Tallgrass Energy Announces Agreement for Tallgrass Energy GP to Acquire Tallgrass Energy Partners; Announces Increased Quarterly Distributions at TEGP and TEP

• TEP public unitholders will receive 2.0 TEGP Class A shares for each
  outstanding TEP common unit; the exchange ratio represents an
  approximate 10 percent premium to the 30-trading day volume weighted
  average exchange ratio prior to the company’s Feb. 7 acquisitions and
  restructuring announcements
• Proposed transaction will result in no
  distribution cut to TEP unitholders, and will be accretive to
  TEGP shareholders and TEP unitholders
• TEGP Class A share first quarter 2018 dividend increased to $0.4875,
  or $1.95 annualized
• TEP common unit first quarter 2018 distribution increased to $0.975,
  or $3.90 annualized
• Upon closing the proposed transaction, TEGP will change its name to
  Tallgrass Energy, LP (“Tallgrass Energy”) and will trade on the New
  York Stock Exchange under the ticker symbol “TGE”
• Tallgrass Energy continues to expect Adjusted EBITDA1 of
  between $755 – $835 million for 2018 and expects dividend coverage for
  Tallgrass Energy in excess of 1.20x for 2018; dividend growth for
  existing TEGP shareholders expected to be between 38 – 42 percent for
  2018
• Upon closing, Tallgrass Energy does not expect to pay cash federal
  income taxes for a period currently estimated to be at least 10 years

LEAWOOD, Kan.–(BUSINESS WIRE)–Tallgrass Energy GP, LP (NYSE: TEGP) and Tallgrass Energy Partners, LP
(NYSE: TEP) today announced the execution of a definitive agreement
pursuant to which TEGP will acquire the approximately 47.6 million TEP
common units held by the public in a taxable stock-for-unit merger
transaction at a ratio of 2.0 TEGP Class A shares for each outstanding
TEP common unit.

“We are executing this transaction from a position of fundamental
business strength, and the result is a win for the TEP unitholders and
TEGP shareholders alike. This non-dilutive combination differentiates
our transaction from most other recent combinations in the MLP
universe,” said President and CEO David G. Dehaemers Jr.

“Eliminating TEP’s incentive distribution rights will immediately
improve our cost of capital and will enhance our ability to compete for,
and the returns generated by, acquisitions and organic growth projects,”
Dehaemers added. “In addition, our single public entity will be more
streamlined, simplified and closely align all of our equity holders’
future financial incentives. We expect the combined company, which will
be taxed as a corporation, will appeal to an even wider set of potential
investors. We are looking forward to closing this transaction and
focusing on the next chapter of value creation at Tallgrass Energy.”

The merger agreement has been unanimously approved by the Board of
Directors of TEGP’s general partner, the Conflicts Committee of the
Board of Directors of TEP’s general partner (the “TEP Conflicts
Committee”) and the Board of Directors of TEP’s general partner. Subject
to customary approvals and conditions, the merger is expected to close
by the end of the second quarter of 2018.
___________________
1Adjusted
EBITDA is a non-GAAP financial measure. For additional information,
please read “Non-GAAP Measures.”

Transaction Details

Under the terms of the merger agreement, TEGP will acquire the
approximately 47.6 million TEP common units held by the public at a
fixed exchange ratio of 2.0 TEGP Class A shares for each outstanding
common unit. As a result of the proposed transaction, the TEP incentive
distribution rights will be cancelled, the TEP common units will no
longer be publicly traded and 100 percent of the equity interests of TEP
will be owned by TEGP’s subsidiary, Tallgrass Equity, LLC (“Tallgrass
Equity”).

In the proposed transaction, TEGP will issue an aggregate of
approximately 95.2 million Class A shares to former TEP common
unitholders, representing approximately 62.1 percent of the outstanding
Class A shares of TEGP following the transaction. The revolving credit
facilities of TEP and Tallgrass Equity, and the senior notes of TEP are
expected to remain outstanding following the merger. Assuming the merger
closes on or before the record date for the second quarter 2018
dividend, former TEP unitholders holding TEGP Class A shares on the
record date would be entitled to receive the second quarter 2018
dividend on the TEGP Class A shares they receive in the merger in
accordance with TEGP’s agreement of limited partnership.

