SemGroup Energy Partners, L.P. Reports Second Quarter 2007 Pre-IPO Financial Results



    TULSA, OKLA., August 15 /CNW/ - SemGroup Energy Partners, L.P. ("the
Partnership") (NASDAQ:   SGLP) today reported Pre-Initial Public Offering (IPO)
results for the second quarter, which included net losses of $12.2 million and
$24.5 million, respectively, for the three and six months ended June 30, 2007.
These financial results reflect the historical results of the Partnership's
predecessor. The Partnership's predecessor did not record any revenue
associated with the gathering, transportation, terminalling and storage
services provided on an intercompany basis, but did recognize the costs of
providing such services.

    On an as-adjusted basis, the Partnership's predecessor's adjusted
earnings before interest, taxes, depreciation and amortization (as-adjusted
EBITDA) was $11.7 million and $23.3 million, respectively, for the three and
six months ended June 30, 2007. These as-adjusted results reflect the revenue
and other adjustments giving effect to the Throughput Agreement and the
Omnibus Agreement entered into with SemGroup, L.P., the Partnership's parent
company, and certain other initial public offering closing transactions.
As-adjusted cash available for distribution was $9.2 million and $18.1 million
for the three and six months ended June 30, 2007, respectively. As-adjusted
EBITDA and as-adjusted cash available for distribution are non-GAAP financial
measures that are defined and reconciled to their most directly comparable
GAAP financial measures later in this press release.

    "It's important to note that the as-adjusted results include the impact
of the Throughput Agreement and the Omnibus Agreement which became effective
on July 20, 2007 - just prior to the close of the IPO on July 23, 2007," Kevin
Foxx, SemGroup Energy Partners president and chief executive officer, said.
"Our as-adjusted results are consistent with our expectations as outlined in
our prospectus and would have been sufficient to allow us to pay the full
minimum quarterly cash distribution on all of the Partnership's outstanding
common and subordinated units for the quarter ended June 30, 2007. We are
appreciative of our unitholders' support in making our IPO successful and look
forward to what the future holds for SGLP."

    As the offering did not close until July 23, 2007, there will be no cash
distribution paid for the quarter ended June 30, 2007. The pro-rata cash
distribution for the quarter ended September 30, 2007 will be based on the
period from the date of the closing of the offering, July 23, 2007, through
September 30, 2007.

    Conference Call

    SemGroup Energy Partners will host a conference call for investors and
analysts on August 16, 2007, at 10 a.m. CDT (11 a.m. EDT) to discuss second
quarter earnings. The conference call can be accessed through the Investors
section of SemGroup Energy Partners' Web site at http://www.SGLP.com or by
telephone at 800-374-0113. The passcode is 12275337. International locations
may dial-in by calling 706-758-9607 and using the same passcode. Please dial
in five to ten minutes prior to the scheduled start time. The audio replay of
this conference call will be available on the Web site until August 30, 2007.

    Use of Non-GAAP Financial Measures

    This press release and accompanying schedules include non-GAAP financial
measures of as-adjusted EBITDA and as-adjusted cash available for
distribution. This press release provides reconciliations of these non-GAAP
financial measures to their most directly comparable financial measure
calculated and presented in accordance with generally accepted accounting
principles in the United States of America ("GAAP"). SemGroup Energy Partners'
non-GAAP financial measures should not be considered as alternatives to GAAP
measures such as net income, operating income, net cash flows provided by
operating activities or any other GAAP measure of liquidity or financial
performance.

    SemGroup Energy Partners defines as-adjusted EBITDA as net income or loss
before interest, income taxes, depreciation, amortization, and including the
effect of execution of the Throughput Agreement and the Omnibus Agreement,
estimated incremental general and administrative expense of being a public
company and incremental incentive compensation expense. As-adjusted cash
available for distribution is defined as as-adjusted EBITDA minus cash
interest expense, maintenance capital expenditures and principal payments on
capital lease obligations, plus capital contributions to fund principal
payments on capital lease obligations.

