Kinder Morgan, Inc.NYSE
Is There A Dividend Bubble: Kinder Morgan Edition
Ian Bezek • 335 Comments
Ian Bezek • 335 Comments
Cutting The Dividend Now Will Increase Kinder Morgan's Value
Andrew Walker, CFA • 186 Comments
Andrew Walker, CFA • 186 Comments
Wed, Nov. 30, 6:28 PM
- British Columbia Premier Clark announces support for Kinder Morgan's (NYSE:KMI) Trans Mountain pipeline expansion, ignoring the anger that erupted in the province following yesterday’s federal approval of the project and showing that Prime Minister Trudeau is building a strong coalition to untangle Canada’s pipeline gridlock.
- Clark says three of her five conditions for allowing construction - regulatory approvals, land spill response and indigenous participation - have been completed, with work still to do on the $1.5B marine spill response plan recently announced by Trudeau and to ensure British Columbians get a fair share of the benefits and jobs.
- It’s a politically risky move for Clark, who faces an election next May and will be remembered by green groups, municipal and opposition leaders, and aboriginal leaders that have slammed Trudeau’s approval.
- Vancouver's mayor says he will continue to oppose the project because it “doesn’t make sense for our economic or environmental future,” and he predicts opposition will get ugly.
Wed, Nov. 30, 11:58 AM
- Kinder Morgan’s (KMI +3.3%) Trans Mountain oil pipeline, now approved by Canadian Prime Minister Trudeau, will continue to face hurdles before it can be built, as the country sorts out the rights and roles of indigenous people in major energy projects.
- Analysts say delays are possible as KMI and Enbridge (ENB +0.1%) - whose Line 3 expansion was approved while the Northern Gateway project was rejected - work to satisfy the conditions placed on their approvals, which "will take some time and may also be met with a variety of legal challenges," says Credit Suisse's Andrew Kuske.
- “It’s not happening. We’ll do what it takes to stop it,” says a member of the Vancouver-area Tsleil-Waututh indigenous community, adding that there’s a “strong possibility” the community will file a legal challenge against Trans Mountain.
- KMI says it will now seek all necessary permits, review cost estimates and make its final investment decision; it expects construction to begin in September 2017 and for the pipeline to enter service in late 2019.
Wed, Nov. 30, 9:50 AM
- Shares of energy companies surge at the open, as hopes for an OPEC deal to cut production send crude oil futures soaring.
- Reports say Saudi Arabia is prepared to accept "a big hit" to production and agree to Iran freezing output at pre-sanctions levels.
- In early trading: XOM +2.2%, CVX +2.3%, RDS.A +3.6%, BP +3.4%, TOT +1.7%, STO +5.1%, PBR +8.1%, COP +7.2%, MRO +12.1%, APC +8%, DVN +12.7%, HES +9.5%, ENB +2.1%, PSX +0.8%, SLB +4.2%, HAL +8.3%, BHI +4.3%, KMI +4.8%, EPD +2.7%, ETP +3.8%, WMB +5.4%, RIG +11.3%, SE +2.2%, CHK +9.4%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN, CRAK
Tue, Nov. 29, 5:18 PM
- Canada's government announces its approval of Kinder Morgan's (NYSE:KMI) Trans Mountain and Enbridge's (NYSE:ENB) Line 3 pipeline projects, while rejecting ENB's Northern Gateway proposal.
- “There isn’t a country in the world that would find billions of barrels of oil and leave it in the ground while there’s still a market for it," Prime Minister Trudeau says, while nixing Northern Gateway because "the Great Bear Rainforest is no place for a pipeline."
- But oil patch hopes for greater access to Asian markets are hurt by a decision to ban crude oil tanker traffic along the northern part of British Columbia’s Pacific coastline.
- KMI +2.5% AH.
Tue, Nov. 29, 11:57 AM
- The Tsleil-Waututh Nation of North Vancouver makes a last-ditch effort to convince the Trudeau government to take their side in opposition to Kinder Morgan’s (KMI -0.2%) $6.8B proposal to triple the capacity of its Trans Mountain pipeline.
- “The project, if approved, would constitute a serious, unjustified infringement of our aboriginal title and rights in Eastern Burrard Inlet for generations to come,” the tribe says in a letter to Natural Resources Minister Carr.
- Carr says the government will make public its position “very, very soon," and speculation says conditional approval could come as early as today at the weekly cabinet meeting, with an announcement today or tomorrow.
