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SemGroup To Contribute SemStream Assets To NGL Energy Partners In Exchange For Cash And Significant Equity Stake

SemGroup ® Corporation (NYSE: SEMG) today announced that it intends to contribute its SemStream ®, L.P. business into NGL Energy Partners LP (NYSE: NGL) in exchange for cash and equity interests. The transaction is expected to enhance SemGroup’s investment in natural gas liquids, create additional opportunities for growth and strengthen SemGroup’s financial profile through increased earnings. The combination is expected to improve the stability of cash flow from this segment due to the fee-based structure of NGL Energy Partners’ business.

The transaction is structured as a contribution of SemStream assets, excluding SemStream Arizona Propane, L.L.C., to NGL Energy Partners in exchange for the following:

  • 8.95 million common units of NGL Energy Partners representing a one third stake in limited partnership (estimated market value $179 million assuming $20 per unit); this includes $25 million attributable to working capital
  • 7.5 percent interest in the General Partner of NGL Energy Partners,
  • cash payment of up to $100,000,000 for working capital that is subject to adjustment
  • SemGroup will have two seats on the board of directors of the general partner of NGL Energy Partners.

“This transaction is the latest in a series of strategic initiatives designed to maximize the value of our assets and enhance our ability to grow the Company,” said Norman Szydlowski, SemGroup President and Chief Executive Officer. “We believe SemStream and NGL have complementary assets and competencies that will create significant operating synergies and growth opportunities. In addition, the transaction will free up debt capacity, enhancing SemGroup’s ability to pursue future growth in its other business units and through potential acquisitions.”

Szydlowski added: “In the past two months we have announced the closing of a new, lower-cost $625 million credit facility, the formation of Rose Rock Midstream, L.P., a master limited partnership to monetize certain assets from our SemCrude division and now the SemStream transaction. These transactions are part of our larger strategic initiative to ensure that we have the right mix of assets and financial strength to participate in what we believe is an exciting and growing opportunity from the resurgent production of oil and natural gas in North America.”

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