the performance obligation. In the Gathering, Processing & Terminalling segment, the performance obligations vary based on the operating asset and type of contract. In our natural gas gathering and processing arrangements, performance obligations typically include an obligation to provide an integrated processing service over the life of the contract, which is a series. These performance obligations are satisfied over time using each unit of gas processed to measure progress toward satisfaction of the performance obligation. In our freshwater supply arrangements, performance obligations typically include an obligation to deliver a specified volume of water to the designated receipt point. These performance obligations are satisfied at a point in time when the customer obtains control of the water. In our produced water gathering and disposal arrangements, performance obligations typically include an obligation to provide an integrated produced water gathering and disposal service over the life of the contract, which is a series. These performance obligations are satisfied over time using barrels disposed to measure progress toward satisfaction of the performance obligation. On June 30, 2018, we had $1.6 billion of remaining performance obligations at our consolidated subsidiaries, which we refer to as total backlog. Total backlog includes performance obligations under long-term crude oil transportation contracts with committed shippers, natural gas firm transportation and firm storage contracts, and certain water business service contracts with minimum volume commitments, and excludes variable consideration that is not estimated at contract inception, as discussed further below. We expect to recognize the total backlog during the remainder of 2018 and future periods as follows (in thousands):
Contract Estimates Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue. Contract estimates are based on various assumptions to project the outcome of future events that often span several years. These assumptions include the anticipated volumes of crude oil expected to be delivered by our customers for transport in future periods. The nature of our contracts gives rise to several types of variable consideration, including PLA, volumetric charges for actual volumes delivered, overrun charges, and other fees that are contingent on the actual volumes delivered by our customers. As the amount of variable consideration is allocable to each distinct performance obligation within the series of performance obligations that comprise the single performance obligation and the uncertainty related to the consideration is resolved each month as the distinct service is provided, we do not estimate the total variable consideration for the single overall performance obligation. Consequently, we are able to include in the transaction price each month the actual amount of variable consideration because no uncertainty exists surrounding the services provided that month. Certain of our contracts include provisions in which a portion of the consideration is noncash. In our Crude Oil Transportation segment, we collect PLA from our customers. As crude oil is transported, we earn, and take title to, a portion of the oil transported for our services. Any PLA that remains after replacing losses in transit can be sold. Where PLA is determined to be a component of compensation for the transportation services provided, crude oil retained is recognized in revenue at its contract inception fair value. In our Gathering, Processing & Terminalling segment, we retain commodity products as consideration under certain of our gathering and processing arrangements. Processing fee revenue is recorded when the performance obligation is completed based on the value of the product received at the time services are performed. At this time, the variability of the non-cash consideration related to both form (price) and other-than-form (volume and product mix), which are interrelated, is resolved. As a significant change in one or more of these estimates could affect the amount and timing of revenue recognized under our customer contracts, we review and update our contract-related estimates regularly. Contract Balances The timing of revenue recognition, billings, and cash collections may result in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on our condensed consolidated balance sheets. Revenue is generally billed and collected monthly based on services provided or commodity volumes sold. In our Crude Oil Transportation segment, we recognize shipper deficiencies, or deferred revenue, for barrels committed by the customer to be transported in a month but not physically received by us for transport or delivered to the customers' agreed upon destination point. These shipper deficiencies are charged at the committed tariff rate per barrel and recorded as a contract liability until the barrels are physically transported and delivered, or when the likelihood that the customer will utilize the deficiency balance becomes remote. We also recognize contract liabilities, in the form of deferred revenue, under certain water business services contracts in the Gathering, Processing & Terminalling segment. Contract balances as of June 30, 2018 were as follows:
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Net Income per Class A Share |
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Net Income per Class A Share | Basic net income per Class A share is determined by dividing net income attributable to TGE by the weighted average number of outstanding Class A shares during the period. Class B shares do not share in the earnings of TGE. Accordingly, basic and diluted net income per Class B share has not been presented. Diluted net income per Class A share is determined by dividing net income attributable to TGE by the weighted average number of outstanding diluted Class A shares during the period. For purposes of calculating diluted net income per Class A share, we considered the impact of possible future exercises of the Exchange Right by the Exchange Right Holders on both net income attributable to TGE and the diluted weighted average number of Class A shares outstanding. The Exchange Right Holders refers to the group of persons who collectively own all TGE's outstanding Class B shares and an equivalent number of Tallgrass Equity units. The Exchange Right Holders are entitled to exercise the right to exchange their Tallgrass Equity units (together with an equivalent number of TGE Class B shares) for TGE Class A shares at an exchange ratio of one TGE Class A share for each Tallgrass Equity unit exchanged, which we refer to as the Exchange Right. The Exchange Right Holders primarily consist of Kelso & Company and its affiliated investment funds, The Energy & Minerals Group and its affiliated investment funds, and Tallgrass KC, LLC, which is an entity owned by certain members of TGE's management. Pursuant to the TGE partnership agreement and the Tallgrass Equity limited liability company agreement, our capital structure and the capital structure of Tallgrass Equity will generally replicate one another in order to maintain the one-for-one exchange ratio between the Tallgrass Equity units and Class B shares, on the one hand, and our Class A shares, on the other hand. As a result, the exchange of any Class B shares for Class A shares does not have a dilutive effect on basic net income per Class A share. However, for the three and six months ended June 30, 2017, the potential issuance of TGE Equity Participation Shares would have had a dilutive effect on basic net income per Class A share. Effective June 30, 2018 with the completion of the TEP Merger, as discussed in Note 1 – Description of Business, TEP's outstanding Equity Participation Units were converted to Equity Participation Shares at a ratio of 2.0 Equity Participation Shares for each outstanding TEP Equity Participation Unit. As of June 30, 2018, TGE has 1,957,974 outstanding Equity Participation Shares with a weighted average grant date fair value of $18.95, and expects to recognize $22.2 million of total compensation cost related to non-vested Equity Participation Shares over a weighted average period of 3.2 years. The potential issuance of TGE Equity Participation Shares would not have had a dilutive effect on the basic net income per Class A share for the three and six months ended June 30, 2018. The following table illustrates the calculation of net income per Class A share for the three and six months ended June 30, 2018 and 2017:
