Sem Group meltdown

[bbriscoe]

Their stock dropped over 50% today.  Tulsa Whirled says they are not answering calls.

Anyone have news?  Know anyone that works there?

[Conan71]

Sheesh, that's a lot more than profit-taking or "market correction".

[Curmudgeon]

Today is the one year anniversary of them going public from what I read. I don't know what that means other than being a random fact.

[RecycleMichael]

Roads are so last century. The real money is in air and water transportation.

[we vs us]

This is the World article.  

This part made me sit up and take notice:

quote: No confirmed news reports about any company troubles had emerged as of the afternoon, but trading in the Tulsa-based oil and asphalt storage was brisk on the Nasdaq market. More than 5.7 million shares changed hands, compared with the company's average daily volume of 68,148.

SOMEONE knows to dump the stock.

[FOTD]

Interesting.

Gas bubble bursting? Placed some lousy hedges?
New asphalt surface failed tests? Holding period ended and insiders needed cash?

Whatever it is we don't need. Maybe, it's an opportunity. Great company for giving back to the community. Stand firm.

[dbacks fan]

From the AP:

By ADAM SCHRECK
AP Business Writer

 
NEW YORK (AP) -- Oil prices tumbled below $130 a barrel for the first time in more than a month Thursday, as crude's dramatic slide entered a third day accompanied by a sharp sell-off in natural gas.

The declines accelerated amid growing concerns that the weakening economy and creeping inflation are eroding demand for fossil fuels in the U.S. and other large energy-consuming nations.

Oil is now more than 10 percent cheaper per barrel than it was on Monday; natural gas prices are down more than 20 percent just since the Fourth of July. Still, experts are not convinced that prices have turned a corner.

"There's no bell that tells you when the market has turned," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com.

Light, sweet crude for August delivery dropped $5.31 to settle at $129.29 a barrel on the New York Mercantile Exchange. Prices have fallen nearly $16 in just the past three days.

Natural gas futures for August delivery fell more than 8 percent Thursday, marking their biggest one-day drop in nearly a year, according to Nathan Golz, researcher at Wachovia Securities in St. Louis. Prices for the key heating, cooking and power generation fuel settled 86.1 cents lower at $10.537, their lowest point since April.

A number of market observers say there simply wasn't enough support for the recent run up in natural gas prices, and that this week's sell-off of oil has only helped speed the declines.

"Any time oil goes up or down on Nymex, it's going to have a carry-over effect on natural gas," said Michael Rieke, senior managing editor for power and gas at energy research firm Platts.

The immediate cause of Thursday's sharp natural gas decline was a larger-than-expected increase of U.S. supplies.

The Energy Department's Energy Information Administration said in its weekly report that natural gas inventories rose by 104 billion cubic feet to more than 2.31 trillion last week. Analysts had been expecting supplies to grow by only 86 billion to 91 billion cubic feet, according to a Platts survey.

A similar report Wednesday showed oil, gasoline and other fuel supplies unexpectedly rose sharply. Traders saw both the petroleum and natural gas reports as reasons to sell, as they reinforce data that show consumers are cutting back on their energy use.

"We're seeing some worries about demand destruction in oil, so I think that's creating some fear among investors and leading them to sell," said Tom Pawlicki, commodities analyst with MF Global Research in Chicago.

Some market observers have said last Friday's record above $147 a barrel could represent a peak price for oil, at least for the time being. But like a number of others, Pawlicki was reluctant to say whether the market's latest swoon represented a lasting shift.

"I think it's too early to call a top to this market," Pawlicki said.

Crude's drop weighed heavily on other commodities Thursday, with gold, silver, soybeans, corn and other agriculture futures all ending sharply lower.

Stocks rallied for the second day. That fueled speculation among some analysts that large investors are pulling money out of oil and other commodities - which had been seen as safe havens given the financial turmoil of the past year - and pumping it back into the beaten-down stock market.

Reports of a pre-dawn explosion that damaged an oil pipeline in Nigeria's restive south - the sort of threat to supply that has helped fuel crude's recent rally - did little to prop up prices Thursday.

A Nigerian military official said the blast on a pipeline owned by Agip, a subsidiary of the Italian energy giant Eni SpA, "affected output," although he did not say by how much.

Col. Chris Musa, head of the Bayelsa State military, also did not say how severe the damage was, and declined to comment on what might have caused the explosion. The company said a sudden drop in pressure led it to halt production on pipelines carrying 47,000 barrels of oil a day.

