|Bid||18.05 x 2200|
|Ask||0.00 x 1100|
|Day's Range||17.82 - 18.09|
|52 Week Range||14.28 - 25.96|
|Beta (3Y Monthly)||0.64|
|PE Ratio (TTM)||12.04|
|Earnings Date||Jan 29, 2020 - Feb 3, 2020|
|Forward Dividend & Yield||2.14 (12.04%)|
|1y Target Est||19.50|
Tallgrass Energy, LP today announced that the Board of Directors of its general partner has appointed Matthew P. “Matt” Sheehy as President of Tallgrass Energy, effective immediately.
Pipeline operator Tallgrass Energy LP said on Monday Chief Executive Officer David Dehaemers resigned and would be replaced by operations head Bill Moler, a move that was backed by shareholder Blackstone Group Inc. Dehaemers had come under fire from retail investors last month over a non-binding take-private proposal by the investment firm, which included a provision for management to be paid nearly 30% premium for shares in the general partner that owns Tallgrass. In August, Blackstone Infrastructure Partners and affiliates that together own a 44.2% stake in Tallgrass made an offer to buy the remaining shares at $19.50 per unit.
Pipeline operator Tallgrass Energy LP said on Monday Chief Executive Officer David Dehaemers would step down immediately and named Bill Moler as his successor. Moler, who was appointed as the company's president and chief operating officer in March this year, has previously served as the executive vice president and chief operating officer of Tallgrass Energy. Dehaemers, who came under fire from investors over sales talks with private equity firm Blackstone Group Inc, would be stepping down from the position immediately and retire as a member of the board on Dec. 31.
Tallgrass Energy, LP (TGE) today announced that the Board of Directors of the general partner (“the Board”) has appointed William R. (Bill) Moler as Chief Executive Officer, effective immediately. David G. Dehaemers Jr. is retiring and stepping down as CEO effective immediately but will remain with the company until the end of the year. Dehaemers will retire as a member of the Board on Dec. 31, 2019.
U.S. pipeline operator Tallgrass Energy, LP has named William (Bill) Moler as its new CEO after David Dehaemers Jr. announced his retirement.
Tallgrass Energy, LP (TGE), through its affiliate Tallgrass Pony Express Pipeline, LLC (“Pony Express”), today announced a binding open season soliciting shipper commitments for crude oil transportation from a new origin near Carpenter, Wyo., to Pony Express destinations in Colorado. Based on commitments received in this binding open season, Pony Express plans to build approximately 25 miles of new 12-inch pipeline from the Hereford origin to the new origin point in Wyoming, expanding capacity from Wyoming to Sterling, Colo., on the Pony Express system. The open season will run from Nov. 20, 2019, to Jan. 20, 2020.
(Bloomberg Opinion) -- Tallgrass Energy LP, a pipeline business being acquired by Blackstone Group Inc., has a theory about why share prices fall:Stock price is down. It was down to around $14 or $15 when Blackstone made their offer and that was due to sellers.There is a lot of backstory, so let’s back up. In January, Blackstone agreed to acquire the general partner of Tallgrass’s master limited partnership, along with a 44% interest in Tallgrass itself, from various owners, including several executives of the company, for $3.3 billion. The stock closed at about $22 that day. It subsequently collapsed. In late August, Blackstone offered to buy out the rest of the ordinary shares at $19.50 each, a 40% premium to where Tallgrass was trading but below January’s level.What really needled investors, though, were side letters to the deal that effectively guaranteed several senior executives a price of $26.25 per remaining share. These had actually been disclosed in a March filing, but David Dehaemers, the CEO, had soothed investors’ nerves about them on a call in April (I wrote about the letters here). So he was determined to set the record straight on Wednesday evening’s earnings call. Apart from his insight on why the stock was down, he wanted to lay out some facts that some of those “blathering on” about the side letters might have missed. First, part of the premium being paid related to the general partner interest, worth “give or take $480 million,” or “about $4 a share,” or “for those of you that have to deal in pennies,” $3.82 a share. Second, the residual premium to the price ordinary shareholders are offered — $2.93 a share, or 15%, according to my penny-counting device — relates to things Blackstone apparently demanded