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Regulatory Matters |
6 Months Ended |
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Jun. 30, 2018 | |
Regulated Operations [Abstract] | |
Regulatory Matters | There are no regulatory proceedings challenging the rates of Pony Express, Rockies Express, or Tallgrass Interstate Gas Transmission, LLC ("TIGT"). On June 29, 2018, Trailblazer Pipeline Company LLC ("Trailblazer") filed a general rate case with the FERC pursuant to Section 4 of the Natural Gas Act ("NGA"), as further described below. We have also made certain regulatory filings with the FERC, including the following: Pony Express On May 22, 2017 and May 31, 2017, Pony Express made tariff filings with the FERC in Docket Nos. IS17-263-000, IS17-464-000, and IS17-465-000 to increase the contract and non-contract rates by an amount reflecting the FERC annual index adjustment of approximately 0.2%, which became effective July 1, 2017. On November 30, 2017, Pony Express filed with the FERC in Docket No. IS18-60-000 certain changes to its tariffs to reflect the addition of two new destination points, which became effective January 1, 2018. On December 29, 2017, Pony Express filed with the FERC in Docket No. IS18-113-000 certain changes to its tariffs to reflect a new origin point in Rooks County, Kansas, which became effective on February 1, 2018. On February 28, 2018, Pony Express filed with the FERC in Docket No. IS18-199-000 certain changes to its tariffs to reflect a new origin point in Platteville, Colorado, which became effective on April 1, 2018. On March 1, 2018, Pony Express submitted proposed revisions to its Rules and Regulations Tariff in Docket No. IS18-204-000 to establish the right to accept "Specialty Batches" of oil that do not conform to the Quality Specifications reflected in the tariff, provided that the acceptance is operationally feasible. These tariff changes became effective on April 1, 2018. On April 11, 2018, Pony Express filed with the FERC in Docket No. IS18–267–000 certain changes to its tariffs to reflect additional contract rates from a new origin point in Platteville, Colorado, which became effective May 1, 2018. On May 2, 2018, Pony Express filed with the FERC in Docket No. IS18-297-000 certain changes to its rules and regulations applicable to new intermediate off-system storage points, which became effective May 15, 2018. On May 31, 2018, Pony Express made tariff filings with the FERC in Docket No. IS18-570-000 to increase the contract and non-contract rates by an amount reflecting the FERC annual index adjustment of approximately 4.4% which became effective July 1, 2018. Rockies Express Rockies Express Zone 3 Capacity Enhancement Project – FERC Docket No. CP15-137-000 On March 31, 2015 in Docket No. CP15-137-000, Rockies Express filed with the FERC an application for authorization to construct and operate (1) three new mainline compressor stations located in Pickaway and Fayette Counties, Ohio and Decatur County, Indiana; (2) additional compressors at an existing compressor station in Muskingum County, Ohio; and (3) certain ancillary facilities. The facilities increased the Rockies Express Zone 3 east-to-west mainline capacity by 0.8 Bcf/d. Pursuant to the FERC's obligations under the National Environmental Policy Act, FERC staff issued an Environmental Assessment for the project on August 31, 2015. On February 25, 2016, the FERC issued a Certificate of Public Convenience and Necessity authorizing Rockies Express to proceed with the project. On March 14, 2016, Rockies Express commenced construction of the project facilities. The project was placed in-service for the full 0.8 Bcf/d on January 6, 2017. Electric Power Charge Clarification - FERC Docket No. RP17-285 On December 21, 2016, in Docket No. RP17-285, Rockies Express proposed certain revisions to the General Terms and Conditions of its tariff to clarify that the electric power costs associated with the operation of gas coolers installed in association with the Zone 3 Capacity Enhancement Project at both electric and gas powered stations, will be included in the Power Cost Tracker. Several shippers submitted comments on the proposal. The FERC issued an order on January 19, 2017 accepting the proposed revisions permitting the recovery of electric power costs from the operation of both gas and electric powered compressor stations, subject to certain clarifications. 2017 Annual and Interim FERC Fuel Tracking Filings - FERC Docket Nos. RP17-401 and RP17-1064 On February 13, 2017, in Docket No. RP17-401, Rockies Express made its annual fuel and power cost tracker filing with a proposed effective date of April 1, 2017. The FERC issued an order accepting the filing, including certain requested waivers, on March 21, 2017. On September 20, 2017, Rockies Express made its interim fuel tracker filing in Docket No. RP17-1064 with a proposed effective date of November 1, 2017. The FERC issued an order accepting the filing on October 18, 2017. Increased Frequency of FL&U and PCT Adjustments - FERC Docket No. RP18-228 On December 1, 2017, in Docket No. RP18-228, Rockies Express made a filing with the FERC to increase the frequency in which it may adjust fixed fuel and lost and unaccounted for retainages and power cost tracker charges during the year so that its recovery of fixed fuel and lost and unaccounted for charges and power costs more closely track usage. Rockies Express proposed an effective date of April 1, 2018. The comment period ended on December 13, 2017, and no parties opposed Rockies Express' filing. On April 4, 2018, the FERC issued a letter order accepting Rockies Express' proposal, subject to certain modifications. Rockies Express submitted a compliance filing reflecting the approved tariff provisions and requested modifications on April 10, 2018. No comments on the compliance filing were submitted by the comment deadline of April 16, 2018. On April 18, 2018, the FERC issued an order accepting Rockies Express' compliance filing effective April 19, 2018. 2018 Annual FERC Fuel Tracking Filing - FERC Docket No. RP18-453 On February 20, 2018, in Docket No. RP18-453, Rockies Express made its annual fuel and power cost tracker filing with a proposed effective date of April 1, 2018. The FERC issued an order accepting the filing on March 19, 2018. Cheyenne Hub Enhancement Project - FERC Docket CP18-103 On March 2, 2018, Rockies Express submitted an application pursuant to section 7(c) of the NGA for a certificate of public convenience and necessity authorizing the construction and operation of certain booster compressor units and ancillary facilities located at the Cheyenne Hub in Weld County, Colorado that will enable Rockies Express to provide a new hub service allowing for firm receipts and deliveries between Rockies Express and certain other interconnected pipelines at the Cheyenne Hub. Rockies Express filed this certificate application in conjunction with a concurrently filed certificate application by Cheyenne Connector, LLC ("Cheyenne Connector") for the Cheyenne Connector Pipeline Project further described below. The comment period for the Cheyenne Hub Enhancement Project closed on April 9, 2018. To date, various comments have been filed by market participants regarding the proposed project. Cheyenne Connector Cheyenne Connector Pipeline Project - FERC Docket CP18-102 On March 2, 2018, Cheyenne Connector, an indirect subsidiary of TGE, submitted an application pursuant to section 7(c) of the NGA for a certificate of public convenience and necessity to construct and operate a 70-mile 36 inch pipeline to transport natural gas from multiple gas processing plants in Weld County, Colorado to Rockies Express' Cheyenne Hub. The comment period for the Cheyenne Connector Pipeline Project closed on April 9, 2018. To date, various comments have been filed by market participants regarding the proposed project. TIGT General Rate Case Filing - FERC Docket No. RP16-137-000, et seq. On October 30, 2015, in Docket No. RP16-137-000, et seq., TIGT filed a general rate case with the FERC pursuant to Section 4 of the NGA. The general rate case was ultimately resolved via settlement, which the FERC approved on November 2, 2016, and a compliance filing that modernized TIGT's FERC Gas Tariff, consistent with prior FERC orders, which the FERC accepted on March 16, 2017. Per the terms of the settlement, TIGT is required to file a new general rate case on May 1, 2019 (provided that such rate case is not pre-empted by a pre-filing settlement). 