| Kinder Morgan's Exposure to Weak Gas Prices Raises Caution | |
| | |
|
On Sep 15, 2015, we issued an updated research report on one of the largest energy infrastructure companies in North America, Kinder Morgan, Inc. KMI.
Kinder Morgan is currently the largest natural gas pipeline operator in North America. As a result, the company’s results are vulnerable to the weak gas price scenario.
Kinder Morgan has numerous large scale projects online that could face delays or opposition. The project deferment, in turn, might delay cash flows realizations. In this respect, it is necessary to mention that the Trans Mountain pipeline expansion in Canada has already been deferred by nine months due to local opposition and the Canadian regulations. The project is expected to cost $5.4 billion or about 30% of Kinder Morgan’s project backlog. Any further delay in the project will adversely impact the company’s earnings as well as long-term growth.
We believe that gas infrastructure opportunities are limited to the near to medium term, given low basis differentials and reduced dry gas drilling. The only positive we see for natural gas infrastructure is the Marcellus shale development.
Other risks include rising interest rates, lower commodity prices leading to reduced customer activity, operational risks like pipeline leaks and terrorism, reduced access to capital markets and regulatory risks.
However, the recent reorganization of Kinder Morgan’s companies into a single entity has created the largest midstream company in North America. This will facilitate access to additional projects and lead to improved growth going forward. We believe that the size advantage provides the company with opportunities to build smaller adjacent pipelines at a lower cost than its peers. Further, increased demand for power generation and exports is expected to drive continued infrastructure build-out for the company. Further, Kinder Morgan has identified growth opportunities of $17.6 billion over the next five years of which, $2.6 billion has been allocated for 2015. The company continues to prove that it is capable of utilizing its extensive presence to boost domestic production, price differentials and shifting demand. With four of its five segments scheduled to receive over $500 million in capital, the company is poised for growth in the near future. During the second quarter of 2015, the earnings of Kinder Morgan’s three segments – natural gas pipelines, products pipelines and terminals – improved on an annual basis buoyed by higher volumes in most of its businesses.
Zacks Rank and Key Picks from the Sector
Kinder Morgan carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same space are Alon USA Partners, LP ALDW, Braskem S.A. BAK and ReneSola Ltd SOL. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RENESOLA LT-ADR (SOL): Free Stock Analysis Report BRASKEM SA (BAK): Free Stock Analysis Report KINDER MORGAN (KMI): Free Stock Analysis Report ALON USA PTNRS (ALDW): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
|
|
|
Kinder Morgan
|
|
|
CODE : KMP |
ISIN : US4945501066 |
|
| |
ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Kinder Morgan is a producing company based in United states of america. Kinder Morgan is listed in Germany and in United States of America. Its market capitalisation is US$ 46.0 billions as of today (€ 36.7 billions). Its stock quote reached its lowest recent point on June 25, 1999 at US$ 10.00, and its highest recent level on November 26, 2014 at US$ 102.03. Kinder Morgan has 450 600 000 shares outstanding. |