Hiland Receives $12.1 Million Payment for Assumed Contract in SemCrude, L.P. Bankruptcy Proceeding
October 23 2008 - 3:05PM
PR Newswire (US)
ENID, Okla., Oct. 23 /PRNewswire-FirstCall/ -- Hiland Holdings GP,
LP (NASDAQ:HPGP) and Hiland Partners, LP (NASDAQ:HLND) (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/. DATASOURCE: Hiland Partners, LP;
Hiland Holdings GP CONTACT: Derek Gipson, Director - Business
Development and Investor Relations of Hiland Partners, LP,
+1-580-242-6040 Web site: http://www.hilandpartners.com/
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