Tulsa World: SemGroup Energy Partners reports 2008 third-quarter loss; asset rise

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SemGroup Energy Partners reports 2008 third-quarter loss; asset rise

By ROD WALTON World Staff Writer
Published: 5/28/2009 12:05 PM
Last Modified: 5/28/2009 12:33 PM

Complete coverage: Read all the stories and documents related to the SemGroup collapse.

SemGroup Energy Partners LP’s journey back from the brink of bankruptcy took another step when the Tulsa midstream energy company released its quarterly financial report for 2008’s third quarter Wednesday evening.

The report, which is about six months late due to challenges surrounding the former subsidiary financial ties to bankrupt SemGroup LP, showed publicly traded SGLP with an $11.85 million net loss for the period ending Sept. 30, 2008. The company’s total current assets, however, rose to $48.8 million that quarter from only $13.9 million six months earlier.

Net income for the nine months ending Sept. 30 totaled $19.5 million, compared to a $20.1 million loss in the same period a year earlier.

SGLP also announced contracts or leases on 39 of its 46 asphalt facilities. The public SemGroup offers fee-based storage, terminaling and transport services in oil and asphalt.

“We believe our ability to get these facilities quickly under contract highlights the strategic location and strong industry demand for our asphalt and residual fuel oil assets,” Jerry Parsons, SGLP’s executive vice president for asphalt operations, said in a statement.

SemGroup LP spun off millions of dollars’ worth of storage, terminal and pipeline assets to form SGLP and take it public

in July 2007. The parent company was once considered one of the nation’s fastest growing and largest private entities but sapped its liquidity through a series of disastrous oil futures transactions, according to reports.

SemGroup LP filed for Chapter 11 bankruptcy protection July 22, 2008, in Delaware federal court. The company traders, including co-founder Tom Kivisto, lost more than $2.4 billion in failed short positions on the oil futures market, court records indicate.

The public SGLP was not a debtor in that bankruptcy, but lost a majority of the revenues it received via its throughput agreement with the parent SemGroup. The public subsidiary also fell into credit default, and hedge funds Alerian Capital Management and Manchester Securities took SGLP board control after the parent SemGroup defaulted on a $150 million loan.

SGLP struggled to find third-party storage and terminal customers to replace the parent company’s business. The company went relatively silent after a July conference call announcing the hedge fund takeover, with only other conference call a month later and no quarterly report since May 2008.

This spring heralded some positive developments for SGLP. The company gained a two-year credit waiver from its senior lending group and was able to borrow again.

In March, SGLP finally released its second-quarter 2008 financial results, showing a $21.6 million profit. The public company also received some of SemMaterials storage assets in a settlement with its former parent company SemGroup earlier this year. By ROD WALTON World Staff Writer

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Reader comments for this story have been moved to the most updated version of the story, now under the headline "SemGroup releases 3Q report," which was published on 5/29/2009. So far, 4 comments have been made.