Tag Archives: Kinder Morgan Energy Partners

Earnings Estimates Rise For Kinder Morgan Management

By Zacks.com, Contributor

Management offers investors a way to participate in the North American energy revolution. The company manages and controls the affairs of Kinder Morgan Energy Partners, which operates approximately 46,000 pipelines and 180 terminals dedicated to the transport of energy products. Over the past four weeks, U.S. oil production rose 18.4% year over year to 7.35 mbd. Production has displayed solid growth in recent years and is up from the 5.0 to 5.5 mbd level in the mid 2000’s. In its Annual Energy Outlook and under a favorable scenario analysis, the U.S. Energy Information Agency (EIA) projected that U.S. oil production could reach 10 mbd by 2030. Likewise, U.S. natural gas production could rise from 23.0 trln cubic feet in 2011 to as much as 36.1 trln cubic feet in 2035 with most of the gain occurring between 2011 and 2025. Three earnings estimates for 2013 and 2014 have been raised in the past 30 days, while the 2013 and 2014 Zacks Consensus Estimate for earnings per share have worked higher over the same period. The 2013 Zacks Consensus EPS Estimate has risen $0.17 to $2.67, while the 2014 Zacks Consensus EPS Estimate has jumped $0.20 to $2.90.  The price and consensus chart highlights the recent upswing in earnings estimates. …read more

Source: FULL ARTICLE at Forbes Latest

What Could Alleviate High Gasoline Prices in This State?

By Taylor Muckerman, The Motley Fool

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Due to its California Air Resources Board and the regulations imposed by it, Californians pay a premium at the pump to every state that’s not named Alaska. One might wonder why California is able to enforce these standards; it’s because the state-run organization was already in place before the Clean Air Act was passed. Currently, the Environmental Protection Agency is trying to enact the low sulfur and nitrogen oxide standards throughout the country, but there has been some pushback.

Is there any help on the horizon?
Those who call California home are certainly hoping so. Increased infrastructure to get cheaper Bakken formation and other mid-continent oil to the West Coast is likely to begin appearing in 2014. One of the state’s biggest refiners, Tesoro , plans on increasing rail capacity to ports on the coast where it can then ship the cheaper, lighter oil to its refineries throughout the state. Couple this with pipeline expansions in Canada, and some, not total, relief could be in sight. 

The general partner of Kinder Morgan Energy Partners will likely see some payback, as well
It’s easy to forget the necessity of midstream operators that seamlessly transport oil and gas throughout the United States. Kinder Morgan is one of these operators, and one that investors should commit to memory due to its sheer size – it’s the fourth largest energy company in the U.S. — not to mention its enormous potential for profits. In The Motley Fool’s premium research report on Kinder Morgan, we break down the company’s growing opportunity – as well as the risks to watch out for – in order to uncover whether it’s a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor’s resource.

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Source: FULL ARTICLE at DailyFinance

KMP's No Longer Cheap After Piping Hot Growth

By Trefis Team, Contributor

Quick Take KMP posts a strong set of Q1 numbers with revenues and earnings growing by 43% and 65% respectively year-over-year. Natural gas pipeline division displays the highest earnings growth (78%) with higher volumes and contribution from recently acquired assets. CO2 segment’s earnings remain flat compared to last year despite increased liquids production due to lower price realization. Canadian operations report marginal growth due to a better performance by the -Platte pipeline and the Puget Sound System of the Trans Mountain pipeline. Products pipeline segment sees its earnings grow with higher volumes on Cochin pipeline and higher trans-mix volumes.   Kinder Morgan Energy Partners released its Q1 2013 results April 17. The results were largely in line with our expectations and were driven by a strong performance from the recently acquired Tennessee Gas Pipeline and El Paso natural gas operations, higher coal exports and strong liquids production in the firm’s CO2 business. (Related read: Kinder Morgan Q1 Preview: Natural Gas Pipelines In The Spotlight) Quarterly revenues grew by around 43% over the last year to $2.66 billion while income from continuing operations grew by around 65% to $794 million.

From: http://www.forbes.com/sites/greatspeculations/2013/04/19/kmps-no-longer-cheap-after-piping-hot-growth/

These Pipeline Companies Are Great, but Which Is the Best?

By Taylor Muckerman and Joel South, The Motley Fool

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When it comes to the midstream segment, it’s clear that some companies are in place to succeed. Demand far outstrips supply, so those that are well diversified with future plans are likely to take the lion’s share of the growth. For Motley Fool analyst Taylor Muckerman, the one company that stands out is Kinder Morgan Energy Partners . While it’s expensive compared with its peers, its portfolio of assets is second to none, especially when supplemented with capital expenditures. 

If that company doesn’t fit your investing style, analyst Joel South offers his take on Boardwalk Pipeline Partners . This natural gas-focused operator offers a tremendous distribution yield above 7% and is diversified into the mid-continent and Utica shale regions. Those interested in high distribution yields would be well served by taking a deeper dive here.

A different vehicle to play the midstream segment
It’s easy to forget the necessity of midstream operators that seamlessly transport oil and gas throughout the United States. Kinder Morgan is one of these operators, and it’s one that investors should commit to memory because of its sheer size — it’s the fourth largest energy company in the U.S. — not to mention its enormous potential for profits. In The Motley Fool’s premium research report on Kinder Morgan, we break down the company’s growing opportunity — as well as the risks to watch out for — to uncover whether it’s a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor’s resource.

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Source: FULL ARTICLE at DailyFinance

Which MLPs Should Investors Choose From the Herd?

