Hedger SemGroup LP Files Chapter 11
July 23rd 2008 23:16
SemGroup LP, 12th largest private U.S. company, according to Forbes, filed for Chapter 11 bankruptcy. Quoting from SemGroup's website,
Jesse's Café Américain writes,
SemGroup was forced to take a $2.4 billion loss on July 16 after it transferred its NYMEX trading account to Barclays Plc. The firm had accounted for this position as "loss contingencies," according to its bankruptcy filing in Delaware federal court.
The chart of SemGroup gave a sell signal when it broke its April low of 24.50 on July 8th. It looks like Oil peaked on the covering of the short position.
Hedging is supposed to be fairly risk free. There are some rumors of a failure in the company's business plan.
UPDATE:
The WSJ has more information on what went on that brought down a company that most have never heard of.
SemGroup, L.P., is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam.
Jesse's Café Américain writes,
The Tulsa, Oklahoma-based company racked up the massive losses as oil prices ran up record gains, undercutting short crude futures positions SemGroup bought to hedge against its 500,000 barrel-per-day trading business.
SemGroup was forced to take a $2.4 billion loss on July 16 after it transferred its NYMEX trading account to Barclays Plc. The firm had accounted for this position as "loss contingencies," according to its bankruptcy filing in Delaware federal court.
The chart of SemGroup gave a sell signal when it broke its April low of 24.50 on July 8th. It looks like Oil peaked on the covering of the short position.
Hedging is supposed to be fairly risk free. There are some rumors of a failure in the company's business plan.
UPDATE:
The WSJ has more information on what went on that brought down a company that most have never heard of.
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