from the insiders, such as lockup agreements and non-compete contracts. He also emphasized the collapse in the stock had not resulted from selling by either Blackstone or insiders.Whatever the reason for the drop in the stock price — which is always and ever the result of some sort of selling — the bigger problem, it seems to me, is that management cut a deal with Blackstone that effectively severed their alignment with ordinary investors. No one denies the general partner commands a value of its own in these sorts of partnership deals. The problem is that this could have been structured in a more straightforward way, like a separate cash payment de-linked from the ordinary share price. Ditto for any value ascribed to non-compete agreements and so forth. As it is, by agreeing to a price floor, insiders effectively got a put option on Tallgrass’s stock, protecting them no matter what Blackstone offered the ordinary investors. In effect, the lower the offer, the bigger the implied value ascribed to those insidery things.Indeed, Simon Lack, managing partner at SL Advisors LLC (a Tallgrass shareholder), says that, “perversely,” such a side deal motivates management to agree to a lower price for the stock, in order to make it more likely the acquirer actually does the deal (you can read his blog post from September here). Daniel Wilson, a manager at Longnecker & Associates, a compensation and governance consultancy, says he has never seen this structure used before in an acquisition. “You want the management team to fight to the death for the highest price possible,” he says, adding that, at the very least, the explanation given on Wednesday evening’s call should have been disclosed up front.We have seen this sort of thing before with master limited partnerships and similar structures in the energy business. Back in 2016, Energy Transfer LP issued some preferred convertibles that were the equivalent of insiders settling into first class while the ordinary investors turned right to the narrow seats, broken armrests and $10 snack boxes. So it’s a problem that extends beyond Tallgrass and explains to a large degree why such partnerships have been largely deserted by generalist investors and, more and more, have converted to higher-rated C-Corps.Ethan Bellamy of Robert W Baird & Co. Inc., the only analyst to raise the topic of the side letters on Wednesday evening’s call, sums it up well:Where are the clients’ yachts? From WeWork to the Anadarko management payouts, insiders appear to be profiting at the expense of investors. This is a major problem for the stock market and American capitalism.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The chief executive of Tallgrass Energy LP, under fire from investors over sales talks with private equity firm Blackstone, on Wednesday defended management provisions in the deal and blamed selling shareholders for a 23% stock-price drop. In August, Blackstone Infrastructure Partners made a non-binding proposal to buy the shares in Tallgrass it does not already own for $3.03 billion, or $19.50 apiece. The agreement included a provision for management to be paid about a 30% premium for shares in the general partner that owns Tallgrass.
LEAWOOD, Kan.-- -- Net Income, Adjusted EBITDA and Cash Available for Dividends of $72.5 million, $263.8 million and $210.5 million Cash Available for Dividends of $0.75 per share, Declared Dividend of $0.55 per share, resulting in dividend coverage of 1.36x Tallgrass financial leverage of approximately 3.5x and REX financial leverage of approximately 2.7x as of Sept. 30, 2019 Tallgrass Energy, LP ...
Tallgrass Energy, LP , through its affiliate Tallgrass Pony Express Pipeline, LLC , today announced that Pony Express’ binding open season announced Sept.
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the […]
Tallgrass Energy, LP (TGE) today announced its quarterly dividend for the third quarter of 2019. The dividend will be paid on Thursday, November 14, 2019, to shareholders of record as of the close of business on Thursday, October 31, 2019. The board of directors of TGE’s general partner declared a quarterly cash dividend of $0.5500 per Class A share for the third quarter of 2019, or $2.20 on an annualized basis.
Tallgrass Energy, LP , through its affiliate Tallgrass Pony Express Pipeline, LLC , today announced a binding open season soliciting shipper commitments for crude oil transportation for near-term expansion on the Pony Express system from origin points in Wyoming to the McPherson refinery destination in Kansas.
