We are downgrading our recommendation to Underperform from Neutral
on Kinder Morgan Inc, following its lower-than-expected third
quarter results. The company's focus on natural gas has raised
concern amid a sluggish natural gas price environment. We also
remain bearish considering the risks that include a decrease in
crude oil production and pricing at the CO2 segment, a decline in
refined products or natural gas demand, and rising costs associated
with organic growth projects. Also in the near-term performance
would be affected by dropdown of interest in Ruby Pipeline, Gulf
LNG and in Young Gas Storage. Finally even with its diversified set
of assets, Kinder Morgan has little exposure to the shale oil
infrastructure. Its most exceptionally placed oil asset
infrastructure is Transmountain.
Texas-based Kinder Morgan, Inc., (KMI) is one of the largest
midstream energy companies in North America, operating
approximately 80,000 miles of pipelines transmitting natural gas,
refined petroleum products, crude oil, carbon dioxide and
additional products. It has more than 180 terminals that store
petroleum products and chemicals, as well as ethanol, coal,
petroleum coke and steel.
KMI owns the general partner (GP) interest and incentive
distribution rights (IDRs) of Kinder Morgan Energy Partners, L.P.
(KMP) and El Paso Pipeline Partners, L.P. (EPB). The company also
owns limited partner units of KMP, Kinder Morgan Management, LLC
(KMR) and EPB. KMP is considered to be one of the leading publicly
traded pipeline limited partnerships in America.
The company's reportable business segments comprise KMP's first
five segments as well as NGPL PipeCo LLC. These include:
KMP - Products Pipelines, Natural Gas Pipelines, CO2, Terminals,
Kinder Morgan Canada
NGPL PipeCo LLC - KMI holds 20% equity interest in NGPL PipeCo
LLC that is considered to be a major interstate natural gas
pipeline and storage system.
Kinder Morgan Inc. (KMI): Read the Full Research
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