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Talk About Tulsa => Other Tulsa Discussion => Topic started by: bbriscoe on July 17, 2008, 04:11:40 PM

Title: Sem Group meltdown
Post by: bbriscoe on July 17, 2008, 04:11:40 PM
Their stock dropped over 50% today.  Tulsa Whirled says they are not answering calls.

Anyone have news?  Know anyone that works there?
Title: Sem Group meltdown
Post by: Conan71 on July 17, 2008, 04:15:04 PM
Sheesh, that's a lot more than profit-taking or "market correction".

Title: Sem Group meltdown
Post by: Curmudgeon on July 17, 2008, 04:27:47 PM
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.
Title: Sem Group meltdown
Post by: RecycleMichael on July 17, 2008, 04:33:33 PM
Roads are so last century. The real money is in air and water transportation.
Title: Sem Group meltdown
Post by: we vs us on July 17, 2008, 04:50:15 PM
This  (//%22http://www.tulsaworld.com/business/article.aspx?articleID=20080717_5__Thest77131%22)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.
Title: Sem Group meltdown
Post by: FOTD on July 17, 2008, 05:01:30 PM
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.
Title: Sem Group meltdown
Post by: dbacks fan on July 17, 2008, 05:05:50 PM
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.

Title: Sem Group meltdown
Post by: FOTD on July 17, 2008, 05:13:10 PM
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. "
Title: Sem Group meltdown
Post by: cannon_fodder on July 17, 2008, 05:15:20 PM
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!
Title: Sem Group meltdown
Post by: cannon_fodder on July 17, 2008, 05:31:07 PM
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.
Title: Sem Group meltdown
Post by: FOTD on July 17, 2008, 06:20:20 PM
Great job Cannon.[8D]

Does not sound good.[:O]

Disasterland.[xx(]
Title: Sem Group meltdown
Post by: we vs us on July 17, 2008, 06:46:40 PM
Yep, excellent research, CF.  
Title: Sem Group meltdown
Post by: inteller on July 17, 2008, 07:35:05 PM
SemGroup is going no where.
Title: Sem Group meltdown
Post by: FOTD on July 17, 2008, 09:11:02 PM
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
Title: Sem Group meltdown
Post by: cannon_fodder on July 17, 2008, 09:16:31 PM
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 (//%22http://www.semgrouplp.com/newsandmedia/newsarticles/newsdetail.aspx?id=%7B536448A0-4389-4D68-B635-9B8FD6FF406A%7D%22)


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:

(http://www.sglp.com/~/media/EDDFC90A13EF458F96EF9549115F87B6.ashx?mw=500px%3b)
Title: Sem Group meltdown
Post by: FOTD on July 17, 2008, 09:31:26 PM
"A private & sound business unit with liquidity issues." Indeed CF. Thought the same going through your post.

Your point on credit is right on. A business saying about owning the bank when you owe them too much could work. Lenders are going to be better off renegotiating the debt than going through bankruptcy.

A white knight.....want me to take a stab? KF.
Title: Sem Group meltdown
Post by: MDepr2007 on July 17, 2008, 10:16:41 PM
Curious why trading wasn't halted , oh well.... They didn't weren't part of the $30 million for the ballapark were they?
Title: Sem Group meltdown
Post by: sgrizzle on July 18, 2008, 07:09:52 AM
quote:
Originally posted by MDepr2007

Curious why trading wasn't halted , oh well.... They didn't weren't part of the $30 million for the ballapark were they?



Yes
Title: Sem Group meltdown
Post by: Breadburner on July 18, 2008, 07:18:05 AM
quote:
Originally posted by inteller

SemGroup is going no where.



Did you say that when you worked for CFS....!
Title: Sem Group meltdown
Post by: cannon_fodder on July 18, 2008, 08:28:48 AM
Down another 30% in pre-market trading.  

- No clarification on where they stand
- Parents stated an unknown course of action (they MUST have seen a cash issue coming and failed to plan.  Or worse, they didn't see it coming)
- Subsidiary failed to address how this will effect their business

The market doesn't like uncertainty.  Management is either incompetent or hiding something.  Then add in a TON of insider trading allegations (volume of 6mil on a 60K volume stock).

They did a CYA filing with the SEC.   But there will certainly still be an investigation.  Anytime a stock slides 50% and the news on why comes out a day later, it just doesn't look good.
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001392091-08-000008

Looks like the open will be somewhere under $8.    It opened near $25 yesterday.  One year ago today the IPO opened at $12 (initially set for $11).

An amazing meltdown.  Management had better announce a plan BEFORE trading ends today or at least the public portion of the company will be worthless.  I'd be interested to see the underlying causes - an oil firm that has made good money going broke when every other oil player is raking it in.

Also, if they had not taken units public last year all this would be under the table.  For better or worse.

Fingers crossed.  Come on management!  You don't build such a large company so fast by being an idiot.  Come out with SOMETHING.
Title: Sem Group meltdown
Post by: kylieosu on July 18, 2008, 08:33:21 AM
Ironically, Kivisto just won ABoT's best business leader award this week:

Business Leader

Tom Kivisto

Tom Kivisto is the CEO, president and co-founder of the Tulsa-based international crude oil service company SemGroup. He was featured in one of our cover stories in May, just after his company sponsored the LPGA Championship. Along with his business acumen and golf patronage, Kivisto is also a modest but avid benefactor of Project Single Parent, the Tulsa Ballet and a host of other endeavors in both charity and art.

Close Calls:

Chet Cadieux

George Kaiser

Elliott Nelson
Title: Sem Group meltdown
Post by: Conan71 on July 18, 2008, 08:39:30 AM
Oh the irony:

"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."

I heard on the news last night regulators with very deep anal probes showed up at Wachovia in St. Louis.  Assumedly unrelated, but couldn't miss the irony from diamondback's post.

SEM has good assets.  We've done business with them since they bought Koch and Frontier's assets around this area.  They've been a good customer and if the **** totally hits the fan,
these are assets which will have good value to someone else.  I'd guess they will start spinning off assets if they really do file Ch. 11.

Before anyone starts comparing Tom Kivisto to Bill Bartmann too closely, CFS was really much more of something like a shell game or ponzi scheme and the owners knew that.  Bartmann is a narcisitic con-man.

I think SEM has been reasonably well-run, but their acquisition binge is likely what has got them in the liquidity crisis.  Couple that with some drops in oil, NG, and LP prices, they could be in deep **** over night.  We somewhat questioned how quickly they were buying asphalt terminals, but as long as a customer pays their bills, we don't really quibble with what they buy and sell.  Let's just hope they keep paying their bills for the time being and there aren't any job losses at SEM over this.  
Title: Sem Group meltdown
Post by: cannon_fodder on July 18, 2008, 08:44:02 AM
Wow.  Opened at $6.39.  Just passed the $6 mark on it's way down.  308,000 shares traded already.  Look's to be stable around $6 - 6.40 at the moment.  

And it just announced Management is out, specifically SemGroup LP. has a new President and CEO:
"SemGroup, L.P. announced today that Terry Ronan has been named acting president and chief executive officer."  Replacing Kevin Foxx.
Press Release: Management Out (//%22http://www.semgrouplp.com/newsandmedia/pressreleases/pressreleasedetail.aspx?id=%7B510A8B9A-39B2-4CC2-9CB1-DC6C459B6976%7D%22)

Markets are happy something was done.  Stock "stable" at $6.50 range, edging up slightly.  No, I won't be giving a stock price play-by play... but I thought the open was damn interesting.  $6.74. Looks like the bet is that they are a going concern... either that or so many people have lost enough to not make it worthwhile to get out.
Title: Sem Group meltdown
Post by: Conan71 on July 18, 2008, 08:57:37 AM
I think people are waiting to see what happens.  I'd like to think of them as being another Williams who can rebound, but they are the new kids on the block.  It's tempting to buy it right now, but if it de-lists, well just not worth the risk to me.
Title: Sem Group meltdown
Post by: Nik on July 18, 2008, 10:36:08 AM
Stock back up to 8.80.

TULSA, Okla.--(BUSINESS WIRE)--A press story today incorrectly reported that Terry Ronan was named to an executive position at SemGroup Energy Partners (NASDAQ: SGLP). In fact, Terry Ronan on July 18 was named SemGroup, L.P. president and chief executive officer. Kevin Foxx is and remains president and chief executive officer of SemGroup Energy Partners, L.P.
Title: Sem Group meltdown
Post by: Nik on July 18, 2008, 10:38:10 AM
From the World: http://www.tulsaworld.com/news/article.aspx?articleID=20080718_11_Thep051117

quote:
Terry Ronan is replacing Tom Kivisto as head of SemGroup LP, which disclosed late Thursday it was considering filing for bankruptcy after SemGroup Energy Partners' stock price fell more than 50 percent.
Title: Sem Group meltdown
Post by: dbacks fan on July 18, 2008, 10:48:28 AM
Just curious as to what the long term investments were. I'm guessing from what I've read they invested in asphalt production and transportation when oil was less expensive,made agreements for a certain price for delivery, and when oil spiked they could not change the price of product since it was already agreed upon.


Just guessing.
Title: Sem Group meltdown
Post by: cannon_fodder on July 18, 2008, 11:05:04 AM
dbacks, as I understand it they aren't on the hook for long-term contracts.  Or at least that's not whats causing the trouble.  Again, as I understand it:

They have bought some 50 companies over the past 8 years.  Spinning some off, absorbing others, using others as subdivision entities.  All of those purchases were financed in debt.

Their primary industry - oil, requires buying the product on margin.  Midstream supplies handle the product and in many instances own it.  They need large amounts of capital to purchase the large amounts of oil (or leverage it).  As oil prices rise, the amount of liquidity they need also rises.

At some point the price of oil caused the margin to outstrip their ability to assure the transaction with liquid assets.  Since that directly effects their ability to operate and thus raise more revenue, their outstanding debt is in question.   Que the credit crisis.

Anyone verify that I have that right?  I'm no expert in this area (midstream production etc.).
Title: Sem Group meltdown
Post by: dbacks fan on July 18, 2008, 12:03:02 PM
Thanks cf.
Title: Sem Group meltdown
Post by: Kenosha on July 18, 2008, 02:50:51 PM
I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.
Title: Sem Group meltdown
Post by: Friendly Bear on July 18, 2008, 04:14:16 PM
quote:
Originally posted by Kenosha

I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.



Wonder how many SemGroup Tulsa jobs will be affected?

P.S. American Airlines announced today that they are laying off 1,500 maintenance personnel?  

How badly will Tulsa's AA facility be affected?

TBA.....

Hope all these folks haven't already bought their Eagles tickets......
Title: Sem Group meltdown
Post by: cannon_fodder on July 18, 2008, 04:22:06 PM
quote:
Originally posted by Kenosha

I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.



I have not heard anything to the effect.  They are listed as a major credit:

quote:
Banc of America Securities LLC is bookrunner. Lead lenders include Bank of America, BNP Paribas, Bank of Montreal, Bank of Oklahoma and The Bank of Nova Scotia.


Not sure why BOk would take over if anyone is.  But again, i have no seen nor heard anything that would suggest they have been placed in receivership or control otherwise taken away from management.  The only suggestion I have seen of that is in the Tulsa World comments section.

BOk announced a poor QT and lost 4% today.  But they didn't mention SemGroup or given an earnings advisory on it at the conference.    Clearly they have exposure, but with the list of creditors I don't think BOk is a lead player in their finance.

Sources please.  Label rumors as such and give sources when you have them.  This is bad enough, we don't need to extrapolate unless it's at least somewhat reliable (or caveat with RUMOR). Not saying you are wrong, just that I haven't seen nor heard it.

But here is what we KNOW on the matter:

quote:
BOk engages in routine energy  hedging  transactions  with SemGroup,  L.P.,
Mustang Fuel Corporation,  Mustang Gas Products,  LLC and Eagle Gas Marketing on
terms offered to customers of BOk generally.  In 2006,  Mustang Fuel Corporation
hedged 668 thousand  MMbtu of natural gas and SemGroup  L.P.  hedged 6.8 million
barrels of oil. The hedges are backed by counter party contracts.  Mr. Joullian,
a director of BOK  Financial,  is the  President  of Mustang  Fuel  Corporation,
Mustang Gas Products,  LLC and Eagle Gas Marketing.  Mr. Kivitso,  a director of
BOK Financial, is President of SemGroup L.P.

http://sec.edgar-online.com/2007/03/21/0000875357-07-000006/Section13.asp

quote:
In 2000, BOK underwrote a $70 million loan to start SemGroup.

http://www.semgrouplp.com/~/media/779E805FFC66480F8BED4F61DF4969AF.ashx

That's all I can find as proof of hard loans. BOKF is a public company, if they foresee a massive loss they are likely to issue a warning. Lest they face a shareholder suit and probably SEC investigation (like SeMGroup)  :
http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

[edit] There's the bear!  I knew he wouldn't miss the chance to gloat over anything that hurts the community or those in it.  SemGroup has 400 jobs in Tulsa and AA has 7,000.  AA stands to lost as much as 10% of those if it is pro rata. [/edit]
Title: Sem Group meltdown
Post by: swake on July 18, 2008, 05:03:43 PM
quote:
Originally posted by cannon_fodder

quote:
Originally posted by Kenosha

I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.



I have not heard anything to the effect.  They are listed as a major credit:

quote:
Banc of America Securities LLC is bookrunner. Lead lenders include Bank of America, BNP Paribas, Bank of Montreal, Bank of Oklahoma and The Bank of Nova Scotia.


Not sure why BOk would take over if anyone is.  But again, i have no seen nor heard anything that would suggest they have been placed in receivership or control otherwise taken away from management.  The only suggestion I have seen of that is in the Tulsa World comments section.

BOk announced a poor QT and lost 4% today.  But they didn't mention SemGroup or given an earnings advisory on it at the conference.    Clearly they have exposure, but with the list of creditors I don't think BOk is a lead player in their finance.

Sources please.  Label rumors as such and give sources when you have them.  This is bad enough, we don't need to extrapolate unless it's at least somewhat reliable (or caveat with RUMOR). Not saying you are wrong, just that I haven't seen nor heard it.

