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FOR IMMEDIATE RELEASE

Tallgrass Energy Partners Acquires Powder River Oil Gathering System, Continues to Expand Service Offerings in the Basin

8/7/2017 5:08 PM ET - LEAWOOD, Kan.--(BUSINESS WIRE)-- Tallgrass Energy Partners, LP (NYSE:TEP) today announced that through its subsidiary Tallgrass Midstream, LLC (“TMID”) it has closed on the acquisition of Outrigger Energy LLC’s crude oil gathering system in the Powder River Basin for approximately $36 million, subject to potential adjustments specified in the purchase agreement. The acquired assets include approximately 34 miles of gathering lines and approximately 150,000 acres dedicated on a long-term fee-based contract. Tallgrass estimates approximately $7 million in additional capital expenditures for the remainder of 2017 on the Outrigger system.

As a result of the acquisition, Tallgrass Interstate Gas Transmission, LLC (“TIGT”) intends to abandon by sale to TMID an underutilized segment of its system from Labonte, Wyo., to Guernsey, Wyo. The abandonment, which is subject to approval by the Federal Energy Regulatory Commission, will have no adverse effect on TIGT’s firm transportation customers.

TMID intends to convert the acquired pipeline segment from TIGT into crude oil service and also construct the necessary facilities to establish a new crude oil line from Labonte to the Outrigger system along with additional laterals into other producing areas in the Powder River Basin. This project will provide direct access for producers on the Outrigger system to Tallgrass Pony Express Pipeline, LLC’s (“Pony Express”) crude oil pipeline system.

“This is another strategic acquisition that complements our existing processing, natural gas gathering, transportation and water assets in the region and enables us to provide additional services for producers in the basin,” said Tallgrass Chief Operating Officer Bill Moler. “With the early, but very encouraging, well results from producers, the Powder River Basin is a strategic focus for Tallgrass. This acquisition expands our footprint in the region and provides another direct supply source for Pony Express.”

Dean Dick to Lead Crude Oil Gathering Efforts

TEP also announced that Dean Dick will lead its crude oil gathering business housed under TMID. Dean has nearly 30 years of experience in crude oil transportation services including trucking, gathering, terminals and DOT regulated pipeline transportation. He has previously worked for Marathon Petroleum and Kinder Morgan in operations, facility development and expansion, new market development and pipeline optimization, making him uniquely qualified to lead this segment of the business. He holds a BSEE from the University of Wyoming and an MBA from Grand Canyon University.

About Tallgrass Energy Partners, LP

Tallgrass Energy is a family of companies that includes publicly traded partnerships Tallgrass Energy Partners, LP (NYSE: TEP) and Tallgrass Energy GP, LP (NYSE: TEGP), and privately held Tallgrass Development, LP. Operating across 10 states, Tallgrass is a growth-oriented midstream energy operator with transportation, storage, terminal and processing assets that serve some of the nation’s most prolific crude oil and natural gas basins.

To learn more, please visit our website at www.tallgrassenergy.com.

Cautionary Note Concerning Forward-Looking Statements

Disclosures in this press release contain “forward-looking statements.” All statements, other than statements of historical facts, included in this press release that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the estimated $7 million of additional capital expenditures by Tallgrass for the remainder of 2017 on the Outrigger system, TIGT's abandonment by sale to TMID of a segment of its system from Labonte, Wyo., to Guernsey, Wyo., the conversion by TMID of the acquired pipeline segment from TIGT into crude oil service, the construction of facilities by TMID to establish a new crude oil line from Labonte to the Outrigger system along with additional laterals into other producing areas in the Powder River Basin, and the direct access for producers on the Outrigger system to the Pony Express Pipeline resulting from the project. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of TEP, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements, and other important factors that could cause actual results to differ materially from those projected, including those set forth in reports filed by TEP with the Securities and Exchange Commission. Any forward-looking statement applies only as of the date on which such statement is made and TEP does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

Tallgrass Energy
Investor Relations
Nate Lien, 913-928-6012
investor.relations@tallgrassenergylp.com
or
Media and Trade Inquiries
Phyllis Hammond, 303-763-3568
media.relations@tallgrassenergylp.com

Source: Tallgrass Energy Partners, LP

Following the transactions, the Company will be re-named Sable Permian Resources LLC ("Sable Resources").  Sable Resources will be led by industry veteran James C. Flores as Chief Executive Officer and Chairman of the Board. In connection with the Equity Financing and Recapitalization, the board of directors of PRES will be re-constituted to consist of three members to be appointed by EMG, three members to be appointed by OnyxPoint and one member to be appointed by management.

The Equity Financing provides the Company with $744 million of cash proceeds at the closing to execute a multi-year development plan, pursue leasehold acquisitions and satisfy general corporate purposes.  At the same time, the Recapitalization transactions eliminate approximately $574 million in principal amount of the Company's indebtedness and are expected to reduce the Company's interest expense by approximately $330 million over the life of the notes being retired.  The Equity Financing and Recapitalization transactions are scheduled to close concurrently on or about May 1st, 2017.  Following the Recapitalization transactions, EMG and OnyxPoint have received the option to purchase an additional $356 million of common equity interests in PRES New Equity LLC to support growth initiatives identified by management as well as other liquidity enhancing transactions. 

