Tallgrass Energy Partners and Silver Creek Midstream Announce Joint Venture to Transport Crude Oil Production in the Powder River Basin to Guernsey, Wyoming

LEAWOOD, Kan.–(BUSINESS WIRE)–Tallgrass Energy Partners, LP (NYSE: TEP) (“Tallgrass”) and Silver Creek
Midstream, LLC (“Silver Creek”) announced today that they have signed
definitive documents to develop the Iron Horse Pipeline (“Iron Horse”),
a joint venture pipeline to transport crude oil from the growing Powder
River Basin (“PRB”) to Guernsey, Wyo. Iron Horse will connect Silver
Creek’s developing gathering system to the Tallgrass Guernsey Terminal,
which is currently under construction, and then to Tallgrass’s Pony
Express crude pipeline system (“Pony Express”), and other pipelines at
Guernsey. Iron Horse and Pony Express intend to create a joint tariff to
offer producers and marketers a single rate and direct access to the
multiple refineries on Pony Express and to the Cushing, Okla. crude oil
hub, from the PRB production zone.

In addition to forming the joint venture, Tallgrass has agreed and
signed definitive documents to sell its 50-mile PRB crude oil gathering
system to Silver Creek (formerly owned by Outrigger Energy). Tallgrass
and Silver Creek expect to close the formation of the joint venture and
the sale of Tallgrass Crude Gathering, LLC later this month.

The transaction gives Silver Creek an immediate presence in the PRB and
provides a strategic footprint as it constructs additional gathering to
cover the core of the PRB. The acquired gathering system alongside the
newly constructed Silver Creek gathering system will deliver into the
Silver Creek Midway Terminal, which will deliver barrels to Iron Horse.
As a result of the acquisition and announced projects, Silver Creek will
be positioned as the preeminent crude oil gathering company in the PRB.

As part of the joint venture, Tallgrass has agreed to contribute
approximately 40 miles of pipe from Labonte, Wyo. to Guernsey, Wyo. This
pipe is currently owned by Tallgrass Interstate Gas Transmission, LLC,
and is undergoing abandonment from gas service. Tallgrass will be a 75
percent owner and will operate the approximately 80-mile, 16” pipeline,
which consists of 40 miles of new build and the 40 miles of gas-to-oil
conversion pipe. Silver Creek will own the remaining 25 percent. Iron
Horse is anticipated to be in-service Q1 2019 with an expected initial
capacity of about 100,000 barrels per day with significant available
expansion capacity. After conversations with both producers and
marketers in the PRB, the parties anticipate a significant amount of the
Iron Horse’s initial capacity will be contracted prior to the pipeline
being placed into service, and depending on commitments obtained,
capacity could be expanded above the 100,000 barrels per day currently
planned.

The combined systems of Silver Creek and Tallgrass intend to leverage
each company’s asset footprint, providing producers in the PRB gathering
and transportation services from wellhead to final sale point. “Silver
Creek is extremely excited to work with Tallgrass in the PRB. Their
current presence in the basin and long-haul crude transport capabilities
bring a competitive advantage to Silver Creek as we work to fully build
out our gathering system. Collectively, we will be able to provide
optimal midstream service solutions for producers in the Powder River
Basin,” said J. Patrick Barley, Founder and Chief Executive Officer of
Silver Creek.

“Silver Creek brings a best-in-class oil gathering management team to
the PRB,” said Matt Sheehy, Tallgrass’s Chief Commercial Officer. “Their
extensive customer relationships and focus on customer service make them
an ideal partner for Tallgrass. Iron Horse Pipeline will quickly become
an important path to bring Wyoming production into Guernsey and onto
Pony Express.”

Tallgrass anticipates that it will invest approximately $150 million
into this initiative, including its proportionate share of the cost to
construct the Iron Horse Pipeline and the new Tallgrass Guernsey
Terminal, but excluding the proceeds from the sale of its PRB gathering
system.

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), and privately held Tallgrass Development,
LP. 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.

About Silver Creek Midstream, LLC

Headquartered in Irving, Texas, Silver Creek Midstream is a private
midstream company focused on providing crude oil gathering,
transportation and storage services in Texas and Wyoming. Silver Creek
Midstream is backed by an initial $150 million funding commitment from
Tailwater Capital, LLC and Silver Creek management.

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

About Tailwater Capital, LLC

Dallas-based Tailwater Capital is a highly specialized, growth-oriented
energy private equity firm with a well-established track record, having
executed more than 65 energy transactions in the upstream and midstream
sectors representing over $16.6 billion in transaction value. Tailwater
currently manages over $2.3 billion in committed capital, over $800
million of which is available for new investments. Tailwater is focused
on acquiring and growing midstream assets as well as participating in
non-operated upstream opportunities in select basins. For more
information, please visit: www.tailwatercapital.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 closing of the joint venture and sale
transactions between Tallgrass and Silver Creek, whether the Iron Horse
Pipeline, the Tallgrass Guernsey Terminal and the Sliver Creek Midway
Terminal will be constructed on time, on budget, or at all and, if
constructed, the capacity of the Iron Horse Pipeline and if the joint
tariff will offer producers a single rate from the PRB to final market,
whether Silver Creek will be positioned as the preeminent crude oil
gathering company in the PRB, whether a significant amount of the Iron
Horse Pipeline’s initial capacity will be contracted prior to the
pipeline being placed into service, whether the combined systems of
Silver Creek and Tallgrass will be able to leverage each company’s asset
footprint to provide producers in the PRB gathering and transportation
services from wellhead to final sale point, and the total amount
invested by Tallgrass on this initiative. Such statements are subject to
a number of assumptions, risks and uncertainties, many of which are
beyond the control of Tallgrass and Silver Creek, 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 Tallgrass with the Securities and
Exchange Commission. Any forward-looking statement applies only as of
the date on which such statement is made and Tallgrass and Silver Creek
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.

King & Spalding served as exclusive legal advisor on the transaction to
Silver Creek Midstream.

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]
or
Silver
Creek:
[email protected]
or
Tailwater
Capital:
Stephen Lipscomb, 214-269-1183
[email protected]