But here is what we KNOW on the matter:

quote:
BOk engages in routine energy  hedging  transactions  with SemGroup,  L.P.,
Mustang Fuel Corporation,  Mustang Gas Products,  LLC and Eagle Gas Marketing on
terms offered to customers of BOk generally.  In 2006,  Mustang Fuel Corporation
hedged 668 thousand  MMbtu of natural gas and SemGroup  L.P.  hedged 6.8 million
barrels of oil. The hedges are backed by counter party contracts.  Mr. Joullian,
a director of BOK  Financial,  is the  President  of Mustang  Fuel  Corporation,
Mustang Gas Products,  LLC and Eagle Gas Marketing.  Mr. Kivitso,  a director of
BOK Financial, is President of SemGroup L.P.

http://sec.edgar-online.com/2007/03/21/0000875357-07-000006/Section13.asp

quote:
In 2000, BOK underwrote a $70 million loan to start SemGroup.

http://www.semgrouplp.com/~/media/779E805FFC66480F8BED4F61DF4969AF.ashx

That's all I can find as proof of hard loans. BOKF is a public company, if they foresee a massive loss they are likely to issue a warning. Lest they face a shareholder suit and probably SEC investigation (like SeMGroup)  :
http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

[edit] There's the bear!  I knew he wouldn't miss the chance to gloat over anything that hurts the community or those in it.  SemGroup has 400 jobs in Tulsa and AA has 7,000.  AA stands to lost as much as 10% of those if it is pro rata. [/edit]



The "rumor" and I stress rumor (from people at American but still) is that Tulsa is pretty much ok on the layoffs but that Kansas City is toast.

BUT, with union rules if someone in KC gets laid off with more time with the company than you, they can have your job if they want it. There are apparently a lot of Tulsa people in KC now for just that reason sharing apartments and such with the family still in Tulsa. It's going to hurt a lot of people no matter what.

Bear, your glee is disgusting.
Title: Sem Group meltdown
Post by: Friendly Bear on July 18, 2008, 05:07:09 PM
quote:
Originally posted by cannon_fodder

quote:
Originally posted by Kenosha

I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.



I have not heard anything to the effect.  They are listed as a major credit:

quote:
Banc of America Securities LLC is bookrunner. Lead lenders include Bank of America, BNP Paribas, Bank of Montreal, Bank of Oklahoma and The Bank of Nova Scotia.


Not sure why BOk would take over if anyone is.  But again, i have no seen nor heard anything that would suggest they have been placed in receivership or control otherwise taken away from management.  The only suggestion I have seen of that is in the Tulsa World comments section.

BOk announced a poor QT and lost 4% today.  But they didn't mention SemGroup or given an earnings advisory on it at the conference.    Clearly they have exposure, but with the list of creditors I don't think BOk is a lead player in their finance.

Sources please.  Label rumors as such and give sources when you have them.  This is bad enough, we don't need to extrapolate unless it's at least somewhat reliable (or caveat with RUMOR). Not saying you are wrong, just that I haven't seen nor heard it.

But here is what we KNOW on the matter:

quote:
BOk engages in routine energy  hedging  transactions  with SemGroup,  L.P.,
Mustang Fuel Corporation,  Mustang Gas Products,  LLC and Eagle Gas Marketing on
terms offered to customers of BOk generally.  In 2006,  Mustang Fuel Corporation
hedged 668 thousand  MMbtu of natural gas and SemGroup  L.P.  hedged 6.8 million
barrels of oil. The hedges are backed by counter party contracts.  Mr. Joullian,
a director of BOK  Financial,  is the  President  of Mustang  Fuel  Corporation,
Mustang Gas Products,  LLC and Eagle Gas Marketing.  Mr. Kivitso,  a director of
BOK Financial, is President of SemGroup L.P.

http://sec.edgar-online.com/2007/03/21/0000875357-07-000006/Section13.asp

quote:
In 2000, BOK underwrote a $70 million loan to start SemGroup.

http://www.semgrouplp.com/~/media/779E805FFC66480F8BED4F61DF4969AF.ashx

That's all I can find as proof of hard loans. BOKF is a public company, if they foresee a massive loss they are likely to issue a warning. Lest they face a shareholder suit and probably SEC investigation (like SeMGroup)  :
http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

[edit] There's the bear!  I knew he wouldn't miss the chance to gloat over anything that hurts the community or those in it.  SemGroup has 400 jobs in Tulsa and AA has 7,000.  AA stands to lost as much as 10% of those if it is pro rata. [/edit]



I resent that.

No one's gloating.  Absolutely NOT.

I feel sincerely sorry for the Sem Group employees, as well as the 1,500+ AA mechanics who will be laid off.

I hope they promptly find comparable employment.

If we had any leadership at City Hall and the MetroTulsaChamberPots, they would be CUTTING back on huge, ongoing capital and operating expenses coming out of the city budget, what with the economy probably heading for a sharp, probably, prolonged recession?

However, our High Maintenance Mayor is apparently only concerned with what helps build her political future.

City Hall move.

$7.1 million handed to BOK for their deal gone bad.  

NOT ours.

BID district for the Manhattan Construction Co.  er, rather the Tulsa Drillers.

$1.8 billion proposed taxes for roadbuilding to Sherwood, Beeco, and their connected contractor cronies, under the supervision of Chas. Hardt and Paul Zachary who personally brought us our local street maintenance DISASTER.

We need R-E-L-I-E-F.
Title: Sem Group meltdown
Post by: Friendly Bear on July 18, 2008, 05:15:05 PM
quote:
Originally posted by cannon_fodder

quote:
Originally posted by Kenosha

I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.



I have not heard anything to the effect.  They are listed as a major credit:

quote:
Banc of America Securities LLC is bookrunner. Lead lenders include Bank of America, BNP Paribas, Bank of Montreal, Bank of Oklahoma and The Bank of Nova Scotia.


Not sure why BOk would take over if anyone is.  But again, i have no seen nor heard anything that would suggest they have been placed in receivership or control otherwise taken away from management.  The only suggestion I have seen of that is in the Tulsa World comments section.

BOk announced a poor QT and lost 4% today.  But they didn't mention SemGroup or given an earnings advisory on it at the conference.    Clearly they have exposure, but with the list of creditors I don't think BOk is a lead player in their finance.

Sources please.  Label rumors as such and give sources when you have them.  This is bad enough, we don't need to extrapolate unless it's at least somewhat reliable (or caveat with RUMOR). Not saying you are wrong, just that I haven't seen nor heard it.

But here is what we KNOW on the matter:

quote:
BOk engages in routine energy  hedging  transactions  with SemGroup,  L.P.,
Mustang Fuel Corporation,  Mustang Gas Products,  LLC and Eagle Gas Marketing on
terms offered to customers of BOk generally.  In 2006,  Mustang Fuel Corporation
hedged 668 thousand  MMbtu of natural gas and SemGroup  L.P.  hedged 6.8 million
barrels of oil. The hedges are backed by counter party contracts.  Mr. Joullian,
a director of BOK  Financial,  is the  President  of Mustang  Fuel  Corporation,
Mustang Gas Products,  LLC and Eagle Gas Marketing.  Mr. Kivitso,  a director of
BOK Financial, is President of SemGroup L.P.

http://sec.edgar-online.com/2007/03/21/0000875357-07-000006/Section13.asp

quote:
In 2000, BOK underwrote a $70 million loan to start SemGroup.

http://www.semgrouplp.com/~/media/779E805FFC66480F8BED4F61DF4969AF.ashx

That's all I can find as proof of hard loans. BOKF is a public company, if they foresee a massive loss they are likely to issue a warning. Lest they face a shareholder suit and probably SEC investigation (like SeMGroup)  :
http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

[edit] There's the bear!  I knew he wouldn't miss the chance to gloat over anything that hurts the community or those in it.  SemGroup has 400 jobs in Tulsa and AA has 7,000.  AA stands to lost as much as 10% of those if it is pro rata. [/edit]



Maybe Sem Group couldn't cover their oil hedge.......

That would explain a 50% drop in their stock price in ONE DAY......yesterday.

Ouch!

Down ANOTHER 25% today.

Ouch, Ouch!

A sign from FB:  

WATCH to see if Mr. Joullian is dropped from the BOK Financial Board of Directors faster than (George?) Kaiser Wilhelm II dropped Bismarck.

Former BOK Director and SemGroup Chairman Tom Kivisto left the BOK Board sometime since EOY 2007.

Auf Wiedersehn, Bubi!

[xx(]
Title: Sem Group meltdown
Post by: Conan71 on July 18, 2008, 05:17:26 PM
Swake, rumor I got from an AA guy yesterday (mechanic) was Alliance (AFW) might get shuttered and they would move a lot of that service work to Tulsa.  Doesn't make sense with a large hub and HQ in Dallas, but I guess they know which units are operating efficiently and which aren't.

The old TWA M&E at MKC is a plausible rumor as it's seemed like a step-child ever since the buy-out.

At any rate, you've heard KC, I've heard Alliance, let's extrapolate that for the time being as good news for Tulsa.  I've heard the same seniority issue before as well.  Not sure that many employees would want to move here from DFW or KC since we didn't pass the river tax [;)] (couldn't resist, it's Friday)

The same fellow I was talking to said the fuel problem stems from earlier reservations, I call B.S. on that one.  Checking other itineraries for a 2500 mile round trip a week before I left two weeks ago, prices were cheaper than the week I booked in May.

All the airlines are so consumed with market share and "commodity pricing" their fares.  How's about stepping up the service and earning loyalty the old fashioned way, then you can afford to charge a profitable fare.

I hate it for individuals who are affected by job cuts, but it's kind of hard to conjure up much pity for the execs at companies like this who obviously haven't planned far enough ahead and who engage in a game of financial "chicken" with the other airlines, just to maintain market share.
Title: Sem Group meltdown
Post by: Kenosha on July 18, 2008, 11:47:46 PM
I have a source in the banking industry.  That is all I know.

Anyway, I didn't get detail...more big picture stuff.

I wonder what their hedge price was?  What I heard was that diving crude prices could rescue the situation.....were down 15 -16 bucks over the last few days?  Hope it keeps dropping.
Title: Sem Group meltdown
Post by: Kenosha on July 18, 2008, 11:48:34 PM
quote:
Originally posted by Kenosha

I have a source in the banking industry.  That is all I know.

Anyway, I didn't get detail...more big picture stuff.

I wonder what their hedge price was?  What I heard was that diving crude prices could rescue the situation.....We're down 15 -16 bucks over the last few days?  Hope it keeps dropping.

Title: Sem Group meltdown
Post by: FOTD on July 19, 2008, 09:40:20 AM
quote:
Originally posted by Kenosha

I have a source in the banking industry.  That is all I know.

Anyway, I didn't get detail...more big picture stuff.

I wonder what their hedge price was?  What I heard was that diving crude prices could rescue the situation.....were down 15 -16 bucks over the last few days?  Hope it keeps dropping.



Just wondering what assets the SemGroup has that are tangible. There may be little here to cherry pick and some banks are not going to take it in the chops. More like kicked in the balls.

Title: Sem Group meltdown
Post by: Friendly Bear on July 19, 2008, 10:23:39 AM
quote:
Originally posted by FOTD

quote:
Originally posted by Kenosha

I have a source in the banking industry.  That is all I know.

Anyway, I didn't get detail...more big picture stuff.

I wonder what their hedge price was?  What I heard was that diving crude prices could rescue the situation.....were down 15 -16 bucks over the last few days?  Hope it keeps dropping.



Just wondering what assets the SemGroup has that are tangible. There may be little here to cherry pick and some banks are not going to take it in the chops. More like kicked in the balls.





There are some oil/fuel storage tanks between Tulsa and Glenpool that say Sem Group.

Maybe they are empty....?
Title: Sem Group meltdown
Post by: FOTD on July 19, 2008, 10:37:14 AM
Yes. My guess would be the oil has been taken.

The tip seems to have started when TK resigned from BOKF.

These may be criminal matters now.

TK rhymes with Ken Lay......?????
Title: Sem Group meltdown
Post by: Friendly Bear on July 19, 2008, 08:37:33 PM
quote:
Originally posted by FOTD

Yes. My guess would be the oil has been taken.

The tip seems to have started when TK resigned from BOKF.

These may be criminal matters now.

TK rhymes with Ken Lay......?????




If you Google on Tom Kivisto, you get many, many charitable hits associated with SemGroup and him personally.

Brother, he was spreading the money around like there was no tomorrow.

Title: Sem Group meltdown
Post by: moonovrmia on July 20, 2008, 09:23:50 PM
I venture to say, when this all shakes out, SemGroups' fallout will make Enron, Ken Lay and Bernie Ebers look like school children.  And it will start at the top!
Title: Sem Group meltdown
Post by: Breadburner on July 20, 2008, 10:07:02 PM
I made a comment to friend a few months back that I thought that company was a house of cards...Needless to say they were shocked that I would say something like that....Things that start fast usually end fast...I think the ENRON comparisons are spot on.....
Title: Sem Group meltdown
Post by: FOTD on July 20, 2008, 11:50:35 PM
quote:
Originally posted by moonovrmia

I venture to say, when this all shakes out, SemGroups' fallout will make Enron, Ken Lay and Bernie Ebers look like school children.  And it will start at the top!



I don't think it would be of that magnitude. TK did not have direct ties to the Bush family or to Wendy Gramm. Nor will they find any Shillings et al. More likely, bad judgement and market conditions rather than the outright fraud of Lay and company.

But the story will no doubt be Enronesque.
Title: Sem Group meltdown
Post by: Bat Bat on July 21, 2008, 07:29:38 AM
The SemGroup Brief

SemGroup Downfall May Be At The Center Of Mayor's Recent Actions

What did the Mayor know about SemGroup's collapse and when and what actions did she take as a result?  Why did the Mayor in a veil of secrecy agree to have the City added to a four plus year old lawsuit so the City could pay the Bank of Oklahoma the full value of a loan gone bad for which the City was under no obligation to pay?  Why settle for the full value of $7.1 million?  Why now?  Why did the Mayor push to have the City Council approve the new downtown ball park on July 10, 2008?  Why could the decision not have been deferred a week until July 17, 2008 as a number of City Councilors suggested?  Why was the contribution amount of each donor for the new downtown ball park not made public prior to the City Council vote on July 10, 2008?  Why was the exclusive period with the Drillers extended the day before the public became aware of the SemGroup demise?

The answer may be that Mayor knew that SemGroup was coming unraveled, that she knew SemGroup had committed a little over $7 million to the construction of the downtown ball park, that knew that SemGroup would not be able to live up to such commitment and that such fact would be made public by the middle of this past week (prior to the July 17, 2008 City Council meeting), that she knew that she needed to get the financing mechanism for the ball park approved by the City Council before SemGroup's demise became public, and that she knew that she needed to find someone to step-in and pick-up SemGroup's commitment.  While the last leg of this answer has yet to be fulfilled, it could easily be foreseen that the Bank of Oklahoma may step-up and assume SemGroup's approximate $7 million ball park commitment albeit with $7.1 million in taxpayer's money.

