Tulsa World: SGLP on the comeback trail year after SemGroup collapse

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SGLP on the comeback trail year after SemGroup collapse
The publicly traded spinoff has found new customers and turned a $17.8 million profit.

By ROD WALTON World Staff Writer
Published: 7/17/2009 2:24 AM
Last Modified: 7/17/2009 4:15 AM

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

The struggles of SemGroup Energy Partners LP that began one year ago had many analysts shaking their heads in amazement at the possible demise of a once-proud Tulsa energy company.

However, they may now be shaking their heads in admiration at the publicly traded spinoff of bankrupt SemGroup LP. Exactly one year since its stock began tanking, the midstream oil and asphalt firm, also known as SGLP, is surviving, signing up customers and finally sharing some of its good news with the public.

"I think they should be given credit for a Herculean effort here," a Tulsa money manager, Fred Russell, said Thursday. "It's always nice to be surprised by a good event."

It was a Thursday — July 17, 2008 — when most of the financial world became aware of SemGroup LP's grievous financial picture. Shares in SGLP fell from more than $22 to $11 in one day as news about SemGroup's liquidity crisis circulated — first as rumor, then as fact that evening.

The parent SemGroup lost control of SGLP when hedge funds moved in after a credit default a few days later. SemGroup LP filed for Chapter 11 bankruptcy protection July 22 in Wilmington, Del., citing more than $2.4 billion in losses on oil futures margin calls.

The publicly owned SGLP avoided its own bankruptcy but lost the assurance of more than $100 million in revenue paid by the parent company through fee-based storage and transport agreements. The stock eventually dropped to an intraday record low of 87 cents, and SGLP was delisted from the Nasdaq index because it did not file a quarterly report for about 10 months.

Since spring, however, the company has released three quarterly reports and one annual report showing that SGLP somehow made a $17.8 million profit last year. Third-party customers stepped in to replace lost business from the parent company, and all but one of 46 storage facilities are committed, reports show.

"It's quite a challenge to get everything out on time," Russell said. "You have to draw a line between giving full disclosure so you're not sued by shareholders without giving away your trade secrets to the competition. This is not an easy task."

If SGLP delivers its first- and second-quarter earnings reports next month, it could be eligible for a return to the Nasdaq stock market.

Shares of SGLP rose Thursday, closing at $5.91 on the over-the-counter "pink sheets" electronic market.

Brian Cropper, SGLP's investor relations specialist, could not offer a specific comment about the anniversary of his company's initial stock collapse.

However, he did point out the signing of new contracts, a two-year credit waiver from senior lenders and retained assets, including 1,150 miles of oil pipeline, 200 vehicles and 7.4 million barrels of combined asphalt and residual fuel capacity at those 46 terminals in 23 states.

CEO Kevin Foxx said in a statement earlier Thursday: "We express our thanks to our customers and gratitude to all of our employees who have worked tirelessly and endured this past year of uncertainty. We are deeply focused on our goal of growing our business and rebuilding value."

Russell said that SGLP seems to be on its way to doing just that, even if he was one of many doubters early on.

"At least I was influenced or prejudiced by the troubles of the parent company and the chaos," he recalled. "I assumed some of the same challenges would overwhelm the public company.

"At least I was wrong."

Russell was not alone. The company itself notified the Securities and Exchange Commission last year that the bankruptcy of SemGroup LP could threaten SGLP as well.

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

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If you see a comment that violates our terms and conditions, please help us by clicking the "Report this Comment" link next to a comment. That will alert the web staff to review the comment. Thank you. -- Web Editor Jason Collington

	Report Comment GoldenDriller1, Out of State (7/18/2009 8:23:49 AM) All be it good news.. Insiders all know that SEM is being 'hawked' behind closed doors to be sold.
	Report Comment Hawktalk, (7/17/2009 7:27:51 AM) Perhaps Brian (at a loss for words) Cropper could offer me half what I paid for my SGLP stock. That'd be a good start.

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