Attacks on oil industry infrastructure in the past two years have slashed oil output by almost a quarter in Nigeria, Africa's top crude producer.

At the gas pump, prices held steady at a record $4.114 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel rose to a new record of $4.845, up more than half a penny.

In other Nymex trade, heating oil fell 9.72 cents to settle at $3.7438 a gallon, while gasoline futures fell 11.61 cents to settle at $3.1633.

Brent crude for September delivery fell $5.12 to settle at $131.07 on the ICE Futures Exchange in London.

---

Associated Press Writers William Nsoyoh in Yenagoa, Nigeria, and Stevenson Jacobs in New York contributed to this report.

[FOTD]

Perhaps. But something bigger is going on with that kind of volume .... unless it's a massive short.

Here's Citi's analysis from 6/25
SemGroup Energy Partners LP (SGLP) Acquisitions Improve Growth, Increasing Target Price to $32, Reiterate Buy

ƒæ Acquisitions Improve Growth ¡V Following two recent acquisitions, we are raising our estimates and target price for SemGroup Energy Partners L.P. We estimate these transactions are 1.2% and 4.3% accretive in 2008 and 2009 respectively.
ƒæ Reiterate Buy ¡V Following the transactions we reiterate our Buy/Medium Risk (1M) on SemGroup Energy Partners, L.P. While the partnership maintains a below average yield of 6.2% versus MLP average 7.5%, we believe units still have upside taking into consideration SGLP's above average growth profile, stable cash flows, internal growth prospects, and a strong general partner willing to divest assets at attractive multiples.
ƒæ Increasing Target Price to $32 ¡V As a result of our improved growth outlook we are increasing our target price to $32.00 from $31.00. Our new target price is based on an annualized 12-month forward distribution of $1.93/unit (previously $1.85/unit) and a target yield of 6.0% (previously 6.0%).

Weird. Watch out when listening to brokers.
From Yahoo msg. board:"liquidity crisis...some of the gossip mongers are chatting about SGLP having a lot to do with NYMEX WTI drop. "

[cannon_fodder]

I agree it looks that way Wevus, but it can't be.  It's WAY too obvious.  Any insider dumb enough to dump stock in this kind of volume would be in prison faster than you can say Martha Stewart.

My guess is a cash flow issue. They have been having some cash flow issues per their financial statements, add the credit crunch.  Not really problems with cash flows, just not the greatest looking statement I've seen.

Since it is ONE year since the stock was issued, it could have something to do with that.  It is the inverse of my understanding of the tax laws (it would be short term gain = regular income instead of cap gains = higher taxation).  Dunno, will call the tax man and see what he says.

Otherwise:

No press releases
No SEC filing
No insider or large institutional transactions
No financials released

It is up slightly in after market trading (50 cents).  Their balance sheet is not fantastic (debt to equity!).  If they missed a payment or a foreclosure was filed it would be news.  I'm thinking a good ole fashioned panic, short attack, or other market manipulation.  Then again, it could be as simple as a tax reason (one year and all).

Real hard to say.  I may buy in if there is no news tomorrow.  The PE is nearing 10!

[cannon_fodder]

The ***RUMOR*** now is that the parent company (part of the company is still private) has had their debt downgraded after defaulting on some covenants and is facing credit problems.  Apparently SGLP gets nearly 90% of it's revenue from agreements with the parent company.  

The fear is that the downgraded debt will curtail future offerings/borrowing and result in limited operations.  Creating a death spiral of inability to conduct business (making money with energy requires huge amounts of capital) which will result in a rush to demand/call debt.  The first to go would be the public entity as a dependent subsidiary on the parent.

BUT, they apparently have $200mil of a $600mil credit line still out.   So they are not out of liquidity by any means... unless that line was closed upon default.

quote:SGLP units sell-off on potential parent  credit issues SGLP LP units have traded down significantly this morning. We understand SGLP's parent, SemGroup, L.P., which is a private  company, held a conference call with its fixed income investors either yesterday or Tuesday. The content of the call was not made public.

However, we note SemGroup, L.P.'s debt instruments are now trading at distressed levels after being quoted close to par earlier this
week (SemGroup is rated B1/B+ by Moody's and Fitch, respectively). In addition to its interests in SGLP, SemGroup, L.P.'s parent conducts business through several different segments: crude oil marketing and trading, a natural gas processing business, refined products marketing and a Canadian natural gas gathering and processing business. SemGroup L.P.'s marketing and trading operations are working capital intensive.