Completion of the merger is subject to customary closing conditions,
including the approval by holders of a majority of the outstanding TEP
common units, including common units owned by Tallgrass Equity, and the
expiration or termination of all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act. As part of the
transaction, TEGP and certain of its subsidiaries entered into a support
agreement agreeing to vote their approximately 25.6 million TEP common
units (representing approximately 35 percent of the total outstanding
TEP common units) in favor of the merger.

An investor presentation related to the transaction will be posted on
the Tallgrass Energy website. TEP unitholders, TEGP shareholders and
other interested parties are invited to view those materials under the
investor relations sections at www.tallgrassenergy.com.

Distributions

TEGP

The board of directors of TEGP’s general partner has declared a
quarterly cash dividend of $0.4875 per Class A share for the first
quarter of 2018, or $1.95 on an annualized basis. This represents a 32.7
percent sequential increase from the fourth quarter 2017 dividend of
$0.3675 per Class A share and an increase of 69.6 percent from the first
quarter 2017 dividend of $0.2875 per Class A share. It is TEGP’s 11th
consecutive increase since its May 2015 initial public offering.

TEP

The board of directors of TEP’s general partner declared a quarterly
cash distribution of $0.975 per common unit for the first quarter of
2018, or $3.90 on an annualized basis. This represents a sequential
increase of 1.0 percent from the fourth quarter 2017 distribution of
$0.965 per common unit and an increase of 16.8 percent from the first
quarter 2017 distribution of $0.835 per common unit. It is TEP’s 19th
consecutive increase since its May 2013 initial public offering.

The TEGP and TEP quarterly distributions for the first quarter of 2018
will be paid on Tuesday, May 15, 2018, to shareholders and unitholders
of record as of the close of business on Monday, April 30, 2018.

Advisors

Barclays acted as advisor to TEGP and Evercore Partners acted as advisor
to the TEP Conflicts Committee. Baker Botts L.L.P. served as legal
counsel to TEGP and Bracewell LLP served as legal counsel to the TEP
Conflicts Committee.

About Tallgrass Energy

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). Operating across 11 states, Tallgrass is a
growth-oriented midstream energy operator with transportation, storage,
terminal, water, gathering 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.

Non-GAAP Measures

Tallgrass Energy Adjusted EBITDA includes the Adjusted EBITDA for the
assets owned by TEP as of Dec. 31, 2017, the additional 2 percent of
Tallgrass Pony Express Pipeline, LLC (acquired by TEP effective Feb. 1)
and the distributions attributable to the additional 25.01 percent
membership interest in Rockies Express Pipeline LLC (acquired by
Tallgrass Equity on Feb. 7). Tallgrass Energy Adjusted EBITDA does not
include our estimate of approximately $15 – $25 million of shipper
deficiency payments that would be included in distributable cash flow.
Adjusted EBITDA is a non-GAAP measure.

Adjusted EBITDA is a non-GAAP supplemental financial measure that
Tallgrass Energy management and external users of our consolidated
financial statements and financial statements of our subsidiaries and
unconsolidated investments, such as industry analysts, investors,
lenders and rating agencies, may use to assess:

• our operating performance as compared to other publicly traded
  partnerships in the midstream energy industry, without regard to
  historical cost basis or, in the case of Adjusted EBITDA, financing
  methods;
• the ability of our assets to generate sufficient cash flow to make
  distributions and dividends to our equity holders;
• our ability to incur and service debt and fund capital expenditures;
  and
• the viability of acquisitions and other capital expenditure projects
  and the returns on investment of various expansion and growth
  opportunities.

We believe that the presentation of Adjusted EBITDA provides useful
information to investors in assessing our financial condition and
results of operations. Adjusted EBITDA should not be considered an
alternative to net income, operating income, net cash provided by
operating activities or any other measure of financial performance or
liquidity presented in accordance with GAAP, nor should Adjusted EBITDA
be considered an alternative to available cash, operating surplus,
distributions of available cash from operating surplus or other
definitions in our partnership agreement. Adjusted EBITDA has important
limitations as an analytical tool because it excludes some but not all
items that affect net income and net cash provided by operating
activities. Additionally, because Adjusted EBITDA may be defined
differently by other companies in our industry, our definition of
Adjusted EBITDA may not be comparable to similarly titled measures of
other companies, thereby diminishing their utility.