Far fetched?  Hardly, considering how obsessive the Mayor is with downtown revitalization and her own political legacy, how much time and effort the Mayor and other officers and directors of the Bank of Oklahoma have invested in building a ball park downtown, that the Bank of Oklahoma carried a substantial portion of SemGroup's debt and was in a position to know of SemGroup's liquidity problems far in advance of the public, that SemGroup's CEO served on the Board of Directors of Bank of Oklahoma (until this past Wednesday when he resigned, but such fact was not made available to the public until late Friday afternoon), that such public company Board resignations do not happen over a period of a day or two but are often well thought out and planned (usually months in advance) by the company and the remainder of the Board, that SemGroup's CEO serves on the Mayor's advisory committee, and that the Mayor was a former Board member of the Bank of Oklahoma.

--------------------

Regardless of whether or not The SemGroup Brief is true, there are questions that need to be answered.  Who is stepping into SemGroup's shoes for its donation to Driller's stadium?  The Bank of Oklahoma?  The taxpayers?  The property owners within the IDL?  How does the final agreement between the city and the Drillers provide for contingencies such as a donor failing to make their contribution?  The bottom line is that we don't want this to become another Great Plains Airlines where the taxpayers are left holding the bag.



Title: Sem Group meltdown
Post by: RecycleMichael on July 21, 2008, 07:43:28 AM
The names of the donors were released and printed by the Tulsa World before all this happened. SemGroup was not on the list.
Title: Sem Group meltdown
Post by: Bat Bat on July 21, 2008, 07:46:34 AM
As reported in the Tulsa World on the 19th:

SemGroup is also a major donor for a proposed downtown ballpark project that includes a multipurpose stadium to house the Tulsa Drillers, the city's Double-A baseball team.

Kivisto and SemGroup had discussed but not committed to a $7.5 million contribution and naming rights for the stadium, said Tulsa Mayor Kathy Taylor.
Title: Sem Group meltdown
Post by: cannon_fodder on July 21, 2008, 08:16:58 AM
SemGroup was listed as a donor several times RM:
"SemGroup is also a major donor for a proposed downtown ballpark project that includes a multipurpose stadium to house the Tulsa Drillers, the city's Double-A baseball team. "

http://www.tulsaworld.com/news/article.aspx?articleID=20080719_11_A1_spancl898497

There were listed before in passing with big lists.  They never have released any levels of donations for most of them. I really hope SemGroup pulls through and continues their community support.
Title: Sem Group meltdown
Post by: FOTD on July 21, 2008, 09:02:31 AM
Agreed CF. Time for calm and not the time to go double posting battie all over TNF.
Title: Sem Group meltdown
Post by: RecycleMichael on July 21, 2008, 09:08:53 AM
A local company wanted to contribute, but couldn't because of their own cash/credit issues. Other contributors could commit.

I guess I don't understand the why people think there is something there.
Title: Sem Group meltdown
Post by: cannon_fodder on July 21, 2008, 09:13:41 AM
SGLP's board (publicly traded subsidiary) has been taken over by creditors Manchester Securities and Alerian Capital Management:
http://biz.yahoo.com/ap/080721/semgroup_energy_partners_investors.html?.v=1

The board:
2 from Manchester
1 from Alerian
2 from SemGroup LP

Title: Sem Group meltdown
Post by: Conan71 on July 21, 2008, 10:12:07 AM
Aside from an over-ambitious appetite for acqusitions and looking like they got pinched on falling oil prices, I have a hard time believing there is anything sinister there.  I'd wondered a few times about the meteoric rise and sudden prominence in the community.

Then again, I thought there was no way there would have been accounting shenanigans at CFS when word first leaked they had problems.  I've still not heard anything about job status at SEM.  FAIK, all their terminal personnel we deal with are still there and have not had hints of being let go.

As far as tangible assets, they've bought a lot of pipeline, tanks, and asphalt terminals.  Of course, it looks like those are all likely encumbered assets so any liquidation is likely only going to benefit a few note holders.
Title: Sem Group meltdown
Post by: dbacks fan on July 21, 2008, 10:34:27 AM
quote:
Originally posted by Bat Bat

As reported in the Tulsa World on the 19th:

SemGroup is also a major donor for a proposed downtown ballpark project that includes a multipurpose stadium to house the Tulsa Drillers, the city's Double-A baseball team.

Kivisto and SemGroup had discussed but not committed to a $7.5 million contribution and naming rights for the stadium, said Tulsa Mayor Kathy Taylor.





Anybody remember the Robert Sutton Stadium issue?
Title: Sem Group meltdown
Post by: Renaissance on July 21, 2008, 11:27:38 AM
Ha, wow--the vultures are circling already:

http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

Amazing how fast plaintiffs' attorneys will detect and go after a company on the ropes.  Although I guess it's a living--securities fraud litigation can be very lucrative.
Title: Sem Group meltdown
Post by: cannon_fodder on July 21, 2008, 12:06:50 PM
quote:
That's all I can find as proof of hard loans. BOKF is a public company, if they foresee a massive loss they are likely to issue a warning. Lest they face a shareholder suit and probably SEC investigation (like SeMGroup) :
http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr


Beat you to it by 3 days.  Bwahahahaaa!  [^]
Title: Sem Group meltdown
Post by: Friendly Bear on July 21, 2008, 05:18:17 PM
quote:
Originally posted by Floyd

Ha, wow--the vultures are circling already:

http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

Amazing how fast plaintiffs' attorneys will detect and go after a company on the ropes.  Although I guess it's a living--securities fraud litigation can be very lucrative.



Breaking News:

Mayor Kathy Taylor has agreed to add the City of Tulsa as a Defendant in the class action lawsuit filed this week against defendant SemGroup.  

She will personally negotiate a settlement in a amount not to exceed the amount of the claim.

News at 10:00.

[;)]
Title: Sem Group meltdown
Post by: HazMatCFO on July 21, 2008, 10:02:32 PM
Margin call boys.. All accounts settled at the end of the day without exceptions.

http://www.youtube.com/watch?v=djoU_l_IECo&feature=related
Title: Sem Group meltdown
Post by: cannon_fodder on July 22, 2008, 09:35:26 AM
SemGroup hedged it's oil trading with a Short of 500,000 barrel at $96.  Contracts it had to buy at $147 per barrel.  The latest news is Moody's has further downgraded SemGroups debt (to B2, or a 5 on a 19 point scale) - making it even harder to get our of this mess.

Also, BOk financial had $130,000,000.00 in exposure to SemGroup at the end of 2007.

Yet another firm has filed a class action suit against SemGroup LP (parent) for market manipulation.
http://uk.reuters.com/article/wtMostRead/idUKN2144018120080721


The publicly traded company (SemGroup Energy Partners, SGLP) has a conference call today at 10AM.
http://www.tradingmarkets.com/.site/news/Stock%20News/1772137/

One source is reporting creditors have seized control of the board at the parent company, but that is incorrect and attributed to name confusion.
http://www.smallcapinvestor.com/articles/07212008-semgroup_energy_jumps_20_on_news_parent_company_taken_o
The official press release and SEC filing indicate it was the subsidiary SGLP that has been taken over:
http://www.semgrouplp.com/newsandmedia/pressreleases/pressreleasedetail.aspx?id={E9E469F3-A213-4D70-A412-C4746403568E}

Title: Sem Group meltdown
Post by: Friendly Bear on July 22, 2008, 10:07:39 AM
quote:
Originally posted by cannon_fodder

SemGroup hedged it's oil trading with a Short of 500,000 barrel at $96.  Contracts it had to buy at $147 per barrel.  The latest news is Moody's has further downgraded SemGroups debt (to B2, or a 5 on a 19 point scale) - making it even harder to get our of this mess.

Also, BOk financial had $130,000,000.00 in exposure to SemGroup at the end of 2007.

Yet another firm has filed a class action suit against SemGroup LP (parent) for market manipulation.
http://uk.reuters.com/article/wtMostRead/idUKN2144018120080721


The publicly traded company (SemGroup Energy Partners, SGLP) has a conference call today at 10AM.
http://www.tradingmarkets.com/.site/news/Stock%20News/1772137/

One source is reporting creditors have seized control of the board at the parent company, but that is incorrect and attributed to name confusion.
http://www.smallcapinvestor.com/articles/07212008-semgroup_energy_jumps_20_on_news_parent_company_taken_o
The official press release and SEC filing indicate it was the subsidiary SGLP that has been taken over:
http://www.semgrouplp.com/newsandmedia/pressreleases/pressreleasedetail.aspx?id={E9E469F3-A213-4D70-A412-C4746403568E}





Reuters News Service reported today that Moody's had downgraded the debt of Sem Group to Junk Bond status.

"Moody's Investors Service downgraded SemGroup debt for the second time in a week on Monday, citing concern over SemGroup's ability to raise funds in the current credit crunch.

The rating agency also questioned the size of SemGroup's energy-hedging program and suggested SemGroup may have shorted more oil than necessary to hedge its normal trading business.

"It would appear that SemGroup's cash margin requirements exceed what Moody's would have expected given the scale and other characteristics of SemGroup's hedged trading activity in the past," Moody's analyst Andrew Oram said in a release.

SemGroup officials were not available to comment"

Translation of: Shorted more oil than necessary to hedge its normal trading business = GAMBLE.

Here's the Link:

http://www.reuters.com/article/marketsNews/idINN2144018120080721?rpc=44


Title: Sem Group meltdown
Post by: TulsaSue on July 22, 2008, 10:17:47 AM
Just heard that they filed bankruptcy.
Title: Sem Group meltdown
Post by: cannon_fodder on July 22, 2008, 12:50:15 PM
4 Subsidiaries have filed for Chapter 11:
quote:

The filing was signed by SemGroup CEO Terry Ronan, named SemCrude, SemCanada, Dynergy Gathering Services and EaglWing, as well as 30 creditors.


http://www.kten.com/Global/story.asp?S=8715438

They bet $3.2 Billion on oil going the wrong way, they are out of funds:
http://www.reuters.com/article/bondsNews/idUSN2229881520080722

On the positive side, no local creditors have been listed on the unsecured asset rolls in excess of $20mil (possible exception of Conoco Phillips, local?):

BP                        Trade Debt         159.0 (Millions USD)
Sunoco                    Trade Debt          88.9
PIMCO                     Bond Debt           86.0
Valero                    Trade Debt          79.3
Western Asset
Management Company        Bond Debt           77.0
ConocoPhillips            Trade Debt          74.2
Noble Energy, Inc         Trade Debt          60.6
Plains All American
Pipeline                  Trade Debt          59.8
Merrill Lynch
Asset Management          Bond Debt           55.0
National Refinery
Association               Trade Debt          53.7
Central Crude
Corporation               Trade Debt          52.2
Husky Energy              Trade Debt          50.1
Crescent Point
Energy Trust              Trade Debt          42.5
Crude Marketing
& Transportation          Trade Debt          40.8
Chevron Corp              Trade Debt          37.2
Alon USA                  Trade Debt          36.5
Eaton Vance Management    Bond Debt           28.0
Bain Capital/Sankaty      Bond Debt           27.5
Apache Canada Ltd         Trade Debt          27.2
Fountain Capital
Management                Bond Debt           27.0
Arc Energy Trust          Trade Debt          26.2
Muzinich & Company        Bond Debt           25.0
Legal and General
Investment Management     Bond Debt           25.0
Teppco Crude Oil          Trade Debt          24.9
Deutsche Capital          Bond Debt           24.0
Pioneer Natural
Resources USA             Trade Debt          23.2
Cimmaron Transportation   Trade Debt          22.8
Nexen Marketing           Trade Debt          22.3
Central Kansas Crude      Trade Debt          21.8
Royal Dutch/Shell         Trade Debt          17.5
TOTAL                                      1,395.2

So either the $135mil from BOk is secured or from a different entity.  Also heard rumors of MidFirst and F&M being out large to SemGroup.

The corporate structure of SemGroup is so complex it's hard to know what is really going on.

Tulsa World just posted an article:http://www.tulsaworld.com/news/article.aspx?articleID=20080722_11_SemC687402
Title: Sem Group meltdown
Post by: cannon_fodder on July 22, 2008, 12:51:49 PM
Tulsa World has their Chapter 11 filing here:
http://www.tulsaworld.com//webextra/content/sem1.PDF

It includes a motion for continuation of operations, as well as wages and benefits for employees.  They are arguing they are more valuable as a going concern.

They lost a HUGE damn bet.  I can only hope they get out of this.
Title: Sem Group meltdown
Post by: FOTD on July 22, 2008, 02:32:05 PM
Shameful. Let's hope they can rescue some of it. My guess, the banks rule.

It ain't ova til the fat lady sez Dnova.



Title: Sem Group meltdown
Post by: Conan71 on July 22, 2008, 02:32:30 PM
Cannon, am I reading correctly?  $1.3 billion???

Sheesh, the Duke brothers were only on the hook for $384 million [}:)]
Title: Sem Group meltdown
Post by: cannon_fodder on July 22, 2008, 03:16:56 PM
The subsidiaries that filed bankruptcy are on the hook for $1.4Bil of UNSECURED debt.  No word on the total debt load, but well above the $1.4B for sure.  We just have to hope they win the argument that they are worth more as a going concern.

Title: Sem Group meltdown
Post by: bokworker on July 22, 2008, 03:23:14 PM
The numbers get bigger...

http://biz.yahoo.com/rb/080722/semgroup.html?.v=3
Title: Sem Group meltdown
Post by: FOTD on July 22, 2008, 04:55:35 PM
A painful mess for Tulsa and the banks.

Seems our debacles take precedent over our success'. Hard to lure business here with our rap sheet.

It ain't ova til the fat lady sez DNova.
Title: Sem Group meltdown
Post by: cannon_fodder on July 22, 2008, 05:15:24 PM
quote:
To meet obligations, SemGroup plans to sell off oil and natural gas gathering, transportation, and storage assets worth an estimated $6.14 billion that were purchased in a whirlwind of acquisitions since it was founded in 2000.

"We have determined that the best way to maximize value for our creditors is to undertake a sales process that will transition our valuable businesses to well-established companies," Terry Ronan, SemGroup's acting chief executive, said in a statement.

. . .

It listed liabilities of $7.53 billion in its bankruptcy filing, including $3.1 billion of total debt $2 billion of secured debt and $594 million in unsecured notes.


Assets of $6.14 Billion and liabilities of $7.53 billion.  

The Chapter 11 looks like protection to sell off assets in a more orderly & profitable way than a Chapter 7 liquidation.  

At the end of March BOk listed $88mil in exposure to SemGroup.  They did not appear on the unsecured list, so presumably...

