Nov. 28, 2014, 10:20 AM| Nov. 28, 2014, 10:20 AM | 17 Comments
Nov. 22, 2014, 3:14 PM
- Test drilling began Friday night. Kinder Morgan (NYSE:KMI) intends to work 24 hours a day over the next 10 to 12 days to complete its work.
- KMI is test drilling 250 meters into the ground as part of its survey work for a proposed expanded pipeline, which would see it bore a tunnel under the mountain to reroute its existing Trans Mountain pipeline.
- KMI received a court injunction a week ago to have protesters removed from the site. More than 30 protesters have been arrested since Thursday.
Nov. 20, 2014, 2:09 PM
- Kinder Morgan (KMI -0.9%) confirms that shareholders and unitholders at KMI, Kinder Morgan Partners (NYSE:KMP), Kinder Morgan Management (NYSE:KMR) and El Paso Pipeline (NYSE:EPB) approved all proposals related to bringing all four pipeline companies under one roof.
- KMI also projects a 16% dividend increase to $2/share for 2015, and expects to grow the dividend by ~10%/year during 2015-20 while producing excess coverage of more than $2B.
Nov. 19, 2014, 12:45 PM
- Kinder Morgan Partners (KMP +0.8%) rises to new 52-week highs a day ahead of the shareholder vote on the merger that would consolidate Richard Kinder's oil pipeline empire into a single entity.
- The closing of the Kinder Morgan (KMI +0.6%) merger is expected to occur on Nov. 26, which would make it the final trading day for KMP, El Paso Pipeline (EPB +0.7%) and Kinder Morgan Management (KMR +0.6%).
Oct. 15, 2014, 6:37 PM
- Kinder Morgan (NYSE:KMI) says Q3 earnings rose 15% Y/Y thanks to strong demand at Kinder Morgan Partners (NYSE:KMP), partly offset by a decline at El Paso Pipeline Partners (NYSE:EPB).
- KMP also reports an increase in distributable cash flow per unit, rising 10% Y/Y to $607M.
- CEO Richard Kinder says the company had identified a combined $17.9B in expansion and joint venture investments, up from $17B at the end of Q2 and $14.4B a year ago; the growth included an increase in KMP's backlog to $16.3B from $15.4B.
- Says earnings at its natural gas pipeline business rose 9%, amid strong results at its Tennessee Gas Pipeline, amid continuing growth in the Marcellus and Utica shale plays; overall natural gas transport volumes improved 10%, while gathering volumes added ~6%.
- Kinder Morgan plans to put all its publicly traded units under one roof by the end of the year, which will end its MLP structure.
- KMI +0.7% AH.
Oct. 15, 2014, 4:57 PM
Oct. 15, 2014, 4:08 PM
Oct. 14, 2014, 5:35 PM
Oct. 2, 2014, 12:14 PM
- Kinder Morgan (KMI +0.6%) is upgraded to Outperform from Market Perform with a $46-$48 valuation range, based on a 4.5% yield and projected 10% annual dividend growth, at Wells Fargo.
- The analyst notes that KMI's underperformance since the post-merger high following its mid-August MLP consolidation acquisitions provides an attractive entry point for investors, particularly for those searching for tax efficient yield in a C-corp structure.
- The other Kinder properties are slightly higher: KMP +0.4%, KMR +0.7%, EPB +0.2%.
Aug. 18, 2014, 11:39 AM
- "Investors beware," Andrew Bary warns in his weekend Barron's article discussing whether Richard Kinder's (KMI -1.1%) "brilliant financial move" to buy up its MLPs actually can create value.
- KMI looks expensive, Bary concludes, with an enterprise value/EBITDA ratio similar to that of Facebook and significantly greater than Google.
- The blue chips Kinder compares itself to - including GE and Coca-Cola - comfortably cover their dividends with after-tax earnings, and some are supplementing dividends with stock buybacks, while funding all or the bulk of their capital expenditures with internally generated funds; KMI expects to cover its dividend next year from cash flow, but it probably won't do so from after-tax earnings, Bary says.
- KMP -1.3%, KMR -1.5%, EPB -1.3%.
Aug. 15, 2014, 10:58 AM
- Kinder Morgan's (KMI +3.1%) consolidation move has created a windfall for bondholders who invested in the energy empire’s riskiest securities, as credit protection is transferred from Kinder Morgan Energy Partners (KMP +2.9%) to KMI and El Paso Pipeline Partners (EPB +2.8%).
