New York, October 02, 2012 -- Moody's Investors Service assigned a Ba3 Corporate Family Rating (CFR) to Tallgrass Operations, LLC (Tallgrass) and assigned a Ba3 rating to the partnership's proposed $875 million six-year senior secured term loan, $250 million five-year delayed draw senior secured term loan and $150 million five-year senior secured revolving credit facility. The outlook is stable. The ratings are subject to a review of the final credit agreements.

The proceeds from the term loans will be used to partially fund the acquisition of natural gas pipelines and other assets from Kinder Morgan Energy Partners, L.P. (KMP) and future capital projects.

"The Ba3 ratings reflect Tallgrass' high financial leverage and the execution risks of its large capital project planned for Pony Express," said Pete Speer, Moody's Vice President. "The rating also incorporates the benefits of owning interstate pipelines with their fee-based earnings and the free cash flow visibility of Rockies Express."

Issuer: Tallgrass Operations, LLC

..Assignments

....Corporate Family Rating of Ba3

....Probability of Default Rating of Ba3

....$875 million six-year senior secured term loan, Ba3

....$250 million five-year delayed draw senior secured term loan, Ba3

....$150 million five-year senior secured revolving credit facility, Ba3

RATINGS RATIONALE

Tallgrass is a wholly owned subsidiary of Tallgrass Energy Partners, LP, that was formed to acquire natural gas pipelines and other assets from KMP for $1.8 billion. The assets to be acquired include a 50% ownership interest in Rockies Express Pipeline LLC (REX, Ba1 stable) and complete ownership of Kinder Morgan Pony Express Pipeline LLC, (Pony Express, unrated), Kinder Morgan Interstate Gas Transmission LLC (KMIGT, unrated), Trailblazer Pipeline Company LLC (Trailblazer, unrated) and KM Upstream LLC.

Tallgrass' Ba3 CFR reflects its high financial leverage upon closing of the acquisition that will remain elevated into 2015 because of rising debt levels to fund the Pony Express capital project. Tallgrass' adjusted debt/EBITDA (including 50% of REX's debt and EBITDA) will initially exceed 6x and stay between 6.5x and 7x in 2013 and 2014. The rating incorporates the inherent execution risks of completing a large multi-year capital project and the declining earnings trends for KMIGT and Trailblazer. These risks are somewhat mitigated by the significant free cash flow visibility of REX through 2019, which provides cash flow to reduce debt at either REX or Tallgrass over the coming years. The rating is also supported by the largely fee-based nature of its predominantly interstate pipeline asset base.

The $1.8 billion purchase price and estimated expenses will be funded with the $875 million term loan and $1 billion of common equity. The equity investment will be primarily provided by the Energy and Minerals Group and Kelso & Company, two private equity firms with significant experience in energy infrastructure investing. Following the acquisition, the partnership plans to continue a project to convert the Pony Express pipeline to oil from natural gas. This project entails substantial capital spending that is expected to be partially funded with the $250 million delayed draw term loan.

We expect Tallgrass to have adequate liquidity primarily because of borrowing availability on its $150 million revolving credit facility. The credit facility and term loan financial covenants have yet to be finalized but we expect there to be a limitation on leverage and a required minimum interest coverage that provides adequate compliance cushion for some variability from the partnership's forecasts. But we also expect the leverage limitation covenants to step down in line with the partnership's forecasted deleveraging post construction of Pony Express.

The stable outlook reflects high leverage over the next few years, somewhat offset by the contracts and significant free cash flow contribution of REX. The ratings could be upgraded if Tallgrass makes substantial progress on the Pony Express project and there is clear visibility for its debt/EBITDA to decline towards 5x. The ratings could be downgraded if Tallgrass' debt/EBITDA exceeds 7x on a sustained basis. This could occur if the partnership experiences significant cost overruns or delays on the Pony Express project, or if it is not able to successfully stem the earnings declines at KMIGT or Trailblazer. Any upgrade or downgrade of REX's ratings could have a similar effect on Tallgrass' ratings given the size and importance of REX to Tallgrass' credit profile.

The Ba3 ratings on the proposed senior secured revolver, term loan and delayed draw term loan reflect the overall probability of default for Tallgrass, to which Moody's assigns a PDR of Ba3, and a loss given default of LGD 4 (50%). The senior secured revolver, term loan and delayed draw term loan will have pari passu senior secured claims to substantially all of the partnership's wholly owned assets. Although Tallgrass will have all bank debt in its capital structure, its largest cash flow source will be its equity ownership in REX. The debt of Tallgrass is structurally subordinated to the debt at REX, and therefore we have used our standard 50% recovery assumption in applying Moody's Loss Given Default Methodology.

The principal methodology used in rating Tallgrass was the Global Midstream Energy Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Tallgrass Energy Partners, LP is a privately-held midstream energy limited partnership headquartered in Overland Park, Kansas. All of its debt is issued by its wholly owned operating subsidiary, Tallgrass Operations, LLC.

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Peter Speer VP - Senior Credit Officer Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Steven Wood MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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