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Two Tulsa firms to buy SemGroup unit
QuikTrip and Magellan seek to obtain terminals and storage.
 
By ROD WALTON World Staff Writer
Published: 6/30/2009  2:20 AM
Last Modified: 6/30/2009  3:44 AM


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


Bankrupt SemGroup LP plans to sell off much of its SemFuel refined petroleum unit to Tulsa companies QuikTrip Corp. and Magellan Midstream Partners LP for a combined $37 million, officials confirmed Monday.

Fee-based gasoline storer and transporter Magellan, through its subsidiary Magellan Pipeline Co., would pay $23 million to buy SemFuel's terminal operations in El Dorado, Kan.; Des Moines, Iowa; and storage sites in Glenpool and west Tulsa, court records show.

As reported on tulsaworld.com , convenience-store giant QuikTrip would spend $14 million to buy its first-ever terminal. The facility is in Fort Worth.

"It fits our long-term plans in the Dallas area," QuikTrip spokesman Mike Thornbrugh said. "We understand the terminal business very well, but we've never owned any terminals."

QuikTrip has never owned a gasoline terminal before, but company officials became interested when SemFuel put its operations on the sale block, Thornbrugh said. He was cautious about the prospect, noting that the deal must clear an auction and court hearing.

"This is new for us," he said. "Reliance on your own supply system is a good thing."

Magellan would add 1.3 million barrels worth of refined storage
if its bid emerges as the winner. The company already owns the property on which the El Dorado, Des Moines and Tulsa-area tanks sit, so the deal make sense from a geographical point of view for fuel transporter.

"They are all already connected to our pipeline system," spokesman Bruce Heine said. "It fits our portfolio well, and we hope that we're going to be the successful bidder."

The acquisitions are still subject to an auction and court approval, but Quik-Trip, Magellan and Combined Locks, Wis.-based U.S. Oil Co. Inc. emerged as stalking horse bidders for three of SemFuel's five assets groups.

A stalking horse bidder is selected by the seller to help set a minimum price for assets and prevent lower offers, and may or may not emerge as the auction winner.

The deadline for other interested bidders is July 27, with an auction potentially scheduled for August, according to court records.

If approved, SemFuels will be the second major piece of the former SemGroup sold to help pay off creditors. The 9-year-old privately held Tulsa energy conglomerate also sold off or wound down all of its SemMaterials asphalt unit earlier this year.

SemGroup LP filed for Chapter 11 bankruptcy protection last July after losing at least $2.4 billion in margins on its oil futures positions. The company also owes at least another $2.5 billion to banks and other creditors, according to reports.

SemFuels was SemGroup's primary refined storage, transport and trading wing, records show. The bankruptcy, however, decimated that unit's ability to do business.

"The circumstances leading to the filing of these Chapter 11 cases and restrictions under SemGroup's post-petition financing arrangements have limited SemFuel's current purchasing, marketing and hedging activities," according to the bankruptcy motion filed Friday evening.

"Further, SemFuel has lot several key employees, including its primary refined products trader and marketing director," the motion added. "Given these impacts, SemFuel's post-petition business has shifted away from marketing and trading-related activities and has primarily consisted of the sale of inventory on hand, terminaling and continued Green Bay operations."

U.S. Oil could buy the terminal operations in Green Bay, Wis.; Bettendorf, Iowa; and Rogers City, Mich., for $14.1 million, according to the court filing. The original motions had QuikTrip buying that asset group and U.S. Oil purchasing the Fort Worth terminal site, but officials later corrected those typographical errors.

Blackstone Advisors, SemGroup's bankruptcy financial consultants, have been searching for SemFuels buyers since last fall, according to reports. Four companies, including the three winning bidders, eventually submitted final, binding bids.

SemFuels still has two asset groups, covering operations in Houston and Bryan, Texas, that are not part of the current bidding deals, according to reports. At its pre-bankruptcy apex, the unit could store 1.5 million barrels and move gasoline, diesel fuel and heating oil.

SemGroup LP filed a reorganization plan last month, but revised its proposal after many oil and gas producers filed objections against the company's disclosure statement. The amended reorganization still calls for SemGroup to emerge as a publicly traded entity offering $2.27 billion in equity and cash by September, if approved by creditors and the court.

Earlier this year, SemGroup CEO Terry Ronan told employees that the eventual plan would focus on the company's SemCrude oil operations. Banks and other secured lenders would own up to 95 percent of the reorganized SemGroup, according to reports.

