Hiland Receives $12.1 Million Payment for Assumed Contract in SemCrude, L.P. Bankruptcy Proceeding
ENID, Okla., Oct. 23 /PRNewswire-FirstCall/ — Hiland Holdings GP, LP and Hiland Partners, LP (the “Partnership”) today updated the status of the Partnership’s credit exposure to certain affiliates of SemGroup, L.P. that purchase natural gas liquids and condensate from the Partnership, primarily at its Bakken and Badlands plants and gathering systems. On July 22, 2008, SemGroup, L.P. and certain subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On August 7, 2008, the Partnership announced the establishment of an allowance for doubtful accounts and bad debt expense of $8.1 million related to product sales to SemGroup during June 2008. The Partnership also announced additional potential exposure estimates of approximately $5.0 million with SemGroup for uninvoiced product sales from July 1 through July 18, 2008.
On October 20, 2008, the United States Bankruptcy Court for the District of Delaware entered an order approving the assumption of a Natural Gas Liquids Marketing Agreement (the “Agreement”) between the Partnership and SemStream, L.P., an affiliate of SemGroup, L.P., relating to the sale of natural gas liquids and condensate at the Partnership’s Bakken and Badlands plants and gathering systems. As a result of the assumption, and in accordance with the order, on October 21, 2008, SemStream paid $12.1 million to the Partnership, representing amounts owed to the Partnership from SemStream for June and July 2008 product sales under the Agreement. The assumption of the Agreement restores the Partnership and SemStream, L.P. to their pre-bankruptcy contractual relationship.
The Partnership’s third quarter results of operations will reflect a reversal of $7.9 million of the $8.1 million allowance for doubtful accounts and bad debt expense previously recorded on the Partnership’s income statement in the second quarter of 2008. After receipt of the October 21 payment, the Partnership’s total pre-petition credit exposure to SemGroup, related to condensate sales to SemCrude, LLC, and outside of the Agreement, is approximately $0.3 million.
About the Hiland Companies
Hiland Partners, LP is a publicly traded midstream energy partnership engaged in purchasing, gathering, compressing, dehydrating, treating, processing and marketing natural gas, and fractionating, or separating, and marketing of natural gas liquids, or NGLs. The Partnership also provides air compression and water injection services for use in oil and gas secondary recovery operations. The Partnership’s operations are primarily located in the Mid-Continent and Rocky Mountain regions of the United States. Hiland Partners, LP’s midstream assets consist of fourteen natural gas gathering systems with approximately 2,079 miles of gathering pipelines, five natural gas processing plants, seven natural gas treating facilities and three NGL fractionation facilities. The Partnership’s compression assets consist of two air compression facilities and a water injection plant.
Hiland Holdings GP, LP owns the two percent general partner interest, 2,321,471 common units and 3,060,000 subordinated units in Hiland Partners, LP, and the incentive distribution rights of Hiland Partners, LP.
This press release may include certain statements concerning expectations for the future that are forward-looking statements. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnership’s Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.
The information contained in this press release is available on the Partnership’s website at http://www.hilandpartners.com/.
Hiland Partners, LP; Hiland Holdings GP
CONTACT: Derek Gipson, Director – Business Development and InvestorRelations of Hiland Partners, LP, +1-580-242-6040
Web site: http://www.hilandpartners.com/