SemGroup's $3.2 billion failure shocks backers

By Robert Campbell

NEW YORK (Reuters) - The dramatic collapse of energy trader SemGroup LP shocked the privately held firm's backers who until last week had little idea of the extent of the oil trading losses that sank it, sources said this week.

As late as June a banker at Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), one of SemGroup's main lenders, described the fast-growing company as one of his best clients, two sources said this week.

The Tulsa, Oklahoma-based company filed for bankruptcy on Tuesday after suffering $3.2 billion in losses on energy futures and derivatives trades that SemGroup says were designed to protect its physical oil trading business.

SemGroup creditors said this week they had little idea of the extent of the firm's losses and were surprised by the much larger than expected size of the hedging program.

Some creditors suggested on Wednesday the possibility that fraudulent trades may have caused the collapse.

"Last week was the first that we heard of this level of losses and at the same time heard the need for more money," said Keith Wafford, a lawyer for 11 SemGroup lenders in a U.S. bankruptcy court hearing on Wednesday.

Due to the larger than expected hedging losses, SemGroup creditors will likely recover only half of the more than $7 billion they are owed, Moody's Investors Service said on Thursday.

Shareholders including private equity giants Ritchie Capital Management, Riverstone Holdings and the Carlyle Group are expected to be wiped out.