A settlement between SemGroup LP and its nonbankrupt subsidiary,
SemGroup Energy Partners LP, a master limited partnership, will provide
the latter with a temporary lifeline, but not much more.
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Approved by Judge Brendan Linehan Shannon of the U.S. Bankruptcy
Court for the District of Delaware on Tuesday, the settlement directs
SemGroup LP to pay some $3.1 million in utility costs on shared
properties and guarantees the company's cash-strapped subsidiary a $4.9
million line of credit.
But SEP's situation is dire, and the
company will certainly need more capital to ensure its long-term
viability. The unit missed an Aug. 14 deadline to file its
second-quarter earnings report and disclosed at the time that roughly
82% of its revenue comes from services it provides SemGroup.
SEP
said in mid-August that its parent's bankruptcy raises "substantial
doubt about the partnership's ability to continue as a going concern"
and has yet to announce a partnership that would replace the revenue
lost amid SemGroup's bankruptcy.
Shannon's order shows that the
parties can review the agreement in November. But considering the
untenable situation of its parent, SEP would be better served by trying
to replace SemGroup's business. - John Blakeley