2017 Annual Fuel Tracker Filing - FERC Docket No. RP17-428-000 On February 27, 2017, in Docket No. RP17-428-000, TIGT made its annual fuel tracker filing with a proposed effective date of April 1, 2017. The filing incorporated the FL&U tracker and power cost tracker mechanisms agreed to in the TIGT Rate Case Settlement. The FERC accepted the filing on March 21, 2017. Electric Power Charge Clarification - FERC Docket No. RP17-1051-000 On September 15, 2017, in Docket No. RP17-1051-000, TIGT proposed certain revisions to its tariff to clarify, amongst other things, that the electric power costs associated with the operation of gas coolers at both electric and gas powered stations are properly included in the Power Cost Tracker. The FERC issued an order on October 3, 2017 accepting the proposed revisions. 2018 Annual Fuel Tracker Filing - FERC Docket No. RP18-533-000 On March 1, 2018, in Docket No. RP18-533-000, TIGT made its annual fuel tracker filing with a proposed effective date of April 1, 2018. The FERC accepted the filing on March 22, 2018. Trailblazer 2017 Annual and Interim Fuel Tracker Filings - FERC Docket Nos. RP17-549-000 and RP17-1052-000 On March 22, 2017, in Docket No. RP17-549-000, Trailblazer made its annual fuel tracker filing with a proposed effective date of May 1, 2017. The FERC accepted the filing on April 19, 2017. On September 15, 2017, Trailblazer made its interim fuel tracker filing in Docket No. RP17-1052-000 with a proposed effective date of November 1, 2017. The FERC accepted the filing on October 13, 2017. 2018 Annual Fuel Tracker Filing - FERC Docket No. RP18-580-000 On March 22, 2018, in Docket No. in Docket No. RP18-580-000, Trailblazer made its annual fuel tracker filing with a proposed effective date of May 1, 2018. The FERC accepted the filing on April 20, 2018. General Rate Case Filing - FERC Docket No. RP18-922-000, et seq. On June 29, 2018, Trailblazer filed a general rate case with the FERC, which satisfies the requirement set forth in the settlement resolving Trailblazer's previous general rate case that Trailblazer file a new general rate case with rates to be effective no later than January 1, 2019. The June 29, 2018 filing reflects an overall increase to Trailblazer's cost of service. In the filing, Trailblazer is proposing to maintain its existing bifurcated firm transportation service rate design as well as its current tracking methodologies for the treatment of Fuel and Lost and Unaccounted For ("FL&U") gas and electric power costs. The proposed rates include an increase in rates on Trailblazer's Existing System Firm Transportation Service. The overall rate increase would be partially offset by a proposed decrease in rates for Expansion System Firm Transportation Service and interruptible services. Trailblazer is also proposing to include a cost recovery mechanism in its tariff to recover future eligible costs related to system safety, integrity, reliability, environmental and cybersecurity issues. Under the NGA and the FERC's regulations, Trailblazer's shippers and other interested parties, including the FERC's Trial Staff, have the right to challenge any aspect of Trailblazer's rate case filing. On July 11, 2018, four protests were filed that challenge various aspects of Trailblazer's rate case filing. FERC action remains pending. On July 31, 2018, the FERC issued an Order accepting and suspending the rate case filing, and establishing hearing and settlement procedures. In the Order, the FERC approved the as-filed rate decreases for Expansion System Firm Transportation Service, as well as Trailblazer’s interruptible services, effective August 1, 2018. The Commission also established a paper hearing to examine the extent to which Trailblazer is entitled to an Income Tax Allowance. All remaining issues, including the proposed rate increases to Existing System Firm Transportation Service have been set for hearing and are accepted effective January 1, 2019, subject to refund. |
Legal and Environmental Matters |
6 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal and Environmental Matters | Legal In addition to the matters discussed below, we are a defendant in various lawsuits arising from the day-to-day operations of our business. Although no assurance can be given, we believe, based on our experiences to date, that the ultimate resolution of such matters will not have a material adverse impact on our business, financial position, results of operations, or cash flows. We have evaluated claims in accordance with the accounting guidance for contingencies that we deem both probable and reasonably estimable and, accordingly, have recorded no reserve for legal claims as of June 30, 2018 or December 31, 2017. Rockies Express Ultra Resources In early 2016, Ultra Resources, Inc. ("Ultra") defaulted on its firm transportation service agreement for approximately 0.2 Bcf/d through November 11, 2019. In late March 2016, Rockies Express terminated Ultra's service agreement. On April 14, 2016, Rockies Express filed a lawsuit against Ultra for breach of contract and damages in Harris County, Texas, seeking approximately $303 million in damages and other relief. On April 29, 2016, Ultra and certain of its debtor affiliates filed for protection under Chapter 11 of the United States Bankruptcy Code in United States Bankruptcy Court for the Southern District of Texas, which operated as a stay of the Harris County state court proceeding. On January 12, 2017, Rockies Express and Ultra entered into an agreement to settle Rockies Express' approximately $303 million claim against Ultra. In accordance with the settlement agreement, Ultra made a cash payment to Rockies Express of $150 million on July 12, 2017, and entered into a new, seven-year firm transportation agreement with Rockies Express commencing December 1, 2019, for west-to-east service of 0.2 Bcf/d at a rate of approximately $0.37 per dth/d, or approximately $26.8 million annually. TEP received its proportionate distribution from the cash settlement payment in July 2017. Environmental, Health and Safety We are subject to a variety of federal, state and local laws that regulate permitted activities relating to air and water quality, waste disposal, and other environmental matters. We currently believe that compliance with these laws will not have a material adverse impact on our business, cash flows, financial position or results of operations. However, there can be no assurances that future events, such as changes in existing laws, the promulgation of new laws, or the development of new facts or conditions will not cause us to incur significant costs. We had environmental reserves of $7.6 million and $7.7 million at June 30, 2018 and December 31, 2017, respectively. Rockies Express Seneca Lateral On January 31, 2018, Rockies Express experienced an operational disruption on its Seneca Lateral due to a pipe rupture and natural gas release in a rural area in Noble County, Ohio. There were no injuries reported and no evacuations. The release required Rockies Express to shut off the flow through the segment until February 27, 2018, when temporary repairs were completed allowing the segment to be placed back into service. Total cost of remediation is expected to be approximately $4.8 million prior to any insurance recoveries. A root cause investigation is ongoing. TMID Casper Plant, EPA Notice of Violation In August 2011, the EPA and the Wyoming Department of Environmental Quality ("WDEQ") conducted an inspection of the Leak Detection and Repair ("LDAR") Program at the Casper Gas Plant in Wyoming. In September 2011, Tallgrass Midstream, LLC ("TMID") received a