"It fits our long-term plans in the Dallas area," he told the newspaper. "We understand the terminal business very well, but we've never owned any terminals."
Spokesperson Mike Thornbrugh told CSP Daily News, "[image-nocss] There are still a couple of hoops to go through, so nothing is final."
Company officials became interested when SemFuel put its operations on the sale block, Thornbrugh added. He was cautious about the prospect, noting that the deal must clear an auction and court hearing. "This is new for us," he told the paper. "Reliance on your own supply system is a good thing."
Fee-based gasoline storer and transporter Magellan, through its subsidiary Magellan Pipeline Co., would pay $23 million to buy SemFuel's terminal operations in El Dorado, Kan.; Des Moines, Iowa; and storage sites in Glenpool and west Tulsa. Magellan would add 1.3 million barrels worth of refined storage if its bid emerges as the winner, the report said.
The acquisitions are still subject to an auction and court approval, but QuikTrip, Magellan and Combined Locks, Wis.-based U.S. Oil Co. Inc. emerged as stalking horse bidders for three of SemFuel's five assets groups.
A stalking horse bidder is selected by the seller to help set a minimum price for assets and prevent lower offers, and may or may not emerge as the auction winner.
The deadline for other interested bidders is July 27, said the report, with an auction potentially scheduled for August, according to court records.
SemGroup LP filed for Chapter 11 bankruptcy protection in July 2008 after losing at least $2.4 billion in margins on its oil futures positions. The company also owes at least another $2.5 billion to banks and other creditors, according to the report.
SemFuels was SemGroup's primary refined storage, transport and trading wing, records show. The bankruptcy, however, decimated that unit's ability to do business.
"The circumstances leading to the filing of these Chapter 11 cases and restrictions under SemGroup's post-petition financing arrangements have limited SemFuel's current purchasing, marketing and hedging activities," the paper said, citing the bankruptcy motion filed last Friday. "SemFuel's post-petition business has shifted away from marketing and trading-related activities and has primarily consisted of the sale of inventory on hand, terminalling and continued Green Bay operations."
U.S. Oil could buy the terminal operations in Green Bay, Wis.; Bettendorf, Iowa; and Rogers City, Mich., for $14.1 million, according to the court filing cited by the World.
Blackstone Advisors, SemGroup's bankruptcy financial consultants, have been searching for SemFuels buyers since last fall, the report said.
SemFuels still has two asset groups, covering operations in Houston and Bryan, Texas, that are not part of the current bidding deals, said the report. At its pre-bankruptcy apex, the unit could store 1.5 million barrels and move gasoline, diesel fuel and heating oil.
SemGroup filed a reorganization plan last month, but revised its proposal after many oil and gas producers filed objections against the company's disclosure statement. The amended reorganization still calls for SemGroup to emerge as a publicly traded entity offering $2.27 billion in equity and cash by September, if approved by creditors and the court.
Tulsa-based SemGroup is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. It 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, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. The company owns and operates proprietary and common carrier pipelines, terminals, storage tanks, processing plants, underground storage and a transportation fleet.
Magellan, Tulsa, is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The partnership primarily transports, stores and distributes refined petroleum products. It has more than 80 petroleum product terminals and 8,700 miles of pipeline.
QuikTrip, also based in Tulsa, operates more than 500 retail outlets in nine states, as well as QT Kitchen facilities in Tulsa, Kansas City, Phoenix and Atlanta. QuikTrip's revenues surpassed $8 billion in 2007, according to the report.
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