By Taylor Muckerman and Joel South, The Motley Fool

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With such a broad range of MLPs out there right now, investors have many options. Distributions from these companies are vital to shareholders’ total returns. This key fact is why the stability of the long-term, fee-based contracts of the midstream MLPs are a great place for investors to focus.

Heightened visibility
Take this long-term revenue stream and compare it to that of MLPs that produce oil and natural gas, and its clear that distribution growth and stability should be much more reliable at a midstream company like Kinder Morgan Energy Partners . Risk is also reduced because expected production from wells is not always guaranteed. 

If KMP doesn’t fit your investment profile, perhaps its general partner will
It’s easy to forget the necessity of midstream operators that seamlessly transport oil and gas throughout the United States. Kinder Morgan is one of these operators, and one that investors should commit to memory due to its sheer size – it’s the third-largest energy company in the U.S. – not to mention its enormous potential for profits. In The Motley Fool’s premium research report on Kinder Morgan, we break down the company’s growing opportunity – as well as the risks to watch out for – in order to uncover whether it’s a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor’s resource.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Taylor Muckerman and Joel South“, contentId: “cms.29172”, contentTickers: “NYSE:EPD, NYSE:KMP, NYSE:NRP, NASDAQ:BBEP”, contentTitle: “Which MLPs Should Investors Choose From the Herd?”, …read more
Source: FULL ARTICLE at DailyFinance

Kinder Morgan Energy Partners to Make Significant Investment in Chemical Industry

By Business Wirevia The Motley Fool

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Kinder Morgan Energy Partners to Make Significant Investment in Chemical Industry

HOUSTON–(BUSINESS WIRE)– Kinder Morgan Energy Partners, L.P. (NYS: KMP) today announced that KMP will invest approximately $58 million to expand its chemical storage capacity. KMP has entered into a long-term contract with Methanex Corporation (NAS: MEOH) to support the construction of methanol storage capacity near Kinder Morgan‘s Geismar Liquids Terminal (GLT) in Geismar, La. Kinder Morgan will build, own and operate the storage tanks and related infrastructure, including improvements to its existing dock at GLT. The assets will provide critical marine, rail and truck access in support of a 1 million tonne per year methanol production plant being relocated by Methanex from Chile, South America. The terminal infrastructure is expected to be in service during the second half of 2014, coinciding with the anticipated startup of the relocated plant.

KMP has also acquired Quality Carriers, Inc.’s 26-acre terminal located in Chester, S.C. The 19-tank facility currently provides storage for a single customer of 35,000 barrels and receives product by rail and distributes by truck.

“The abundance of attractively priced domestic natural gas has led to a resurgence in the chemical and manufacturing industries,” said John Schlosser, president of Kinder Morgan Terminals. “We are very pleased to be able to leverage our existing footprint in Geismar in support of Methanex’s significant capital project, and look forward to continuing to provide logistical and infrastructure solutions for Methanex and others as the renewed industrial development continues along the Gulf Coast and elsewhere. We are also pleased to be entering the public liquid terminal market in the greater Charlotte area and look forward to growing that business with new chemical customers.”

Kinder Morgan Energy Partners, L.P. (NYS: KMP) is a leading pipeline transportation and energy storage company and one of the largest publicly traded pipeline limited partnerships in America. It owns an interest in or operates approximately 44,000 miles of pipelines and 180 terminals. The general partner of KMP is owned by Kinder Morgan, Inc. (NYS: KMI) . Kinder Morgan is the largest midstream and the third largest energy company in North America with a combined enterprise value of approximately $100 billion. It owns an interest in or operates approximately 73,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMI …read more
Source: FULL ARTICLE at DailyFinance

Natural Gas Will Never Knock Out Coal

By Tyler Crowe, The Motley Fool

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Fans of Muhammad Ali should have an appreciation for the coal story. Much like the Rumble in the Jungle, where an older Ali faced a younger opponent in George Foreman, the coal industry has found itself up against a younger, cleaner opponent in natural gas. And despite the overwhelming odds in favor of the young upstart, coal, like Ali, is poised to come out of this fight as the reigning champion.

Let’s look at the scorecards and see why coal will take this fight in the long run.

The greatest in the world …
To look only at the U.S. and determine the prospects of coal would be very misleading. While low domestic gas prices have dragged the price of coal down with them, the same can’t be said overseas, for two distinct reasons:

  • Natural gas requires a much more robust infrastructure to be competitive, normally consisting of large pipeline networks and sophisticated liquefaction and regasification terminals, where coal can much more easily use existing roads, rail lines, and ports.
  • In several countries outside North America, natural gas prices are indexed to oil on a BTU equivalency. That has given North America a distinct advantage in selling natural gas, but it also enables coal to compete on the international stage much better than here.

Looking at the global market for coal, it appears there are no signs that natural gas will be able to take the title from coal. An International Energy Agency report back in January estimates that coal will pass oil as the most used energy source by 2017. In fact, the report projects that the U.S. will be the only country that will see its coal use decline between now and 2017. Just like almost every story in the energy space, the major drivers of demand will be China and India. Analysts project that the two countries’ total coal consumption for electricity generation will be almost double that of all member nations of the Organization for Economic Cooperation and Development, combined. Furthermore, coking coal for steel production should see a substantial gain as well. Total steel demand between now and 2020 is expected to double in India and continue to grow steadily in China.