- Creditors of KMI and EPB have seen the market value of their notes rise $468M, while securities of investment-grade Kinder Morgan Partners lost $85M since the Aug. 10 announcement that the three units plus the debt-free Kinder Morgan Management (KMR +3.2%) would be rolled into one.
- Collapsing the corporate structure makes KMI less risky, says Moody's Stuart Miller, in part because it will give the pipeline and terminals company direct access to KMP's cash flows.
- Moody’s is planning to raise KMI and EPB to Baa3 and decrease KMP to that level.
Aug. 13, 2014, 3:57 PM
- Kinder Morgan's (KMI +0.1%) three subsidiary entities - Kinder Morgan Partners (KMP +0.9%), Kinder Morgan Management (KMR +0.5%) and El Paso Pipeline Partners (EPB +1.1%) - have all gained in unit price since the consolidation deal announcement, but Wells Fargo calculates that KMP’s unitholders will effectively lose 4% on the deal after taxes, while KMR’s gain 21% and EPB’s gain 7%.
- For KMP and EPB, the transaction will be considered as a sale of the units and trigger a taxable event, Wells explains; while some of the tax will be offset by the cash proceeds from the offering, unitholders will still be forced into a taxable event; for KMR unitholders, however, the merger represents a tax-free event.
- The premium received by KMP unitholders would be essentially fully offset by tax obligations upon conversion of KMP to KMI shares, Wells says; even after KMP’s strong price performance since the merger, the gain is effectively offset by tax obligations.
Aug. 12, 2014, 12:23 PM
- "There are a lot of growth opportunities" following Richard Kinder's suggestion that he'll be looking to acquire rival pipeline operators, says Global Hunter analyst Sunil Sibal, who considers MarkWest Energy (NYSE:MWE) and Targa Resources (NYSE:TRGP) as prime buyout candidates.
- MWE processes and transports natural gas from U.S. shale basins including the Marcellus and Utica, while TRGP has a footprint in the Permian and Bakken, as well as one of the Gulf coast’s two commercial export terminals for natural gas liquids - "assets which are very desirable in the current production growth environment,” Sibal says.
- So far todfay: KMI -1.9%, KMP -2.4%, KMR -1.7%, EPB -1.9%.
Aug. 12, 2014, 10:28 AM
- The Kinder Morgan companies open lower, giving back a bit of yesterday's big gains following the plan to consolidate their collection of pipeline companies: KMI -1%, KMP -1.4%, KMR -1.1%, EPB -1%.
- Some investors in Kinder’s MLPs could be left with big, unexpected tax bills; taxes on the substantial quarterly payouts from MLPs are deferred, and when the units are sold or exchanged - as they will be in the reorganization - the deferred taxes come due.
- Some investors were planning on holding the units and not paying a tax until they sold it or died, "so it's probably going to be a bit of a surprise for those people,” says Twenty-First Securities' Robert Gordon.
- Kinder Morgan confirms the deal will be a taxable transaction for owners of KMP and EPB, while KMR owners will have a tax-free transaction; according to estimates released by the company, the tax owed by an average investor in KMP units could range from $12.39 to $18.16 per unit, depending on the individual’s tax rate.
Aug. 11, 2014, 3:43 PM
- Kinder Morgan's (KMI +8.6%) consolidation is "the right long-term move for shareholders," Raymond James analysts say; the "streamlined structure, lower cost of capital, and benefit of tax depreciation meaningfully enhance long-term value."
- A lower equity cost of capital will greatly improve Kinder’s ability to maximize return on investment capital on both organic and acquisition-driven capital expenditures, the firm says; the substantial tax depreciation from existing basis and future capex - the five-year forecast organic backlog alone currently reflects ~$17B, with no acquisition capex forecast - also creates meaningful value.
- BofA/Merrill upgrades KMI to Buy from Neutral, and Goldman Sachs maintains its Conviction Buy rating and raises its price target to $50.
- KMP +16.4%, KMR +23.8%, EPB +20%.
Aug. 11, 2014, 12:48 PM
- Before today’s pop, all four Kinder Morgan stocks traded roughly flat to slightly down in 2014, and a source familiar with the just-announced Kinder combination tells WSJ the stalling share price of the four stocks was one reason Richard Kinder moved to simplify the structure.
- Another reason for the deal: the consolidated company will be more tax efficient - even with the restructuring, Kinder Morgan says it actually will cut its tax bill by $20B over 14 years despite relinquishing the MLP tax benefits.
- The source says KMI now is likely to focus squarely on the midstream space, buying up more energy infrastructure in the U.S. amid the country’s oil and gas boom.
- KMI +10.7%, KMP +18.7%, KMR +26.2%, EPB +22.5%.
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