letter from the EPA alleging violations of the Standards of Performance of Equipment Leaks for Onshore Natural Gas Processing Plant requirements under the Clean Air Act. TMID received a letter from the EPA concerning settlement of this matter in April 2013 and received additional settlement communications from the EPA and Department of Justice beginning in July 2014. Settlement negotiations are continuing, including the expected inclusion of TIGT as a party to any possible settlement as a result of TIGT owning a compressor that is located adjacent to the Casper Gas Plant site. Casper Gas Plant On November 25, 2014, WDEQ issued a Notice of Violation for violations of Part 60 Subpart OOOO related to the Depropanizer project (wv-14388, issued 7/9/13) in Docket No. 5506-14. TMID had discussed the issues in a meeting with WDEQ in Cheyenne on November 17, 2014, and submitted a disclosure on November 20, 2014 detailing the regulatory issues and potential violations. The project triggered a modification of Subpart OOOO for the entire plant. The project equipment as well as plant equipment subjected to Subpart OOOO was not monitored timely, and initial notification was not made timely. Settlement negotiations with WDEQ are currently ongoing. TMG Archibald Booster Station Tallgrass Midstream Gathering, LLC ("TMG") is currently a party to a remedy agreement entered into with the WDEQ in July 2013 with respect to the Archibald Booster Station located in Campbell County, Wyoming. In connection with the remedy agreement, TMG has agreed to complete certain remedial actions at the site related to a former earthen pit including semi-annual groundwater sampling, and quarterly recovery activities at monitoring wells. The facility is currently in compliance with the WDEQ under the remedy agreement. Irwin Booster Station TMG is also party to a remedy agreement entered into with the WDEQ in July 2013 with respect to the Irwin Booster Station located in Converse County, Wyoming. In connection with the remedy agreement, TMG has agreed to complete certain remedial actions at the site related to a former earthen pit including semi-annual groundwater sampling. The facility is currently in compliance with the WDEQ under the remedy agreement. Trailblazer Pipeline Integrity Management Program Starting in 2014 Trailblazer's operating capacity was decreased as a result of smart tool surveys that identified approximately 25 - 35 miles of pipe as potentially requiring repair or replacement. During 2016 and 2017, Trailblazer incurred approximately $21.8 million of remediation costs to address this issue, including replacing approximately 8 miles of pipe. To date the pressure and capacity reduction has not prevented Trailblazer from fulfilling its firm service obligations at existing subscription levels or had a material adverse financial impact on us. However, Trailblazer intends to continue performing remediation to increase and maximize its operating capacity over the long-term and expects to spend in excess of $20 million during 2018 for this pipe replacement and remediation work. Trailblazer is exploring all possible cost recovery options to recover expenditures, including recovery through a general rate increase, negotiated rate agreements with its customers, or other FERC-approved recovery mechanisms. In connection with TEP's acquisition of Trailblazer in April 2014, TD agreed to indemnify TEP for certain out of pocket costs related to repairing or remediating the Trailblazer Pipeline. The contractual indemnity was capped at $20 million and subject to a $1.5 million deductible. TEP received the entirety of the $20 million from TD pursuant to the contractual indemnity as of December 31, 2017. Pony Express Pipeline Integrity In connection with certain crack tool runs on the Pony Express System completed in 2015, 2016, and 2017, Pony Express completed approximately $18 million of remediation for anomalies identified on the Pony Express System associated with the initial conversion and commissioning of portions of the pipeline converted from natural gas to crude oil service. Remediation work was substantially complete as of March 31, 2018. |
Reporting Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reporting Segments | Our operations are located in the United States. We are organized into three reportable segments: (1) Natural Gas Transportation, (2) Crude Oil Transportation, and (3) Gathering, Processing & Terminalling. Corporate and Other includes corporate overhead costs that are not directly associated with the operations of our reportable segments, such as interest and fees associated with our revolving credit facilities and the 2024 and 2028 Notes, public company costs, and equity-based compensation expense. Natural Gas Transportation. The Natural Gas Transportation segment is engaged in the ownership and operation of FERC-regulated interstate natural gas pipelines and an integrated natural gas storage facility that provide services to on-system customers (such as third-party LDCs), industrial users and other shippers. The Natural Gas Transportation segment includes our aggregate 75% membership interest in Rockies Express, inclusive of the additional 25.01% membership interest acquired effective February 7, 2018. Crude Oil Transportation. The Crude Oil Transportation segment is engaged in the ownership and operation of the Pony Express System, which is a FERC-regulated crude oil pipeline serving the Bakken Shale, Denver-Julesburg and Powder River Basins, and other nearby oil producing basins. Gathering, Processing & Terminalling. The Gathering, Processing & Terminalling segment is engaged in the ownership and operation of natural gas gathering and processing facilities that produce NGLs and residue gas sold in local wholesale markets or delivered into pipelines for transportation to additional end markets; our crude oil terminal services; water business services provided primarily to the oil and gas exploration and production industry; the transportation of NGLs; and Stanchion. These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for their respective operations. During the second quarter of 2018, upon completion of the TEP Merger, management updated TGE's internal reporting. Beginning in the second quarter of 2018, we consider Adjusted EBITDA, as described below, to be our primary segment performance measure. We consider Adjusted EBITDA to be our primary segment performance measure as we believe it is the most meaningful measure to assess our financial condition and results of operations as a public entity. 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 and deficiency payments received from or utilized by our customers. Adjusted EBITDA is calculated and presented at the Tallgrass Equity level, before consideration of noncontrolling interest associated with the Exchange Right Holders, which we believe provides investors the most complete picture of our overall financial and operational results. The following tables set forth our segment information for the periods indicated:
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||
Basis of Presentation | Basis of Presentation These condensed consolidated financial statements and related notes for the three and six months ended June 30, 2018 and 2017 were prepared in accordance with the accounting principles contained in the Financial Accounting Standards Board's Accounting Standards Codification, the single source of accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP for annual periods. The condensed consolidated financial statements for the three and six months ended June 30, 2018 and 2017 include all normal, recurring adjustments and disclosures that we believe are necessary for a fair statement of the results for the interim periods. In this report, the Financial Accounting Standards Board is referred to as the FASB and the FASB Accounting Standards Codification is referred to as the Codification or ASC. Certain prior period amounts have been reclassified to conform to the current presentation. Our financial results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018. The accompanying condensed consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 ("2017 Form 10-K") filed with the SEC on February 13, 2018. |