It looks like it could be the worst.
Title: Sem Group meltdown
Post by: MacGyver on July 22, 2008, 05:28:04 PM
Did anyone else raise an eyebrow to this in the Yahoo news link:

"Included in the NYMEX loss was $290 million owed to SemGroup by a trading company owned by co-founder and former chief executive Thomas Kivisto, who was placed on administrative leave on July 17."

Is this the first indication of off-book liabilities? [:O]

Title: Sem Group meltdown
Post by: OUGrad05 on July 22, 2008, 06:08:40 PM
This will have a substantial fallout and the dollars listed are only for public companies!  Private companies like mine have been hit as well.  

This is going to be a mess but the AP wire said the energy partners were not listed on the chapter 11.  Which was interesting.
Title: Sem Group meltdown
Post by: Renaissance on July 22, 2008, 06:11:03 PM
This one looks like it is going to get ugly.

Sucks for SemGroup and sucks for Tulsa.
Title: Sem Group meltdown
Post by: Conan71 on July 22, 2008, 08:50:27 PM
It's such a convoluted mess of companies under the SEM umbrella it's really hard for the average person (and some analysts) to unravel it all.

SEM is correct, they have many valuable assets as they relate to the collection, storage, and distribution of petroleum products.

Everyone has been looking at the up-side of $140-plus oil from an investment standpoint, I think we've just seen the downside of it.

What a mess and what a total shame.
Title: Sem Group meltdown
Post by: HazMatCFO on July 22, 2008, 09:29:47 PM
quote:
Originally posted by Conan71

Cannon, am I reading correctly?  $1.3 billion???

Sheesh, the Duke brothers were only on the hook for $384 million [}:)]



Devaluation of the dollar since the mid 80s, about the same amount of money.

In regards to BOK, not good timing with IndyMac going belly up last week. I don't know if $ 130,000,000 could bankrupt BOK, but it may cause a run on the bank. Merger with larger bank on the horizon?

This is not good and I'm not usually a sky is falling person.
Title: Sem Group meltdown
Post by: Conan71 on July 22, 2008, 09:50:42 PM
Depends on what BOK has for security.  There would be a market for their assets.  Whether or not others are willing to pay carrying value remains to be seen.  Remember SEM is saying they can continue to operate it's fee-based businesses at a profit.

I would bet the assets will be sold off into smaller chunks.  Consolidating all that into one huge, convoluted ball doesn't look so brilliant now.
Title: Sem Group meltdown
Post by: inteller on July 22, 2008, 10:07:03 PM
with great corporate friends like this, TUlsa doesn't need any enemies.

I see a bunch of turds wanted to play Enron Lite with their money.

Keep in mind that MANY of the turds running Semgroup are the same thugs that ran williams into the ground earlier this decade.

we need some corporate ethic cleansing around here.  Tulsa is just going to be known as a haven for shady business tactics.

lets see:

CFS
WIlliams/Wiltel debacle
ORU (if you count the way RR spent money)
Mayor Sue me and I'll Pay You
and now SemGroup.
Title: Sem Group meltdown
Post by: Conan71 on July 22, 2008, 10:21:25 PM
You heard what's going on at Samson, didn't you?

Title: Sem Group meltdown
Post by: swake on July 22, 2008, 11:01:18 PM
quote:
Originally posted by Conan71

You heard what's going on at Samson, didn't you?





No, do tell...
Title: Sem Group meltdown
Post by: FOTD on July 22, 2008, 11:07:08 PM
quote:
Originally posted by inteller

with great corporate friends like this, TUlsa doesn't need any enemies.

I see a bunch of turds wanted to play Enron Lite with their money.

Keep in mind that MANY of the turds running Semgroup are the same thugs that ran williams into the ground earlier this decade.

we need some corporate ethic cleansing around here.  Tulsa is just going to be known as a haven for shady business tactics.

lets see:

CFS
WIlliams/Wiltel debacle
ORU (if you count the way RR spent money)
Mayor Sue me and I'll Pay You
and now SemGroup.



Devil's bud has to agree with everything but add Ethic cleansing around THE COUNTRY! Mayor Kat stands pat. At this time, we need her type of leadership. She has to find the resouces left behind we depended on from Kovisto.

Painful loss.

It ain't ova til the fat lady sez Dnova.
Title: Sem Group meltdown
Post by: FOTD on July 22, 2008, 11:09:53 PM
quote:
Originally posted by Conan71

You heard what's going on at Samson, didn't you?





Tell me they were fellow gamblers?

They're selling out?

You have a %10 chance of being correct whatever rumor you relay to us.
Title: Sem Group meltdown
Post by: bokworker on July 23, 2008, 08:25:13 AM
quote:
Originally posted by HazMatCFO

quote:
Originally posted by Conan71

Cannon, am I reading correctly?  $1.3 billion???

Sheesh, the Duke brothers were only on the hook for $384 million [}:)]



Devaluation of the dollar since the mid 80s, about the same amount of money.

In regards to BOK, not good timing with IndyMac going belly up last week. I don't know if $ 130,000,000 could bankrupt BOK, but it may cause a run on the bank. Merger with larger bank on the horizon?

This is not good and I'm not usually a sky is falling person.



Please... BOk has announced EARNINGS of about $100 million in the first six months of 2008. Forgive me for being sensitive to comments such as this but we are talking about losing some measure of annual earnings... not even touching our capital. These comments are irresponsible and dangerous....

Is it a bad deal?Yes. Is BOk on the hook? Yes. But to suggest that it will be the downfall of BOk is just flat wrong...
Title: Sem Group meltdown
Post by: TUalum0982 on July 23, 2008, 08:33:54 AM
so in Lehman's terms...they basically gambled away their loans by betting that oil prices would go down, when in reality, they went up...way up and now they are out billions of dollars??
Title: Sem Group meltdown
Post by: cannon_fodder on July 23, 2008, 08:38:37 AM
quote:
Originally posted by HazMatCFO

Devaluation of the dollar since the mid 80s, about the same amount of money.




1) To compare currencies we need a staple, clearly the Euro was not around. The longest standing currency is the British Pound, so lets use that:
1980-10-01  2.4165 Pounds to 1 USD
1985-12-01  1.4447
1988-12-01  1.8258

CURRENT:    1.9816
http://research.stlouisfed.org/fred2/data/EXUSUK.txt

I'd have to say we are within the 1980's range you speak of.  The strongest dollar was near $1, the weakest was in the 1970's at 2.62 pounds/dollar.  

People usually fail to realize how things really look in context.  In the moment it always looks bad, but in historical context the dollar is fine.  It is simply well off it's historic highs.

quote:

In regards to BOK, not good timing with IndyMac going belly up last week. I don't know if $ 130,000,000 could bankrupt BOK, but it may cause a run on the bank. Merger with larger bank on the horizon?



2) First, BOKF is a secured debt holder.  It is possible that they are under secured, but since they were an initial investor and the assets are in oil tanks and pipelines - I doubt it.  Those assets are likely to have appreciated if anything.

Second, even IF BOKF had to take a $130,000,000 loss - that would represent about one quarter of operating income.  The company holds 21,000,000,000 in assets.  The loss would be significant (one quarter) but by no means a death blow.

And finally, it would take at least $3.5 Billion to buy out BOk.  Not too many companies have that kind of liquidity at the moment.  Add to that BOk has declared and proven a desire to grow instead of being absorbed.   It seems unlikely on the face and even more so as a result of this transaction (you will note the stock price is not too alarmed).

Not saying it can't happen.  Just that it doesn't seem as much of an issue as you seem to think.  not picking on you, just trying to limit the doom and gloom.
- - -



And finally, the oil industry breeds high risk companies.  Tulsa has seen them come and go over the last century.  WE have profited from most.  If SemGroup goes away, we are still better off for having them over the last 8 years than if they never existed.  

I don't think this is unique to Tulsa.  There is a reason it is called a Boom or Bust industry.

Title: Sem Group meltdown
Post by: inteller on July 23, 2008, 05:38:20 PM
quote:
Originally posted by FOTD

quote:
Originally posted by Conan71

You heard what's going on at Samson, didn't you?





Tell me they were fellow gamblers?

They're selling out?

You have a %10 chance of being correct whatever rumor you relay to us.



they have been in the paper a lot lately donating money left and right...sunday's paper said they donated to OSU..  they were one of the ballpark donors.  I guess guilt by association?  are you going to tell us they are getting the naming rights?
Title: Sem Group meltdown
Post by: tulsacyclist on July 23, 2008, 05:49:42 PM
cannon_fodder, I appreciate all of the research/info you're sharing here. It's helping me make a little more sense of it all.
Title: Sem Group meltdown
Post by: inteller on July 23, 2008, 05:59:42 PM
quote:
Originally posted by tulsacyclist

cannon_fodder, I appreciate all of the research/info you're sharing here. It's helping me make a little more sense of it all.



well I hope it all brings you solace because Kaiser's house of cards is getting pretty wobbly.  If the qui tam suit is successful in getting our 7.1 mil back I know a loan officer or two over there that will be going to jail.

the most ridiculous thing is BoK will probably sell williams various semgroup assets for a song.  which would be highly ironic because if I remember correctly semgroup bought some williams assets when they were near bankruptcy.
Title: Sem Group meltdown
Post by: JoeMommaBlake on July 23, 2008, 05:59:53 PM
Samson Stadium...

Samson Park....

Samson Coliseum....

Samson Park at Greenwood Gardens...

or I could just pony up for the naming rights....

Joe Momma's Park.

I like it. Who do I make the check out to?

Title: Sem Group meltdown
Post by: inteller on July 23, 2008, 06:02:48 PM
quote:
Originally posted by JoeMommaBlake

Samson Stadium...

Samson Park....

Samson Coliseum....

Samson Park at Greenwood Gardens...

or I could just pony up for the naming rights....

Joe Momma's Park.

I like it. Who do I make the check out to?






hahaha...Samson Coliseum has a nice ring to it.  Didn't the biblical Samson bring down a coliseum?  That would be fitting irony for Tulsa.
Title: Sem Group meltdown
Post by: Renaissance on July 23, 2008, 06:18:47 PM
quote:
Originally posted by inteller

quote:
Originally posted by tulsacyclist

cannon_fodder, I appreciate all of the research/info you're sharing here. It's helping me make a little more sense of it all.



well I hope it all brings you solace because Kaiser's house of cards is getting pretty wobbly.  If the qui tam suit is successful in getting our 7.1 mil back I know a loan officer or two over there that will be going to jail.

the most ridiculous thing is BoK will probably sell williams various semgroup assets for a song.  which would be highly ironic because if I remember correctly semgroup bought some williams assets when they were near bankruptcy.



Who's filing a qui tam?
Title: Sem Group meltdown
Post by: inteller on July 23, 2008, 06:25:22 PM
quote:
Originally posted by Floyd

quote:
Originally posted by inteller

quote:
Originally posted by tulsacyclist

cannon_fodder, I appreciate all of the research/info you're sharing here. It's helping me make a little more sense of it all.



well I hope it all brings you solace because Kaiser's house of cards is getting pretty wobbly.  If the qui tam suit is successful in getting our 7.1 mil back I know a loan officer or two over there that will be going to jail.

the most ridiculous thing is BoK will probably sell williams various semgroup assets for a song.  which would be highly ironic because if I remember correctly semgroup bought some williams assets when they were near bankruptcy.



Who's filing a qui tam?



Sutton, Davis & Staggs Law Office 91st/Yale
Title: Sem Group meltdown
Post by: Conan71 on July 23, 2008, 07:20:14 PM
quote:
Originally posted by inteller

quote:
Originally posted by Floyd

quote:
Originally posted by inteller

quote:
Originally posted by tulsacyclist

cannon_fodder, I appreciate all of the research/info you're sharing here. It's helping me make a little more sense of it all.



well I hope it all brings you solace because Kaiser's house of cards is getting pretty wobbly.  If the qui tam suit is successful in getting our 7.1 mil back I know a loan officer or two over there that will be going to jail.

the most ridiculous thing is BoK will probably sell williams various semgroup assets for a song.  which would be highly ironic because if I remember correctly semgroup bought some williams assets when they were near bankruptcy.



Who's filing a qui tam?



Sutton, Davis & Staggs Law Office 91st/Yale



Sutton- that's ironic since we were talking about Sutton Driller's stadium on this thread as well.  I'm sure no relation.

It's not that unusual for energy/petroleum infrastructure/transportation/storage companies to buy and sell assets back and forth.  I can't even tell you how many times SEM's terminal at POC has been sold in the last 20 years.

Koch might be a player in buying back some assets.

BOK wobbly or a house of cards, I don't think so.  SEM was a house of cards.

FWIW, I was yanking your chain on Samson.
Title: Sem Group meltdown
Post by: inteller on July 23, 2008, 07:27:08 PM
well, if you are going to come forward with speculation, at least have a SemGroup Brief or something.
Title: Sem Group meltdown
Post by: Conan71 on July 23, 2008, 08:55:53 PM
quote:
Originally posted by inteller

well, if you are going to come forward with speculation, at least have a SemGroup Brief or something.



[}:)]

Well, yeah, donating money to stadiums, spreading the love around with the arts, guilt by association.

Interesting factoid: SEM is the owner of a former Enron property out at the Port and probably many other former Enron assets.
Title: Sem Group meltdown
Post by: inteller on July 23, 2008, 09:49:57 PM
quote:
Originally posted by Conan71

quote:
Originally posted by inteller

well, if you are going to come forward with speculation, at least have a SemGroup Brief or something.



[}:)]

Well, yeah, donating money to stadiums, spreading the love around with the arts, guilt by association.

Interesting factoid: SEM is the owner of a former Enron property out at the Port and probably many other former Enron assets.




they don't call it SemRon for nothing.

hopefully this will get national attention that NOTHING has changed since Enron.
Title: Sem Group meltdown
Post by: cannon_fodder on July 24, 2008, 08:55:48 AM
Lets keep the rumors in check please. There are people that read this that work at BOK or Samson, that don't need stress from some internet rumor that is unfounded.  There are other's that just care about the community that don't need to worry either.

- - -
I've found no Samson rumor.  As a exploration/production company the risk factor is WAY, WAY lower than energy trading/transport.    I call BS on whatever you heard - unless it's naming rights or stepping up philanthropically somehow.
- - -

Per BOk as a deck of cards, I also call BS.  Financial companies are heavily regulated.  This isn't a hedge fund, an investment group, or less regulated company.  It's an FDIC bank.

Go look at their financials.  Barring unheard of bank-fraud they are on firm footings.  It's stock has taken a decent hit lately, but not as bad as it's banking peers.
- - -

Per a qui tam suit, I welcome it.  I'm sorry the city/county may have to incur some expense, but ultimately the liability is passed to the "public servant" found culpable.   I'm not familiar enough with such actions to know if Kaiser or BOk would have any real liability (private enterprise is generally not liable for public officials misdeeds), but even if they are on the hook for the full trebble damages and take a $7mil loss on the loan they are out $30,000,000 tops.

