Oil & Gas 01 (May 08 - Jul 08)

[HengHeng]

Typical beh lou jiu ki lor .. anyway i think the arrangement only good til 120. . anything below that .. consumer pattern would think oil price drop start to consume again .. then the cycle goes again.

Anyway recently i think petrol drop 16cent liaoz per litre so i think more should be in the pipeline.

[millionairemind]

Another bet gone wrong..... any1 remembers Amaranth Advisor back in 2006? Another firm that refuses to cut losses short...

Huge oil trading loss sinks energy trader SemGroup
Tue Jul 22, 2008 7:40pm EDT Email | Print | Share| Reprints | Single Page| Recommend (3) [-] Text [+]
By Robert Campbell

NEW YORK (Reuters) - SemGroup LP declared bankruptcy on Tuesday after $3.2 billion in oil trading losses torpedoed the formerly 12th-largest private U.S. company.

The Tulsa-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.

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.

SemGroup took a $2.4 billion loss on July 16 after it transferred its New York Mercantile Exchange oil futures trading account to Barclays Plc, converting what they called "loss contingencies" into an actual loss.

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.

Securities legislation limits publicly traded company executives from extensive dealings with their firms, but experts said privately held companies have more flexibility.

"They can't do anything illegal. But there is no particular disclosure to anyone apart from any contractual agreements that they may have with investors," said Kenneth Froewiss, a professor of finance at New York University.
SemGroup had engaged in regular hedging transactions with BOK Financial Corp, where Kivisto had been a board member since 2006 before resigning on July 16. As of the end of 2007, SemGroup had hedged 21 million barrels of crude oil with BOK, which had a fair value of negative $130 million.

As of the end of March, this position was worth negative $88 million, said BOK spokesman Jesse Boudiette, who declined to comment on BOK's current exposure to SemGroup saying the bank would not speak publicly about individual clients.

Since going public just over a year ago, SemGroup Energy's stock has lost 72 percent of its value, most of that in the past five trading days. The stock closed at $22.69 on July 16, the day before Semgroup Energy disclosed SemGroup LP was having liquidity issues, and ended Tuesday at $8.28.

BIG LOSSES

SemGroup, ranked the No. 12 private U.S. company by Forbes.com in a 2007 article, also took $850 million in losses on July 17 when its over-the-counter hedging program was marked to market. 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.

SemGroup's financial difficulties were disclosed by its publicly traded affiliate SemGroup Energy Partners LP last week, when it warned that a liquidity crisis at its parent could lead to bankruptcy.

SemGroup Energy Partners management said it was confident the partnership could survive despite SemGroup's bankruptcy and would seek new business from third parties. The company's board has also authorized management to consider a sale or merger.

SemGroup Energy Partners also warned it was not ready to say if it would make a cash distribution to unitholders in the second quarter, though its management believes parent SemGroup will continue to use its fee-based assets to maintain operations while in bankruptcy.

[HengHeng]

Well another doubtful debt for Barclays to take over. Well Barclays is really in my bad books. Time to buy it's puts.

[kennynah]

yes lah....

crude inventory down
BUT
distillates are up more....

sui lah !!!

[kennynah]

here we go again.... these militants are losing money on their Long CL futures...

MEND warns of attacks on Nigerian oil pipelines
7/23/2008 12:15 PM ET

(RTTNews) - The Movement for the Emancipation of the Niger Delta (MEND), the main militant group in Nigeria's oil-rich region, has warned of an attack on major oil pipelines in the next 30 days to disprove claims that it received money from the government to stop its campaign.

The head of Nigeria's national oil company told a parliamentary committee that rebels had asked for a $6m monthly fee to protect the country's oil infrastructure. While media reports said the Nigerian National Petroleum Corporation (NNPC) paid millions of dollars to militants, its chief, Abubakar Yar'Adua, denied the reports.

MEND said in a statement that it could not be bought off in its "fight for freedom," unlike some criminal gangs in Delta state that received huge payments as a protection fee.

"To prove that we are not a part of this deal, the Chanomi creek pipeline in Delta state and other major facilities will be destroyed within the next 30 days," the group warned.

Despite being one of Africa's largest oil producing nations, frequent pipeline bombings and other attacks by militants have reduced Nigeria's oil output by at least 25 percent.

[HengHeng]

actually markets are tired of nigeria news and emergence of alternative sources might push oil back below 100 in the next few years and probably in ten years time the dependence on fossil fuels might be as long as when we converted from coal to crude..

[winston]

It's Good to Know: Smart Pigs

The word "pig" doesn't always refer to barnyard animals or chauvinistic people. It's also the term for devices that help keep gas and oil pipelines in tip-top shape. These pigs (pipeline inspection gauges) check out the condition of pipeline walls, clean the insides of pipelines, and record data about the pipelines (including size and position) for engineers to analyze.

According to the Pigging Products & Services Association, the devices range from utility pigs (which clean and seal pipelines) to geometry pigs (which record wrinkles, bends, and dents). And so-called "smart pigs" provide even more information about the pipe and its contents, and detect corrosion, leaks, and cracks.

[blid2def]

Source: http://www.bloomberg.com/apps/news?pid= ... 3KfJ0v2akE

Excerpt:

Congress Pursues $80 Oil With Trading Limits, Disclosure Rules

By Daniel Whitten

July 23 (Bloomberg) -- Congress may outlaw elements of oil futures trading that lawmakers found distorted demand and contributed to the 69 percent surge in prices in the past year.

U.S. legislators are considering limits on the number of oil contracts an investor can hold and may increase disclosure requirements. Speculators such as Goldman Sachs Group Inc. use the practices to bet on price swings, which may drive up prices, though they have no intention of taking delivery of underlying goods, lawmakers say.

Proposals being debated this week in the Senate would bring prices more in line with demand, proponents say. Excluding the effect of speculation, oil would be around $80 a barrel, 38 percent lower than yesterday's price, according to Jesus Reyes Heroles, the chief executive officer of Petroleos Mexicanos. Critics say restrictions may interfere with the functioning of a $4 trillion annual market for crude oil.

Visit the link for the full article.

[iam802]

Interesting. Just TOL.

1. Can speculators like Goldman Sachs etc trade in other markets and on other platforms?

Eg. in UK through ICE...(are these link?.. so complicated)

2. Can they trade other derivatives or products that will indirectly still drive up oil price?

eg. freight (if freight charges goes up, I assume it will have some impact on oil)

[kennynah]

maybe asian traders havent read this report...becos CL is still up 4 cents as of now.