The chief executive of Overland Park-based Ferrellgas Partners L.P. is out, and the founder stepped into the role Wednesday on an interim basis as problems at the company’s crude oil delivery business triggered a large fourth-quarter loss.
Stephen L. Wambold, named chief executive in 2009, stepped down as president and CEO, the company said in a brief announcement separate from its financial news. A $661.4 million loss in May, June and July also has the company contemplating cutting its cash distribution to owners to $1 per partnership unit each year from $2.05 per unit currently.
“As we highlighted last quarter, record temperatures across the nation continue to have an adverse impact on the propane sector of our company, and low oil prices have seriously damaged our midstream (oil delivery) sector,” newly named interim chief executive James E. Ferrell said in the earnings report.
Publicly traded partnership units in the business, the equivalent of shares, fell $3.50, or 21.21 percent, to close at $13 Wednesday.
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Ferrellgas’ large loss stemmed mostly from a decision to write down the value of its midstream oil logistics operations by $628.8 million. Purchased last year, the business delivers oil to buyers such as refineries without owning the oil itself. The oil logistics business was intended to smooth out Ferrellgas’ seasonal propane business that prospers mostly in winter months.
Falling oil prices indirectly led Ferrellgas’ oil logistics business to lose its largest customer and to the unwinding of business agreements with the customer and another company. The financial charge did not drain Ferrellgas’ cash, but it recognized a sizable drop in the value of that business, which still owns rail cars and trucks that it uses to deliver oil.
Ferrellgas said it is considering cutting its cash distribution to unit holders to help reduce its debt levels, which it said it needs to do under agreements with lenders.
The large quarterly loss, including the writedown in the value of its oil business, dwarfed the $58.8 million loss reported in the same quarter of 2015. Ferrellgas said the quarterly loss boosted its loss for its fiscal year, which runs from Aug. 1 to July 31, to $665.4 million.