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SemGroup Corporation

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We are initiating coverage on SemGroup Corporation with a 'Hold' rating. The addition of HFOTCO has significantly expanded the geographical diversity and footprint of the company, while SemGroup's conversion of the White Cliffs Pipeline system to NGL service is expected to open up new avenues. Finally, the company's fee-based assets help ensure steady cash-flow generation and support the hefty dividend yield. However, as a counter to these strengths,SemGroup still carries considerable debt load, which may spell trouble. Moreover, the company's Supply & Logistics unit will face continued pressure through 2018. As such, the stock is expected to perform in line with the broader market.