Judge Set To Rule On SemGroup Loan

The $250 million loan would keep the oil and gas company afloat as it heads into Chapter 11 bankruptcy.

Thursday, July 31st 2008, 5:22 pm

By: News On 6

SemGroup will have to wait until next week to learn if it will have access to an emergency loan from Bank of America. The $250 million loan would keep the oil and gas company afloat as it heads into Chapter 11 bankruptcy. News On 6 anchor Scott Thompson reports a federal judge in Delaware ordered a new hearing for next Tuesday.

He has to decide whether oil suppliers or Bank of America has first priority over SemGroup's assets. It's just one more step on what is becoming a very bumpy ride.

The wheels of bankruptcy continue to turn at SemGroup. Each day its impact gets deeper and deeper.

"People are just now starting to miss their checks," said Jerry Simmons of the National Association of Royalty Owners.

Simmons represents more than $200,000 mineral rights owners in Oklahoma. Those are the people who own the rights to the oil that SemGroup contracts with to transfer from the ground to the refinery. Some royalty owners get less than $25 a month others get much, much more. But none are getting paid by SemGroup.

"Our average member, she is over 60 and widowed and makes less than $500 a month in royalties," said Simmons.

Analysts across the country are watching SemGroup's money troubles. Kevin Stark is in Connecticut.

"Yeah, it's a pretty big Chapter 11 filing. They have about $3.1 billion in debt, that's got to be one of the biggest one's this year, one of the biggest one's in a long time, frankly," said Kevin Starke of CRT Capital Holdings.

Starke says SemGroup's property is widely valued in the oil and gas industry. He expects, no matter what happens in bankruptcy court, that property will sell and new owners will take over, but adds the future of SemGroup is not good.

"So they will be a pretty active bidding process among investors or competitors. But the entity SemGroup and its affiliates, that's probably going to disappear," said Starke.

As for the royalty owners, Simmons says state law is on their side. If they file a lien within 90 days of missing their first payment, the royalty owner will go to the top of the list of those getting money from SemGroup.

Simmons has made that process easy for royalty owners by providing the information on his website.

07/30/2008 - Management Change At SemGroup