Tulsa World: SGLP reports profit of $17.8 million for 2008

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SGLP reports profit of $17.8 million for 2008
It comes in spite of the collapse of its former parent firm.

By ROD WALTON World Staff Writer
Published: 7/3/2009 2:25 AM
Last Modified: 7/3/2009 4:14 AM

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

SemGroup Energy Partners LP generated a $17.8 million annual profit last year despite its parent SemGroup LP's financial collapse and bankruptcy, company officials said Thursday.

For the public SemGroup, also known as SGLP, Thursday's earning report was another step toward righting itself with investors and regulators. The company has filed three earnings reports over four months since Nasdaq delisted it after 10 months of non-reporting.

"We now look forward to the opportunity to get back to our goal of growing our business and being a leading provider of services in the crude oil and asphalt industry," SGLP CEO Kevin Foxx said in a statement.

Fourth-quarter figures showed a net loss of $1.7 million on revenues totaling $42.9 million. SGLP lost much of those revenues in the wake of SemGroup LP's bankruptcy, but since has worked successfully to find third-party oil and asphalt storage and transport customers.

In fact, 95 percent of the company's capacity is now committed to third-party customers, according to reports. Those outside revenues totaled $5 million during the second quarter 2008 and rose to $10.9 million and $13.6 million by the third and fourth quarters, respectively.

SGLP has not released an earnings report for 2009's first quarter,

but Thursday's release indicated that the company's third-party revenues surpassed $13 million for that period.

"The asphalt contracts, in connection with our existing crude oil storage, transportation and terminaling business, further stabilize our revenues," Foxx said. "We also wish to express our gratitude to our new asphalt counterparties, existing crude oil customers and approximately 400 employees for their continued support."

The independent audit of SGLP finances also warned of the company's future challenges. The company must deal with "substantial long-term debt, a deficit in partners' capital, significant litigation uncertainties and other issues, which raise substantial doubt about its ability to continue as a going concern."

SemGroup spun off much of its terminal, pipeline and trucking assets to form SGLP and take it public in July 2007, sustaining the subsidiary with fee-based revenues on storing and moving its oil and asphalt. The parent company filed for bankruptcy a year later, reporting at least $2.4 billion in oil futures trading losses, $2.5 billion to banks and other creditors and up to $1 billion to oil and gas producers.

The bankruptcy did not include SGLP, but the loss of revenues and other accounting problems put SGLP on the brink and delayed any financial reporting from May 2008 until March of this year.

SGLP's showed a $21.6 million profit for the second quarter 2008, although those earnings reflected operations before the SemGroup bankruptcy. The company's net loss was $11.8 million for the third quarter, according to reports.

The release of 2008's second-quarter and third-quarter earnings in March and May, respectively, may pave the way for a return to the Nasdaq index that delisted SGLP earlier this year. Releasing the first-quarter and second-quarter statements by August could put SGLP right with its reporting requirements.

No conference call, however, was scheduled Thursday to follow up the annual report. SGLP has not held a conference call for analysts and media since August 2008.

In addition to the earnings reports being released, senior lenders earlier this year gave SGLP a two-year credit waiver that allows the company to borrow again.

The public SemGroup technically is not even considered a subsidiary of the bankrupt firm anymore. Hedge funds Manchester Securities and Alerian Capital Management took over board and voting control after a $150 million loan default in July 2008, and SGLP no longer shares employees or payroll services with the onetime parent SemGroup.

The parent company hopes to emerge by this year's third quarter as a publicly traded firm focused on its crude oil operations, according to reports. SemGroup LP is selling off much of its asphalt and refined petroleum terminaling assets.

Trading for SGLP, which dropped as low as 80 cents per unit on the Nasdaq last year, was listed at $5.95 Thursday afternoon on the over-the-counter "Pink Sheets" electronic market.

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 "SemGroup Energy Partners files 2008 annual report," which was published on 7/2/2009.

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Twilight in Paris, near the water in SE OK (7/3/2009 9:16:12 AM)

I guess this is good, but I'm guessing this isn't the SemGroup we had in Oklahoma...right?

All the states that are amid a financial crisis need to MAKE MORE MONEY! You can only spend so much, but once you are spending 10X what you are making, you are California!

All the states that are in that prediciment need to re-evaluate contracts with unions, etc and cut the pay (for a period of time) and while that is going on, EARN MORE MONEY!!!!!!!!!!

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Hawktalk, (7/4/2009 8:30:22 AM)

$5.95/share. Well...whoopee snorts.

"...SGLP no longer shares employees" with the onetime parent. Does this mean they won't be jumping back and forth anymore ?

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