Tulsa World: Billionaire finds new partner in Oklahoma

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Billionaire finds new partner in Oklahoma
Catsimatidis' acquisition company will merge with Chaparral Energy.

The Chaparral Energy Inc. headquarters is at 701 Cedar Lake Blvd. in Oklahoma City.Paul Hellstern / The Oklahoman

By ROD WALTON World Staff Writer
Published: 10/14/2009 2:24 AM
Last Modified: 10/14/2009 4:22 AM

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

New York billionaire John Catsimatidis' acquisition company, which dropped a bid earlier this year to take control of Tulsa-based SemGroup LP, announced Tuesday it has found a new Oklahoma energy partner.

Catsimatidis' publicly held United Refining Energy Corp. is merging with Oklahoma City-based private producer Chaparral Energy Inc. in a deal estimated at $1.8 billion. The transaction is expected to close no later than Dec. 11.

"Chaparral is a great company with good cash flow and great management team and a tremendous value for our shareholders," Catsimatidis said in an e-mailed reply to a Tulsa World question.

He also said he is glad that business interests will bring him back to the state.

"I like Oklahoma," wrote Catsimatidis, who made his fortune in the grocery, aviation, energy and real estate industries.

United Refining Energy was formed two years ago as a special purpose acquisition company — a kind of investment pool designed for mergers. The initial public offering raised about $464 million, according to reports.

Late last year Catsimatidis set his sights on buying SemGroup. The midstream conglomerate had filed for Chapter 11 bankruptcy protection in July 2008 after admitting at least $2.4 billion in margin losses

on failed oil futures trades.

Catsimatidis promised to keep SemGroup's various units intact within the oil, gas and asphalt pipeline, storage and transportation fields. SemGroup also would stay in Tulsa, Catsimatidis said in December.

"What I see, I like," he quipped at a meeting with SemGroup employees.

Catsimatidis and his colleagues went purchased seats on the SemGroup management committee from co-founder and former CEO Tom Kivisto and others. They gained five of the nine seats but couldn't force everyday management changes due to the veto power of hedge fund Carlyle/Riverstone's position on the board.

The proposed marriage between United Refining Energy and SemGroup also hit a snag when Catsimatidis clashed with SemGroup CEO Terry Ronan over the reorganization plan. SemGroup eventually sued Catsimatidis and his partners, claiming they violated a confidentiality pact in discussing their plans and also attempted to hold a secret meeting with other executives.

The Catsimatidis group countered by suing Ronan, accusing him of resisting their efforts to save SemGroup. Both lawsuits were dismissed when the two sides settled and Catsimatidis moved on.

In the Chaparral Energy deal, the New Yorker would become executive chairman of the merged company's board of directors.

Chaparral is a 21-year-old independent oil and natural gas exploration and production company that focuses on the Permian Basin and Mid-Continent region. It expects to produce about 7.6 million barrels of oil equivalent this year and 9.9 BOEs in 2010, according to reports.

The merger, under which Chaparral would become a publicly traded company, must be approved by United Refining Energy shareholders. Chaparral has scheduled an investor conference call at 10 a.m. Wednesday.

"This merger will give Chaparral access to capital we need to exploit our larger inventory of drilling and development opportunities," Chaparral co-founder and CEO Mark Fischer said in a statement.

Catsimatidis had said that he could lead SemGroup's revival because he also bought United Refining Co., a separate entity from the later effort, and guided it successfully out of Chapter 11. However, he did not deliver a specific SemGroup reorganization plan.

SemGroup has a plan to emerge from bankruptcy, offering $2.24 billion in cash and equity to creditors. The company has hired Norm Szydlowski to be CEO, and it plans a new board of directors.

Ronan will step down as CEO once the reorganization is complete. The executive transition suffered a setback earlier this month when presumptive Chief Financial Officer Philip Reedy resigned after less than a month as a SemGroup consultant.

A confirmation hearing on SemGroup's plan will be Oct. 26 in U.S. Bankruptcy Court in Wilmington, Del. SemGroup hopes to emerge as a publicly traded midstream outfit by early November.

United Refining Energy’s search for a partner

December 2007: John Catsimatidis, others form special purpose acquisition group to accomplish merger with another energy company.

July 2008: SemGroup LP declares bankruptcy.

September 2008: Catsimatidis contacts SemGroup CEO Ronan about possibility of leading SemGroup reorganization. Ronan reportedly tells Catsimatidis to go through Blackstone Advisory Group, which he declines to do.

December 2008: Catsimatidis and partners buy up management committee seats from SemGroup co-founder Tom Kivisto, others. Catsimatidis holds press conference and meeting with SemGroup employees, promising to lead company out of Chapter 11.

Jan. 6: Ronan and Chief Restructuring Officer Lisa Donahue issue press release noting Catsimatidis has yet to produce a reorganization plan and that any efforts must be fair, impartial and gain creditor approval. Management committee wants to reprimand Ronan and Donahue but cannot because of Carlyle/Riverstone’s veto power.

Feb. 11: SemGroup sues Catsimatidis for allegedly violating confidentiality pact, asks federal judge to remove him and some partners from management committee.

Early April: Catsimatidis sues Ronan.

May 15: SemGroup files first proposed reorganization plan without Catsimatidis’ input.

June 25: Ronan and Catsimatidis meet at creditors meeting in New York. It’s their first meeting since December in Tulsa.

July 20: Settlement reached between SemGroup and Catsimatidis. He drops bid for company but buys some asphalt assets for $3.9 million.

Tuesday: United Refining Energy Corp. announces $1.8 billion merger with Oklahoma City-based Chaparral Energy Inc.

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

Some reader comments for this story were copied from "Former SemGroup LP pursuer finds different Oklahoma energy partner," which was published on 10/13/2009.

	Report Comment irwindale, Tulsa (10/14/2009 10:52:53 AM) Get ready for the slice and dice. Dismemberment!
	Report Comment FUTURE WORLD, Tulsa (10/14/2009 10:56:49 AM) A new speculator in town.
	Report Comment One Of Those Days, (10/15/2009 1:25:45 AM) Just when you think the story is dead.
	Report Comment lucky girl, mine (10/14/2009 11:20:41 AM) More drama headed our way....
	Report Comment forkandknife, Tulsa (10/15/2009 10:49:19 AM) Drama. Drama. Drama.
	Report Comment okie ridgerunner, Small Country Town State Line (10/15/2009 12:28:08 AM) Wait and watch.
	Report Comment Pinky, Tulsa (10/14/2009 11:11:25 PM) Well, for the sake of Chapparel, I hope Cat drops Mr Cauglin from Tulsa from this venture. He's the 'partner' that brought him to Tulsa and ya see how that worked out. A year's effort and a lawsuit or two to show for it. Sometimes a partner has ulterior self-serving interests....I'm just saying...

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