Tallgrass CEO Slams Hedgeye Analyst Who Asks, ‘You Mad Bro?’

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  • Tallgrass Energy’s David Dehaemers accuses Kaiser of libel
  • Dehaemers says Hedgeye’s Kaiser fabricated information in note

Tallgrass Energy Partners LP Chief Executive Officer David Dehaemers had more on his mind than earnings during the company’s quarterly call with analysts on Wednesday.

Dehaemers took a break from talking strategy to accuse Hedgeye Risk Management analyst Kevin Kaiser of libel. Ripping into what he described as “people who act like analysts,” Dehaemers said Kaiser falsely reported on Aug. 1 that Tallgrass faces a potential contract restructuring with Bonanza Creek Energy Inc. Dehaemers said Bonanza is not a shipper on the company’s Pony Express oil pipeline. Kaiser lashed back on Twitter, citing Bonanza filings that appeared to back up his report.

On Thursday, James Edwards, Bonanza’s investor relations director, said by phone the oil explorer uses the pipeline through a third party.

The earnings-call tiff comes as pipeline operators are facing increasing pressure to prove to investors that their contracts with energy explorers will survive the collapse in crude prices. Oil futures have plunged 23 percent since the beginning of last year. In March, a U.S. bankruptcy court ruling threw into question just how heavily midstream companies could rely on their customer pacts by allowing a bankrupt producer, Sabine Oil & Gas Corp., to reject two of its contracts with companies that treat and transport oil and gas.

‘Substantial Doubt’

Bonanza Creek said in a filing on Aug. 1 that it had “substantial doubt” about its ability to continue as a going concern and may have to file for Chapter 11 protection. Last month, the oil explorer said it was evaluating options including a restructuring.

Bonanza has a contract through an intermediary to ship 12,580 barrels a day on Pony Express, Edwards said, without identifying the third-party.

“If we go deficient, the third-party marketer will be deficient,” Edwards said. “If they fall short, they’ll have a financial liability."

On Wednesday’s call, Dehaemers knocked Kaiser’s report from Monday toward the end of his opening remarks, pausing to address something he said was “not funny.” Tallgrass’s stock fell 1.8 percent on the day of the report.

“What you aren’t able to do is make up your own set of facts and then slander us,” Dehaemers said. “If this continues, we’ll have other means for which we’ll address this in the future.”

‘Mad, Bro?’

Within moments, Kaiser fired back on Twitter, posting, “Hey David, you mad bro?” and then “Calm down David.” He also posted parts of Bonanza’s public statements and filings the company made with the U.S. Securities and Exchange Commission that, he said, back up his report by showing Bonanza is a shipper on Pony Express, which carries crude from Wyoming to the Cushing, Oklahoma, hub. Bonanza has stated at least four times that it’s a committed shipper on the pipeline, Kaiser said.

Tallgrass did not immediately respond Thursday to phone and e-mail requests seeking additional comment about Bonanza.

In a phone interview, Kaiser called the situation a "non-issue" that Tallgrass had "blown way out of proportion." He said it "just brings more attention" to a company that he calls "extremely overvalued."

It wasn’t the first time that Kaiser’s research had weighed on Tallgrass’s stock. On May 24, Tallgrass plunged by the most in three months after Kaiser recommended shorting the Leawood, Kansas-based company.

Tallgrass fell 0.3 percent to $47.84 at 2:54 p.m. in New York. The shares are up 16 percent this year.