(Bloomberg Opinion) -- As the fight for Marathon Petroleum Corp.’s future intensifies, collateral damage looms for an already battle-scarred asset class: master limited partnerships.Elliott Management Corp.’s call for splitting Marathon in three has garnered support from a couple of other shareholders now pushing CEO Gary Heminger to step down. Marathon’s board says it stands behind Heminger, but the persistent discount in the stock versus its sum-of-the-parts value should keep the issue of a corporate overhaul alive. While the future of retail arm Speedway looks like the most contentious area, Elliott’s suggestion of converting Marathon’s MLP, called MPLX LP, into a regular C-Corp and spinning it off looks less controversial.Such conversions have become commonplace. Problems with governance, debt, tax reform and general energy exposure have crushed MLP valuations, eroding their main reason for existing, namely as a cheap source of capital. MPLX now sports a distribution yield of about 9.5%. Converting to a C-Corp, as many others have done, would open up a wider pool of investors.That could be great for MPLX; less so for MLPs.I wrote here back in May about the shrinking MLP pool. Since then, a few partnerships have disappeared, including Andeavor Logistics LP, which was bought by MPLX. Meanwhile, Tallgrass Energy LP has received a buyout offer (of sorts), and Kinder Morgan Canada Ltd. should disappear by the end of the year. Plus, with Occidental Petroleum Corp. trying to pay off the debt from its acquisition of Anadarko Petroleum Corp., Western Midstream Partners LP also could be exiting the scene.Here are updated charts breaking down 83 North American energy infrastructure companies (not including utilities) into their respective groups, weighted by market cap and free float. The dominance of the C-Corps is pretty clear: An MPLX conversion would have a big impact. With a market cap of roughly $30 billion(1), MPLX represents about 11% of North American energy partnerships’ aggregate value. It’s also the largest member of the Alerian MLP Index. Assume MPLX converts and is spun off, plus Buckeye Partners LP(2), Tallgrass, Kinder Morgan Canada and Western Midstream all disappear. Under that scenario, C-Corps would jump from about 62% of the aggregate free float of energy infrastructure firms to more than two-thirds. Meanwhile, outside of C-Corps and the big four, we would be left with a long tail of 61 companies with a combined free float of just $48 billion, averaging less than $800 million each.And the dwindling ranks of the Alerian MLP index would thin further; MPLX, Tallgrass and Western Midstream account for a fifth of its weighting. The relative weighting of smaller partnerships with lower-quality midstream assets would increase. For example, all else equal, Genesis Energy LP, which houses everything from soda-ash production to pipelines to shipping, could enter the top 10 of the index’s holdings.A vicious cycle is at work here. As generalist investors have withdrawn, so MLP valuations have remained subdued despite some recovery in energy prices and continued growth in U.S. physical energy flows. This, along with governance concerns, persuades more partnerships to either sell out or give up on the structure, reducing the pool of available investments, which in turn leads to investment mandates and specialist funds migrating away.Earlier this month, large pension funds in Iowa and Oklahoma effectively eliminated asset allocations to MLPs, with Teachers’ Retirement System of Oklahoma noting a number of drawbacks, including an “extremely small universe of securities relative to other asset classes.” In his latest weekly roundup of the sector, Hinds Howard at CBRE Clarion Securities noted that after a year of trying to deal with weak performance and growing concentration, institutions are “throwing in the towel,” with allocations “being diverted to listed infrastructure strategies, private equity or just plain old global equities.” He adds:MLPs have lost the special designation as a separate allocation within real assets that the sector has enjoyed over the years. That fund flow headwind is the biggest impediment to midstream performance [for] the rest of 2019, especially if oil prices are going to remain a headwind.Of course, even if MLPs are shrinking in importance, the hard assets they own remain and can be invested in under other structures. BP Capital Fund Advisors LLC is touting the catchily named UBS E-TRACS NYSE Pickens Core Midstream Index ETN, which includes allocations to C-Corps, with a recent report subtitled: “Is your midstream exchange traded product still relevant?” Some funds have taken an holistic approach to energy infrastructure for years, notably the First Trust North American Energy Infrastructure Fund, which mixes partnerships with C-Corps and even utilities, and the Voya CBRE Global Infrastructure Fund, which extends beyond energy-related infrastructure.Looking at the relative performance, it isn’t hard to see why. And as more MLP constituents either change identity or leave altogether, more institutional money will follow.\- With graphics by Elaine He (1) All data are as at the market close on September 26, 2019.(2) IFM Investors agreed to buy Buckeye for $11.1 billion (including assumed debt) in May 2019, with completion expected by the end of the year.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Tallgrass Energy, LP , through its affiliate Tallgrass Pony Express Pipeline, LLC , today announced a binding open season soliciting shipper commitments for crude oil transportation for near-term expansion on the Pony Express system from origin points in Wyoming to Cushing, Okla.