Certainly not enough to rock the boat.  Shed a couple officers who made the deal, sure.  But again, DISCOVERY is a beautiful thing.  Public disclosure can sometimes render people to get mighty honest.
- - -

BACK TO SEMGROUP:

Latest looks like they are sheding most of their assets.  The future of the company is in serious doubt as it exists today.  They COULD remain as an asset manager, trading firm, or other player and try to rebuild.  But it is looking like none of their assets will survive as all units have been brought into the Chapter 11 proceedings.

They will lay off some 250 people, most in Tulsa.  They have funding to keep paying them as they unload assets and try to restructure.  Those leaving will get an average severance of $3,500 or so (about one months take home pay for the average employee).  Executives will get TWO YEARS PAY as a severance.

So basically, the people that are actually responsible for running the company into the ground get FAT and send everyone else on the street.  I know that's how it works and that's the contracts that have to be made to attract "big names" to your company, but it still sucks.

SGLP (publicly traded Tulsa based part) will continue to operate and has avoid bankruptcy.  They are searching for new customers and the outlook is uncertain, but not bleak.  Purportedly their services are in great demand.

http://www.tulsaworld.com/news/article.aspx?articleID=20080724_49_A1_Ardtri493783
(most other sources seem to be pulling from the World on the above)

In court yesterday the prospect (RUMOR) of unauthorized trading was raised. Which would effect the criminality of the downfall as well as creditors rights, but would probably not save the company (unless they could show fraud such that the company was not liable, unlikely):
http://uk.reuters.com/article/oilRpt/idUKN2340298220080723
Title: Sem Group meltdown
Post by: cannon_fodder on July 24, 2008, 08:59:32 AM
The Wall Street Journal has run a piece on SemGroup in todays publication:

SemGroup Loses Bets on Oil
http://online.wsj.com/article/SB121685645708379013.html?mod=googlenews_wsj

VERY clearly talks about how they failed and what the overall effects are/will be.

quote:
The Tulsa, Okla., company filed for Chapter 11 bankruptcy protection Tuesday, citing among other financial woes a loss of at least $2.4 billion in crude-oil futures. Changes in its hedging strategies coincided with big moves in oil recently.

The company had taken out short positions, or bets that crude prices would fall, as a hedging strategy for oil it intended to move through a subsidiary's pipelines and sell to refiners, according to an affidavit filed in Delaware bankruptcy court by Terrence Ronan, SemGroup's senior vice president, finance.

Then, when oil prices rose, SemGroup moved to "cover" its short positions by taking out equivalent long positions, or bets that oil prices would rise.

Eventually, SemGroup was unable to put up collateral for its swelling bets and sold its futures account to Barclays Capital on July 16, according to the affidavit.

. . .

One theory making the rounds in the market is that as SemGroup's long positions snowballed, so did the oil rally. SemGroup's rapid exit from the market removed a force for upward momentum when the market, under siege from negative U.S. economic indicators, needed it most.

"In the three days surrounding that transfer" to Barclays, crude futures "plunged $15.89...thus, with SemGroup removed from the market, crude oil has been free to fall," wrote Stephen Schork, editor of the Schork Report, a newsletter tracking the oil market.



Interesting take.  They dug a deep hole and kept trying to "dig up" to get out of it.  At least according to that "rumors" on wall street.
Title: Sem Group meltdown
Post by: Conan71 on July 24, 2008, 09:27:39 AM
quote:
Originally posted by cannon_fodder

I've found no Samson rumor. As a exploration/production company the risk factor is WAY, WAY lower than energy trading/transport. I call BS on whatever you heard - unless it's naming rights or stepping up philanthropically somehow.




Lighten up Francis, I said I was yanking Inteller's chain about six or seven posts back.

(http://www.davejenkins.com/wp-content/uploads/2008/02/francis.jpg)
Title: Sem Group meltdown
Post by: FOTD on July 24, 2008, 09:50:42 AM
The latest rumor is three or four execs will be facing stiff jail terms.

Tee Kay (rhymes with Ken Lay) will be in jail for some time.

Taking Tulsa down a notch from third to fourth tier. Shed a tear for Tom Terrific.

And remember, it ain't ova til the lady sez DNova......
Title: Sem Group meltdown
Post by: OUGrad05 on July 24, 2008, 10:23:09 AM
So what did Samson do?  Donate a bunch of money to the city?  They're a midsize private firm aren't they?
Title: Sem Group meltdown
Post by: Conan71 on July 24, 2008, 10:23:30 AM
quote:
Originally posted by FOTD

The latest rumor is three or four execs will be facing stiff jail terms.

Tee Kay (rhymes with Ken Lay) will be in jail for some time.

Taking Tulsa down a notch from third to fourth tier. Shed a tear for Tom Terrific.

And remember, it ain't ova til the lady sez DNova......



I believe there will be quite a bit more investigation before anyone connected to this will be given their due process THEN may face stiff sentencing.  That's the general order our justice system works in.

Title: Sem Group meltdown
Post by: Conan71 on July 24, 2008, 10:25:27 AM
quote:
Originally posted by OUGrad05

So what did Samson do?  Donate a bunch of money to the city?  They're a midsize private firm aren't they?



Okay, pay attention to previous posts:

THE SAMSON COMMENT WAS AN INNOCUOUS COMMENT TO YANK INTELLER'S CHAIN!

Title: Sem Group meltdown
Post by: OUGrad05 on July 24, 2008, 10:36:12 AM
quote:
Originally posted by Conan71

quote:
Originally posted by OUGrad05

So what did Samson do?  Donate a bunch of money to the city?  They're a midsize private firm aren't they?



Okay, pay attention to previous posts:

THE SAMSON COMMENT WAS AN INNOCUOUS COMMENT TO YANK INTELLER'S CHAIN!





Wakeup on the wrong side of the bed this morning?
Title: Sem Group meltdown
Post by: MacGyver on July 24, 2008, 11:46:08 AM
quote:
Originally posted by cannon_fodder

 

As a exploration/production company the risk factor is WAY, WAY lower than energy trading/transport.  




Cannon Fodder,  

That is an interesting perspective.  

When you consider that Transport/Trading is buying and selling known quantities of known product at known prices with the benefit of a smorgasbord of financial tools to mitigate all kinds of exposure whereas Exploration/Production involves spending unknown quantities of money to attempt to reach a specific location in a zone with a terminal geometry that is somewhat unpredictable, to achieve unknown rates of production that will be sold at unknown prices, my take is that risk is clearly greater in production.  

If risk was a concern, I'd rather be in the oil buying business instead of exploration/production.  

I can see that some greedy fools could use those same risk-avoidance tools to ratchet up their return (and risk), but fundamentally, there should be much less risk in trading/gathering.

What's your take?

M
Title: Sem Group meltdown
Post by: Double A on July 24, 2008, 01:04:55 PM
quote:
Originally posted by Friendly Bear

quote:
Originally posted by Floyd

Ha, wow--the vultures are circling already:

http://www.marketwatch.com/news/story/roy-jacobs--associates-announces/story.aspx?guid=%7BA783526B-942E-45E1-9091-01E5C558D118%7D&dist=hppr

Amazing how fast plaintiffs' attorneys will detect and go after a company on the ropes.  Although I guess it's a living--securities fraud litigation can be very lucrative.





Breaking News:

Mayor Kathy Taylor has agreed to add the City of Tulsa as a Defendant in the class action lawsuit filed this week against defendant SemGroup.  

She will personally negotiate a settlement in a amount not to exceed the amount of the claim.

News at 10:00.

[;)]



LOL, post of the month. Sem group is just another victim in a long list of incompetent, corrupt CEO's. Anybody remember Willtell? Bumgarner ran that into the ground, dumped his stock, and left with a golden parachute while being praised as a generous benefactor. This is a Tulsa tradition, it's nothing new.
Title: Sem Group meltdown
Post by: deinstein on July 24, 2008, 01:34:50 PM
quote:
Originally posted by kylieosu

Ironically, Kivisto just won ABoT's best business leader award this week:

Business Leader

Tom Kivisto

Tom Kivisto is the CEO, president and co-founder of the Tulsa-based international crude oil service company SemGroup. He was featured in one of our cover stories in May, just after his company sponsored the LPGA Championship. Along with his business acumen and golf patronage, Kivisto is also a modest but avid benefactor of Project Single Parent, the Tulsa Ballet and a host of other endeavors in both charity and art.

Close Calls:

Chet Cadieux

George Kaiser

Elliott Nelson




Classic Urban Tulsa. Flavor of the week. I read Bates and close that junk with the quickness.
Title: Sem Group meltdown
Post by: cannon_fodder on July 24, 2008, 02:39:58 PM
Very fair points MacGyver.  I over simplified it.

Production is a high risk venture for SURE.  Huge up front costs and very uncertain returns.

I guess I was trying to convey that Energy Trading has more immediate risk.  They can disappear over night on one huge loss.  Most exploration has SOME return, even if it fails to cover the cost.  Very few wells are "dry holes."  

Bah.  Am I conveying what I mean at all?  Just that trading has more potential to be all or nothing.  Look at what oil companies go under - most aren't exploration. More Energy Trading companies have gone under in the last 10 years probably 5 to 1.
Title: Sem Group meltdown
Post by: FOTD on July 24, 2008, 02:49:12 PM
quote:
Originally posted by Conan71

quote:
Originally posted by FOTD

The latest rumor is three or four execs will be facing stiff jail terms.

Tee Kay (rhymes with Ken Lay) will be in jail for some time.

Taking Tulsa down a notch from third to fourth tier. Shed a tear for Tom Terrific.

And remember, it ain't ova til the lady sez DNova......



I believe there will be quite a bit more investigation before anyone connected to this will be given their due process THEN may face stiff sentencing.  That's the general order our justice system works in.





Yes. They'll live lavishly and on the bail in some beautiful Island. Surely, stashed some bucks just in case things went bad.

Who here has been effectd by this debacle? What companies had to find out the hard way they won't get paid for what they delivered? What small business in town has had their tit removed? WHo and how many will find out they got screwed? The drama will continue to unfold in the months ahead.

But Conan your %10 came in and even the devil  agrees to due process ..... then I will wonder if Tee Kay will pull a Ken Lay and fly away.



Title: Sem Group meltdown
Post by: cannon_fodder on July 24, 2008, 02:50:56 PM
Ken Lay didn't fly away, he died.
Title: Sem Group meltdown
Post by: FOTD on July 24, 2008, 02:53:23 PM
Hey, I can believe what I want.

He was one of the smartest guys in the room.....


[:D][:X]
Title: Sem Group meltdown
Post by: yayaya on July 24, 2008, 03:21:27 PM
uh-yeah-dnova
heard something very interesting about that connection a few weeks before all this happened
Title: Sem Group meltdown
Post by: inteller on July 24, 2008, 04:48:38 PM
quote:
Originally posted by OUGrad05

quote:
Originally posted by Conan71

quote:
Originally posted by OUGrad05

So what did Samson do?  Donate a bunch of money to the city?  They're a midsize private firm aren't they?



Okay, pay attention to previous posts:

THE SAMSON COMMENT WAS AN INNOCUOUS COMMENT TO YANK INTELLER'S CHAIN!





Wakeup on the wrong side of the bed this morning?



must have...and I don't know why he directed the comment specifically at me.  I could care less what they do really.  Now if Williams goes belly up again, that could be bad.
Title: Sem Group meltdown
Post by: FOTD on July 24, 2008, 05:37:07 PM
Is that a tip, a rumor, inside info, or just a comment?^
Title: Sem Group meltdown
Post by: inteller on July 24, 2008, 05:54:05 PM
quote:
Originally posted by FOTD

Is that a tip, a rumor, inside info, or just a comment?^



last i heard Williams was doing well for itself.  they've hired a few flunkies over there, but i think they got rid of the worst at the top.
Title: Sem Group meltdown
Post by: FOTD on July 24, 2008, 06:07:50 PM
quote:
Originally posted by inteller

quote:
Originally posted by FOTD

Is that a tip, a rumor, inside info, or just a comment?^



last i heard Williams was doing well for itself.  they've hired a few flunkies over there, but i think they got rid of the worst at the top.



Well, we know that....some were higher ups at that Sem group.
Title: Sem Group meltdown
Post by: inteller on July 24, 2008, 06:28:31 PM
quote:
Originally posted by FOTD

quote:
Originally posted by inteller

quote:
Originally posted by FOTD

Is that a tip, a rumor, inside info, or just a comment?^



last i heard Williams was doing well for itself.  they've hired a few flunkies over there, but i think they got rid of the worst at the top.



Well, we know that....some were higher ups at that Sem group.



yup, no one knows how to run a company in the ground like those thugs.

the up side for williams and other concerns in town is that there is now a fresh pool of highly skilled labor on the market.
Title: Sem Group meltdown
Post by: FOTD on July 26, 2008, 08:35:18 AM
Highly skilled? For what? How to bruise a local economy?

The TulsaWhirled reporting continues to be like a high school rag with teeny bits of lazy investigative reporting.

Several independent oil producers want their money and have been offered only last years pricing at just over $60/barrel when they though they were due $140.

I'm also currious about other donors like Zarrow and QT and Kaiser et al who gave thinking goals were attained not realizing the consequences to the Tee Kay ( rhymes with Ken Lay) debacle of insufficient funds to complete projects and goals.

Cover ups and ommissions indicate our newspaper is dubious. Urby should fall in the cracks with tittlelating details of all the other "gossip" going around. What a mess.

It ain't ova til the lady sez DNova......

Title: Sem Group meltdown
Post by: waterboy on July 26, 2008, 09:41:31 AM
Urby fill in the details? The same Urby who just named TeeKay as their Absolute Best Business Leader of 2008? I doubt they'll do much or Tulsa People either. Their readers have very little to do with those awards. They depend on advertising dollars spent and social climbing potential for the publishers which means his award was for being a friend or potential friend of the publishers.

There is no investigative press in Tulsa. Too expensive and every story creates a new enemy from the "oligarchy". This story will unfurl on blogs, this forum and perhaps from outside publications.

Title: Sem Group meltdown
Post by: inteller on July 26, 2008, 10:17:44 AM
quote:
Originally posted by FOTD

Highly skilled? For what? How to bruise a local economy?

The TulsaWhirled reporting continues to be like a high school rag with teeny bits of lazy investigative reporting.

Several independent oil producers want their money and have been offered only last years pricing at just over $60/barrel when they though they were due $140.

