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Kinder Morgan Wins Texas Court Challenge for PHP Project

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Kinder Morgan, Inc. (KMI - Free Report) recently cleared a lawsuit hurdle for the $2-billion natural gas pipeline. A Texas court judge discarded a lawsuit that barred the company to build the proposed Permian Highway Pipeline (PHP) Project through the Texas Hill Country.

Lora Livingston, a judge from the Travis County District Court, Austin, TX, tossed out the claims made against the pipeline project, following four weeks of reviewing evidences and testimonies. Kinder Morgan is pleased with the ruling, which affirms the company’s steps taken for the project. The ruling makes sure that no single landowner can obstruct the building of a critical infrastructure.

The 42-inch pipeline, with a length of about 430 miles, is intended to carry about 2.1 billion cubic feet per day of natural gas. The gas will be sourced from the Waha to Katy areas, and will have links to the U.S. Gulf Coast and Mexico markets.

The project comes at an opportune time when there is a dearth of pipeline capacity for transporting natural gas and oil to Gulf Coast export facilities from the Permian. The project — with all of its capacity fully subscribed under long-term agreements — is anticipated to offer additional capacity for steady transportation of natural gas to the U.S. Gulf Coast. The project will likely come online by late 2020. EagleClaw, Exxon Mobil Corporation’s (XOM - Free Report) unit XTO Energy Inc. and Apache Corporation (APA - Free Report) are incorporated in the list of shippers for the pipeline. The pipeline is expected to help the company to set appropriate tariff and eradicate Permian bottlenecks.

Moreover, the PHP project is estimated to generate additional revenues of around $1 billion per annum for the state of Texas. Individual leaseholders are expected to get more than $2 billion annually in royalties.

Price Performance

Headquartered in Houston, TX, Kinder Morgan has gained 17.2% in the past year compared with 4.6% collective gain of the industry it belongs to.

Zacks Rank & Another Stock to Consider

Kinder Morgan currently has a Zacks Rank #2 (Buy). Another top-ranked player in the energy space is Plains Group Holdings, L.P. (PAGP - Free Report) , which carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Plains Group’s sales growth is projected at 26.1% through second-quarter 2019.

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