Tallgrass Energy Partners, LP announced today that it acquired Tallgrass Terminals, LLC and Tallgrass NatGas Operator, LLC from Tallgrass Development for cash consideration of $140 million. The acquisition represents TEP’s fifth dropdown acquisition from Tallgrass Development and was funded at closing through borrowings on TEP’s revolving credit facility.
“TEP continues to benefit from its relationship with Tallgrass Development, and we expect the dropdown to be immediately accretive to unitholders based on an initial transaction multiple of approximately 8.0x estimated 2017 cashflow on the fully operational acquired assets,” said President and CEO David G. Dehaemers Jr. “While we expect to provide financial guidance for calendar year 2017 in February, this transaction is supportive of our previously issued distribution growth guidance that includes 2017. However, as we continue to grow Tallgrass Terminals, we expect it to be a more significant contributor to the long-term Tallgrass growth story.”
Tallgrass Terminals owns the following fully operational assets:
- The Sterling Terminal near Sterling, Colo., that provides approximately 1.3 million barrels of operational storage to the Tallgrass Pony Express crude oil pipeline. This facility’s footprint could accommodate an expansion of storage capacity of at least 0.8 million barrels.
- The Buckingham Terminal in northeast Colorado that includes four truck unloading skids capable of receiving up to 16,000 barrels per day and provides shippers an injection point into Tallgrass Pony Express.
- A 20 percent interest in the Deeprock Development Terminal in Cushing, Okla., which provides Tallgrass Pony Express approximately 2.3 million barrels of operational storage capacity.
Tallgrass Terminals owns the following projects currently under development:
- Approximately 550 acres in south Cushing, Okla., where civil engineering work is nearing completion and the permitting process is underway for up to 5.5 million barrels of storage for a potential terminal facility located on approximately 80 acres of the parcel. The terminal would connect with other third-party terminals in Cushing, have inbound pipeline connectivity and provide outbound pipeline connectivity to destinations on the Gulf Coast. Tallgrass Terminals has spent in excess of $10 million acquiring and developing the property to this point.
- Approximately 250 acres in Guernsey, Wyo., where permits have been acquired for 2.1 million barrels of storage. Tallgrass Terminals is currently exploring a number of opportunities that could provide customers with receipt, blending, storage and delivery services, in addition to direct access to transportation services on Tallgrass Pony Express.
Tallgrass NatGas Operator is the operator of Rockies Express Pipeline LLC (“REX”) and receives from REX an annual fee equal to 1 percent of REX’s EBITDA as compensation for operating the pipeline. For more information regarding REX’s EBITDA, see “Non-GAAP Financial Measure” below.