With so much demand headed overseas, several coal companies in the U.S. will need to boost their export capacity. Peabody Energy has a deal in place with Kinder Morgan Energy Partners to use its export terminal in the Gulf of Mexico and on the East Coast. This agreement will increase Peabody’s export capacity in the Gulf region to a range of 5 million to 7 million tons per year. Also, as one of the leading exporters of U.S. coal, Alpha Natural Resources has the export capacity for about 25 million tons per year, which provides it plenty of room to run, considering the company exported only 14 million tons in 2011.

… just not in the United States
Despite the exploding global demand, the IEA does …read more
Source: FULL ARTICLE at DailyFinance

3 Opportunities in Booming South Texas

By Aimee Duffy, The Motley Fool

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Earlier this week, the Texas Railroad Commission announced that its preliminary numbers for oil production in the Eagle Ford Shale are outstanding. Production climbed 50% from 2011 to 2012, averaging 373,303 barrels per day. That growth is significant, and provides investors with some pretty compelling opportunities, so let’s take a closer look at what’s going on in southeastern Texas.

Eagle eye
The Eagle Ford shale seems to have come out of nowhere. In 2008, oil production in the region was a scant 358 barrels per day — but take a look at what’s happened since then:

Source: Texas Railroad Commission

You can see that the biggest production increase in the short four year history of the play came last year. Keep in mind that the slight uptick at the end of the graph is a mere month’s worth of production — and even that increased by more than 12,000 bpd.

What’s the story here?
The Eagle Ford Shale is a geologic wonder that stretches from the southern border of Texas up through to around Austin.

Source: Energy Information Association

The shale’s pay zone is thicker than most U.S. plays, with a higher percentage of carbonate material. On top of that, the distinct banding pattern of the Eagle Ford allows producers to target specific commodities for production. In the picture above, the green band is the oil region, the yellow band is for natural gas liquids, and the pink band is for dry gas.

Three winners
This sort of production growth is hard to ignore. The companies behind these staggering numbers are making a killing … so who are they?

The top producer in the play is EOG Resources . In fact, EOG cranks so much oil out of the Eagle Ford — 109,776 barrels per day in 2012 — that it’s actually the second largest oil producer in all of Texas.

Another winner here is ConocoPhillips . The company drills the cheapest wells in the industry, and is the second-biggest producer in the shale.

Finally, we have Kinder Morgan Energy Partners . All of the oil and NGLs produced in the Eagle Ford are worthless without transportation and processing infrastructure. Kinder Morgan had the pipeline asset base in the Eagle Ford, and its buyout of Copano Energy will give it a processing footprint, as well, when the deal closes in the third quarter of this year.

More to come?
Producers are increasingly targeting the region, which includes both the Eagle Ford and the Woodbine sandstone formations. This area, cleverly titled “Eaglebine,” is northeast of where the bulk of the oil activity is in the Eagle Ford right now. Halcon Resources is one company that plans to make the most of the new sweet spot. The company has nine wells there, and plans to spend $490 million on drilling and completing many more this year.

All this oil still needs a way to …read more
Source: FULL ARTICLE at DailyFinance

4 Opportunities in Pennsylvania's Gas Boom

By Aimee Duffy, The Motley Fool

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Last week, the Energy Information Administration, or EIA, reported that Pennsylvania‘s natural gas production climbed an astounding 69% between 2011 and 2012. The state sits above the Marcellus Shale, and exploiting that formation has likely catapulted Pennsylvania into the ranks of the top five natural gas producing states. Let’s take a closer look at this story, and what opportunities it may provide for investors.

Rapid growth
Pennsylvania‘s transformation from gasless laggard to methane monster happened seemingly overnight. In 2008, the state produced less than 1 billion cubic feet per day (bcfd) of natural gas. That was the first year producers started drilling horizontal wells in meaningful numbers. The results are impressive:

Source: EIA

In a mere four years, Pennsylvania‘s natural gas production has climbed from 1.0 bcfd to reach 6.1 bcfd in 2012. You can see how much of an impact shale drilling has had, given the rapid decline of non-horizontal wells in blue, and the corresponding rise of horizontal wells in brown.

Perhaps the more important take away from the graph above, is that this growth came at a time when drilling slowed overall. Between 2011 and 2012, there were about 750 fewer wells drilled, yet production increased 69% over that same period. Let’s take a look at how this happened, and at two key opportunities that came out of it for investors.

Fewer rigs, but more gas?
There are two reasons that drilling rig counts dropped but production increased. The first is that because of a lack of pipeline capacity in the Marcellus, many rigs were drilled and never turned on. Capacity grew in 2012, and will grow even more in 2013, and again in 2014. This will allow producers to move more gas, which should drive the price up, much the way additional pipeline capacity in Texas has boosted the price of oil.

The second reason is that producers are much more efficient at drilling wells now. Improved techniques contribute to not only shorter drilling times, but higher production rates per well. The average horizontal well drilled in the Marcellus costs about $3 million-$4 million. Obviously, any company that improves drilling efficiency has the opportunity to cut costs as well.