Tallgrass Energy, LP , through its affiliate Tallgrass Pony Express Pipeline, LLC , today announced a binding open season soliciting shipper commitments for crude oil transportation under a joint tariff between Pony Express Pipeline and the Iron Horse Pipeline, which transports crude oil from the Powder River Basin to Guernsey, Wyo., where it connects with Pony Express for delivery to three refineries ...
DALLAS , Sept. 13, 2019 /PRNewswire/ -- Alerian announced the results of the September quarterly review for the Alerian Index Series. All changes will be implemented as of the close of business on Friday, ...
2019 has been a rotten, no-good year for energy stocks. While the stock market as a whole has prospered, energy stocks have missed the boat. The price of crude oil hasn't been particularly favorable and natural gas prices have sunk like a rock. On top of that, investors have been favoring growth while shying away from value stocks. This has left the energy sector orphaned; in fact, energy's share of the S&P 500 has fallen to its lowest level in many years.For investors willing to buy what others are selling, however, energy stocks offer many rewards here. For one, these are the stocks to buy now if you want strong dividend yields. Across the sector, leading energy firms are offering their highest dividend yields in decades. This, while rates on fixed income in general have plummeted. * 7 Best Tech Stocks to Buy Right Now Additionally, expect a wave of M&A to help reignite interest in the energy stocks. For example, Blackstone (NYSE:BX) just announced a takeover for pipeline operator Tallgrass Energy (NYSE:TGE). That led to a 35% surge for TGE stock last Wednesday. And as we'll see, that's not the only dealmaking activity going on in the sector right now. With everyone abandoning energy stocks, this could be the time to take advantage of the general pessimism.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Energy Stocks to Buy: BP (BP)Source: AVM Images / Shutterstock.com Tallgrass wasn't the only company making headlines this week. BP (NYSE:BP) also caused a stir with its announcement that it is selling its Alaskan oil interests to Hilcorp, a privately-owned company. Hilcorp will pay BP $5.6 billion; $4 billion of that goes to BP immediately, and Hilcorp will deliver the rest gradually in coming years.It seems that BP drove a fair bargain. Its Alaskan properties produce roughly 74,000 barrels of oil a day, and have been declining in production in recent years. Figuring an average oil price in the low $50s per barrel, Alaska was generating around $1.4 billion annually for BP in revenues. Thus, it sold a mature oil field for around 4x annual revenues, even given the poor industry sentiment at the moment.Additionally, this sale helps with BP's promised transformation. BP said that it will divest $10 billion in assets as it transitions to more growth and green energy opportunities. With this deal, they have now reached more than half of their overall target.Management is delivering on its corporate strategy. The asset sales also help strengthen the balance sheet. This should give investors more confidence in BP's gigantic 6.71% dividend yield. In a market starved for yield, it's hard to think BP stock will stay unloved for too long. ExxonMobil (XOM)Source: Michael Gordon / Shutterstock.com Speaking of dividend yields, ExxonMobil (NYSE:XOM) is another income champion that the market is paying no respect right now. ExxonMobil has raised its dividend for 36 consecutive years, making it one of the few companies to manage that feat. Incredibly, it was able to keep raising its dividend even through the oil and gasoline price doldrums in the late 1990s. The great financial crisis didn't break its streak either.XOM stock is now offering a 5.1% dividend yield. That's amazing; it's the most that ExxonMobil has offered since 1990. Particularly with interest rates plunging ever lower, XOM stock is a fantastic alternative to bank CDs or government bonds yielding 2% or less.Is the dividend sustainable? Yes. In fact, ExxonMobil still has one of the highest-quality balance sheets in corporate America and is rated a sterling AA+. Even with the slump in oil and natural gas prices, ExxonMobil has still been able to cover its dividend payments out of free cash flow. * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off And after years of lying low, XOM is pushing the accelerator. It has plans to double its earnings and cash flow over the next five years or so. While the competition has had to retrench due to the slump in energy, ExxonMobil is ready to pick up the slack. With a huge new oil field coming online soon in Guyana, ExxonMobil is prepared for the next decade and more. Throw in any recovery in oil prices, and XOM stock should soar. Suncor (SU)Source: Shutterstock A lot of investors, Americans in particular, have some faulty perceptions of the Canadian oil sands. Often disparagingly called "tar sands," oil sands -- primarily located in the province of Alberta -- are an emerging power play in global crude oil production. Many years ago, this type of production was extremely expensive and damaging to the environment. Over the years, however, operators