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Consolidation | The condensed consolidated financial statements include the accounts of TGE and its subsidiaries and controlled affiliates. Significant intra-entity items have been eliminated in the presentation. Net income or loss from consolidated subsidiaries that are not wholly-owned by TGE is attributed to TGE and noncontrolling interests in accordance with the respective ownership interests. A variable interest entity ("VIE") is a legal entity that possesses any of the following characteristics: an insufficient amount of equity at risk to finance its activities, equity owners who do not have the power to direct the significant activities of the entity (or have voting rights that are disproportionate to their ownership interest), or equity owners who do not have the obligation to absorb expected losses or the right to receive the expected residual returns of the entity. Companies are required to consolidate a VIE if they are its primary beneficiary, which is the enterprise that has a variable interest that could be significant to the VIE and the power to direct the activities that most significantly impact the entity's economic performance. We have presented separately in our condensed consolidated balance sheets, to the extent material, the liabilities of our consolidated VIEs for which creditors do not have recourse to our general credit. Our consolidated VIEs do not have material assets that can only be used to settle specific obligations of the consolidated VIEs. Prior to June 29, 2018, both Tallgrass Equity and TEP were considered to be VIEs under the applicable authoritative guidance and included in our consolidated results. As a result of the TEP Merger, and changes in ownership and their respective partnership arrangements, Tallgrass Equity and TEP are no longer considered to be VIEs. We continue to consolidate our membership interests in Tallgrass Equity and TEP through the voting interest model. |
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Use of Estimates | Use of Estimates Certain amounts included in or affecting these condensed consolidated financial statements and related disclosures must be estimated, requiring management to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time the financial statements are prepared. These estimates and assumptions affect the amounts reported for assets, liabilities, revenues, and expenses during the reporting period, and the disclosure of contingent assets and liabilities at the date of the financial statements. Management evaluates these estimates on an ongoing basis, utilizing historical experience, consultation with experts and other methods it considers reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from these estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. |
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Revenue Recognition, Policy | Revenue Recognition In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a comprehensive and converged set of principles-based revenue recognition guidelines which supersede the existing industry and transaction-specific standards. The core principle of the new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, entities must apply a five-step process to (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 also mandates disclosure of sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The disclosure requirements include qualitative and quantitative information about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. Management has completed its evaluation and implemented the revised guidance using the modified retrospective method as of January 1, 2018. This approach allows us to apply the new standard to (i) all new contracts entered into after January 1, 2018 and (ii) all existing contracts for which all (or substantially all) of the revenue has not been recognized under legacy revenue guidance as of January 1, 2018 through a cumulative adjustment to members' equity. Consolidated revenues presented in the comparative consolidated financial statements for periods prior to January 1, 2018 have not been revised. On January 1, 2018, we recorded a cumulative effect adjustment to equity of $44.1 million, increased the carrying amount of our investment in Rockies Express by $42.8 million, and recognized a receivable from Rockies Express of $1.3 million. These adjustments relate to the cumulative effect adjustment recorded by Rockies Express of $125.2 million upon adoption of ASC 606. The cumulative effect adjustment at Rockies Express arose as a result of the allocation of the transaction price to a series of individual performance obligations in certain long-term transportation contracts with tiered-pricing arrangements. The adjustment increases the carrying amount of our investment in Rockies Express to reflect increased equity in earnings and establishes a receivable for the increased management fee revenue that would have been earned by NatGas during the periods prior to implementation. Through our review process, we also identified the following changes to our revenue recognition policies that did not result in a cumulative effect adjustment on January 1, 2018:
See Note 11 – Revenue from Contracts with Customers for revenue disclosures related to both the implementation and the additional requirements prescribed by the standard. These new disclosures include information regarding the significant judgments used in evaluating when and how revenue is (or will be) recognized and data related to contract assets and liabilities. |
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Accounting Pronouncements | Accounting Pronouncements Not Yet Adopted ASU No. 2016-02, "Leases (Topic 842)" In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 provides a comprehensive update to the lease accounting topic in the Codification intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in ASU 2016-02 include a revised definition of a lease as well as certain scope exceptions. The changes primarily impact lessee accounting, while lessor accounting is largely unchanged from previous GAAP. Management is currently evaluating the impact of our pending adoption of ASC 842. The status of our implementation is as follows:
The amendments in ASU 2016-02 are effective for public entities for annual reporting periods beginning after December 15, 2018, and for interim periods within that reporting period. Early application is permitted. We plan to adopt ASU 2016-02 on January 1, 2019 using the modified retrospective method. ASC 842 provides for a number of practical expedients. We intend to elect the following practical expedients upon adoption of ASC 842: •An entity need not reassess whether any expired or existing contracts are or contain leases. •An entity need not reassess the lease classification for any expired or existing leases. •An entity need not reassess initial direct costs for any existing leases.
We are in the process of quantifying the impact of adoption, but we cannot reasonably estimate the full impact of the standard at this time. Additionally, we are currently evaluating our business processes, systems, and controls to ensure the accuracy and timeliness of the recognition and disclosure requirements under the new lease guidance. |
Acquisitions & Dispositions - Equity Method Investments (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments, Policy | As the aggregate 75% membership interest does not represent a controlling interest in Rockies Express, TGE's 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 25.01% membership interest in Rockies Express was transferred to Tallgrass Equity 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. |
Acquisitions & Dispositions - Business Combinations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Summarized financial information for Rockies Express is as follows:
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Business Acquisition, Pro Forma Information | Unaudited pro forma revenue and net income attributable to TGE for the six months ended June 30, 2018 and 2017 is presented below as if the acquisition of BNN North Dakota had been completed on January 1, 2017.
