Sem Group meltdown

[FOTD]

 Exactly, Spartacus.

"close personal relationship" pales in the face of greed and corruptness....

Is it worth getting millions for 10 years in the slammer?

[guido911]

My understanding was that if he could have kept the shell game up for another month when energy prices started to fall, SEM would have been okay.  Is that the correct read on it?  They were betting on shorts and well, took it in the shorts, yes?

It's a shame his greed made Kivisto such an idiot.  Their tank farm and asphalt businesses were basically cost-plus operations which are real money-makers so long as you have product to go through them. 

OMG, I think I just figured out your avatar. Since I keep my office so darn dark I could not make out what that was until now.

[mjchamplin]

Man, I'm sorry to spam with quips from this article but . . .

Actually that's the first time I've really understood exactly what caused the whole mess in the first place.

[cannon_fodder]

Conan, it is my understanding by looking over the dates in question and my best realization of their practices that if they would have placed another 6 month roll forward on it they would have been just fine.  Business as usual.  And of course, with the stabilization of the prices recently within their predicted range they would have operated as normal.  Essentially, yeah.  He was right about prices returning to the predicted range but dead wrong in the time frame.

When you are dealing with contracts in the $50 range you can turn over your bet several times, hoping to eventually win.  As the price climbed the numbers escalated.  You couldn't afford to double down as many times before your credit line went dry.  When you tap the last of the credit line you have your last chips on the table.  The turn card was for continuing prices that didn't cover the options and the company had written a check it couldn't cash. 

The report says they went for last minute cash and failed - you really have to wonder if they got the line the close call would have taught him a lesson.  It surely would have been great for Tulsa if it had.

I hope people don't think I'm an expert here, but that is as I understand it . . .

[Conan71]

Conan, it is my understanding by looking over the dates in question and my best realization of their practices that if they would have placed another 6 month roll forward on it they would have been just fine.  Business as usual.  And of course, with the stabilization of the prices recently within their predicted range they would have operated as normal.  Essentially, yeah.  He was right about prices returning to the predicted range but dead wrong in the time frame.

When you are dealing with contracts in the $50 range you can turn over your bet several times, hoping to eventually win.  As the price climbed the numbers escalated.  You couldn't afford to double down as many times before your credit line went dry.  When you tap the last of the credit line you have your last chips on the table.  The turn card was for continuing prices that didn't cover the options and the company had written a check it couldn't cash. 

The report says they went for last minute cash and failed - you really have to wonder if they got the line the close call would have taught him a lesson.  It surely would have been great for Tulsa if it had.

I hope people don't think I'm an expert here, but that is as I understand it . . .

Degenerate gamblers rarely, if ever, learn their lesson.  It would only inflate his ego more that he was smarter than the system and, IMO, the stakes would have kept increasing.  Sooner or later he was going to get caught with his pants down.  I don't care who it is, be suspicious of any company who goes from not being in existence to having $9.2 bln in assets in seven or eight years.  There's either unsustainable leverage or insane bets involved, or an out-and-out ponzi scheme.

[Conan71]

OMG, I think I just figured out your avatar. Since I keep my office so darn dark I could not make out what that was until now.

Like that do you?  A friend of mine took that and encouraged me to use it if I wished.  Apparently this cat is quite the exhibitionist.  I thought it looked like he'd fallen asleep in that position.

[FOTD]

OMG, I think I just figured out your avatar. Since I keep my office so darn dark I could not make out what that was until now.

It's a pussy (cat) "cleaning itself"....pretty sick. Or is it self revealing?
At least he understands the nature of gambling.....

[Conan71]

It's a pussy (cat) "cleaning itself"....pretty sick. Or is it self revealing?
At least he understands the nature of gambling.....

I know you weren't born completely devoid of a sense of humor...sick?? I don't think so.

[bokworker]

Conan, it is my understanding by looking over the dates in question and my best realization of their practices that if they would have placed another 6 month roll forward on it they would have been just fine.  Business as usual.  And of course, with the stabilization of the prices recently within their predicted range they would have operated as normal.  Essentially, yeah.  He was right about prices returning to the predicted range but dead wrong in the time frame.

When you are dealing with contracts in the $50 range you can turn over your bet several times, hoping to eventually win.  As the price climbed the numbers escalated.  You couldn't afford to double down as many times before your credit line went dry.  When you tap the last of the credit line you have your last chips on the table.  The turn card was for continuing prices that didn't cover the options and the company had written a check it couldn't cash. 

The report says they went for last minute cash and failed - you really have to wonder if they got the line the close call would have taught him a lesson.  It surely would have been great for Tulsa if it had.

I hope people don't think I'm an expert here, but that is as I understand it . . .

CF, the crux of the issue is that had they gotten an extension then the game would still be on because the market knew they had a player by the short hairs and would keep the pressure on. In the couple of weeks before the Semgroup demise Gold Mansacks had made a call for oil to go to $200..... and it would have if Semgroup had gotten an additional cash amount to make the required margin call. Before this article came out I always had a cynical supicion that a short sqeeze was on. The oil markets are pretty small with a limited number of traders that trade for multiple accounts, including themselves. Now we just know the names of the players. Semgroup was doomed once they got in a position that was too big for them to manage and the result was a massive tranfer of wealth from Oklahoma, and Tulsa in particular, to Chicago...

[cannon_fodder]

I understand the argument that SemGroup (or people reacting to their moves) was driving the price of oil up and hence, any move they made would have been futile.  The article did not cover this aspect and it is largely speculation.  So while not dismissing it, I simply chose to ignore it because at the end of the day it doesn't really matter.  The point doesn't dismiss the crux of the report:  Kavisto got SemGroup into a position from which they were unlikely to recover.  It doesn't matter if it was because market forces were at work or because SemGroup other people to protect their own interest . . . really it is the same thing.

[Conan71]

Anyone see this morning's Tulsa World.  Photo of Kivisto's face reflected in a roulette wheel.  I think someone at the Tulsa World has been reading TulsaNow.

[FOTD]

No doubt the World loves to read your posts, Conan.

Can't help thinking of that Forbes article....the big boys (J.Aron and Goldman) were peeking into their bets... no doubt out of concern. But maybe out of self interests as well?

[Conan71]

No doubt the World loves to read your posts, Conan.

Can't help thinking of that Forbes article....the big boys (J.Aron and Goldman) were peeking into their bets... no doubt out of concern. But maybe out of self interests as well?

I think they just like the cat.  Greed does weird stuff to people.  Kivisto either pissed someone off or someone else's greed led them to tank Kivisto.  Did anyone else find it odd how quickly oil fell after SEM went tits-up?  I found this pic of Kivisto whilst surfing around:



And another famous degenerate gambler:

[FOTD]

The devil was pointing out how manipulated the price was in an old thread.....oil price fix nation me thinketh...but it's been wiped clean....oh well...

FOTD met much opposition as usual....but proved to be correct. No longer any proof...

[Conan71]

The devil was pointing out how manipulated the price was in an old thread.....oil price fix nation me thinketh...but it's been wiped clean....oh well...

FOTD met much opposition as usual....but proved to be correct. No longer any proof...

I'm sure it's still around, I've not figured out searching old threads on the new format yet.