    As-adjusted EBITDA and as-adjusted cash available for distribution are
presented because the Partnership believes they provide additional information
with respect to the expected performance of the Partnership's fundamental
business as well as its ability to meet our future debt service, capital
expenditures and working capital requirements. The Partnership believes this
information may be helpful to your understanding of its financial results.

    The following table presents a reconciliation of as-adjusted EBITDA and
as-adjusted cash available for distribution to net loss for the periods shown:

    
                                               Three Months   Six Months
                                                   Ended         Ended
                                               June 30, 2007 June 30, 2007
                                               ------------- -------------
                                                       (Unaudited)
                                                     (in thousands)

    Net loss                                       $(12,211)     $(24,495)
    Add:
      Effect of execution of Throughput and
       Omnibus Agreements(1)                         22,510        44,994
      Interest expense                                  516           945
      Depreciation and amortization                   2,187         4,387
                                               ------------- -------------

    Less:
      Incremental general and administrative
       expense of being a public company(2)            (713)       (1,425)
      Incremental incentive compensation
       expense(3)                                      (572)       (1,073)
                                               ------------- -------------

    As-adjusted EBITDA                               11,717        23,333
    Less:
      Cash interest expense(4)                       (1,754)       (3,797)
      Maintenance capital expenditures(5)              (762)       (1,484)
      Principal payments on capital lease
       obligations                                     (499)         (992)
                                               ------------- -------------

    Add:
      Capital contribution to fund principal
       payments on capital lease
       obligations(6)                                   499           992
                                               ------------- -------------
    As-adjusted cash available for
     distribution                                    $9,201       $18,052
                                               ------------- -------------
    

    (1) Reflects revenues pursuant to the terms of the Throughput Agreement.
The Partnership's predecessor has historically been a part of the integrated
operations of SemGroup, L.P., and the predecessor did not record the revenue
associated with the gathering, transportation, terminalling and storage
services provided on an intercompany basis. The predecessor recognized only
the costs associated with providing such services. The adjustment is based on
actual gathering, transportation, terminalling and storage services provided
on an intercompany basis for the period presented at rates specified in the
Throughput Agreement. Also reflects the elimination of operating expenses of
$0.5 million and $1.1 million for the three and six month periods ended June
30, 2007, respectively, related to the costs associated with the clean up of a
crude oil leak that occurred in the quarter ended March 31, 2007 in relation
to a thirty-five mile pipeline located in Conroe, Texas. This gathering line
was sold by SemGroup, L.P. on April 30, 2007, and SemGroup, L.P. has assumed
any future obligations associated with the aforementioned leak. Further
reflects adjustment of historically allocated general and administrative
expenses to give effect to the fixed $5.0 million per year administrative fee
specified in the Omnibus Agreement.

    (2) Reflects an adjustment for an estimated incremental cash expense
associated with being a publicly traded limited partnership, including costs
associated with annual and quarterly reports to unitholders, tax return and
Schedule K-1 preparation and distribution, independent auditor fees, investor
relations activities, registrar and transfer agent fees, incremental director
and officer liability insurance costs and independent director compensation.

    (3) The predecessor's incentive compensation has historically been paid
based on EBITDA. Reflects an adjustment of discretionary incentive
compensation based on EBITDA after giving consideration to adjustments (1) and
(2).

    (4) Reflects the interest expense related to $98.8 million in borrowings
under our new five-year credit facility ($137.5 million initial borrowings
less the repayment of $38.7 million in borrowings with the net proceeds from
the underwriters' full exercise of the over-allotment option) at an interest
rate of 6.65% and the interest expense on capital lease obligations, including
capitalized interest of $0.3 million and $0.6 million for the three and six
months ended June 30, 2007, respectively, and excluding $0.1 million and $0.2
million in amortization of debt issuance costs for the three and six months
ended June 30, 2007, respectively.