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BNN North Dakota | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following represents the fair value of assets acquired and liabilities assumed (in thousands):
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Rockies Express Pipeline LLC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity Method Investments | At June 30, 2018, the basis difference for our membership interests in Rockies Express was allocated as follows:
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Related Party Transactions (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Transactions with Affiliated Companies | Totals of transactions with affiliated companies, excluding transactions disclosed elsewhere in these notes, are as follows:
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Schedule of Balances with Affiliates Included in Consolidated Balance Sheets | Details of balances with affiliates included in "Receivable from related parties" and "Accounts payable to related parties" in the condensed consolidated balance sheets are as follows:
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Schedule of Balances of Gas Imbalance with Affiliated Shippers | Gas imbalances with affiliated shippers are as follows:
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Inventory - (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Inventory | The components of inventory at June 30, 2018 and December 31, 2017 consisted of the following:
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Property, Plant and Equipment (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Property Plant and Equipment | A summary of net property, plant and equipment by classification is as follows:
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Investments in Unconsolidated Affiliates - (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | Summarized financial information for Rockies Express is as follows:
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Risk Management (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Derivative Contracts | The following table summarizes the fair values of our derivative contracts included in the condensed consolidated balance sheets:
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Derivative Contracts Included in Consolidated Statements of Income | The following table summarizes the impact of derivative contracts not designated as hedging contracts for the three and six months ended June 30, 2018 and 2017:
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Schedule of Energy Commodity Derivative Contracts Based on Fair Value Hierarchy Established by Codification | The following table summarizes the fair value measurements of our derivative contracts as of June 30, 2018 and December 31, 2017, based on the fair value hierarchy:
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Long-term Debt (Tables) |
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Schedule of Debt | Long-term debt consisted of the following at June 30, 2018 and December 31, 2017:
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Carrying Amount and Fair value of Long-term Debt | The following table sets forth the carrying amount and fair value of our long-term debt, which is not measured at fair value in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017, but for which fair value is disclosed:
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Tallgrass Equity, LLC | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | The following table sets forth the available borrowing capacity under the Tallgrass Equity revolving credit facility as of June 30, 2018 and December 31, 2017:
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Tallgrass Energy Partners | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Line of Credit Facilities | The following table sets forth the available borrowing capacity under the TEP revolving credit facility as of June 30, 2018 and December 31, 2017:
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Partnership Equity - Dividends Declared |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tallgrass Energy, LP (TGE) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Dividends | The following table details the dividends for the periods indicated:
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Tallgrass Energy Partners | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Dividends | TEP Distributions. The following table shows the distributions for the periods indicated:
As a result of the TEP Merger, Tallgrass Equity and its wholly-owned subsidiary, Tallgrass Equity Investments, LLC, will receive all distributions paid by TEP for the second quarter of 2018 and subsequent periods. |
Revenue from Contracts with Customers - (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following tables provide the impact of the guidance on our condensed consolidated balance sheet as of June 30, 2018 and the condensed consolidated statements of income for the three and six months ended June 30, 2018:
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Disaggregation of Revenue | A summary of our revenue by line of business is as follows:
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction | We expect to recognize the total backlog during the remainder of 2018 and future periods as follows (in thousands):
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Contract with Customer, Asset and Liability | Contract balances as of June 30, 2018 were as follows:
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Net Income per Class A Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Income per Class A Share | The following table illustrates the calculation of net income per Class A share for the three and six months ended June 30, 2018 and 2017:
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Reporting Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of TGE's Segment Information of Revenue | The following tables set forth our segment information for the periods indicated:
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Summary of TGE's Segment Information of Earnings |
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Summary of TGE's Segment Information of Capital Expenditures |
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Summary of TGE's Segment Information of Assets |
|
Description of Business - Additional Information (Detail) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018
shares
|
Jun. 30, 2018
shares
|
Jan. 01, 2017 |
|
Organization [Line Items] | |||
Exchange Ratio | 0 | ||
Rockies Express Pipeline LLC | |||
Organization [Line Items] | |||
Equity Method Investment, Ownership Percentage | 75.00% | 75.00% | |
Tallgrass NatGas Operator, LLC | |||
Organization [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Tallgrass Terminals, LLC | |||
Organization [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Tallgrass Equity, LLC | |||
Organization [Line Items] | |||
Managing Member or General Partner, Ownership Interest | 100.00% | ||
Tallgrass Energy Partners | |||
Organization [Line Items] | |||
Ownership Percentage | 100.00% | 100.00% | |
Ownership Interests Held By Public | |||
Organization [Line Items] | |||
Common Units, Units Outstanding | 47,693,097 | 47,693,097 |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Jan. 01, 2018 |