have gotten much better on both fronts.Oil sands are now one of the cheapest sources of crude in North America. There's still another issue, however. The oil sands have huge upfront development costs to launch production. That's in stark contrast to, say, fracking another well in the Permian in Texas. Some investors have been put off on oil sands projects because of these capital costs.Here's the thing they're missing: When you drill a new well in the Permian, for example, most of the production comes within the first couple years. By year ten or so of operation, that well will be kicking out only a few barrels of oil a day. Thus, for frackers, it's a constant and expensive treadmill to keep production rolling. With the oil sands, however, once it's built, you can produce for decades at a low cost. Your production doesn't fall off a cliff -- rather you get stable sweet returns for many years.Suncor (NYSE:SU) has become the leader in this space in Canada. It has several other attractive features as well. The most important right now is that it is integrated; it has a ton of gasoline refining capacity as well. This allows Suncor to earn far higher prices for its oil than other Western Canadian operators who are dealing with a glut of oil locally.It's possible that upcoming elections will deliver a more pro-energy government in Canada, making way for more pipelines. Until then, however, Suncor, with its refining and decades of cheap oil reserves, is a standout pick for its refining edge. SU stock currently yields 4.53%, making it one of the better options in the energy stocks space. Canadian Natural Resources (CNQ)Source: Shutterstock Canadian Natural Resources (NYSE:CNQ) is another big player in oil sands, although it has oil operations around the world in addition to its Canadian holdings.The firm just made a huge power play, buying up $2.8 billion of oil sands assets from Devon Energy (NYSE:DVN). This deal appears to have been an absolute steal. Bankers estimated that Devon could fetch up to $5 billion for these assets; Canadian Natural grabbed them for barely half of that. * 7 Stocks to Buy Down 10% in the Past Week Canadian Natural doesn't have the same refining capacity as Suncor, however it has a huge asset base and nice diversity across its operations. At a $27 billion market cap, CNQ stock is also a huge player in Canada. When money comes flowing back into Canadian shares and the energy stocks in particular, CNQ stock should catch a solid bid. In the meantime, it also offers a generous 4.88% dividend yield. Enbridge (ENB)Source: Shutterstock Speaking of unloved Canadian stocks, let's turn our attention to pipeline giant Enbridge (NYSE:ENB). Enbridge is right up there with Kinder Morgan (NYSE:KMI) among the big midstream energy players. Unlike Kinder Morgan, Enbridge is not as popular with American investors; the company doesn't have the same sort of promotional management style you get from Rich Kinder. Nor has Enbridge made a history of big dividend hikes followed by painful dividend cuts.By contrast, Enbridge has built a reputation for stability, and has become a Canadian blue chip stock. ENB stock offers a current dividend yield of more than 6.5%. And unlike so many energy stocks, Enbridge offers a rock-solid yield. Even despite the difficult operating environment, the company is still able to grow its cash flow by around 5% per year, paving the way for more dividend increases in the future.Additionally, with 93% of its customers having investment-grade credit ratings, Enbridge has a quality group of clients using its pipelines and thus is largely insulated from more bankruptcies in the E&P space. Schlumberger (SLB)Source: Shutterstock Benjamin Graham, who is widely considered to be the "father of value investing" recommended an interesting strategy for profits in beaten down sectors. He said investors should look at the industry and find the biggest firm that has a strong balance sheet. That way, you know that your investment will survive the down cycle and perhaps even benefit as smaller competition goes bust. Then, when the cycle turns upward, you'll be poised to capture huge gains.With oil services, Schlumberger (NYSE:SLB) is that company today. Schlumberger has a long and storied history of shareholder value creation. Its stock soared from a split-adjusted $12 in 1995 to as high as $140 in 2014. Since then, with the plunge in oil prices, SLB stock has gotten hammered as well; it's down 75% to around $32 today. * 7 'Strong Buy' Stocks to Beat Volatility However, much of Schlumberger's competition has already gone bankrupt or is on life support at this point. Meanwhile, Schlumberger remains the global leader in its field, continues to generate profits even during these hard times, and offers a 6.3% dividend yield. When oil booms again, Schlumberger could make it all the way back to its old high of $140 per share; even this past October, it traded at $62, making the current $32 price quite a discount. Cullen/Frost Bankers (CFR)Source: Shutterstock You might be asking what a banking stock like Cullen/Frost Bankers (NYSE:CFR) is doing on a list of energy stocks to buy. That's a fair question. Cullen/Frost, however, is no ordinary