Pipelines & Transport News By Continents

TEP purchases 33.3 percent interest in Pony Express Pipeline

Tallgrass Energy Partners, LP closed on the transaction that gained the company a 33.3 percent interest in the Tallgrass Pony Express Pipeline, LLC. TEP purchased the interested from subsidiary Tallgrass Development, LP for $600 million.

 

This is TEP's second dropdown transaction and further diversifies the company's current operations. The Pony Express Pipeline that will transport domestic light crude produced at the Bakken from Guernsey, Wyoming, to Cushing, Oklahoma. The pipeline is being built by converting previously existing natural gas pipeline as well as constructing new equipment, and will move through Wyoming, Colorado, Nebraska, Kansas and Oklahoma.

 

The purchase price was divided between $597 million in cash and 70,340 common units of TEP stock to Tallgrass Development, LP. Under the terms of the contract, TEP will be given a quarterly distribution preference payment of a minimum of $16.65 million through Sept. 30, 2015.

 

Additionally, TEP does not have to contribute more capital to complete the remaining construction of the Pony Express pipeline project. Any necessary capital will come from Tallgrass Development, LP, without diluting any of TEP's 33.3 percent membership interest.

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