24/7 Wall St. » SGLP

The Plot Thickens at SemGroup, L.P. (SGLP, BX)

247wallst — Thu, 16 Oct 2008 09:30:19 +0000

Not every piece of SemGroup, L.P. was included in the company’s Chapter 11 filing back in July. The company’s publicly traded midstream subsidiary, SemGroup Energy Partners LP (NASDAQ:SGLP), was spared, as was SemGroup’s SemLogistics Milford Haven subsidiary in England.

Now, though, SemGroup is looking for a buyer for the largest petroleumstorage facility in England. Milford Haven has 8.5 million barrels ofstorage for everything from crude oil to refined products and SemGroupis offering if for sale through The Blackstone Group (NYSE:BX).SemLogistics is not included in the Chapter 11 proceedings, but there’snot much doubt what this sale is all about, is there?

Paul Ausick
October 16, 2008

Posted in Oil & Gas Tagged: BX, SGLP

Did SemGroup Drive the Fall in Crude Prices? (SGLP, TYG, TYN, TYY)

247wallst — Thu, 24 Jul 2008 09:00:00 +0000

Late yesterday afternoon, a bankruptcy court in Delaware has approved SemGroup LP’s Chapter 11 filing. One of the company’s subsidiaries, SemGroup Energy Partners LP (NASDAQ:SGLP), is publicly traded and not included in the bankruptcy filing. The court has permitted SemGroup to liquidate its assets (estimated at about $211 million) and to withhold about $50 million to pay suppliers.

A group of lenders challenged SemGroup’s plan to use some of the cash to stay in business. The lenders argue that the protections being granted "are not commensurate with the substantial amount of cash being made available to debtors."

The fate of SemGroup Energy Partners (SGLP) is still unclear, althoughthat company has expressed a desire to remain in business. How thatmight happen is also vague, because as much as 90% of SGLP’s revenue isderived from its parent. SGLP’s common unit price hovered around$25/unit until last Friday, when it fell to $11/unit following adowngrade of its debt to junk status. The stock closed at $8/unityesterday. The company’s long-term debt is approximately $300 million.

Other investors are also feeling the pinch. Tortoise Capital Adisors,LLC, which is the investment adviser for Tortoise Energy InfrastructureCorp. (NYSE:TYG), Tortoise Energy Capital Corp (NYSE:TYY), and TortoiseNorth American Energy Corp (NYSE:TYN), issued a press release lateyesterday. In the release, Tortoise noted that the value of SemGroup’s8.75% Senior Notes had decreased in value from 96.5% of par to 11.5% ofpar. Other creditors have not disclosed their exposure yet.

SemGroup’s problems stemmed from its short position in NYMEX crude oilfutures. The demands for cash to cover its positions overtook itsability to raise the money. SGLP, which owns pipelines and terminals,could not by itself generate the necessary liquidity.

It’s hard to believe, though, that SemGroup’s problems drove down thecost of crude. The company’s trading business amounted to just 500,000b/d, out of more than 85 million b/d worldwide. Besides, it was bettingthat crude prices would fall. SemGroup got its market timing wrong, andit’s now paying the price.

Paul Ausick
July 24, 2008

Top Pre-Market Analyst Upgrades (AKS, BHI, IPI, NAT, PSYS, SGLP, SNN, SYNA, ULTA)

247wallst — Wed, 23 Jul 2008 06:33:56 +0000

AKS, BHI, IPI, NAT, PSYS, SGLP, SNN, SYNA, ULTA
These are some of the top upgrades or positive analyst calls we are seeing this Wednesday morning in early pre-market hours:

AK Steel (AKS) Raised to Overweight at JPMorgan.
Baker Hughes (BHI) raised to Buy at UBS.
Intrepid Potash (IPI) Started as Outperform at BMO Capital.
Nordic American Tanker (NAT) Raised to Overweight at JPMorgan.
Psychiatric Solutions (PSYS) Started as Buy at Stanford Group.
Semgroup Energy (SGLP) Raised to Market Perform at Wachovia.
Smith & Nephew (SNN) Raised to Buy at Piper Jaffray.
Synaptics (SYNA) Raised to Outperform at Oppenheimer.
Ulta Salon (ULTA) Started as Outperform at Oppenheimer.

Jon C. Ogg
July 23, 2008

52-Week Low Club (AYE, AXL, APL, AUO, CHB, CMLS, GAP, MAC, MIR, RRI, SGLP, SWY, VRTU)

247wallst — Fri, 18 Jul 2008 14:29:00 +0000

Its Friday, and despite a fairly stable market today there were of course many 52-week lows. Some look like a mid-city explosion from news, and some are just the normal selling. As a reminder, some of these stocks are not under the 52-week lows at the time this published but these would have hit prior 52-week lows or traded under them on an intra-day basis.