Companies to consider
Given what we know about what is behind the growth in Pennsylvania, it makes sense to search for pipeline operators and efficient drillers in the Marcellus Shale. Here are four companies to get your research started:

  • Kinder Morgan Energy Partners is the nation’s leading natural gas transporter and naturally has a stake in the Marcellus. It is expanding its Tennessee Gas Pipeline system in several places, which should increase takeaway capacity by more than 8.0 million cubic feet per day by the end of November 2013.
  • Enterprise Products Partners is bringing online one of the region’s most anticipated pipeline projects, the ATEX Express. Chesapeake Energy said in its last investor presentation that its wet gas production isn’t going to …read more
    Source: FULL ARTICLE at DailyFinance

The Biggest Oil Winners in Texas

By Aimee Duffy, The Motley Fool

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At the end of 2012, oil production in the state of Texas had reached a level not seen since the late 1990s. The state was cranking out more than 2.2 million barrels per day in December, accounting for roughly 31% of all U.S. oil production. This resurgence can present an opportunity for investors, and with that in mind today we will take a look at the five top producers in the great state of Texas.

The list
The most important thing about the 2012 list is that it did not look the same in 2011. The emergence of the Eagle Ford Shale in East Texas, and the application of horizontal drilling and hydraulic fracturing in certain segments of the Permian Basin has caused some changes:

Company

Avg. Daily
Production

Annual
Production

% State

Occidental Petroleum

116,911

42.7 M

8.0%

EOG Resources

109,776

40.1 M

7.5%

Pioneer Natural
Resources

62,507

22.8 M

4.3%

Apache

57,876

21.1 M

4.0%

Kinder Morgan Energy Partners

51,705

18.9 M

3.5%

Source: Texas Railroad Commission 

In 2011, all of these companies were on the list, but in a different order. Kinder Morgan ranked second then, but almost failed to rank this year, and no one outside of Occidental was posting production numbers over 52,000 barrels per day, let alone 100,000. Things will continue to change, no doubt, so let’s take a closer look at what these companies are up to.

The players
Occidental Petroleum is the top producer in the Permian Basin. The company has mastered the art of using carbon dioxide in tertiary recovery to increase well production by 15%-25% in certain fields. Kinder Morgan, aside from using CO2 to produce oil and natural gas liquids, sources and distributes the gas to other producers in the play. If you’re looking for a diversified operator in the Permian, that’s the company for you.

Apache is another Permian player with the potential to rise up on this list next year. The chart above reflects an annual average number for daily production, but by the end of 2012 Apache was producing 134,123 barrels per day in the Permian. While some of that production was outside of Texas on the New Mexico side, the company has really ramped up its growth in the Texas shale portion of the Permian. 

Pioneer Natural Resources is double dipping, exploiting both the Permian and the Eagle Ford for its benefit. The company is really doing it all right now, as far as drilling goes. It is focused on vertical wells in the Spraberry section of the Permian, horizontal wells in the Wolfcamp region of the same play, and of course horizontal wells in the Eagle Ford. If you include the state’s Barnett Shale, the company plans to spend about $2.4 billion drilling in Texas …read more
Source: FULL ARTICLE at DailyFinance

Inside Kinder Morgan: CO2

By Aimee Duffy, The Motley Fool

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Based on combined enterprise value, Kinder Morgan is the third-largest energy company in North America. We tend to associate the giant with its 75,000 miles of pipelines, but in reality its operations are incredibly diverse. Over the past week, I’ve taken a closer look at each of the midstream company’s five distinct business units: So far I’ve reviewed terminalsnatural gas pipelines, products pipelines, and Kinder Morgan Canada. Today we dig into the last business segment, one of the least understood parts of the partnership’s operations: CO2.

Background on the assets
Kinder Morgan is at the top of the heap when it comes to the CO2 business, serving as North America‘s leading transporter and marketer of the gas. The company delivers about 1.3 billion cubic feet per day through its 1,300 miles of CO2 pipe. Before we get into the nitty-gritty of Kinder Morgan‘s assets (which are technically owned by Kinder Morgan Energy Partners ), let’s remind ourselves of what the CO2 business actually is.

Most often, when it comes to energy production, carbon dioxide is the enemy. However, in the mature oil fields of West Texas, carbon dioxide is an oil man’s best friend. The gas is injected into a well at high pressure, in a process called flooding, to force out every last bit of oil. Companies such as Occidental Petroleum in the Permian Basin and Denbury Resources on the Gulf Coast have used enhanced oil recovery, or EOR, to maximize output. The process is often called tertiary recovery, because it’s the third step after normal production, followed by water flooding.

Kinder Morgan engages in the transportation of CO2, selling it to customers in the Permian, but it also uses it to produce oil. The partnership has four CO2 source fields in Arizona, New Mexico and Colorado, and three oil-producing fields in Texas. Its assets also include the requisite CO2 and oil pipelines.

In 2012, oil production at Kinder Morgan‘s SACROC field beat management’s expectations by more than 1,000 barrels per day, and it was the same story with NGL production. However, as many midstream industry fans know, the NGL price collapse last year really hurt, and Kinder Morgan was no exception, suffering a $59 million impact on distributable cash flow.

Let’s look at how the segment’s assets performed in 2012 compared with management’s expectations. Note that the CO2 producing fields and pipelines are grouped together as “Source & Transportation,” or S&T:

Asset

Expected

Actual

Difference

SACROC (oil)

27,868 Bbl/D

28,968 Bbl/D

3.8%

SACROC (NGL)

17,361 Bbl/D

18,825 Bbl/D

7.8%

Yates

20,986 Bbl/D

20,839 Bbl/D

(0.7%)

Katz

2,267 Bbl/D

1,722 Bbl/D

(24%)

CO2 S&T

1,264 Mmcf/D

1,212 Mmcf/D

(4.1%)

Source: Company presentation. 

