Semgroup Shares Surged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of midstream petroleum services provider Semgroup (NYS: SEMG) soared as high as 12.4% in heavy intraday trading.

So what: The company just announced that it is handing off much of its SemStream liquid natural gas assets to natural-gas specialist NGL Energy Partners (NYS: NGL) . In return, Semgroup gets a 33% ownership stake in NGL Energy Partners, a $100 million cash payment, and two seats on the board of NGL's majority-owner partnership.

Now what: The move bolsters Semgroup's balance sheet while streamlining the business model. The company should turn around and invest the newfound cash cache in small-scale acquisitions and infrastructure investments soon enough. Semgroup's shares recently fell as far as 47% from 52-week highs set in the spring, making this move a part of a larger turnaround bounce.

Interested in more info on Semgroup? Add it to your watchlist.

At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies discussed here. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.

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