    (5) Maintenance capital expenditures are capital expenditures made to
replace partially or fully depreciated assets, to maintain the existing
operating capacity of the Partnership's assets and to extend their useful
lives, or other capital expenditures that are incurred in maintaining existing
system volumes and related cash flows.

    (6) Represents cash provided by SemGroup, L.P. to fund capital lease
obligations.

    About SemGroup Energy Partners, L.P.

    SemGroup Energy Partners (NASDAQ:   SGLP) provides crude oil gathering,
transportation, terminalling and storage services primarily in its core
operating areas in Oklahoma, Kansas and Texas. A subsidiary of SemGroup, L.P.
is the general partner of SemGroup Energy Partners. SemGroup Energy Partners
owns and operates terminalling and storage facilities with approximately 6.7
million barrels of storage capacity, including approximately 4.8 million
barrels of storage capacity located at the Cushing Interchange, two pipeline
systems consisting of approximately 1,150 miles of pipeline, and tanker trucks
used to gather oil at remote wellhead locations generally not covered by
pipeline and gathering systems. The Partnership is based in Tulsa, Oklahoma.
For more information, visit the Partnership's Web site at www.SGLP.com.

    Forward-Looking Statements

    Certain statements in this release are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and are
intended to qualify for the safe harbors from liability provided therein. All
statements, other than statements of historical facts, included in this
release that address activities, events or developments that the Partnership
expects, believes or anticipates will or may occur in the future are
forward-looking statements. These forward-looking statements rely on a number
of assumptions concerning future events and are subject to a number of
uncertainties, factors and risks, many of which are outside SemGroup Energy
Partners' control, which could cause results to differ materially from those
expected by management of SemGroup Energy Partners. Such risks and
uncertainties include, but are not limited to, our dependence upon SemGroup,
L.P. for a substantial majority of our revenues; our exposure to the credit
risk of SemGroup, L.P. and third-party customers; a decrease in the demand for
crude oil in the areas served by our storage facilities and pipelines; a
decrease in the production of crude oil from the oil fields served by our
pipelines; the availability of, and our ability to consummate, acquisition
opportunities; our debt levels and restrictions in our credit facility;
general economic, market or business conditions; and other factors and
uncertainties inherent in the crude oil gathering, transportation,
terminalling and storage business. These and other applicable uncertainties,
factors and risks are described more fully in the Partnership's prospectus
relating to its initial public offering and other reports filed with the
Securities and Exchange Commission. SemGroup Energy Partners undertakes no
obligation to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.


    
                  SEMGROUP ENERGY PARTNERS, L.P. PREDECESSOR
                         STATEMENTS OF OPERATIONS(1)
                                 (Unaudited)
                                (In thousands)

                                    Three Months Ended  Six Months Ended
                                         June 30,           June 30,
                                    ------------------ -------------------
                                      2006     2007      2006      2007
                                    -------- --------- --------- ---------

    Service revenue                  $6,603   $10,464   $12,941   $19,098

    Expenses:
     Operating                       11,649    18,041    24,976    34,158
     General and administrative       2,718     4,118     5,495     8,490
                                    -------- --------- --------- ---------

     Total expenses                  14,367    22,159    30,471    42,648
                                    -------- --------- --------- ---------

    Operating loss                   (7,764)  (11,695)  (17,530)  (23,550)
                                    -------- --------- --------- ---------

    Other expenses:
     Interest expense                   530       516     1,041       945
                                    -------- --------- --------- ---------


    Net loss                        $(8,294) $(12,211) $(18,571) $(24,495)
                                    -------- --------- --------- ---------
    

    (1) These financial results reflect the historical results of the
Partnership's predecessor. The Partnership's predecessor did not record any
revenue associated with the gathering, transportation, terminalling and
storage services provided on an intercompany basis, but did recognize the
costs of providing such services.




For further information:

For further information: SemGroup Energy Partners, L.P. Susan
Dornblaser, 918-524-8365 sdornblaser@semgrouplp.com

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SEMGROUP ENERGY PARTNERS, L.P.

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