A combination of high oil prices and higher production at SACROC allowed Kinder Morgan to partially mitigate lower production at Katz …read more
Source: FULL ARTICLE at DailyFinance

Canada Is Drowning in Oil, Even With Keystone XL

By Taylor Muckerman and Joel South, The Motley Fool

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Western Canadian Select crude from Canada‘s oil sands has been trading at a steep discount to WTI and Brent crude oils. As a result, Canadian producers such as Suncor Energy  and Talisman Energy  have been suffering. One way to reverse the trend is if these producers can gain access to the Asian markets, which command a higher price. 

Come one, Come all
That’s exactly how Kinder Morgan Energy Partners  feels right now, as it’s the company in the best position to help bring this crude to the West Coast. It also owns the only terminal on the West Coast with the ability to export this crude once it reaches the Pacific Ocean. Despite Enbridge‘s proposed Northern Gateway pipeline and the hotly contested Keystone XL pipeline, it still appears that KMP will be the dominant player in this market.

See more in the following video.

Need a closer look at the entire Kinder Morgan family?
It’s easy to forget the necessity of midstream operators that seamlessly transport oil and gas throughout the United States. Kinder Morgan is one of these operators, and one that investors should commit to memory because of its sheer size — it’s the fourth largest energy company in the U.S. — not to mention its enormous potential for profits. In The Motley Fool’s new premium research report on Kinder Morgan, our top energy analyst breaks down the company’s growing opportunity, as well as the risks to watch out for, to uncover whether it’s a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor’s resource.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Taylor Muckerman and Joel South“, contentId: “cms.23675”, contentTickers: “NYSE:TLM, NYSE:TRP, NYSE:ERF, NYSE:SU, NYSE:KMP“, …read more
Source: FULL ARTICLE at DailyFinance

Inside Kinder Morgan: KM Canada

By Aimee Duffy, The Motley Fool

Filed under:

Based on combined enterprise value, Kinder Morgan is the third-largest energy company in North America. We tend to associate the giant with its 75,000 miles of pipelines, but in reality its operations are incredibly diverse. Over the next few days, I’ll take a closer look at each of the midstream company’s five distinct business units. I’ve already tackled terminalsnatural gas pipelines, and products pipelines, so today we’ll break down the partnership’s Canada segment.

Background on the assets
Kinder Morgan Canada consists of five pipeline systems and two terminals. The capacity of the pipeline systems are broken out below:

  • Trans Mountain (crude oil, refined products): 300,000 bpd 
  • Trans Mountain Jet Fuel (jet fuel): 45,000 bpd 
  • Puget Sound (crude oil, refined products): 180,000 bpd
  • Express & Platte (crude oil): Express, 280,000 bpd; Platte, ~150,000 bpd
  • Cochin (propane): 70,000 bpd

There are five terminals that are technically part of the Trans Mountain pipeline system. The biggest one is the Edmonton terminal, which features 19 storage tanks and a current capacity of 2.5 million barrels.

The two main terminals are operated by a Kinder Morgan Energy Partners subsidiary, cleverly titled Kinder Morgan Canada Terminals. Its North Forty terminal is located east of Edmonton. It provides storage and blending services for crude oil and petroleum products and has a capacity of 2.2 million barrels. Its Vancouver Wharves terminal sits in Port Metro, British Columbia, and handles over 3 million tons of bulk cargo every year.

From a fiscal standpoint, Kinder Morgan Canada makes the smallest contribution to the bottom line out of all of the partnership’s business segments. It earned $71 million in the fourth quarter of last year, which was a 38% increase over 2011. At the end of 2012, Kinder Morgan sold its ownership interest in the Express-Platte pipeline system to Spectra Energy, which will affect earnings in the short term. That being said, this segment is going to be a powerhouse in five years, based largely on some expansion work.

A look ahead
The biggest news for the segment is the potential growth of the Trans Mountain line, which we’ll get to in a minute. First, let’s cover the expansion of the Edmonton terminal, which sits on the Trans Mountain line.

In January, Kinder Morgan announced that it had secured contracts that would support the additional expansion of the facility. This would be phase two of the build out (phase one is already under way), and it will add 1.2 million barrels of additional storage capacity to the site. The partnership expects to spend $112 million to bring the new capacity online by the end of 2014. Once completed, the Edmonton terminal will have a total capacity of 9.4 million barrels.

And now on to the Trans Mountain expansion. As stated above, the current capacity is 300,000 barrels per day. Management was originally looking to increase that number to 750,000 bpd, but received so much interest during its open season, that the target is now …read more
Source: FULL ARTICLE at DailyFinance

Kinder Morgan Energy Partners Completes Sale of One-Third Interest in Express-Platte Pipeline System

By Business Wirevia The Motley Fool

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Kinder Morgan Energy Partners Completes Sale of One-Third Interest in Express-Platte Pipeline System

HOUSTON–(BUSINESS WIRE)– Kinder Morgan Energy Partners, L.P. (NYS: KMP) , today announced that it has closed its previously announced sale of its one-third interest in the Express-Platte Pipeline System to Spectra Energy Corp for approximately $380 million pre-tax. KMP‘s joint venture partners in Canada (Ontario Teachers’ Pension Plan Board and Borealis Infrastructure, the infrastructure investment arm of the OMERS pension plan) also sold their interests in the pipeline system, as Spectra Energy Corp purchased 100 percent of Express-Platte—a 1,700-mile oil pipeline system connecting Canadian and U.S. producers to refineries in the Rocky Mountain and Midwest regions of the United States.

