What Contributes to Tallgrass Energy Partners’s Stable Cash Flow?



Contract structure

Nearly 95% of Tallgrass Energy Partners’s (TEP) EBITDA[1. earnings before interest, tax, depreciation, and amortization] is backed by firm fee or take-or-pay contracts. The majority of the Crude Oil Transportation & Logistics and Natural Gas Transportation & Logistics segments’ cash flows are backed by take-or-pay contracts.

On the other hand, ~92% of TEP’s reserved processing capacity for its Processing and Logistics segment is subject to fee-based processing contracts. The above graph shows a breakdown of TEP’s adjusted EBITDA by contract type.

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