Tallgrass Energy GP and Tallgrass Energy Partners Announce Acquisitions and the Evaluation of Tallgrass Energy Organizational Structure

LEAWOOD, Kan.–(BUSINESS WIRE)–Tallgrass Energy GP, LP (NYSE: TEGP) and Tallgrass Energy Partners, LP
(NYSE: TEP) (“TEP”) today announced that Tallgrass Equity, LLC
(“Tallgrass Equity”), a subsidiary of TEGP, has acquired a 25.01 percent
membership interest in Rockies Express Pipeline LLC (“REX”) and
5,619,218 TEP common units from Tallgrass Development, LP (“TD”). The
companies also announced that TEP has acquired a 2 percent membership
interest in Tallgrass Pony Express Pipeline, LLC (“Pony Express”) and
other administrative assets from TD. In addition, Tallgrass announced it
is beginning an evaluation of potential reorganization alternatives
involving TEGP and TEP.

Tallgrass Equity Acquisition and Anticipated
Distribution Increase

On Feb. 7, 2018, TD merged into a wholly owned subsidiary of Tallgrass
Equity. As a result, Tallgrass Equity acquired a 25.01 percent
membership interest in REX and 5,619,218 TEP common units. In
consideration, TEGP and Tallgrass Equity issued 27,554,785 unregistered
TEGP Class B shares and Tallgrass Equity units valued at approximately
$644.8 million based on the TEGP closing price on Feb. 6, 2018. The
equity issued by TEGP and Tallgrass Equity was based on a discounted
30-day volume-weighted average price of TEGP Class A shares. The 25.01
percent REX membership interest was valued at approximately $400 million
and the 5,619,218 TEP common units were valued at approximately $256.2
million based on a 30-day volume-weighted average price.

Management intends to recommend to the board of directors of TEGP’s
general partner that TEGP increase its quarterly distributions for the
first and second quarters of 2018 by an aggregate of approximately $0.12
($0.48 annualized) per class A share, which would be an increase of
approximately 33 percent as compared to the quarterly distribution
declared for the fourth quarter of 2017.

“This acquisition represents an accretive transaction for Tallgrass
Equity and TEGP,” said Tallgrass President and CEO David G. Dehaemers
Jr. “The TEGP equity consideration utilizes our most effective cost of
equity at this time, and likely addresses Tallgrass Energy’s foreseeable
equity capital requirements for currently known financing needs during
2018 and 2019. In addition, the TEGP share consideration received by
Tallgrass Development partners demonstrates our continued belief in the
long-term value creation opportunities that lie ahead for Tallgrass
Energy. As sponsors, the TD partners continue to have a significant
investment in Tallgrass Energy and we now have another $645 million
invested as a result of this transaction.”

TEP Acquisition

Effective Feb. 1, 2018, TEP acquired a 2 percent membership interest in
Pony Express and administrative assets — primarily information
technology assets — from TD for cash consideration of approximately $60
million. TEP funded the transaction with borrowings under its revolving
credit facility.

“The organic growth projects and third-party acquisitions TEP announced
during 2017 and early 2018, including those issued earlier today,
demonstrate our ability to continue to grow TEP distributions at an
attractive rate without sponsor dropdowns,” Dehaemers said. “We continue
to see capital deployment opportunities. Those opportunities can be made
even more attractive to our partners when enhanced by the potential for
a reduced cost of equity capital following a possible reorganization
transaction involving TEGP and TEP.”

Evaluation of TEGP and TEP Reorganization
Alternatives

Tallgrass is evaluating potential reorganization transactions that
could, among other things, streamline and simplify TEP and TEGP’s
organizational structure, improve its equity cost of capital, improve
its debt cost of capital and facilitate financing of its current and
future growth opportunities. Management expects that the evaluation
process and any resulting transaction or transactions could potentially
be completed by the end of 2018, although the process is ongoing and no
decision to pursue a particular alternative has been reached. Tallgrass
does not intend to disclose further developments with respect to the
evaluation process except to the extent that a specific course of action
is approved, the process is concluded, or it is required by law or
otherwise deemed appropriate.

“Today’s announcements, including the merger of Tallgrass Development
into a subsidiary of TEGP, reinforce our commitment to best position
Tallgrass to be a fiscally prudent and growth-oriented midstream
operator for decades to come and demonstrate what could be the first
step in a potential reorganization transaction,” said Dehaemers.

Conference Call

Tallgrass plans to hold a conference call at 9:30 a.m. Central Time on
Thursday, Feb. 8, 2018, to discuss these announcements as well as other
announcements from Feb. 7, 2018. Tallgrass invites unitholders,
shareholders and other interested parties to listen to the call through
a link posted on the Investor Relations section of Tallgrass’ 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 TEP or TEGP continuing to evaluate
potential reorganization alternatives, whether such a transaction will
occur in 2018 or at all, and whether such a transaction would improve
Tallgrass's cost of equity and debt capital, facilitate financing of
future growth opportunities or streamline Tallgrass's organizational
structure; whether the acquisition by Tallgrass Equity of a 25.01
percent membership interest in REX and 5,619,218 TEP common units will
be accretive and whether the use of equity consideration by TEGP and
Tallgrass Equity to acquire such assets will address Tallgrass Energy's
equity capital requirements during 2018 and 2019; TEP's ability to
continue to grow distributions at an attractive rate without sponsor
dropdowns; and whether TEGP will increase its quarterly distributions
for the first and second quarters of 2018 by an aggregate of
approximately $0.12 per Class A share, or at all. Such statements are
subject to a number of assumptions, risks and uncertainties, many of
which are beyond the control of TEGP and 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 TEGP and TEP with the Securities and
Exchange Commission. Any forward-looking statement applies only as of
the date on which such statement is made and TEGP and TEP 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.

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.

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]