I'm also currious about other donors like Zarrow and QT and Kaiser et al who gave thinking goals were attained not realizing the consequences to the Tee Kay ( rhymes with Ken Lay) debacle of insufficient funds to complete projects and goals.

Cover ups and ommissions indicate our newspaper is dubious. Urby should fall in the cracks with tittlelating details of all the other "gossip" going around. What a mess.

It ain't ova til the lady sez DNova......





i'm not referring to the people up top.  I'm talking about the people doing the actual real work.  They have a number of highly skilled and experienced IT professionals over there.  They will get a job no doubt, but if Tulsa isn't careful they will lose them entirely as they move to Dallas and Houston.
Title: Sem Group meltdown
Post by: FOTD on July 26, 2008, 05:25:07 PM
Some journalism:

http://online.wsj.com/article/SB121702824404886365.html?mod=hps_us_whats_news



In Oil Debacle, Ex-Basketball Star
In College Shot a Brick
By JASON WOMACK and CAROLYN CUI
July 26, 2008; Page B1

In Oil Debacle, Ex-Basketball Star
In College Shot a Brick
By JASON WOMACK and CAROLYN CUI
July 26, 2008; Page B1

Houston

Until just days ago, 56-year-old Tom Kivisto was one of the most public, revered figures in Tulsa, Okla.'s thriving business scene. The founder and recently deposed head of SemGroup LP had built one of the largest private companies in the U.S., a perch from which he oversaw a range of donations to local groups and his alma mater, the University of Kansas.

This past week, the company he built filed for Chapter 11 bankruptcy-law protection after losing $2.4 billion on energy contracts with various other parties. One of those parties, according to court documents, was a firm owned by Mr. Kivisto. That trade cost SemGroup $290 million.

A person familiar with SemGroup's trading and court documents suggests the firm was an active trader that used risky, complicated trading techniques including options trades that exposed it to greater risks if the market made big moves. A spokesman for SemGroup declined to comment on the company's trading strategies. "We have not disclosed how the company hedged its positions," he said.

Mr. Kivisto hasn't made any public statements since the bankruptcy filing, a change for a man who was an outspoken community member and a 2007 "Tulsan of the Year."

"I think it's disturbing that we haven't heard from him," said Jake Dollarhide, a Tulsa-based money manager who knows Mr. Kivisto through community organizations. "After all of the things he's done for the city of Tulsa, it's eerie."

Several attempts to reach Mr. Kivisto on his cellular phone and at a number listed as his home number were unsuccessful.

SemGroup's collapse is also catching the attention of those who received donations from Mr. Kivisto. The Tom and Julie Kivisto Family Foundation pledged $7.5 million to fund a stadium for the Tulsa Drillers minor-league baseball team. Mr. Kivisto was also behind a $12 million pledge toward the University of Kansas's new football complex. So far about $4 million of the amount has been extended, according to a school official.
Mr. Kivisto has a long history in the sports world, having watched his father, Ernie, become one of the winningest basketball coaches in Illinois high-school history. The younger Mr. Kivisto took his own basketball skills to the University of Kansas, where he led the Jayhawks to a Final Four appearance in 1974, and where he still holds the school's single-game assist record.

The roots of Mr. Kivisto's business career began at Koch Industries, a privately held energy giant where he eventually rose to become vice president of crude-oil marketing for the company. He was the "fair-haired boy" of Koch, said Dewey F. Bartlett Jr., a longtime Oklahoma oil man and president of Keener Oil & Gas Co.

After 15 years at Koch, Mr. Kivisto struck out on his own, founding oil-marketing company Eaglwing Trading in 1993, which is listed in bankruptcy filings as a subsidiary of SemGroup.

In 2000, he founded SemGroup with a $65 million loan from BOK Financial Corp., where he would later serve as a director. SemGroup grew rapidly in following years by making more than 50 oil and gas acquisitions from several companies, including several deals with Dynegy Inc. and Williams Cos.

Mr. Kivisto saw storage as a new frontier in the oil and gas business. As other countries developed refineries and began exporting petroleum products, storage facilities, such as the key hub in Cushing, Okla., would become increasingly important. SemGroup Energy Partners owns 1,200 miles of pipeline and 15 million barrels of oil-storage capacity, including seven million barrels of capacity at Cushing.

Mr. Bartlett said Mr. Kivisto always maintained that the price of crude oil would be driven by world demand and that the "wild card" in the market was the war on terror.

"I still think he is one of the brightest, most astute people I've ever met as far as what drives our business," Mr. Bartlett said. "I just think he's not seeing anybody."

SemGroup in court documents this week attributed its losses to volatility in the commodities markets and tighter margin requirements, or the collateral a trader must post to support its positions.

According to a person familiar with the firm's trading, in addition to buying and selling futures to hedge the commodities it owned, SemGroup traded options that exposed it to greater risks if the market made big moves. The person said SemGroup sold puts, a trade that has the potential for large losses.

The company, which transports, stores and distributes crude oil and refined products, is one of the nation's largest private firms and by some estimates handles oil volumes representing 2.5% of U.S. consumption. SemGroup creditors as well as others in the energy industry have questioned whether its troubles helped lead to a fall in oil prices earlier this month.

What is unclear is whether SemGroup's dilemma rose out of unusually active trading with insufficient risk management or whether the company was merely a victim of current circumstances.

High volatility and high prices have put a strain on many physical oil players, which try to hedge their risk by placing bets in the financial markets to help them lock in profit regardless of the direction of oil's moves. Given the current volatility, those bets have become more costly, prompting firms to use riskier strategies that cost less up front but have a greater downside. Failure to manage that risk can lead to dire results.
"It's something new that everybody is adjusting to," said Montie Krumnow, a broker at Starsupply GFI, an over-the-counter energy brokerage. "How to react to these drastic changes....That's the main struggle."

The companies owed money by SemGroup range from major public corporations to small, private gathering companies, which buy oil from producers and sell it to companies like SemGroup. One such gathering company, Central Kansas Crude LLC, is owed $21.8 million by SemGroup, according to court filings.

Chuck Touchstone, Central Kansas Crude's president, said he had sold oil to SemGroup, his only customer, for seven years without asking for a letter of credit.

"Our part of the country does business on a handshake and a promise," Mr. Touchstone said. "You just don't ask a big company like that, 'Are you going broke?' You just don't ask."

Mr. Touchstone said SemGroup's collapse will have ripple effects throughout the industry.

"People will take harder looks at financials, they'll try to get secured credit lines, and the trouble is I'll have to do the same thing," he said. "That limits everybody's ability to draw on their credit."

--Jessica Resnick-Ault, Joseph Checkler, Aaron Lucchetti and Ben Casselman contributed to this article.

Write to Carolyn Cui at carolyn.cui@wsj
 News Licensing   Advertising   About Dow Jones
Copyright © 2008 Dow Jones & Company, Inc. All Rights Reserved


Title: Sem Group meltdown
Post by: FOTD on July 26, 2008, 05:32:59 PM
More Journalism:

http://online.wsj.com/article/SB121699348325584683.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.124027

COMMODITIES  


 
SemGroup Collapse Leaves
Oil-Distribution System Exposed
Producers Cut Back
Scheduled Deliveries
On Broad Network
By BRIAN BASKIN
July 26, 2008; Page B6

SemGroup LP's implosion has left a hole in the intricate web of oil pipelines and storage terminals relied upon by refiners throughout the Midwest.

Over the past eight years, the Tulsa, Okla., private company bought or acquired oil pipelines, trucks and storage terminals across a swath of the oil patch stretching from east Texas to the Kansas-Nebraska border. At least 2,000 producers, big and small, sold their oil to SemGroup, which sent the crude onto refiners across the region. SemGroup filed for Chapter 11 bankruptcy protection on July 22, citing a $3.2 billion loss in the futures market. The top 30 creditors are owed as much as $1.4 billion, with as many as 5,000 others also due money, many from physical oil transactions for which SemGroup never paid.


A publicly traded subsidiary, SemGroup Energy Partners, owns most of the pipelines and terminals that the private SemGroup used to move its oil, including tanks at Cushing, Okla., a key storage hub closely monitored in energy markets. Under new management, the public company has vowed to forge new relationships with producers and refiners.

"This is a toll road business model; we are simply paid based on volume transported," said Gabriel Hammond, managing director at Alerian Capital Management, one of the hedge funds that took over management of the public company on Monday. He was speaking in a conference call with investors and analysts earlier this past week.

If only it were that simple. Few producers have so far been willing to pay the toll if they believe the road ahead could be blocked at any minute by financial troubles bleeding over from the private SemGroup to the public one. Pipeline space is typically booked a month or more in advance, so for now it's business as usual across both SemGroup assets. But the companies are quickly falling behind in scheduling future oil deliveries.

Mr. Hammond said it could be weeks before the company knows how successfully it can operate without its former parent, which provided 89% of its revenue in the first three months of 2008.

One SemGroup Energy Partners pipeline system delivers oil to a ConocoPhillips refinery in Borger, Texas, while a second links east and south Texas oil to other pipelines that criss-cross the Midwest and Gulf Coast. ConocoPhillips declined to comment.

The privately held SemGroup also operated a pipeline system between Wichita, Kan., and Cushing, a region home to many small producers that rely on a single oil marketing company for their entire business.


• SemGroup's Kivisto in Spotlight
07/26/08
• Oil Bets Slam SemGroup
07/25/08Central Kansas Crude LLC, for example, trucked 5,000 barrels a day from small producers to a pipeline owned by SemGroup that connected into Cushing. When SemGroup told the company on July 18 that it would have difficulty making payments, the trucking operation was shut down immediately, leaving many producers with nowhere to send their oil, said Rick Navarro, director of crude-oil supply at Central Kansas Crude.

Central Kansas Crude is owed $21.8 million by SemGroup, according to the bankruptcy filing.

In a July 22 letter, SemGroup's acting chief executive, Terry Ronan, told suppliers that they might be eligible to be paid existing bills if they continue to do business with the company. "If your supplier protection agreement is accepted by SemGroup, you will receive payment, in full, in cash or kind of your pre-bankruptcy claim," the letter says.

Companies that are due payment for goods and services provided to SemGroup before the filing must agree by Sunday to provide goods or services to SemGroup through Jan. 31, according to a copy of the letter reviewed by Dow Jones.

Not everyone sees SemGroup's collapse as a disruptive force in the market. Numerous pipelines cut through Texas and Oklahoma, and Cushing storage is only at half capacity. If SemGroup vanishes for good, the physical market will simply rearrange itself around other companies' assets, one trader said.

In other commodity markets:

GOLD: Prices on the Comex division of the Nymex recovered from early weakness as traders bought futures to cover previously sold positions ahead of the weekend. Stronger-than-expected durable-goods and housing data, which pressured gold early in the session, still revealed a serious credit crisis, one analyst said. Nearby July gold added $4.60 to settle at $926.60 a troy ounce, while most-active August rose $4.50 to $926.80.

COCOA: Prices rose as the market took some direction from other commodity markets and as traders bought futures to cancel previous sales. September cocoa on the ICE Futures U.S. exchange added $69 to settle at $2,813 a metric ton.

Title: Sem Group meltdown
Post by: inteller on July 26, 2008, 10:07:46 PM
Kivisto needs to go to jail.  If any bloke off the street operated with such negligence they would be in the slammer.  Go find this guy and revoke his passport until we figure out just how much damage this donkey has done.
Title: Sem Group meltdown
Post by: OUGrad05 on July 27, 2008, 11:49:26 AM
quote:
Originally posted by inteller

Kivisto needs to go to jail.  If any bloke off the street operated with such negligence they would be in the slammer.  Go find this guy and revoke his passport until we figure out just how much damage this donkey has done.

Very true.
Title: Sem Group meltdown
Post by: Double A on July 28, 2008, 08:53:47 PM
quote:
Originally posted by waterboy

Urby fill in the details? The same Urby who just named TeeKay as their Absolute Best Business Leader of 2008? I doubt they'll do much or Tulsa People either. Their readers have very little to do with those awards. They depend on advertising dollars spent and social climbing potential for the publishers which means his award was for being a friend or potential friend of the publishers.

There is no investigative press in Tulsa. Too expensive and every story creates a new enemy from the "oligarchy". This story will unfurl on blogs, this forum and perhaps from outside publications.





There used to be when G.W. Shulz was around.
Title: Sem Group meltdown
Post by: cannon_fodder on July 29, 2008, 09:13:01 AM
quote:
Originally posted by inteller

Kivisto needs to go to jail.  If any bloke off the street operated with such negligence they would be in the slammer.  Go find this guy and revoke his passport until we figure out just how much damage this donkey has done.



Again, what do you know that no one else does?

Operating a company negligently, even with reckless disregard is not criminal.  In fact, if he wanted to take all his assets in SemGroup and have them burned... he is free to do so.  In his position as CEO he was free to essentially gamble the assets as he saw fit.

He did, he lost, then he got fired.  Now he will be sued repeatedly.  If there is fraud involved he will be prosecuted.  But if he just ran a business poorly he will face civil suits and nothing more.

Either let me know what crime was committed or stop with the accusations and demands for him to be "locked up."  I'm not sure you realize that running a company poorly is not a crime.  If you know this, let me know what "crime" was committed that you know of that has eluded the rest of the world.
Title: Sem Group meltdown
Post by: Conan71 on July 29, 2008, 09:30:11 AM
^ +1

In order to be close enough to "know" there was criminal wrong-doing, you'd likely be a co-conspirator.

Inteller, do you really want your neighbors assuming you are committing all sorts of heinous crimes and then have them blab on a public forum about it?

Title: Sem Group meltdown
Post by: bokworker on July 29, 2008, 11:15:22 AM
Some more news... that might add some color.

http://www.forbes.com/2008/07/28/semgroup-oil-kivisto-biz-energy-cz_ch_0728semgroup.html?partner=email
Title: Sem Group meltdown
Post by: cannon_fodder on July 29, 2008, 11:52:37 AM
Good find BOK:

I guess SemGroup's trading branch began betting against oil at $100 a barrel.  Ouch.

And a nugget for Inteller:
quote:
It's a violation of securities laws for Kivisto to hide huge undisclosed trading losses while soliciting additional financing for the company. If that's what he did, "He would be as guilty as any of the Enron guys," says Dallas corporate bankruptcy attorney Richard Levy.


Also, it looks more damning for SemGroup per the driving up oil prices game:
quote:
How big must Semgroup's positions have been to rack up $2.5 billion in losses? In the simplest (and purely hypothetical) terms, to lose that much since January, Semgroup would need to have shorted 50 million barrels of crude oil at $100, then lost roughly $50 on each barrel. This is enormous, says Andrew Lipow, a Houston oil trading consultant, noting that such a position would be equal to one-sixth of the entire U.S. crude inventory of 300 million barrels.


