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Kansas producers should get money soon from SemGroup settlement

For Kansas producers, the 15-month saga of the SemGroup bankruptcy has come to an end.

A federal judge in Delaware has signed off on the Tulsa-based oil and gas trader's reorganization plan. Checks should soon be in the mail.

Kansas producers will average less than 50 cents on the dollar for their claims totaling more than $130 million, but they are receiving more than was expected at one point, when it appeared SemGroup would be liquidated.

The majority of the proceeds are expected to be disbursed by the end of the year, Rick Griffin, the Wichita attorney heavily involved in representing the state's producers, said Tuesday.

"It remains a very good deal for Kansas producers in that we can get money in the hands of these independent oil and gas producers this year," he said.

Producers from eight states had claims totaling more than $430 million. The plan will pay them $172.5 million with the most of that going to producers from Kansas, Oklahoma and Texas.

In a hearing that lasted 10 hours before ending late Monday night, U.S. Bankruptcy Judge Brendan Shannon approved the fourth and final reorganization plan.

SemGroup filed its $9.5 billion bankruptcy July 22, 2008, leaving producers unpaid for oil or gas delivered to SemGroup and its subsidiaries.

"It's unfortunate that this bankruptcy had to occur," said Ed Cross, president of Kansas Independent Oil and Gas Association. "But what the producers will receive is better than nothing."

Griffin said the plan was confirmed "without any significant changes" by the court from the one that was hammered out after nearly 24 hours of mediated discussions last month.

Under the agreement, claims are broken down into two categories:

* Twenty-day claims for oil and gas sold between July 2, 2008, and July 22, 2008, to SemGroup will receive 100 percent of their claims, totaling $125.5 million.

* The remaining $47 million, minus a deduction going to pay some litigation fees, will be paid on claims filed for oil and gas sold to SemGroup between June 1, 2008 and July 1, 2008. That works out to 14 cents on the dollar.

What percentage each producer receives depends on how much the producer has in claims in the two categories. Griffin estimated the average amount for Kansas producers would total 40 to 45 percent of the $130 million _ or $52 million to $58.5 million.

The court's approval also allows SemGroup to emerge from Chapter 11 bankruptcy as early as next month and become a public company. The new company wouldn't be listed on the stock exchange until 2010, according to reports.

The plan is reportedly worth about $2.45 billion to creditors and would leave SemGroup majority-owned by its lenders.

Shannon said in court the plan had "overwhelming" creditor support.

Tom Kivisto, the former SemGroup CEO, had opposed the plan. In an objection filed with the court, he said the plan would affect a lawsuit filed against him by SemGroup.

That suit alleges misconduct by Kivisto and other former SemGroup executives. The company has acknowledged taking at least $2.4 billion in margin losses from risky and secretive oil futures trading led by Kivisto.

The U.S. Securities and Exchange Commission is investigating SemGroup's collapse.

Veteran energy executive Norm Szydlowski, who helped rebuild Iraq's oil sector, will take over as SemGroup's CEO after the company emerges from bankruptcy. He is currently serving as a consultant to SemGroup.

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