Here is today’s list on the 52-week lows:

Allegheny Energy Inc. (NYSE: AYE)
American Axle & Manufacturing (NYSE: AXL)… gotta love those auto suppliers.
Atlas Pipeline Partners (NYSE: APL)
AU Optronics Corp. (NYSE: AUO) hit but didn’t stay under low
Champion Enterprises (NYSE: CHB) again from yesterday
Cumulus Media Inc. (NASDAQ: CMLS)
Great Atlantic Pacific & Tea (NYSE: GAP)… who says food is safe???
Macerich (NYSE: MAC) downgrade
Mirant (NYSE: MIR)
Reliant Energy Inc. (NYSE: RRI)
Semgroup Energy (NASDAQ: SGLP) battered again after parent woes.
Safeway Stores Inc. (NYSE: SWY)… who says food is safe???
Virtusa Corp. (NASDAQ: VRTU) on downgrade

Jon C. Ogg
July 18, 2008

52-Week Low Club (T, CCE, CHB, EBAY, GGC, GLBL, IGT, PAA, RRI, SGLP, TXT, VCLK)

247wallst — Thu, 17 Jul 2008 14:35:00 +0000

We’ve had essentially a 500 point rally in the DJIA in just the last two days and oil is starting to lose its mo-mo. Yet some companies just refuse to participate in the rally because of news, and many look like they were caught in a mid-city explosion (hence the image).

Regardless of how the market does you can always count on many news-driven or sector driven events causing new lows. One thing is for sure during a weak economy and during choppy earnings, there will be many more stocks in the coming weeks hitting 52-week lows. Some will continue hitting new lows over and over.

Below are some of the companies whose stocks hit new 52-week lows today:

AT&T Inc. (NYSE: T)
Coca Cola Enterprises (NYSE: CCE)
Champion Enterprises (NYSE: CHB)
eBay Inc. (NASDAQ: EBAY)
Georgia Gulf (NYSE: GGC)
Global Industries (NASDAQ: GLBL)
International Game Tech (NYSE: IGT)
Plains All American LP (NYSE: PAA)
Reliant Energy Inc. (NYSE: RRI)
Semgroup Energy Partners (NASDAQ: SGLP)
Textron Inc. (NYSE: TXT)
ValueClick Inc. (NASDAQ: VCLK)

As a reminder, not all of these have closed on fresh 52-week lows butthese were among the more active stocks today that hit fresh lows overthe last year.

Jon C. Ogg
July 17, 2008

Devon Energy Forms MLP To Pay Down Debt (DVN, SGLP)

247wallst — Wed, 18 Jul 2007 18:45:10 +0000

Devon Energy (NYSE:DVN) shares traded up more than 4% after announcing that it will form a master limited partnership (MLP) in the third quarter of 2007 by issuing partnership units in the company’s U.S. midstream and onshore marketing assets. The chief asset is Devon’s gathering and pipeline system around the Barnett Shale natural gas play near Ft. Worth, Texas. All told, DVN owns midstream assets including 2,700 miles of pipeline, two gas processing plants with a total capacity of 680 MMcf/d, and an NGL fractionater with a capacity of 15,000 b/d.

Devon’s Fiscal 2006 margin from its marketing and midstream operations totalled $448 million, essentially flat with FY2005. It expects the margins to be roughly the same in 2007, from revenue of $1.71B – $2.1B, and expenses of $1.31B – $1.67.

This is pretty small beer, as pipeline MLPs go. But investors seem to like them because an MLP’s tax advantage: income is not taxed at the corporate level, only the individual partner pays income tax. Current shareholders also get a nice present from the sale of partnership units.

Still, the company directors and officers are the ones who really score. Devon will retain ownership of its new MLP’s general partner (GP) and a majority stake in it. The GP typically gets a 2% distribution and, on top of that, what are called "incentive distributions" that could equal as much as 50% of the MLP’s income. All that will be spelled out in the registration documents that Devon files with the SEC later this quarter.

In its announcement, Devon said it would use a "significant portion" of the proceeds from the sale of partnership units to pay down the parent company’s debt and to repurchase shares of DVN’s common stock. It’s pretty easy to see why company officers and directors like MLPs, and even company shareholders get a nice one-time dividend.

But why do other investors buy in? The tax benefit is surely attractive, and MLPs do offer guaranteed returns because pipelines are subject to federal and state rate regulation. Unitholders often pay dearly for these benefits and the secondary supply of shares or units is somewhat limited, so anyone wanting in on new MLP usually tries to get in early. If you don’t believe it, take a look at how well SemGroup Energy Partners, L.P. (NASDAQ:SGLP) did in its trading debut today.

Paul Ausick
July 18, 2007