NEW YORK (Reuters) - SemGroup LP declared bankruptcy on Tuesday after $3.2 billion in oil trading losses torpedoed the formerly 12th-largest private U.S. company.
The Tulsa-based company racked up the massive losses as oil prices ran up record gains, undercutting short crude futures positions SemGroup bought to hedge against its 500,000 barrel-per-day trading business.
To meet obligations, SemGroup plans to sell off oil and natural gas gathering, transportation, and storage assets worth an estimated $6.14 billion that were purchased in a whirlwind of acquisitions since it was founded in 2000. (
Semgroup was, according to Forbes, the 12th largest private company in the U.S. The company overestimated the oil market and it has collapsed unto itself. Unlike what the popular media regularly portrays, sometimes the “speculators” will not be making a mint. They will instead make the wrong moves and they will lose spectacularly. Being an oil trader or a "speculator" does not automatically mean great profits and high returns.
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