Dec. 31, 2017 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 44,100 | ||
Unconsolidated investments | $ 1,475,056 | $ 909,531 | |
Accounts receivable, net | $ 213,973 | $ 118,615 | |
Rockies Express Pipeline LLC | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Unconsolidated investments | 42,800 | ||
Tallgrass NatGas Operator, LLC | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accounts receivable, net | 1,300 | ||
Rockies Express Pipeline LLC | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Cumulative Effect of New Accounting Principle in Period of Adoption | $ 125,200 |
Acquisitions & Dispositions - Equity Method Investments (Details) - Rockies Express Pipeline LLC - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Feb. 07, 2018 |
|
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ (1,117,570) | $ 376,500 |
Basis Difference, Amortization Period | 35 years | |
Long-term Debt | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ 48,571 | |
Property, Plant and Equipment | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ (1,166,141) | |
Basis Difference, Amortization Period | 35 years | |
Minimum | Long-term Debt | ||
Schedule of Equity Method Investments [Line Items] | ||
Basis Difference, Amortization Period | 2 years | |
Maximum | Long-term Debt | ||
Schedule of Equity Method Investments [Line Items] | ||
Basis Difference, Amortization Period | 25 years |
Acquisitions & Dispositions - BNN North Dakota Acquisition, Assets Acquired & Liabilities Assumed (Details) - USD ($) $ in Thousands |
Jan. 12, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Inventories | $ 21,063 | $ 21,609 | |
Property, plant and equipment, net | 2,595,063 | 2,394,337 | |
Intangible assets, net | $ 134,663 | $ 97,731 | |
BNN North Dakota | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 2,457 | ||
Inventories | 67 | ||
Property, plant and equipment, net | 48,900 | ||
Intangible assets, net | 46,800 | ||
Accounts Payable and Accrued Liabilities | (3,224) | ||
Net identifiable assets acquired (excluding cash) | $ 95,000 | ||
Minimum | |||
Business Acquisition [Line Items] | |||
Finite-Lived Intangible Assets, Remaining Amortization Period | 8 years | ||
Maximum | |||
Business Acquisition [Line Items] | |||
Finite-Lived Intangible Assets, Remaining Amortization Period | 14 years |
Acquisitions & Dispositions - Pro Forma Revenue & Net Income (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Business Combinations [Abstract] | ||
Pro Forma Revenue | $ 373,111 | $ 309,893 |
Pro Forma Net income attributable to TGE | $ 17,824 | $ 20,606 |
Related Party Transactions - Schedule of Transactions with Affiliated Companies (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Related Party Transaction [Line Items] | ||||
Revenue from related parties | $ 1,869 | $ 1,692 | $ 3,765 | $ 3,324 |
Cost of transportation services from related parties | 0 | 4,907 | 0 | 9,414 |
Operations and maintenance | ||||
Related Party Transaction [Line Items] | ||||
Expenses related to transactions with related companies | 0 | 7,430 | 0 | 13,707 |
General and administrative expense | ||||
Related Party Transaction [Line Items] | ||||
Expenses related to transactions with related companies | 0 | 11,095 | 0 | 20,668 |
Property, Plant and Equipment | ||||
Related Party Transaction [Line Items] | ||||
Costs capitalized from transactions with related parties | $ 0 | $ 510 | $ 0 | $ 803 |
Related Party Transactions - Schedule of Balances with Affiliates in Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Related Party Transaction [Line Items] | ||
Receivable from related parties | $ 2,923 | $ 1,340 |
Accounts payable to related parties | 0 | 5,342 |
Rockies Express Pipeline LLC | ||
Related Party Transaction [Line Items] | ||
Receivable from related parties | 2,686 | 1,340 |
Iron Horse Pipeline, LLC | ||
Related Party Transaction [Line Items] | ||
Receivable from related parties | 120 | 0 |
Pawnee Terminal, LLC | ||
Related Party Transaction [Line Items] | ||
Receivable from related parties | 117 | 0 |
Tallgrass Operations, LLC | ||
Related Party Transaction [Line Items] | ||
Accounts payable to related parties | $ 0 | $ 5,342 |
Related Party Transactions - Schedule of Balances of Gas Imbalance with Affiliated Shippers (Detail) - Affiliated Shippers - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Related Party Transaction [Line Items] | ||
Affiliate gas imbalance receivables | $ 172 | $ 18 |
Affiliate gas imbalance payables | $ 0 | $ 442 |
Inventory - (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Crude oil | $ 11,501 | $ 12,792 |
Materials and supplies | 6,310 | 5,891 |
Natural gas liquids | 471 | 942 |
Gas in underground storage | 2,781 | 1,984 |
Inventory, Net | $ 21,063 | $ 21,609 |
Investments in Unconsolidated Affiliates - Equity Method Investments (Details) - Rockies Express Pipeline LLC - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Revenue | $ 227,615 | $ 207,149 | $ 457,673 | $ 408,487 |
Operating income | 130,034 | 112,703 | 258,712 | 220,072 |
Net income to Members | $ 88,663 | $ 70,945 | $ 179,631 | $ 137,195 |
Risk Management - Schedule of Fair Value of Derivative Contracts (Detail) - Energy Related Derivative $ in Thousands |
Jun. 30, 2018
USD ($)
bbl
|
Dec. 31, 2017
USD ($)
bbl
|
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative liability at fair value | $ 1,143 | $ 2,368 |
Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability at fair value | $ 1,143 | $ 2,368 |
Commodity | ||
Derivatives, Fair Value [Line Items] | ||
Derivative, Nonmonetary Notional Amount | bbl | 121,000 | 356,000 |
Risk Management - Derivative Contracts Included in Consolidated Statement of Income (Detail) - Derivatives not designated as hedging contracts - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Energy Related Derivative | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in income on derivatives | $ 2,935 | $ 227 | $ 7,230 | $ 890 |
Energy commodity derivative contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in income on derivatives | 0 | (67) | 0 | 106 |
Equity Option | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain (loss) recognized in income on derivatives | $ 0 | $ 0 | $ 0 | $ 1,885 |
Risk Management - Schedule of Energy Commodity Derivative Contracts Based on Fair Value Hierarchy Established by Codification (Detail) - Energy Related Derivative - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Derivative liability at fair value | $ 1,143 | $ 2,368 |
Quoted prices in active markets for identical assets (Level 1) | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability at fair value | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability at fair value | 1,143 | 2,368 |
Significant unobservable inputs (Level 3) | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability at fair value | $ 0 | $ 0 |
Risk Management - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Feb. 01, 2017 |
Jan. 01, 2016 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Feb. 01, 2018 |
|
Derivative [Line Items] | |||||||
Partners' Capital Account, Units, Treasury Units Purchased | 736,262 | ||||||
Partial exercise of call option | $ 35,300 | ||||||
Cash in Margin Accounts and Outstanding Letters of Credit | 1.1 | 3.0 | |||||
Pony Express Pipeline | |||||||
