Newspaper article THE JOURNAL RECORD

Tulsa-Based SemGroup Reports Loss; Rose Rock Profit Rises

Newspaper article THE JOURNAL RECORD

Tulsa-Based SemGroup Reports Loss; Rose Rock Profit Rises

Article excerpt

Despite seeing higher crude oil volumes, SemGroup Corp. suffered a $113.6 million decrease in revenue from a year ago as the midstream service company reported a $2.8 million loss for the third quarter on Thursday.

Rose Rock Midstream Partners LP, meanwhile, reported that third- quarter profits rose 71 percent to $6.5 million, up from $3.8 million last year.

SemGroup reported a 29-percent drop in third-quarter revenues, down to $277.9 million, compared to $391.1 million for the same period last year.

SemGroup's loss per share was 7 cents in the just-completed quarter, compared to $14.3 million in profits a year ago and earnings per share of 34 cents.

It's the same story all this earnings season: Low natural gas prices are hitting all the energy producers hard. SemGroup is no exception, said Katie Michaels, portfolio manager for Tulsa-based Fredric E. Russell Investment.

"The company is increasing its capital expenditure guidance hoping that spending on infrastructure now will pay off when prices rise in the future," Michaels said.

Third-quarter profits at SemGroup suffered from a $16.4 million expense in non-cash items during the current period, said Norm Szydlowski, SemGroup president and CEO.

SemGroup recognized a non-cash expense of $9.5 million related to a change in the fair value of warrants, Szydlowski said.

Also, the company reported a $6.9 million net loss from equity earnings of NGL Energy Partners LP. The loss was driven by the seasonal aspect of the business as well as one-time charges related to an acquisition that were recorded by NGL in the quarter ending June 30, Szydlowski said.

"The warrants were issued when we restructured and as stock price increases, so do the warrants," Szydlowski said. "As the stock goes up, we report the warrants as an expense."

Despite the hiccup, investors should take comfort that it is a one-time non-recurring item, said M. "Jake" Dollarhide, CEO of Tulsa- based Longbow Asset Management.

"SemGroup suffered a loss for the quarter, but during its history in this, its second run as a publicly traded company, most reports have been solid and dependable," Dollarhide said.

SemGroup filed for Chapter 11 bankruptcy protection in 2008 and re-emerged a little more than a year later. …

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