Published: April 20, 2009 02:50 pm      

SemGroup wants to sell Nymex seats

TULSA, Okla. (AP) — A bankrupt oil and gas transportation and storage provider wants to sell its two seats on the New York Mercantile Exchange.

A motion filed Friday on behalf of SemGroup seeks Delaware bankruptcy court approval of the sale at an auction on the Nymex, the world’s largest commodity futures exchange. SemGroup quit trading in crude oil, propane and natural gas on the exchange after its July 22 filing for Chapter 11 protection.

“SemGroup no longer has any economic incentive to retain ownership of the Nymex seats,” the motion reads.

If approved, the sale “constitutes a sound exercise of SemGroup’s business judgment and the best procedure to yield the highest or otherwise best offer for the Nymex seats,” it added. “SemGroup is not engaged in trading operations that require it to maintain its ownership.”

Before that, SemGroup co-founder and then-CEO Tom Kivisto’s trading strategy cost his company close to $3 billion in losses on the futures transactions, according to reports.

Kivisto allegedly held steadfast to a short position on futures options, betting on prices to fall back even as the oil market raced to $147 per barrel last July.

According to a U.S. Examiner’s investigation report released this week, Kivisto is accused of hiding those losses and his personal trading efforts using SemGroup’s funds and methods.

Margin calls on the exchange’s account depleted SemGroup’s cash flow until it could not pay them anymore.

The transfer of the company’s Nymex account to Barclays in mid-July forced SemGroup to recognize a $2.4 billion loss, causing credit defaults, Kivisto’s ouster and the bankruptcy petition, records show.

SemGroup LP’s petition noted the trading losses and at least another $3.5 billion owed to producers, lenders and vendors.

The U.S. Examiner’s report accuses Kivisto, co-founder Gregory Wallace, former SemGroup treasurer Brent Cooper and others of concealing Kivisto’s allegedly unbalanced, speculative trading efforts and misleading creditors and other officials about his private business dealings.

The examiner has no indictment power but aligned his probe with other federal agencies.

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Information from: Tulsa World, http://www.tulsaworld.com