QuikTrip owns and operates more than 500 convenience stores in nine states. Forbes magazine rated the company 37th among the nation's largest privately held firms, and QuikTrip's revenues surpassed $8 billion in 2007, according to reports.

Magellan Midstream Partners is a public company with more than 80 petroleum product terminals and 8,700 miles of pipeline.


Rod Walton 581-8457
rod.walton@tulsaworld.com
By ROD WALTON World Staff Writer

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Some reader comments for this story were copied from "QuikTrip, Magellan planning to buy SemGroup assets," which was published on 6/29/2009.

Report Comment
Arbythree, Tulsa (6/29/2009 1:59:36 PM)
There goes the price of my coffee.
Report Comment
Dad, Up North (6/29/2009 2:43:21 PM)
No more 49 cent fountain quarts..........
Report Comment
Mike S, Tulsa (6/29/2009 3:45:05 PM)
Ya know KC, it'd probably be more effective if you'd print that and stick a 44 cent stamp on it.

As to the acquisition, very cool for QT. I've been glad over the last few years to see the increasing number of QT stores in the Dallas area on my visits there.
Report Comment
Barleybaby, Tulsa (6/30/2009 8:02:07 AM)
Big move for Tulsa based QT. For those who aren't aware, QT is consistently on Forbes "Top 100 private companies to work for" list.
Report Comment
susieq, broken arrow (6/30/2009 8:37:35 AM)
are they going to have a simgroup on every corner
Report Comment
shaw411, Scottsdale, AZ (6/30/2009 9:03:01 AM)
49 cent drinks!!! They are 59 cents here at QT's in Phoenix!
Report Comment
HOGRIDER, BA (6/30/2009 11:48:55 AM)
Now QT can really control the price of gasoline at the pump...up up up and away we go.
Report Comment
kyote, (6/30/2009 11:53:41 AM)
This is so quik Rip and control the price of a gallon of gasoline mor than they already do. Up by 10 cents a gallon down by a penny. Hold on to your pump they have to pay for this terminal someway.
Report Comment
Tough but Fair, COWETA (6/30/2009 3:32:44 PM)
Very good business move for QT - and for all of us in Tulsa over the long haul.

We need many more of these well-analyzed, transparent and good-fit business deals in our area - and way fewer fly-by-night, get-rich-quick, flashy SemGroup "businesses" who set up hundreds of stunned Tulsa employees for the unemployment line, even as their "leaders" wined and dined the pols, dazzled the opera-goers, stuffed their own personal pockets chock-full of cash, and then moved on down the road to peddle their business graft and corruption to some other naive community. (Check out Bill Bartmann's "get rich quick" ads these days - running in both USA Today and the Wall Street Journal. Remember when Bill's "SemGroup-style" of flashy business management at Commercial Financial Services was worshiped and praised by 5000+ Tulsa employees out there at Citiplex, so piously guarded by Oral Roberts' famous praying hands?)

Give me a solid company with a tested track record who provides stable, secure middle-class jobs for Tulsans over the long haul any old day! Congratulations, QuikTrip!
Report Comment
Tough but Fair, COWETA (6/30/2009 3:38:06 PM)
Oh, yeah. And remember the thousands of City of Faith Hospital employees who found themselves in the unemployment lines BEFORE CFS and Bartmann arrived here to dazzle us with their business - those folks got their pink slips in the very same building, watched over by the same set of pious praying hands?
Report Comment
O&Gtrader, ft. worth (7/1/2009 12:57:30 PM)
Had lunch yesterday with a guy I knew from my Houston days who is involved in the physical energy commodity business. He buys, sells, ships and transports actual barrels, gallons and molecules of the stuff and has never delved into the "Dark Side" of trading either physical or financial energy products. He has done some business with SemGroup in the past and had very nice things to say about the people with whom he did that business. When I asked him about Sem's trading blow-up a year ago he looked at me with an incredulous, bewildered look that I have seen from others at various industry functions when posed with the same question. He had nothing further to say. I think the oil marketing business community wants the "SemGroup trading thing" to go away really, really soon. It is attracting way too much auditor participation within other trading and marketing businesses these days and oil traders do not like auditors getting in their business. I think I could even get an "amen" on that from the surviving SemGroup and SGLP professionals.
 

 
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