Basically, this article says they started on common hedges.  They lost.  They stubbornly tried to make that money back with bigger, and bigger bets until they went belly up.

Sounds like a hot-head at a blackjack table.  

Though, it should be noted, this is another speculative article.  Little real information, but it is Forbes, so I doubt it's just far fetched.
Title: Sem Group meltdown
Post by: Conan71 on July 29, 2008, 12:33:49 PM
"You sound like a couple of bookies to me"

(http://www.dvdbeaver.com/film2/DVDReviews33/a%20trading%20places%20blu-ray/08_TradingPlaces_BD.jpg)
Title: Sem Group meltdown
Post by: FOTD on July 29, 2008, 12:47:01 PM
quote:
Originally posted by cannon_fodder

Good find BOK:

I guess SemGroup's trading branch began betting against oil at $100 a barrel.  Ouch.

And a nugget for Inteller:
quote:
It's a violation of securities laws for Kivisto to hide huge undisclosed trading losses while soliciting additional financing for the company. If that's what he did, "He would be as guilty as any of the Enron guys," says Dallas corporate bankruptcy attorney Richard Levy.


Also, it looks more damning for SemGroup per the driving up oil prices game:
quote:
How big must Semgroup's positions have been to rack up $2.5 billion in losses? In the simplest (and purely hypothetical) terms, to lose that much since January, Semgroup would need to have shorted 50 million barrels of crude oil at $100, then lost roughly $50 on each barrel. This is enormous, says Andrew Lipow, a Houston oil trading consultant, noting that such a position would be equal to one-sixth of the entire U.S. crude inventory of 300 million barrels.


Basically, this article says they started on common hedges.  They lost.  They stubbornly tried to make that money back with bigger, and bigger bets until they went belly up.

Sounds like a hot-head at a blackjack table.  

Though, it should be noted, this is another speculative article.  Little real information, but it is Forbes, so I doubt it's just far fetched.



WE HAVE A BINGO!
Title: Sem Group meltdown
Post by: Renaissance on July 29, 2008, 02:34:44 PM
NOW the barrel starts dropping.  

http://www.reuters.com/article/hotStocksNews/idUST14048520080729

They almost made it, if the cash would have lasted.  Just pushed the hedge a little too soon.
Title: Sem Group meltdown
Post by: Breadburner on July 29, 2008, 03:52:47 PM
quote:
Originally posted by Floyd

NOW the barrel starts dropping.  

http://www.reuters.com/article/hotStocksNews/idUST14048520080729

They almost made it, if the cash would have lasted.  Just pushed the hedge a little too soon.



If Grandma would have had a dick she would have been Grandpa......
Title: Sem Group meltdown
Post by: Renaissance on July 29, 2008, 04:25:53 PM
quote:
Originally posted by Breadburner

quote:
Originally posted by Floyd

NOW the barrel starts dropping.  

http://www.reuters.com/article/hotStocksNews/idUST14048520080729

They almost made it, if the cash would have lasted.  Just pushed the hedge a little too soon.



If Grandma would have had a dick she would have been Grandpa......



Yeah yeah--it's all history now.  But the price of oil is inflated right now, and conforms to every aspect of a commodity bubble.  Semgroup's analysts recognized this, but they bet too big too soon.
Title: Sem Group meltdown
Post by: FOTD on July 29, 2008, 05:11:43 PM
Ch. 6 report with Mike Terry confirms what the devil feared.....worst disaster in State Economy since Penn Square Bank.

Now, that's bad bad bad to hear.
Title: Sem Group meltdown
Post by: bokworker on July 29, 2008, 05:15:39 PM
quote:
Originally posted by Floyd

quote:
Originally posted by Breadburner

quote:
Originally posted by Floyd

NOW the barrel starts dropping.  

http://www.reuters.com/article/hotStocksNews/idUST14048520080729

They almost made it, if the cash would have lasted.  Just pushed the hedge a little too soon.



If Grandma would have had a dick she would have been Grandpa......



Yeah yeah--it's all history now.  But the price of oil is inflated right now, and conforms to every aspect of a commodity bubble.  Semgroup's analysts recognized this, but they bet too big too soon.



As a wise investor once told me... "the market can remain irrational longer than you can remain solvent"...
Title: Sem Group meltdown
Post by: inteller on July 29, 2008, 06:41:54 PM
quote:
Originally posted by bokworker

quote:
Originally posted by Floyd

quote:
Originally posted by Breadburner

quote:
Originally posted by Floyd

NOW the barrel starts dropping.  

http://www.reuters.com/article/hotStocksNews/idUST14048520080729

They almost made it, if the cash would have lasted.  Just pushed the hedge a little too soon.



If Grandma would have had a dick she would have been Grandpa......



Yeah yeah--it's all history now.  But the price of oil is inflated right now, and conforms to every aspect of a commodity bubble.  Semgroup's analysts recognized this, but they bet too big too soon.



As a wise investor once told me... "the market can remain irrational longer than you can remain solvent"...



which means that companies can ruin other companies by keeping the prices inflated beyond when they were "supposed" to go down....and thus the bet is lost and the company folds.
Title: Sem Group meltdown
Post by: Renaissance on July 29, 2008, 06:44:32 PM
If you know of an entity besides OPEC who can keep the price of a barrel of oil inflated, let me know.
Title: Sem Group meltdown
Post by: moonovrmia on July 29, 2008, 07:50:50 PM
quote:
Originally posted by Floyd

If you know of an entity besides OPEC who can keep the price of a barrel of oil inflated, let me know.



Lets see? Wall Street Speculators, Hedge funds at Goldman Sach, Louis Dreyfuss (who owns TransMontaigne which is a fuel supplier), Merril Lynch and how many billion dollar loses has the latter shown? And I bet its not all subprime mortgages either. And the kick is, the new CFO who is now acting CEO of Semgroup came from Merril Lynch this past March.. I would run.. they will implode and take many unfortunate business's with them is my prediction.. Unless the OPEC markets are controlling the future trades.. they only thing they control is the product being manipulated on the NYMEX, London and Singapore exchanges by speculators. Its all paper trades....
Title: Sem Group meltdown
Post by: OUGrad05 on July 29, 2008, 08:01:30 PM
quote:
Originally posted by cannon_fodder

quote:
Originally posted by inteller

Kivisto needs to go to jail.  If any bloke off the street operated with such negligence they would be in the slammer.  Go find this guy and revoke his passport until we figure out just how much damage this donkey has done.



Again, what do you know that no one else does?

Operating a company negligently, even with reckless disregard is not criminal.  In fact, if he wanted to take all his assets in SemGroup and have them burned... he is free to do so.  In his position as CEO he was free to essentially gamble the assets as he saw fit.

He did, he lost, then he got fired.  Now he will be sued repeatedly.  If there is fraud involved he will be prosecuted.  But if he just ran a business poorly he will face civil suits and nothing more.

Either let me know what crime was committed or stop with the accusations and demands for him to be "locked up."  I'm not sure you realize that running a company poorly is not a crime.  If you know this, let me know what "crime" was committed that you know of that has eluded the rest of the world.



Generally I would agree with you, but keep in mind a portion of this company (a subsidiary) was public, furthermore the SEC forbids companies from engaging in speculation on the futures markets, only "hedging" traditionally its pretty tough to tell the difference, however, from what I've read of this case it seems to be fairly clear.  But then again we could easily be missing a big chunk of the story since we only get what the media prints/braodcasts.
Title: Sem Group meltdown
Post by: inteller on July 29, 2008, 08:53:55 PM
before we go any further let me just say that hedging can be used for good.  Just look at Southwest.  They are where they are today because of properly hedging fuel to keep the price they pay steady.  What Kvisto did was like a mad granny at the casino....instead of quitting while he was a little behind, he just kept pulling the one arm bandit until it was all gone.

On a positive note I have heard that many of the bright employees there already have several offers so it looks like Tulsa stepped up to the plate to keep good people here.


But Kivisto needs to start practicing the ankle grab. (and he better not pull a Ken Lay)
Title: Sem Group meltdown
Post by: Breadburner on July 29, 2008, 09:19:25 PM
Lol...This doesn't even come close to the Penn Square deal.....BOK..Mid-First and F&M...All get to take a bite of a big $hit sandwich.....Arvest is in the clear....
Title: Sem Group meltdown
Post by: FOTD on July 29, 2008, 09:26:43 PM
Your punch drunk sucker punch missed BB......[:P]

It's dominoes......
Title: Sem Group meltdown
Post by: inteller on July 29, 2008, 09:59:08 PM
quote:
Originally posted by Breadburner

Lol...This doesn't even come close to the Penn Square deal.....BOK..Mid-First and F&M...All get to take a bite of a big $hit sandwich.....Arvest is in the clear....



oh F&M gets to take a dive?  Great!  After what they did at 71st/Harvard, I hope they get everything that is coming to them.
Title: Sem Group meltdown
Post by: FOTD on July 29, 2008, 10:14:32 PM
quote:
Originally posted by inteller

quote:
Originally posted by Breadburner

Lol...This doesn't even come close to the Penn Square deal.....BOK..Mid-First and F&M...All get to take a bite of a big $hit sandwich.....Arvest is in the clear....



oh F&M gets to take a dive?  Great!  After what they did at 71st/Harvard, I hope they get everything that is coming to them.



Their in house piss ant legal team is in dnova their heads......gawd knows how many pardners borrowed on the c*m.
Title: Sem Group meltdown
Post by: Conan71 on July 29, 2008, 11:00:20 PM
quote:
Originally posted by FOTD

Ch. 6 report with Mike Terry confirms what the devil feared.....worst disaster in State Economy since Penn Square Bank.

Now, that's bad bad bad to hear.




One stark difference was the whole oil industry in Oklahoma took a beating around the Penn Square debacle, along with a bunch of smaller rural and urban S & L's hitting the toilet.

SEM's fee-based operations like transportation, mid-stream services, and storage are still viable, will still make income from customers, will still have to spend money in the state economy, and will still require workers to operate them.  Should SEM not be able to operate them, they will sell and sell quickly as they have some assets which are incredibly important to the nations oil infrastructure.

Sounds like channel 6 is pumping sensational bull****.  Since I'm assuming you lived through that, I can't believe you are buying what Mike Terry was selling.  Please do offer what all was said and sources.

It's like saying the economy is just like the Great Depression.  Sounds great coming out of a politician's mouth to some, but to others, it totally ignores historical fact and perspective.
Title: Sem Group meltdown
Post by: FOTD on July 29, 2008, 11:05:15 PM
Worst financial disaster SINCE Penn Square does not mean on the same scale. But lots of mullah missing does not trickle down.

OK?
Title: Sem Group meltdown
Post by: JeffreyRS on July 30, 2008, 01:07:54 PM
Hi everyone,

I've been watching this topic since the SemGate story broke.  Currently I'm an intern working for SemGroup and we're alledgedly getting laid off today.  The SemMaterials (asphalt division) president was "replaced" today--fired--and he was the person who was responsible for keeping the interns around for so long already.

Interesting fact to know.
Title: Sem Group meltdown
Post by: cannon_fodder on July 30, 2008, 02:43:06 PM
Thanks.  I appreciate insider incite and your disclaimer of "allegedly."  I'm sorry to see you in the position of being laid off, but you're a notch above people that made a career move to be at SemGroup so stick with it!
Title: Sem Group meltdown
Post by: Breadburner on July 30, 2008, 03:01:03 PM
quote:
Originally posted by JeffreyRS

Hi everyone,

I've been watching this topic since the SemGate story broke.  Currently I'm an intern working for SemGroup and we're alledgedly getting laid off today.  The SemMaterials (asphalt division) president was "replaced" today--fired--and he was the person who was responsible for keeping the interns around for so long already.

Interesting fact to know.



Wow..I heard the asphalt div was in good shape...
Title: Sem Group meltdown
Post by: Conan71 on July 30, 2008, 03:05:44 PM
quote:
Originally posted by Breadburner

quote:
Originally posted by JeffreyRS

Hi everyone,

I've been watching this topic since the SemGate story broke.  Currently I'm an intern working for SemGroup and we're alledgedly getting laid off today.  The SemMaterials (asphalt division) president was "replaced" today--fired--and he was the person who was responsible for keeping the interns around for so long already.

Interesting fact to know.



Wow..I heard the asphalt div was in good shape...



Ditto.  Starting to wonder if our bills to the asphalt div are going to get paid or not....gulp.


Title: Sem Group meltdown
Post by: FOTD on July 30, 2008, 03:09:00 PM
Wise up. SemGroup is Dnova....nada left after 12/31/08....

SemGate....that's good.

Title: Sem Group meltdown
Post by: cannon_fodder on July 30, 2008, 04:51:03 PM
I prefer SemRon as it is a corporate and not a political scandal.
Title: Sem Group meltdown
Post by: Rex on July 31, 2008, 01:01:47 AM

quote:
 But lots of mullah missing does not trickle down.


That is moola....the mullahs are the guys who issue fatwas to the jihadists.
Title: Sem Group meltdown
Post by: FOTD on July 31, 2008, 09:31:55 AM
A visual pun.....sorta like Semron.

Or SemRan as the case may be.....
Title: Sem Group meltdown
Post by: Jitter Free on August 03, 2008, 03:28:49 PM
I am a financial adviser and I had one of my clients tell me that she was meeting with Mike Neal's the President of the Tulsa Chamber a day or two before the SemGroup story broke.  She said that in the middle of the meeting Mike took a call from Chet Caddeaux and in that phone call Chet told Mike about the SemGroup situation.  Mike's initial response was "we can't let the media get a hold of this yet--they will kill us."

I don't know what this adds to anything other than to show a number of non-inside people knew about the SemGroup meltdown before the story broke.
Title: Sem Group meltdown
Post by: Conan71 on August 03, 2008, 03:30:46 PM
quote:
Originally posted by Jitter Free

I am a financial adviser and I had one of my clients tell me that she was meeting with Mike Neal's the President of the Tulsa Chamber a day or two before the SemGroup story broke.  She said that in the middle of the meeting Mike took a call from Chet Caddeaux and in that phone call Chet told Mike about the SemGroup situation.  Mike's initial response was "we can't let the media get a hold of this yet--they will kill us."

I don't know what this adds to anything other than to show a number of non-inside people knew about the SemGroup meltdown before the story broke.



Why would Chet have known anything about it?

Title: Sem Group meltdown
Post by: FOTD on August 03, 2008, 03:31:37 PM
FB....FOTD will leave it to you to explain the hierarchy in Tee Town to jitter free.