Parent provides majority of SGLP's revenues SGLP is almost unique among our coverage universe with the derivation of ~90% of its revenues from agreements with its parent, SemGroup, L.P. Essentially, SGLP's assets are "tolled" by the parent via long-term contracts. While this limits the business risk surrounding SGLP's crude oil pipeline, terminalling and asphalt
terminalling businesses, it does expose SGLP to its parent's credit profile.

Need to hear from parent before becoming comfortable Given SGLP's reliance on its parent for its revenues, we need to hear further detail from its parent prior to having conviction on what to do with SGLP's LP units and therefore we are placing our opinion under review. We also think the issues surrounding SGLP are unique to it and should not have implications for the rest of our Energy MLP coverage.

http://www.masterlimitedpartnerships.net/

If this is an over reaction, the complaint will stand that the company did NOTHING to slow the fall.  Certainly a 50% drop warrants a disclaimer, a clam word, or an explanation.  Management will have a hard time gaining back much confidence if this was just a panic.  Which fuels rumors that it's not.

If management or anyone else gets pissed about the rumors, then take a look around.  This is what happens without information... it gets culled, drawn out and sometimes just flat out made up.

But the above is the best info I could find.

[FOTD]

Great job Cannon.[8D]

Does not sound good.[:O]

Disasterland.[xx(]

[we vs us]

Yep, excellent research, CF.  

[inteller]

SemGroup is going no where.

[FOTD]

quote:Originally posted by inteller

SemGroup is going no where.

Hope you're right. But sounds like bankruptcy may loom. Cherry pickin'time again in T town.....

Enron Jr.?

http://www.reuters.com/article/marketsNews/idINWEN676720080718?rpc=44

[cannon_fodder]

And so it is.  

quote: CHICAGO, Jul 17, 2008 (BUSINESS WIRE) -- Fitch Ratings has downgraded the ratings of SemGroup, L.P., SemCrude L.P, and SemCAMS Midstream Co. and placed the ratings on Rating Watch Negative. Affected ratings are as follows:
SemGroup, L.P. (SemGroup)
--Long-term Issuer Default Rating (IDR) to 'B-' from 'B';
--Senior unsecured to 'B/RR3' from 'B+/RR3'.
SemCrude L.P. (SemCrude)
--Long-term (IDR) to'B-' from 'B';
--Senior secured working capital facility to 'BB-/RR1' from 'BB/RR1';
--Senior secured revolving credit facility to 'B+/RR1' from 'BB-/RR1';
--Senior secured term loan B to 'B+/RR1' from 'BB-/RR1'.
SemCAMS Midstream Co. (SemCAMS)
--Long-term (IDR) to'B-' from 'B';
--Senior secured working capital facility to 'BB-/RR1' from 'BB/RR1';
--Senior secured revolving credit facility to 'B+/RR1' from 'BB-/RR1';
--Senior secured term loan B to 'B+/RR1' from 'BB-/RR1'.
Approximately $2.6 billion of debt is affected by these actions.

http://www.marketwatch.com/news/story/fitch-downgrades-semgroup-places-ratings/story.aspx?guid=%7BBD28006E-D228-4572-B90E-D61995D44784%7D&dist=hppr

quote:
SemGroup Energy Partners, L.P. (NASDAQ: SGLP), has been informed by SemGroup, L.P., SGLP's parent, that SemGroup, L.P. is experiencing liquidity issues and is exploring various alternatives, including raising additional equity, debt capital or the filing of a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code.

Kevin Foxx, SemGroup Energy Partners', President and Chief Executive Officer stated that, "While SGLP's parent is experiencing liquidity challenges, SGLP's assets provide important terminalling and storage services to the energy industry. We own valuable assets in strategic locations and remain positioned to provide midstream services. Until our parent advises us of their course of action, we cannot fully evaluate and are not yet prepared to comment on how any such action taken by our parent might affect SGLP."

Press release here


SGLP has been more profitable than thought.  Revenue's & profits are on target to beat estimates.  BUT, with the parent floundering there are doubts.

I don't think SemGroup is going any where either Inteller.  But in a credit crunch environment the need to raise capital is not good.  Credit issues are can be both a snow ball and a self fulfilling prophecy.  Announce a credit problem, so you can't get credit, so you can't get revenue, so you can't pay creditors so...

According to the release, SemGroup has not even advised it's subsidiary if it is a going concern or not.  I hate to say it, but the scuttlebutt is SemGroup (parent) is a candidate for a takeover.  A private & sound business unit with liquidity issues.  God I hope I'm wrong, but it sure is a possibility with the rest of the market flush with cash.  

In case your confused, this chart should clear things up: