General | Quarterly / Earnings Reports

Post IPO, Midstream Co. Tallgrass Sees Solid Q1

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Tallgrass Energy Partners LP has reported financial and operating results for the first quarter of 2013.

President and CEO David G. Dehaemers, Jr. said, "We are pleased with the solid performance demonstrated by the Partnership in the first quarter. While pro forma distribution coverage in the first quarter was very strong, we expect that coverage will vary from quarter to quarter. Our Gas Transportation and Storage segment executed several key contract renewals, and our Processing segment performed well while continuing to execute on its expansion projects that are progressing consistent with our expectations. In the short time since we acquired these businesses, we have accomplished several significant milestones and I sincerely thank our dedicated employees for their focused efforts."

Segment Overview

The first quarter 2013 results by segment are summarized below:

Adjusted EBITDA in the Gas Transportation and Storage segment for the first quarter of 2013 was in line with management’s expectations. Average firm contracted transportation capacity declined when compared to the first quarter of 2012 but are consistent with volumes in the fourth quarter of 2012.

Dehaemers noted: "We are confident that in the near term Tallgrass Interstate Gas Transmission will perform at levels approximating those achieved in the first quarter of 2013, as our team remains focused on renewing transportation and storage contracts. We believe that our focus on our customers and our markets will provide opportunities for this segment to outperform this level in the future."

The Processing segment adjusted EBITDA decline is primarily due to lower natural gas liquids (NGL) prices in the first quarter of 2013 as compared to the 2012 first quarter. NGL prices at Conway averaged $0.98/gallon during the first quarter of 2013 as compared to $1.07/gallon during the first quarter of 2012. Approximate average inlet volumes were 127 MMcf/d for the three-month period ended March 31, 2013, as compared to 123 MMcf/d for the three-month period ended March 31, 2012, reflecting near capacity utilization of our Processing assets during the 2013 first quarter.

"We are very pleased with Tallgrass Midstream’s performance in the first quarter," Dehaemers noted. "Our expansion and efficiency upgrade projects are progressing well and we expect that they will be completed and in-service early in the fourth quarter of 2013 and that the additional capacity will be fully contracted."

2013 Outlook and Guidance

The Partnership expects Adjusted EBITDA for the year ending December 31, 2013 to be in the range of $71 – 75 million, maintenance capital expenditures of $8 – 9 million and interest expense of $7 – 8 million. This would result in coverage of approximately 1.2x.

"While we have seen weaker NGL prices in the second quarter as compared to the first quarter, overall processing volumes have increased slightly in the second quarter. We remain confident that both of our segments will perform well during 2013, particularly in light of the completion of the Processing expansion projects and related increases in volumes expected throughout the second half of 2013," Dehaemers said.