Commenting on the transaction, Mr. Flores said, "With the Company's outstanding Permian assets and my new partners EMG, OnyxPoint and my Sable Resources senior management team of Doss Bourgeois, Winston Talbert and John Wombwell, we plan to again drive strong returns for our new stakeholders. Our Sable Resources management team worked with me to build Plains Exploration & Production Company in 2001 from a $200 million enterprise to more than $15 billion market capitalization at the time of its 2013 sale, a more than nine times return on initial capital invested with strong execution in both operations and commercial transactions."

John T. Raymond, founder and CEO of EMG added, "Post the consensual and highly successful restructuring of the balance sheet, we optimistically look to the future.  With the addition of significant liquidity and a proven, well known management team who has generated tremendous value in other resource plays, the company is now well positioned to generate significant equity value on behalf of all stakeholders.  We look forward to again working with Jim and his management team and the partnership we have created with OnyxPoint."

"We are delighted to partner with EMG, Jim Flores and his team to effectuate this transformational recapitalization, which we believe creates a powerful platform for future growth," noted Shaia D. Hosseinzadeh, Managing Partner of OnyxPoint.

About EMG

EMG is the management company for a series of specialized private equity funds. The firm was founded by John Raymond (majority owner and CEO) and John Calvert in 2006. EMG focuses on investing across various facets of the global natural resource industry including the upstream and midstream segments of the energy complex. EMG has approximately $16.2 billion of regulatory assets under management and approximately $10.4 billion in commitments have been allocated across the energy sector since inception.

About OnyxPoint

OnyxPoint is an alternative asset manager with a primary focus on investing in the energy sector. The firm seeks to partner with world class management teams to provide transformational capital to businesses with high quality assets. OnyxPoint takes an interdisciplinary approach by pursuing a broad range of transaction types including asset build-ups, corporate partnerships, financial restructurings and opportunistic buyouts. For more information about OnyxPoint, please contact: inquiries@opglp.com.

About Permian Resources, LLC

Permian Resources, LLC, formerly American Energy – Permian Basin, LLC, is an independent oil and natural gas company focused on the acquisition, development and production of unconventional oil and natural gas reserves in the Wolfcamp Shale play in the central Midland Basin within the Permian Basin of West Texas.  For additional information, please visit www.permianresources.com.

This press release is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell with respect to any securities.

Cautionary Statement Regarding Forward-Looking Statements

This document contains forward-looking statements. Forward-looking statements express views regarding future plans and expectations and include, but are not limited to, statements regarding future operations and operating costs, business strategy, future liquidity, future values of anticipated reserves and future production. These statements may include words such as "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar words or expressions, although not all forward-looking statements contain such identifying words.

Forward-looking statements are based on numerous assumptions and are subject to known and unknown risks and uncertainties, many of which are beyond our control. These risks include, but are not limited to, those risks related to our ability to: execute on our financial strategy and access the capital required for our development program; access the capital markets on terms acceptable to us or at all; navigate through general credit market and economic conditions; satisfy the covenants in our debt instruments and agreements; successfully transition acquired businesses and assets to the management and control of Permian Resources; execute on future drilling plans; hold our leasehold by production and convert reserves into production on an economic basis; manage rapid growth; realize attractive oil, NGL and natural gas prices or manage a prolonged period of low oil, natural gas and NGL prices; develop a successful marketing plan for the oil, NGLs and natural gas produced by Permian Resources; successfully identify and acquire additional productive leasehold; recruit and retain appropriately qualified personnel; effectively utilize technology; execute our drilling program; mitigate credit risk posed by significant customers; respond to intense competition in the onshore E&P industry; respond to shifting and increasing government regulatory requirements with respect to unconventional resource recovery, including hydraulic fracture stimulation; accurately predict the timing of infrastructure development (including long-haul pipelines) and tie-in of wells; accurately predict the timing and amount of future production of oil, NGLs and natural gas; access water, sourcing, distribution and disposal systems; generate sufficient cash flow to pay fixed charges; control our operating expenses and other costs; implement our hedging strategy and deliver expected results; avoid material legal or environmental liabilities; and manage inflation.

Actual future results may vary materially from those expressed or implied in these forward-looking statements, and Permian Resource's business, financial condition and results of operations could be materially and adversely affected by numerous factors, including such known and unknown risks and uncertainties listed above.  As a result, forward-looking statements should be understood to be only predictions and statements of our current beliefs, and not as guarantees of performance. Any forward-looking statement speaks only as of the date on which it is made, and Permian Resources does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

 

SOURCE Permian Resources, LLC

Related Links

http://www.permianresources.com


 


 

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