Maybe Fraidy Bear could draw us a pic.
Title: Sem Group meltdown
Post by: Jitter Free on August 03, 2008, 03:34:38 PM
This has been a number of months ago if not a year  or more ago.  Another one of my clients said that he had been invited by Greg Wallace the CFO of SemGroup to fly down to somewhere in the Carribean on SemGroup's jet for basically a free vacation on SemGroup.  My client had no working relationship with SemGroup other than being a friend of the CFO.  He went and said it was a huge jet and that a number of F&M Bank people and the Rib Crib founder went as well.  All at the expense of SemGroup.  Again I don't know what this shows other than the money was free flowing.
Title: Sem Group meltdown
Post by: FOTD on August 03, 2008, 03:39:48 PM
quote:
Originally posted by Jitter Free

This has been a number of months ago if not a year  or more ago.  Another one of my clients said that he had been invited by Greg Wallace the CFO of SemGroup to fly down to somewhere in the Carribean on SemGroup's jet for basically a free vacation on SemGroup.  My client had no working relationship with SemGroup other than being a friend of the CFO.  He went and said it was a huge jet and that a number of F&M Bank people and the Rib Crib founder went as well.  All at the expense of SemGroup.  Again I don't know what this shows other than the money was free flowing.



NOW THAT'S NEWS!

Two Bentley's....a his and her's they say.

Yep. Let's see what happens with some of these allegations.

Articles in this mornings paper were muted for sure by a headline print size and the following lack luster stories.

Where's the real stuff TW? It will appear in a new book titled "The Smartest Guys In the Room II".
Title: Sem Group meltdown
Post by: Jitter Free on August 03, 2008, 03:47:32 PM
FOTD I'm not looking at the paper right now but one of the things I thought was interesting in the article was a quote from an unnamed SemGroup employee that said something like "the decision were made at the top but not by the one getting all of the media attention."  Again this is just paraphrasing from my recollection of the article.  It will be interesting if anything comes of this statement or if this was just some SemGroup employee talking to be talking.
Title: Sem Group meltdown
Post by: FOTD on August 03, 2008, 03:59:39 PM
Where ever, it will not be further explained by the local tabloid. And with sources such as shopping center owners and ex politicians the World's really getting to the bottom. Bottom of the barrel for sources not bottom of the facts.

But look for the more surly stuff in The Murdock Street Journal....

How long's the grand jury go on for? FOTD imagines any rumor would be investigative material for wrong doings.

It's all demonesque of Enron. Tee Kay rhymes with Ken Lay and it ain't ova 'til the lady sez Dnova.....
Title: Sem Group meltdown
Post by: MacGyver on August 05, 2008, 10:32:27 PM
Any royalty owners out there who haven't received their check from SemCrude subsidiaries?

Apparently the checks for last month didn't go out.

Not a good sign for re-organization.

M
Title: Re: Sem Group meltdown
Post by: FOTD on April 16, 2009, 02:22:52 PM
XTRA XTRA...READ ALL ABOUT IT!

http://www.tulsaworld.com/webextra/content/items/SemGroupExaminerReport.pdf


Takes a while to digest......do they have wifi in D'Nova?
Title: Re: Sem Group meltdown
Post by: cannon_fodder on April 16, 2009, 03:08:36 PM
QuoteThree of the Debtors' former principals (former Chief Executive Officer Thomas L.
Kivisto ("Kivisto"), former Chief Financial Officer Gregory C. Wallace ("Wallace"), and former
Treasurer Brent Cooper ("Cooper") refused the Examiner's requests for interviews. They also
each invoked their Fifth Amendment privilege against self-incrimination during the Examiner's
subsequent depositions of them.

Ouch.  It can't be construed as a negative in a criminal case, but it can in a civil case.  Never looks good when someone takes the 5th in relation to a business transaction.  Few reason to do so unless they could at very least be construed as criminal.

The short version:

QuoteF. The Examiner's Conclusions
1. Kivisto engaged in a complex trading strategy that introduced increased risk to
SemGroup at the time of an unprecedented rise in the price of oil. There were aspects of
Kivisto's trading strategy that made it speculative and which ultimately led to the filing of the
Debtors' bankruptcy petitions. Kivisto engaged in mismanagement in this regard.
2. Kivisto tightly controlled SemGroup's trading strategy. He was responsible for
hiring Coen and Oven, and he recruited Shimonov, to assist him in implementing his options
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ny-865047
trading strategy, knowing that they had little or no prior commodity options trading experience,
but could be trusted to do what he directed. Similarly, Allen was chosen as Risk Director
although he had no prior risk management experience. Kivisto engaged in mismanagement in
this regard.
3. Wallace, Kivisto and Cooper failed to integrate properly the commodities trading
function into SemGroup's financial controls, which subjected SemGroup to additional risk.
They engaged in mismanagement in this regard.
4. As SemGroup's founders and business leaders from 2000 to 2008, Foxx, Wallace
and Kivisto failed to develop a suitable risk management policy or to integrate one into
SemGroup's business controls. Further, they failed to comply with the RMP that did exist. They
engaged in mismanagement in this regard.
5. At various points in time, members of SemGroup's senior management team
(Kivisto, Wallace, Cooper and Mr. Alex Stallings ("Stallings")) were aware that Kivisto was
using SemGroup's funds and resources to engage in options trading activity on his own behalf
(through Westback), and that such activity had the potential to expose, and did expose,
SemGroup to increased risk, yet they failed to stop it. They engaged in mismanagement in this
regard.
6. Kivisto, Wallace and Cooper engaged in mismanagement and misconduct by
allowing Kivisto to engage in physical commodity trades for SemGroup through Westback, for
which Kivisto received additional compensation from SemGroup for activity that was within his
normal scope of duties.
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7. Kivisto engaged in misconduct by concealing or attempting to conceal the full
nature and extent of Westback's relationship with SemGroup from SemGroup's MC and others.
8. Kivisto engaged in mismanagement and misconduct by using SemGroup's
resources and its personnel to further his personal, business and financial interests, including
Westback, Gallery KH, KN Art Gallery and D'Novo Lean Gourmet.
9. Cooper, and perhaps other SemGroup personnel, engaged in mismanagement and
misconduct, by: (A) incorrectly categorizing SemGroup's commodities trading positions in the
MtM and Position Reports submitted to SemGroup's lenders, which made the position reports
for each affected category incorrect; (B) falsely claiming in MtM and Position Reports that
SemGroup personnel had operated within the guidelines of SemGroup's RMP, when, in fact,
SemGroup was in violation of its trading limits and its bank covenants on numerous occasions
during the reporting periods; (C) submitting data in MtM and Position Reports which did not
match the data contained in SemGroup's internal Summary Position and MtM spreadsheets; and
(D) submitting at least one false "Borrowing Base Report" on July 11, 2008, which showed that
SemGroup had in excess of $72 million of credit available as of July 7, 2008.
10. Kivisto engaged in misconduct and mismanagement, by engaging in, or causing
others to engage in: (A) "naked options" transactions; and (B) transactions for his personal
benefit, through Westback, an entity he owned and controlled (an "Affiliate," as defined in
SemGroup's Pre-Petition Credit Agreement, defined below), all in violation of SemGroup's
banking covenants.
11. Kivisto engaged in mismanagement by placing, or causing to be placed, the
results of his options trading strategy on the books of other SemGroup business units, including
17
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SemGas, SemFuel, SemMaterials, SemEuro and SemStream, thereby subjecting these entities to
increased risk.
12. Kivisto and Wallace engaged in misconduct and mismanagement by approving
the semi-annual bonuses paid to themselves and other executives without MC approval, and by
personally benefiting from their own decisions in this regard, in violation of their employment
agreements.
13. Kivisto, Wallace and Cooper provided inaccurate and misleading information to
members of SemGroup's MC that SemGroup's trading activity was supported by its physical
inventory.
14. Kivisto, Wallace and Cooper provided false and misleading information to Bank
of Oklahoma ("BOK") representatives during their meetings and conversations with them about
SemGroup's trading-related activities.
15. Wallace provided false and misleading information to representatives of J. Aron,
by claiming that SemGroup's liquidity issues were exaggerated, and that it did not have similar
trading exposure with other brokers.
16. Kivisto had a conflict of interest by authorizing substantial bonus payments to
Oven (approximately $1.5 million in 2007), a trader he hired with no previous trading experience
to assist him in implementing his trading strategy, and someone with whom he had a close
personal relationship.
17. Kivisto and Wallace breached the terms of their employment agreements by
accepting semi-annual bonuses for themselves that had not been approved by the MC.
18
ny-865047
18. Kivisto, Wallace and Foxx had a conflict of interest by permitting Ms. Anna
Hollinger ("Hollinger"), their outside business partner and a person with whom Kivisto had a
close personal relationship, to engage in, and to reap the benefits of, a business relationship with
SemGroup. They did so without notifying SemGroup's MC of their ownership interest in the
vendor company, or of Kivisto's personal relationship with their co-owner, Hollinger.
G. Potential Causes of Action
The Debtors' estates have potential claims or causes of action including, without
limitation, the following: [fraud, conversion, negligent mismanagement, and on and on]


I recommend reading the summary . . . first 30 pages or so.  Explanatory and damning.
Title: Re: Sem Group meltdown
Post by: cannon_fodder on April 16, 2009, 03:16:21 PM
Man, I'm sorry to spam with quips from this article but . . .

The basic philosophy was that oil would return to a normal range of $40-70 a barrel eventually.  To facilitate that bets were placed putting oil in this range.  If the bet looked like it would time-out and lose, the bet was rolled forward and more money was risked.   From 2000-2006 the bets usually paid off.  If they didn't, the subsequent cover bets (option trading, mind you) did.   The report summarizes it fantastically by analogizing system gambling:

QuoteAn analogy of sorts can be drawn, for illustrative purposes, between Kivisto's options
trading strategy and a game of chance. When playing roulette, an individual can bet on "red" or
"black." If an individual placed a bet on "black" and lost, that person could stop playing the
game or place another bet and play again. If the person stopped playing the game at that point,
he or she would realize a loss. If the person played again, the loss could be "rolled forward," by
placing another bet. However, additional money would be required to place the bet. If the
person continued to double the bet until the person won, his or her previous losses would be
eliminated. However, the person would need to continue risking an increasingly large amount of
money on the bets, and could do so only for as long as he or she had sufficient funds to place
additional bets.


SemGroup was like the person in the previous hypothetical who bet on "black." In this
context, "black" represents the belief that the price of oil would decline in the future, while "red"
represents the belief that the price of oil would continue to rise. SemGroup continued to lose by
betting on "black." In other words, "red" was the winning bet in 2007 and 2008 because the
price of oil continued to rise. However, SemGroup continued to place bets. It engaged in an
increasing volume of options trades, in part to obtain additional cash from the premiums it
received from them, with the hope that, eventually, "black" would be the winning bet, and
SemGroup's "rolled forward" trading losses would evaporate.

Report, page 7-8.
Title: Re: Sem Group meltdown
Post by: Conan71 on April 16, 2009, 03:24:18 PM
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. 
Title: Re: Sem Group meltdown
Post by: FOTD on April 16, 2009, 03:28:19 PM
 Exactly, Spartacus.

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

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

Title: Re: Sem Group meltdown
Post by: guido911 on April 16, 2009, 03:30:23 PM
Quote from: Conan71 on April 16, 2009, 03:24:18 PM
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.
Title: Re: Sem Group meltdown
Post by: mjchamplin on April 16, 2009, 03:30:42 PM
Quote from: cannon_fodder on April 16, 2009, 03:16:21 PM
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.
Title: Re: Sem Group meltdown
Post by: cannon_fodder on April 16, 2009, 04:13:25 PM
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 . . .
Title: Re: Sem Group meltdown
Post by: Conan71 on April 16, 2009, 04:20:19 PM
Quote from: cannon_fodder on April 16, 2009, 04:13:25 PM
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.
Title: Re: Sem Group meltdown
Post by: Conan71 on April 16, 2009, 04:22:14 PM
Quote from: guido911 on April 16, 2009, 03:30:23 PM
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.
Title: Re: Sem Group meltdown
Post by: FOTD on April 16, 2009, 04:35:38 PM
Quote from: guido911 on April 16, 2009, 03:30:23 PM
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.....
Title: Re: Sem Group meltdown
Post by: Conan71 on April 16, 2009, 04:38:00 PM
Quote from: FOTD on April 16, 2009, 04:35:38 PM
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.
Title: Re: Sem Group meltdown
Post by: bokworker on April 17, 2009, 09:52:39 AM
Quote from: cannon_fodder on April 16, 2009, 04:13:25 PM
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...
Title: Re: Sem Group meltdown
Post by: cannon_fodder on April 17, 2009, 10:11:17 AM
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.
Title: Re: Sem Group meltdown
Post by: Conan71 on April 17, 2009, 11:28:47 AM
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.

Title: Re: Sem Group meltdown
Post by: FOTD on April 17, 2009, 12:54:07 PM
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?




Title: Re: Sem Group meltdown
Post by: Conan71 on April 17, 2009, 02:03:18 PM
Quote from: FOTD on April 17, 2009, 12:54:07 PM
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:

(http://www.costumeworld.com/images/gambler.jpg)

And another famous degenerate gambler:

(http://www.depressedfan.com/images/pete-rose-jockey.jpg)
Title: Re: Sem Group meltdown
Post by: FOTD on April 17, 2009, 02:16:56 PM
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...
Title: Re: Sem Group meltdown
Post by: Conan71 on April 17, 2009, 02:52:07 PM
Quote from: FOTD on April 17, 2009, 02:16:56 PM
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.
Title: Re: Sem Group meltdown
Post by: Enid on April 19, 2009, 08:52:40 AM
But, what about the romantic scandal?  I want something juicy to read; I need to figure out how to get rich men to invest in my company?  Oh wait, its just a garden store, nothing elegant like Lean Cuisine, I mean Lean Gourmet?!!! ;)
Title: Re: Sem Group meltdown
Post by: Kashmir on April 19, 2009, 04:32:26 PM
Dontcha know it!  It is so very very steamy.  That World article was crazy!
Title: Re: Sem Group meltdown
Post by: FOTD on July 28, 2009, 10:31:28 AM
SemGroup creditors ask to see bank data
They want to examine the bankrupt firm's relationship with BOK.

http://www.tulsaworld.com/business/article.aspx?subjectid=51&articleid=20090728_351_E1_Bankof566651

  "alleged that Kivisto; another SemGroup co-founder, Gregory Wallace; and former SemGroup Treasurer Brent Cooper misled BOK and other creditors about the company's trading practices."

Big orange jumpsuits?