- The government already has made its decision on the fate of the proposed $7.9B Enbridge (ENB -2.1%) pipeline to Kitimat, but is waiting until this week to make the verdict public.
Tue, Nov. 29, 10:20 AM
- Crude oil continues to slide - WTI now -3.8% at $45.27/bbl, and Brent -3.8% at $46.40/bbl - dragging oil and gas equities (XLE -2.1%) down with it.
- Iran's oil minister says he is not prepared to reduce supply, and Saudi Arabia says it would not participate in a production deal without Iran and Iraq.
- Reuters reports that Iran has written to OPEC saying Saudi Arabia needs to cut oil output to 9.5M bbl/day; Saudi has said it was prepared to reduce its production only by 500K bbl/day from current levels of 10.5M.
- In early trading: XOM -1%, CVX -1.7%, RDS.A -1.4%, BP -1%, TOT -0.3%, STO -1.8%, PBR -3.7%, COP -2.9%, MRO -4%, APC -2.8%, DVN -2.7%, HES -3.6%, ENB -2.3%, PSX -1.2%, MPC -0.8%, SLB -2.2%, HAL -2.3%, BHI -2.1%, KMI -1.4%, EPD -2%, ETP -2.2%, WMB -2.4%, SE -2.3%, CHK -2.6%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, FIF, PXJ, RYE, NDP, GUSH, DRIP, DDG, FXN, CRAK
Tue, Nov. 15, 4:57 PM
- The election of Trump, who supports TransCanada’s (NYSE:TRP) proposed Keystone XL pipeline, does not reduce the pressure on Canada's government to approve other pipeline projects to the Pacific and Atlantic coasts, Natural Resources Minister Jim Carr says.
- Financial Post interprets Carr's remarks as another indication that the Trudeau government is poised to approve Kinder Morgan's (NYSE:KMI) $6.8B Trans Mountain pipeline expansion project.
- Keystone XL “doesn’t get oil to export markets... in Asia, and it’s a goal of the government of Canada to expand its export markets,” Carr said today when asked about the impact of Trump’s U.S. victory on the government’s pipeline plans.
- Carr also reiterates the government's pledge to make a decision by Dec. 19 on whether to approve KMI’s request to triple the capacity of the Trans Mountain pipeline to 895K bbl/day.
Tue, Nov. 8, 5:25 PM
- With yesterday's announcement of a $1.5B marine protection plan, Canadian Prime Minister Trudeau created the conditions to approve Kinder Morgan’s (NYSE:KMI) Trans Mountain pipeline expansion, Financial Post's Claudia Cattaneo writes.
- Although Trudeau did not tip his hand about his plans for the pipeline, Cattaneo notes that he said the oceans’ protection plan meets the highest global marine safety standards, giving him cover in aiming to satisfy the British Columbia government’s conditions for its support of the $6.8B project.
- The consolation prize to the anti-pipeline lobby could be the permanent spiking of Enbridge's (NYSE:ENB) rival Northern Gateway pipeline, Cattaneo also surmises.
Tue, Nov. 8, 11:13 AM
- Oklahoma’s oil and gas regulator says it plans to shut some disposal wells and reduce the volume of others in response to Sunday’s earthquake near the Cushing oil hub.
- The Oklahoma Corporation Commission says its plan covers 700 sq. miles but does not say how many wells were affected; when a quake of similar magnitude hit the state in September, the agency ordered 37 wells shut over a 500 sq. mile area.
- Pipeline operator Magellan Midstream Partners (NYSE:MMP) quickly resumed normal operations at Cushing following a controlled shutdown of its assets after the quake, while Kinder Morgan (NYSE:KMI) and Enbridge (NYSE:ENB) said their facilities were not affected.
- Oklahoma's top oil and gas producers include CLR, CHK, DVN, MRO, NFX, XEC and SD.
Mon, Nov. 7, 2:58 PM
- Canada will take its next step toward revamping pipeline oversight as soon as tomorrow when it unveils a panel to overhaul the National Energy Board, WSJ reports.
- The proposed five-member panel will have until the end of March to offer advice on changes to the NEB, part of a wider effort among government departments to toughen legislation regarding environmental reviews, according to the report.
- The panel’s work will take place as Prime Minister Trudeau decides in the coming weeks on the fate of individual projects led by Kinder Morgan's (KMI +0.9%) expansion of its Trans Mountain pipeline.
- Meanwhile, the government also has imposed a Nov. 25 deadline in which it must decide what the next steps are for Enbridge's (ENB +3.1%) Northern Gateway pipeline.