We generally define Adjusted EBITDA as net income excluding the impact
of interest, income taxes, depreciation and amortization, non-cash
income or loss related to derivative instruments, non-cash long-term
compensation expense, impairment losses, gains or losses on asset or
business disposals or acquisitions, gains or losses on the repurchase,
redemption or early retirement of debt, and earnings from unconsolidated
investments, but including the impact of distributions from
unconsolidated investments.

Tallgrass Energy is unable to project net cash provided by operating
activities or net income attributable to partners to provide the related
reconciliation of projected Adjusted EBITDA to the most comparable
financial measures calculated in accordance with GAAP, because the
impact of changes in operating assets and liabilities and the volume and
timing of deficiency payments received and utilized from our customers
are out of our control and cannot be reasonably predicted. Tallgrass
Energy provides a range for the forecasts of Adjusted EBITDA to allow
for the variability in the timing of cash receipts and disbursements,
customer utilization of our assets, and maintenance capital spending and
the impact on the related reconciling items, many of which interplay
with each other. The timing of maintenance capital expenditures is
volatile as it depends on weather, regulatory approvals, contractor
availability, system performance and various other items. Therefore, the
reconciliation of projected Adjusted EBITDA to projected net cash
provided by operating activities and net income attributable to partners
is not available without unreasonable effort.

Additional Information and Where to Find it

In connection with the transactions referred to in this material, TEGP
expects to file a registration statement on Form S-4 with the Securities
and Exchange Commission (“SEC”) that will include a proxy
statement/prospectus for the TEP unitholders. After the registration
statement is declared effective, TEP will mail a definitive proxy
statement/prospectus to its unitholders. This material is not a
substitute for the joint proxy statement/prospectus or registration
statement or for any other document that TEGP or TEP may file with the
SEC and send to TEGP’s and/or TEP’s shareholders or unitholders in
connection with the proposed transactions.

INVESTORS AND SECURITY HOLDERS OF TEGP AND TEP ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION.

This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval.

Investors and security holders will be able to obtain free copies of the
proxy statement/prospectus (when available) and other documents filed
with the SEC by TEGP or TEP through the website maintained by the SEC at http://www.sec.gov.
Copies of the documents filed with the SEC by TEGP and TEP will be
available free of charge on TEGP’s and TEP’s website at www.tallgrassenergylp.com,
in the “Investor Relations” tab near the top of the page, or by
contacting TEGP’s and TEP’s Investor Relations Department at
913-928-6012.

Participants in the Solicitation

TEGP and TEP and their respective general partner’s directors and
executive officers may be considered participants in the solicitation of
proxies with respect to the proposed transactions under the rules of the
SEC. Information about the directors and executive officers of TEGP’s
general partner may be found in its 2017 Form 10-K filed with the SEC on
Feb. 13, 2018, and any subsequent statements of changes in beneficial
ownership filed with the SEC. Information about the directors and
executive officers of TEP may be found in its 2017 Form 10-K filed with
the SEC on Feb. 13, 2018, and any subsequent statements of changes in
beneficial ownership filed with the SEC. These documents can be obtained
free of charge from the sources indicated above. Additional information
regarding the participants in the proxy solicitations and a description
of their direct and indirect interests, by security holdings or
otherwise, will also be included in any proxy statement and other
relevant materials to be filed with the SEC when they become available.

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 expected consideration to be received
in connection with the closing of the merger transaction, whether the
merger transaction between TEP and TEGP will be consummated before the
end of the second quarter of 2018 or at all, whether the proposed
transaction will be accretive to TEGP shareholders and TEP unitholders,
the Tallgrass Energy financial guidance for 2018, that Tallgrass Energy
upon closing will not pay cash federal income taxes for a period
estimated to be at least 10 years, whether the elimination of TEP’s
incentive distribution rights will improve TEP’s and TEGP’s cost of
capital or enhance TEP’s and TEGP’s ability to compete for, or increase
returns generated by, acquisitions or organic growth projects, and
whether the structure resulting from the merger will be more appealing
to a wider set of investors. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the
control of TEP and TEGP, 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 and TEGP with the SEC. Any forward-looking
statement applies only as of the date on which such statement is made
and TEP and TEGP do 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.

Contacts

Tallgrass Energy
Investor and Financial Inquiries
Nate
Lien, 913-928-6012
[email protected]
or
Media
and Trade Inquiries
Phyllis Hammond, 303-763-3568
[email protected]