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Kinder Morgan playing hardball with Canadian government, analysts say

Apr. 09, 2018 11:05 AM ETKinder Morgan, Inc. (KMI) StockKMI, ENB, TRP, KMLGFBy: Carl Surran, SA News Editor63 Comments
  • Kinder Morgan’s (KMI +1.2%) decision to suspend all non-essential activities and related spending on its Trans Mountain expansion project will create volatility until further clarity is provided, analysts say.
  • Scotiabank says Kinder Morgan Canada (OTCPK:KMLGF) is playing "hardball" and seeking to pressure Canada's federal government into taking action on the project; the firm rates KML shares as Sector Outperform with a C$23 price target.
  • RBC analysts expect investors will view the news negatively, but they say a potential pact with stakeholders by May 31 ultimately could prove positive and de-risk the project and enhance clarity for completion.
  • CIBC takes the view that KMI needs the federal government to use "constitutional powers to enable the company to have the confidence to move forward with the project" but that a May 31 deadline will be difficult to meet.
  • Morgan Stanley notes the need for Enbridge's (ENB +1.2%) Line 3 or TransCanada's (TRP +1.5%) Keystone XL (NYSE:TRP) projects would be elevated if Trans Mountain is sidelined.
  • Source: Bloomberg First Word

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