bank. It's focused on the Texas economy and has substantial direct exposure to energy loans.The San Antonio-based bank, in fact, has all 134 of its branches and more than 1,300 ATMs located within Texas. On every earnings call, management devotes substantial time talking about the health of the Texas economy. Given its reliance on energy companies in Houston and fracking in West Texas, the local economy is heavily levered to oil. As a result, investors absolutely pummeled CFR stock in 2015 and 2016 when oil dropped.CFR stock plummeted from $80 to $45 during that oil crash. Despite that, Cullen/Frost's loan losses barely went up, and the bank came through unscathed. In fact, it has gone through a ton of obstacles without harm; it was the only major Texas bank to survive that state's massive bust in the 1980s oil collapse. On top of that, Cullen/Frost kept raising the dividend even during the financial crisis which took out so many banks. In 2016, after investors gave up on CFR stock, it soared back from $45 to $120 as oil prices normalized.However, with energy in retreat again, CFR has plunged back to $80 a share. At just 12x forward earnings, it is trading well below its normal valuation. The stock is also yielding more than 3.5%. It could come flying back up in a hurry -- as it did in 2017 -- once the tide turns for oil, gas, and the Texas economy.At the time of this writing, Ian Bezek owned shares of BP, CNQ, XOM, SLB, and ENB. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post 7 Deeply Discounted Energy Stocks to Buy appeared first on InvestorPlace.
In order to privatize the plunging Tallgrass Energy (TGE) that is partially under Blackstone Group's control, the latter plans to purchase the left-over stakes worth $3.03 billion.
(Bloomberg Opinion) -- One could almost feel sorry for that decidedly unloved crowd known as pipeline operators. Except they keep finding ways to make it really hard.Tallgrass Energy LP has received a buyout offer from an investor group led by Blackstone Group Inc. This follows a deal in March in which the group took a controlling stake in Tallgrass. Things haven’t gone well since then.The biggest thing weighing on the stock is fear that Tallgrass will have to drop prices in upcoming contract negotiations for two of its major pipelines amid rising competition. That and the fact that energy stocks are just pariahs in general. Plus, while Blackstone and others made a big bet on Tallgrass earlier this year and looked likely to eventually bid for the whole thing, they aren’t exactly known for being a soft touch when it comes to pricing.The new offer is a 36% premium to where Tallgrass was trading, although that isn’t saying much given how far it had sunk. It effectively makes up just one month’s worth of lost ground.What may really crush the already despondent souls holding the other 56% of Tallgrass, however, is the knowledge that several of the company’s executives hold something akin to a get-out-of-jail-free card.I saw a reference on Twitter under an anonymous handle called @mr_skilling (it’s a parody, folks … I think) to “Management Side Letters” in a filing made by Tallgrass with the Securities and Exchange Commission in March. Among other things, these letters contain a provision that if the investor group took Tallgrass private within a one-year lockup period, then those executives – including the CEO, CFO and COO – could sell their stakes for a minimum price of $26.25 per share, a 35% premium to this week’s buyout proposal.Tallgrass notes the letters were already disclosed and reflect a “general-partner control premium” as part of the deal in March. The company also characterizes the agreements as “facilitating management’s retention of equity interests,” and thereby “ensure continued alignment between management and [Tallgrass’s] equity holders.”That last bit may prompt some narrowing of the eyes by equity holders faced with the prospect of getting paid substantially less than the executives with whom they are supposedly aligned. And while the letters were referenced in a filing that’s been out there for several months, it’s possible they could have done with a bit more airing. Stephen Ellis, an analyst at Morningstar Inc., certainly seemed taken aback, calling the letters “awful corporate governance” in a note published after the new proposal was announced. Ellis hopes the company’s conflicts committee will either reject the proposal outright or push for a higher offer (Tallgrass emphasized this independent committee would review the offer). However this turns out, it is a reminder of the governance minefield that can greet the investor who strays into energy land. While exploration and production has its fair share of egregious examples, the pipelines business has long punched above its weight when it comes to misaligned incentives and investor-unfriendly outcomes (see this and this for two real doozies). One of the ironies of Blackstone’s offer is that it sparked speculation this week about private equity jumping on bargains in a sector that generalist investors have deserted – while simultaneously reminding us why they left in the first place.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.