Based on the structure of KMP‘s investment with the Express-Platte Pipeline partners, KMP received approximately $15 million of cash flow on an annual basis from its investment, consisting primarily of debenture interest. KMP plans to redeploy the proceeds from the sale into various growth projects to further benefit its unitholders.

Kinder Morgan Energy Partners, L.P. (NYS: KMP) is a leading pipeline transportation and energy storage company and one of the largest publicly traded pipeline limited partnerships in America. It owns an interest in or operates more than 44,000 miles of pipelines and 180 terminals. The general partner of KMP is owned by Kinder Morgan, Inc. (NYS: KMI) . Kinder Morgan is the largest midstream and the third largest energy company in North America with a combined enterprise value of approximately $100 billion. It owns an interest in or operates more than 73,000 miles of pipelines and 180 terminals. Its pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store petroleum products and chemicals and handle such products as ethanol, coal, petroleum coke and steel. KMI owns the general partner interests of KMP and El Paso Pipeline Partners, L.P. (NYS: EPB) , along with limited partner interests in KMP, Kinder Morgan Management, LLC (NYS: KMR) and EPB. For more information please visit www.kindermorgan.com.

This news release includes forward-looking statements. These forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although Kinder Morgan believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual …read more
Source: FULL ARTICLE at DailyFinance

Inside Kinder Morgan: Products Pipelines

By Aimee Duffy, The Motley Fool

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Based on combined enterprise value, Kinder Morgan is the third-largest energy company in North America. We tend to associate the giant with its 75,000 miles of pipelines, but in reality its operations are incredibly diverse. Over the next few days, I’ll take a closer look at each of the midstream company’s five distinct business units. I’ve already tackled the terminals segment and the natural gas pipelines segment, so today we’ll break down the partnership’s products pipelines business.

Background on the assets
Kinder Morgan, with its master limited partnership Kinder Morgan Energy Partners , operates an 8,000-mile network of refined products pipelines and 50 liquids terminals. It transports 2 million barrels a day, making it the largest independent transporter of refined petroleum products in the U.S.

Products include the usual suspects — gasoline, diesel, and jet fuel — but also natural gas liquids and biofuels. That diversity plays a crucial role come earnings time, and we’ll get to that in a minute. Unlike the partnership’s natural gas pipeline system, which is largely concentrated in Texas, its refined products network is smaller, with assets in California, the northeast, and Canada.

Across the country, demand for refined products such as gasoline has dropped over the past few years. Kinder Morgan wasn’t immune from the effects of that. Segment volumes dropped 1.5% in 2012, led by a 5% drop in diesel volumes. And yet, fourth-quarter earnings were up year over year because NGL volumes and biofuels volumes both increased by about 22%.

Kinder Morgan was the first company to transport ethanol via pipeline for commercial use, way back in 2008.  It started moving biodiesel in 2009 and never looked back.  The segment has been on a tear ever since, and earned $176 million in Q4, a 9% jump over 2011’s earnings.

Kinder Morgan anticipates growth in the refined products segment in 2013, despite expectations for relatively flat demand for petroleum products:

Source: Company presentation.

The target for the year is to achieve $791 million in earnings, translating to $741 million in distributable cash flow, which would be close to a $90 million increase over last year’s results. At the same time, Kinder Morgan hopes for a minimal increase in sustaining capital expenditures. The partnership spent $47.8 million in 2012 and is looking to keep capex under $50.1 million in 2013.

Let’s take a look at how Kinder Morgan plans to achieve that growth .

A look ahead
A big part of Kinder Morgan‘s growth will come from its biofuels segment. The partnership expects to increase biofuels volumes handled from 34.4 million in 2012 to 41.8 million in 2013. A few recent developments will help that dream come true, beginning with increased biodiesel blending at four locations between California and Arizona. As far as transportation goes, Kinder Morgan has acquired a transload terminal in South Carolina, and has put an ethanol unit train receipt facility on line in Tampa, Fla. The regulatory environment remains strong for biofuels, …read more
Source: FULL ARTICLE at DailyFinance

The Best Dividends in Energy

By Travis Hoium, The Motley Fool

HE Net Income TTM Chart

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Stable dividends can be an investor’s best friend and the energy sector is one of the most stable for supplying those dividends. Energy usage on all levels varies very little from year to year and regulated markets can provide very stable businesses for investors. With that in mind, I’ve assembled a list of five companies that supply great dividends that I think will be stable in the long term.

Seadrill 
Oil drilling can be a very volatile business. A better than expected well can send your stock through the roof and a dry well can send your stock crashing down. But supplying equipment to a growing market can be extremely stable and lucrative.

Right now, one of the best equipment businesses in offshore drilling, and even more specifically ultra-deepwater offshore drilling, is Seadrill. The company owns a large fleet of deepwater rigs and has 22 more rigs under construction, seven of which are ultra-deepwater drillships. This will be a stable business because of the overall trends in the oil market.

Oil is harder and harder to find both onshore and offshore, so drillers are going to greater lengths to find it. That’s led companies to oil fields in water up to two miles deep off the coasts of the U.S., Brazil, Africa, and other parts of the world. As more drilling takes place, more oil is found, creating a reinforcing loop for ultra-deepwater rig owners.

For shareholders, Seadrill trades at just 10 times this year’s earnings estimates, and with new rigs coming online over the next few years, profits should continue to grow. The stock‘s 9% dividend yield is among the highest on the market, but I think it’s safe in this growing energy market.

