Tallgrass acquires additional interest in Pony Express

Tallgrass Energy Partners, LP announced today that it has closed on the acquisition of an additional 33.3% interest in Tallgrass Pony Express Pipeline, LLC for cash consideration of US$700 million. The acquisition increases TEP’s membership interest in Pony Express to 66.7%.

“We are excited to complete our third dropdown acquisition at TEP which increases our size and scale and provides TEP with additional firm, fee-based cash flows supported by long-term contracts,” said Tallgrass President and Chief Executive Officer, David G. Dehaemers, Jr. 

“This acquisition furthers one of our commitments: to grow TEP’s cash distributions to its unitholders through dropdown transactions at attractive multiples. Consistent with our first Pony Express acquisition, we expect this transaction to be immediately accretive to unitholders and expect to recommend that our board of directors increase our distribution over the next two quarters by an aggregate of at least 15%, providing clear visibility toward achieving our previously announced distribution growth guidance of approximately 20% for 2015.”

Acquisition of an additional 33.3% interest in Pony Express

The US$700 million cash purchase price was funded through TEP’s follow-on equity offering of 10 million common units, which closed on February 27, and borrowings under its revolving credit facility. The terms of the transaction provide TEP an additional minimum quarterly preference payment of US$20 million, bringing TEP’s total quarterly preference payment amount to US$36.65 million for its 66.7% interest. 

The preference will continue through distributions made with respect to the quarter ended 31 December, 2015, with distributions of available cash generally shared pro rata thereafter. The aggregate pro-rated preference payment to TEP for the first quarter of 2015 will be approximately US$23.5 million.


Adapted from press release by Hannah Priestley-Eaton

Published on 03/03/2015


Get your FREE Oilfield Technology magazine »

Get your FREE trial of Hydrocarbon Engineering magazine »

Get your FREE trial of World Pipelines magazine »


 
 

Related articles

Pony Express and Hiland Crude announce open season

Tallgrass Pony Express Pipeline and Hiland Crude announce joint open season.

Pony Express Pipeline announces open season

Tallgrass Pony Express Pipeline announces binding open season for crude oil pipeline expansion.

Tallgrass and AGL Resources to develop new natural gas pipeline

Tallgrass Development intends to pursue the development of the Prairie State Pipeline, with ownership participation by Tallgrass and AGL Resources Inc.

Pony Express Pipeline begins commercial service

Line fill for the Tallgrass Pony Express Pipeline, LLC crude oil pipeline project is complete and the pipeline is in commercial service.

Recommend magazines

  World Pipelines