Derivative [Line Items] | |||||||
Business Acquisition, Percentage of Voting Interests Acquired | 31.30% | 2.00% | |||||
Equity Option | |||||||
Derivative [Line Items] | |||||||
Partners' Capital Account, Units, Treasury Units Purchased | 1,703,094 | ||||||
Partial exercise of call option | $ 72,400 | $ 0 | $ 72,381 | ||||
Equity Option | Pony Express Pipeline | |||||||
Derivative [Line Items] | |||||||
Derivative, Term of Contract | 18 months | ||||||
Option Indexed to Issuer's Equity, Strike Price | $ 42.50 | ||||||
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | 6,518,000 |
Long-term Debt - Capacity under Revolving Credit Facility - Tallgrass Equity (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
May 12, 2015 |
---|---|---|---|
Line of Credit Facility [Line Items] | |||
Long-term Debt | $ (2,535,555,000) | $ (2,292,993,000) | |
Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt | (1,049,000,000) | (807,000,000) | |
Tallgrass Equity, LLC | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt | (125,000,000) | (146,000,000) | |
Line of Credit Facility, Remaining Borrowing Capacity | 25,000,000 | 4,000,000 | |
Barclays Bank | Tallgrass Equity, LLC | Revolving Credit Facility | |||
Line of Credit Facility [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 |
Long-term Debt - Capacity under Revolving Credit Facility - TEP (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Line of Credit Facility [Line Items] | ||
Long-term Debt | $ (2,535,555) | $ (2,292,993) |
Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt | (1,049,000) | (807,000) |
Tallgrass Energy Partners | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt | (924,000) | (661,000) |
Letters of Credit Outstanding, Amount | (94) | (94) |
Line of Credit Facility, Remaining Borrowing Capacity | 825,906 | 1,088,906 |
Wells Fargo Bank, National Association | Tallgrass Energy Partners | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,750,000 | $ 1,750,000 |
Partnership Equity - TGE Summary of Dividends (Details) - Tallgrass Energy, LP (TGE) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
|
Dividends Payable [Line Items] | ||||||
Dividends | $ 77,052 | $ 28,316 | $ 21,346 | $ 20,617 | $ 19,891 | $ 16,697 |
Dividends Payable, Amount Per Share | $ 0.4975 | $ 0.4875 | $ 0.3675 | $ 0.3550 | $ 0.3425 | $ 0.2875 |
Partnership Equity - TEP Summary of Distributions (Details) - Tallgrass Energy Partners - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
|
Distribution Made to Limited Partner [Line Items] | |||||
Limited Partner Common Units | $ 71,370 | $ 70,638 | $ 69,174 | $ 67,671 | $ 60,486 |
Incentive Distribution Rights | 39,816 | 39,125 | 37,744 | 36,342 | 29,840 |
General Partner Units | 1,267 | 1,251 | 1,219 | 1,186 | 1,040 |
Total Distributions | $ (112,453) | $ (111,014) | $ (108,137) | $ (105,199) | $ (91,366) |
Distribution Made to Limited Partner, Distributions Paid, Per Unit | $ 0.9750 | $ 0.9650 | $ 0.9450 | $ 0.9250 | $ 0.8350 |
Revenue from Contracts with Customers - Contract with Customer, Asset and Liability (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Revenue from Contract with Customer [Abstract] | |||
Contract with Customer, Asset, Net, Current | $ 64,890 | $ 64,890 | $ 61,888 |
Accounts and Other Receivables, Net, Current | 149,083 | 149,083 | 56,727 |
Accounts receivable, net | 213,973 | 213,973 | 118,615 |
Deferred revenue | 99,991 | 99,991 | $ 88,471 |
Contract with Customer, Liability, Revenue Recognized | $ 4,200 | $ 7,300 |
Net Income per Class A Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to TGE | $ 1,063 | $ 8,753 | $ 17,798 | $ 20,782 |
Basic average number of Class A shares outstanding | 59,397 | 58,075 | 58,745 | 58,075 |
Basic net income per Class A share | $ 0.02 | $ 0.15 | $ 0.30 | $ 0.36 |
Incremental net income attributable to TGE including the effect of the assumed issuance of Equity Participation Shares | $ 0 | $ 38 | $ 0 | $ 64 |
Net income attributable to TGE including incremental net income from assumed issuance of Equity Participation Shares | $ 1,063 | $ 8,791 | $ 17,798 | $ 20,846 |
Equity Participation Shares equivalent shares | 0 | 117 | 0 | 112 |
Diluted average number of Class A shares outstanding | 59,397 | 58,192 | 58,745 | 58,187 |
Diluted net income per Class A Share | $ 0.02 | $ 0.15 | $ 0.30 | $ 0.36 |
Net Income Per Class A Share - Additional Information (Details) $ / shares in Units, $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018
USD ($)
$ / shares
shares
|
Jun. 30, 2018
USD ($)
$ / shares
shares
|
|
Earnings Per Share [Abstract] | ||
Exchange Ratio | 0 | |
Nonvested Equity Participation Shares | shares | 1,957,974 | 1,957,974 |
Nonvested, Weighted Average Grant Date Fair Value | $ / shares | $ 18.95 | $ 18.95 |
Nonvested Awards, Compensation Cost Not yet Recognized | $ | $ 22.2 | $ 22.2 |
Weighted Average Remaining Contractual Terms | 3 years 2 months |
Regulatory Matters (Details) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018
Bcf / d
mi
|
Jul. 01, 2018 |
Jul. 01, 2017 |
|
Public Utilities, General Disclosures [Line Items] | |||
Capacity Enhancement | Bcf / d | 0.8 | ||
Miles of Pipeline | mi | 70 | ||
Size of Pipeline | 36 | ||
Pony Express Pipeline | |||
Public Utilities, General Disclosures [Line Items] | |||
FERC Annual Index Adjustment | 4.00% | 0.00% |
Reporting Segments - Summary of TGE's Segment Information for Payments to Acquire Plant, Property and Equipment (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 176,275 | $ 53,995 |
TGE | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 176,275 | 53,995 |
TGE | Natural Gas Transportation | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 72,882 | 8,368 |
TGE | Crude Oil Transportation | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 24,945 | 18,189 |
TGE | Gathering, Processing & Terminalling | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 76,342 | 27,438 |
TGE | Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 2,106 | $ 0 |
Reporting Segments - Summary of TGE's Segment Information of Assets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Segment assets | $ 5,178,196 | $ 4,292,013 |
TGE | ||
Segment Reporting Information [Line Items] | ||
Segment assets | 5,178,196 | 4,292,013 |
TGE | Natural Gas Transportation | ||
Segment Reporting Information [Line Items] | ||
Segment assets | 2,187,783 | 1,606,666 |
TGE | Crude Oil Transportation | ||
Segment Reporting Information [Line Items] | ||
Segment assets | 1,419,144 | 1,407,758 |
TGE | Gathering, Processing & Terminalling | ||
Segment Reporting Information [Line Items] | ||
Segment assets | 1,239,021 | 943,340 |
TGE | Corporate and Other | ||
Segment Reporting Information [Line Items] | ||
Segment assets | $ 332,248 | $ 334,249 |
Reporting Segments - Additional Information (Detail) - Segment |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Feb. 07, 2018 |
|
Segment Reporting Information [Line Items] | ||
Number of reportable segments | 3 | |
Rockies Express Pipeline LLC | Tallgrass Development LP | ||
Segment Reporting Information [Line Items] | ||
Business Acquisition, Percentage of Voting Interests Acquired | 25.01% | |
Rockies Express Pipeline LLC | ||
Segment Reporting Information [Line Items] | ||
Equity Method Investment, Ownership Percentage | 75.00% |
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