Mon, Nov. 7, 8:16 AM
- A 5.0-magnitude earthquake struck last night near Cushing, Okla., home of the largest U.S. commercial oil storage hub, according to the U.S. Geological Survey.
- The quake has prompted some pipeline operators to shut down operations at the site as a precaution: Magellan Midstream Partners (NYSE:MMP) says it is working through a controlled shutdown of its assets in the area but reports no damage to its assets, Enbridge (NYSE:ENB) says there was no effect on its facility in Cushing, and Kinder Morgan (NYSE:KMI) says it is not aware of any impact on its Cushing operations.
- Oklahoma has been plagued by earthquakes in recent years, which many people blame on underground wastewater disposal from oil and gas production.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Thu, Nov. 3, 10:37 AM
- October monthly performance was: -2.87%
- 52-week performance vs. the S&P 500 is: +5%
- $0.18 in dividends were paid in October
- Top 10 Holdings as of 9/30/2016: AT&T Inc (T): 5.35027%, Exxon Mobil Corp (XOM): 5.13076%, Verizon Communications Inc (VZ): 4.13129%, Chevron Corp (CVX): 3.71538%, General Electric Co (GE): 3.29251%, Procter & Gamble Co (PG): 3.2247%, Wal-Mart Stores Inc (WMT): 2.95756%, Pfizer Inc (PFE): 2.82962%, Philip Morris International Inc (PM): 2.75804%, Kinder Morgan Inc P (KMI): 2.44856%
Thu, Nov. 3, 8:24 AM
Mon, Oct. 24, 12:27 PM
- Kinder Morgan (KMI +1.3%) adds to recent gains as two firms issue upgrades following earnings last week that convinced investors the company is likely to raise its dividend by 2018.
- Raymond James upgrades shares to Strong Buy from Outperform with a $27 price target, raised from $23, with analyst Darren Horowitz forecasting a 130% dividend hike to $1.15/share, which would bring KMI’s yield, using the current stock price, to 5.3% from 2.34%.
- Horowitz says KMI’s leverage profile continues to improve, placing it on a path to achieve a sub-5x leverage ratio by Q1 2018, when he expects KMI to begin returning cash to shareholders via substantial dividend growth.
- Also, BMO Capital raises its rating on KMI to Outperform from Market Perform with a $26 price target, lifted from $20, reflecting the firm's belief that KMI's proposed Trans Mountain oil pipeline expansion will be approved.
Thu, Oct. 20, 7:08 PM
- Kinder Morgan (NYSE:KMI) climbed 2.3% in today's trade after founder Rich Kinder said the company’s favored use for any future excess cash is dividend increases, rather than share buybacks or new projects.
- “With clarity on a dividend hike as KMI’s preferred method, we have increased confidence in a dividend hike in 2018,” SunTrust's Tristen Richardson says, adding that KMI's willingness to consider selling stakes in major projects such as the Trans Mountain pipeline expansion in Canada to raise cash may speed the return to dividend growth sooner than the more likely mid-2018.
- Even more tantalizing, using consensus estimates and capex figures, KMI could afford to double its dividend in 2018 and still bring leverage down to below 5x; but Bloomberg's Liam Denning suggests that it might be prudent for KMI to be cautious, given how finely balanced the company's leverage math is around the 5x level, in the interests of supporting sustained dividend growth once higher payouts resume.
Thu, Oct. 20, 10:24 AM
- Kinder Morgan (KMI +1.8%) opens higher after reporting strong enough Q3 results to earn analyst praise, including upgrades from Credit Suisse and Stifel.
- Credit Suisse upgrades shares to Outperform from Neutral with a $26 price target, up from $23, as it forecasts KMI's dividend bumping up to $0.25/share by mid-2018 as the debt/EBITDA ratio slips below 5x, and notes Chairman Rich Kinder's comments that management is working to ensure excess cash over dividends to be able to cover 50% of normalized capex when the balance sheet goes below 5x leverage.
- Stifel upgrades KMI Buy form Hold, saying Q3 results generally were in-line with expectations but a potential Trans Mountain JV could provide a potential catalyst for accelerating capital returning to shareholders, likely in the form of higher dividends rather than share repurchases.
- Morgan Stanley maintains an Overweight rating and $24 price target, saying the stability in KMI's base business has kept investor attention on the pace of leverage reduction, the progress on Trans Mountain and the timeline for return of capital to shareholders.