Equity Research
SemGroup Energy Partners, L.P.
SGLP: Moving In The Right Direction
Signs Term Sheet Agreement With SemGroup, L.P.

• Key Takeaways. On March 6, SGLP signed a term sheet with SemGroup L.P. to
receive the company’s asphalt business in exchange for the partnership's Kansas
crude storage assets and certain other concessions. If consummated, this agreement
would largely settle all outstanding issues between the two parties. We view these
developments as positive as (1) this should provide final separation between the
MLP and its bankrupt parent and (2) should lead to greater cash flow stability and
visibility. However, we are staying on the sidelines and maintaining our Market
Perform rating. While these are positive steps, there still exists uncertainty as to the
cash flow generating capabilities of the partnership. Further, there is no timetable
for when SGLP may file its Q2-Q4 2008 SEC financial statements, which would
enable the partnership to begin the process of relisting on NASDAQ.

• SGLP And SemGroup Sign Term Sheet. On March 12, 2009, a U.S. bankruptcy
judge approved the transfer (i.e. term sheet) of certain SemGroup asphalt assets (i.e.
SemMaterials business) to SGLP after the failed auction for the assets on February
26, 2009. As part of the agreement, the partnership would also transfer specific
Kansas crude oil storage assets to SemGroup, L.P, in exchange for 355,000 barrels
of crude oil tank bottoms and line fill.

• Asphalt Auction Fails--Assets Could Be Transferred To SGLP. SGLP emerged
as a likely candidate to assume control/ownership of certain asphalt assets, as
formal bidders were unable to secure financing. Notably, the company received six
formal bids for the assets (including one from Mr. Catsimatidis) from about 130
prospective buyers. The asphalt assets are scheduled to be transferred to SGLP on
March 31 unless SemGroup, L.P. can sell all or essentially all of SemMaterials’
U.S. asphalt assets, as a going-concern business, to a third party by March 30,
2009. If the assets are sold to a third party, SGLP and the third party must also have
an agreement for either the sale or use of SGLP’s asphalt storage and related assets.

• Catsimatidis Has Not Filed A Reorg Plan, But Is Still Expected To Do So. Mr.
Catsimatidis has not submitted his SemGroup, L.P. reorganization plan; however,
he is expected to deliver a plan soon. Mr. Catsimatidis announced his intention to
develop and file a reorganization plan for SemGroup, L.P. by January 2009. As
previously noted, Mr. Catsimatidis's reorganization of the parent company could
have positive or negative implications for SGLP, depending upon the plan's details.

Valuation Range: $4 to $8
Our valuation range is based on a liquidation and going-concern analysis, which
implies SGLP's unit value could be $4-8 per unit, according to our analysis. Risks to
our valuation range include a potential distribution cut or suspension, inability to recontract
with third-parties in a timely manner, and rising interest rates.

Investment Thesis:
We rate SGLP Market Perform as risk/reward seems balanced. While its GP sponsor
has filed for bankruptcy, SGLP could potentially survive as a going concern given
management's focus on re-contracting with third parties, and the strategic value of its
asset base, in our view.