Kinder Morgan
Another play on the energy market that’s safer than betting on explorers is with the companies transporting oil and gas from place to place. Kinder Morgan owns oil and gas pipelines, processing stations, terminals, and other energy assets. The company makes money by moving oil and gas from processing sites to refiners, in many cases in regulated markets, providing stable returns. As shale production in the U.S. increases there will be expanded opportunities for Kinder Morgan to grow and diversify its assets.  

The stock pays a 4% dividend yield; with the stability of the oil and gas markets investors can count on payouts for a long time to come. Another way to play this company is with Kinder Morgan Energy Partners , which pays a 6% dividend yield. The difference is, Kinder Morgan Partners is an MLP so it has different tax consequences than its parent Kinder Morgan, something you can learn more about here.

Total
In the oil production space, Total is one of the biggest players and it is well-positioned for a changing energy landscape in the future. The company is one of the largest players in liquefied natural gas, supplying an increasing amount of the …read more
Source: FULL ARTICLE at DailyFinance

Why Kinder Morgan Is Poised to Outperform

By Brian Pacampara, Pacampara, The Motley Fool

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, energy storage and transportation company Kinder Morgan Energy Partners has earned a coveted five-star ranking.

With that in mind, let’s take a closer look at Kinder Morgan and see what CAPS investors are saying about the stock right now.

Kinder Morgan facts

 

 

Headquarters (founded)

Houston, Texas (1992)

Market Cap

$31.9 billion

Industry

Oil and gas storage and transportation

Trailing-12-Month Revenue

$8.6 billion

Management

Chairman/CEO Richard Kinder

CFO Kimberly Dang

Return on Equity (average, past 3 years)

17%

Cash/Debt

$527.0 million/$17.4 billion

Dividend Yield

6%

Competitors

Enterprise Products Partners, L.P.

Koch Industries

TransMontaigne

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 96% of the 1,538 members who have rated Kinder Morgan believe the stock will outperform the S&P 500 going forward.

Earlier this month, one of those Fools, brenoboyle, succinctly summed up the Kinder Morgan bull case for our community:

Natural gas is going to be one of the largest long term success stories in the history of U.S. energy production. While companies exploring and drilling NG have lagged due to cost overruns a company like Kinder Morgan makes money regardless through a ‘toll-road’ model. They maintain pricing power through the ownership of assets that are nearly impossible to replicate. As the electric grid switches over from coal to NG demand is sure to rise making this ‘sure-thing’ investment a must own in any dividend growth portfolio.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong five-star rating, Kinder Morgan may not be your top choice.

If that’s the case, we’ve compiled a special free report for investors called “The 3 Dow Stocks Dividend Investors Need,” which uncovers a few other juicy income opportunities. The report is 100% free, but it won’t be around forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

The article Why Kinder Morgan Is Poised to Outperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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…read more
Source: FULL ARTICLE at DailyFinance

Inside Kinder Morgan: Natural Gas Pipelines

By Aimee Duffy, The Motley Fool

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Based on combined enterprise value, Kinder Morgan is the third largest energy company in North America. We tend to associate the giant with its 75,000 miles of pipelines, but in reality, its operations are incredibly diverse. Over the next few days, I’ll take a closer look at each of the midstream company’s five distinct business units. I’ve already tackled the terminals segment, and today we’ll break down the partnership’s natural gas pipeline business.

Background on the assets
Kinder Morgan, together with its master limited partnerships Kinder Morgan Energy Partners and El Paso Pipeline Partners , operates an impressive 62,000 miles of natural gas pipeline, making it the largest natural gas transporter in the United States. The pipelines reach natural gas plays and serve major consuming markets from coast to coast but are concentrated heavily along the southern border of the U.S., from Arizona to Florida. Texas is the epicenter of the partnership’s footprint, yet it’s the company’s East region that’s expected to generate the largest percentage of earnings for the segment in 2013.

Source: Kinder Morgan.

The East segment includes roughly all of Kinder Morgan‘s pipes east of the Mississippi River, from Florida to New Hampshire, while the midstream segment designates the Texas intrastate system. West denotes everything west and north of El Paso, while Central includes everything west of the Mississippi and north of the Texas/Oklahoma border. You can check out the whole map here.

Overall, the segment grew 64% year over year in the fourth quarter of 2012 and $474 million in earnings. Much of that growth can be attributed to the booming Eagle Ford Shale play, and the increase of natural gas used for power generation. Kinder Morgan hopes to continue to drive success here and is in the midst of investing $2.7 billion in its natural gas pipeline assets.

A look ahead
A big part of that investment capital is headed straight for two shale plays: the Marcellus and the Eagle Ford. We’ll get to Texas in a minute, but first let’s tackle the Marcellus, where Kinder Morgan has two of similar looping projects on the Tennessee Gas Pipeline system coming online by the end of November.

The first project is the Marcellus Pooling Point project, an $86 million pipeline expansion that will loop a line in northwest Pennsylvania with 7.9 miles of 30-inch pipe. (Looping means that new pipe will be installed adjacent to the existing line.) It will also feature upgrades to four pumping stations. The new capacity comes in around 240,000 dekatherms per day, which is roughly equal to 2.3 million cubic feet of gas, and it will feed utilities and other connecting pipelines.

