Black Hills Corporation
) has decided to purchase a natural gas pipeline from MGTC Inc.
The market reacted positively with Black Hills shares gaining
1.71% from Jan 9 and closing at $53.97 yesterday.
MGTC Inc. is an indirect, wholly owned subsidiary of
Anadarko Petroleum Corp.
). Black Hills will pay $6 million for the system, which provides
services to nearly 400 customers in the northeast Wyoming. The
annual throughput of the pipeline exceeds 2.8 billion cubic feet
Black Hills is working on a strategy to increase its customer
base via acquiring small businesses situated in the vicinity of
its existing operations. This current purchase is expected close
by the end of 2014, subject to approval of the Commission.
Wyoming is rich in natural reserves with nearly 100 companies
operating in the state. These companies control more than 27,000
miles of pipelines to transport oil and natural gas to refiners
and storage locations. The use of natural gas is on the rise due
to its clean burning nature and is gradually becoming the most
preferred source of fuel in the U.S.
The decision of Black Hills Corporation to increase its footprint
in Wyoming is thus justified given the anticipated spurt in
natural gas demand. President Obama's Climate Action Plan
followed by the U.S. Environmental Protection Agency's (EPA)
proposal for granting permission for setting up new power plants
is expected to increase the demand for natural gas.
Black Hills' acquisition of the pipeline will give it access to
over 271 miles of transmission pipeline and 135 miles of
distribution pipeline in northern Wyoming. This addition will
further expand its existing 624 miles of intrastate gas
transmission pipelines and 19,979 miles of gas distribution mains
and service lines.
The financial strength of Black Hills allows it to make strategic
acquisitions and also pay regular dividends to its shareholders.
The company has successfully increased its annual dividend in a
row for the last 43 years. Such a feat is bound to attract income
oriented investors to the stock.
Black Hills Corporation currently has a Zacks Rank # 2 (Buy).
Other electric utilities, which look attractive at current
Wisconsin Energy Corp.
NRG Yield, Inc.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
ANADARKO PETROL (APC): Free Stock Analysis
BLACK HILLS COR (BKH): Free Stock Analysis
NRG YIELD INC-A (NYLD): Free Stock Analysis
WISC ENERGY CP (WEC): Free Stock Analysis
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