The second looping project is the Northeast Upgrade, and it is much more expensive at $450 million. This project will add about 40 miles of 30-inch looped line on the Tennessee Gas Pipeline system and will have a capacity of about 640,000 dekatherms per day, which …read more
Source: FULL ARTICLE at DailyFinance

A High-Yielding Energy Company for Income Investors

By Aimee Duffy, The Motley Fool

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The midstream industry, those companies responsible for carting oil and gas to and fro, is known among dividend investors for its high-yielding investment opportunities. Many of these businesses are structured as master limited partnerships (or MLPs), a designation that requires the entity to pass its earnings through to its partners, which is where the high yields come from. The company I’m looking at today is Martin Midstream Partners . It boasts an 8.9% yield and an annualized distribution of $3.08 per unit.

The story behind the yield
Martin Midstream is an MLP based in Kilgore, Texas. Things are going quite well for the company right now. Operating income in 2012 came in at $73.84 million, a significant increase from 2011’s $47.35 million. At the center of its business are four distinct operating segments:

  • Terminals and storage
  • Natural gas services
  • Sulfur services
  • Marine transportation services

We are accustomed to think of midstream players as pipeline operators, but many companies in the industry make a great deal of money from energy-related businesses outside of pipelines. Kinder Morgan Energy Partners has its terminals and CO2 business; Enbridge has wind and solar, etc.

From an earnings perspective, Martin’s sulfur business is its most lucrative, generating $12.5 million in net income in the fourth quarter of 2012 and $41.9 million for the full year. Its marine transportation segment is the weakest, generating a loss of $612,000 in the same quarter, though it was profitable for the full year, generating $6.75 million over the course of 12 months. I expect both of these segments to do well in the future so let’s take a closer look.

Sulfur
If there is anyone in the world who would equate the smell of rotten eggs with cash money, they most certainly work at Martin Midstream. The company processes and distributes sulfur produced by Gulf Coast oil refineries. Most of it winds up in fertilizer or industrial chemicals. Martin has six sulfur-based fertilizer plants and one emulsified sulfur blending plant. It also has four sulfur prillers, which are facilities that form molten sulfur into pellets. The combined capacity of these plants is about 5,000 tons per day.

Sulfur sales have grown from 62,000 tons in 1997 to 306,000 tons in 2012. Earnings for this segment have really taken off in the last few years, climbing from $15.7 million in 2009 to $37.2 million in 2012. This trend should continue if the U.S. petrochemical industry grows the way many think it will over the course of the next few years. As it is, domestic and foreign demand for sulfur remains high.

Marine Transportation Services
Martin Midstream‘s marine transportation services segment has seen better days. EBITDA has declined since reaching $22.7 million in 2010.

The partnership operates 54 inland marine tank barges, 29 inland marine push-boats, four offshore tank barges, and four offshore tugboats. It transports asphalt, fuel oil, gasoline, sulfur, and other bulk liquids around the Gulf Coast, East Coast, and the …read more
Source: FULL ARTICLE at DailyFinance

1 Energy Stock to Avoid

By Aimee Duffy, The Motley Fool

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Shares of midstream company NuStar Energy fell after an analyst at Credit Suisse downgraded NuStar from neutral to underperform. Is now the time to bail? Or did the 7% drop in price create a buying opportunity? Let’s take a closer look at NuStar and the reasons behind the downgrade.

A quick look at NuStar
The San Antonio-based master limited partnership has operations in the U.S., Canada, and Mexico, but unlike almost all other midstream companies, also offers investors international exposure with assets in the Netherlands, the U.K., the Caribbean, and Turkey.

The company’s assets include 87 terminals with about 96 million barrels of storage capacity, and 8,634 miles of crude oil and refined products pipelines. Its best performing business unit is its transportation segment, which generated $47.95 million in operating income for the fourth quarter of 2012.

By most accounts, NuStar did not have a great fourth quarter. In an effort to move more toward fee-based revenue — which is reliable and correlates to a reliable distribution — the partnership is going through a bit of a restructuring. It sold its asphalt and fuels refinery in San Antonio and is refocusing on storage and transportation business, specifically targeting the Eagle Ford Shale for acquisition and organic growth opportunities.

The drop
The Credit Suisse downgrade comes on the heels of a NuStar SEC filing that intimates TexStar wants out of the second half of its $100 million deal to sell assets to NuStar. After successfully acquiring a crude oil pipeline, gathering, and storage assets, the pending acquisition of a natural gas liquids pipeline is now up in the air, and NuStar is evaluating its legal options. According to Bloomberg, Credit Suisse analyst Brett Reilly fears a failure to acquire these TexStar assets will force NuStar to cut its distribution.

Right now, NuStar sports an 8.7% yield and an annualized distribution of $4.38 per unit, which is one of the higher yields going in an industry known for its payouts. However, NuStar’s distribution coverage for the fourth quarter was not ideal, coming in at 0.67 times, slightly better than its full year coverage of 0.63 times. Compare that to the full-year or fourth-quarter distribution coverage for other midstream players:

  • Plains All American , full year 1.51 times 
  • Kinder Morgan Energy Partners , fourth quarter 1.16 times 
  • Enterprise Products Partners , full year 1.3 times

Anything over 1.0 is a strong coverage ratio, anything below it calls into question a partnerships ability to continue to pay its distribution, so the downgrade from Credit Suisse does not seem that unwarranted.

Foolish takeaway
This may be rock bottom for NuStar, and while I certainly wouldn’t advocate buying it right now, I do think the focus on fee-based revenue and building out its Eagle Ford assets bode well for the future. The first-quarter earnings call should give investors some more insight about the future of NuStar, regardless of what happens with the TexStar NGL pipe.

Enterprise Products Partners had a …read more
Source: FULL ARTICLE at DailyFinance