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Kinder Morgan Raises 2013 Estimate
SM KMI DWSN
Kinder Morgan Inc. ( KMI - Analyst Report) , the parent company of pipeline operator Kinder Morgan Energy Partners LP , has raised its 2013 projections for itself and the latter.
The increase is based on the contributions anticipated from the purchase of Copano Energy that closed on May 1. KMI now proposes to declare dividends of $1.60 per share in 2013, an increase of nearly 2% from its published annual budget of $1.57 per share and 14% from its 2012 declared distribution of $1.40 per share.
KMP too intends to announce cash distributions of $5.33 per unit compared with its 2013 published annual budget of $5.28 per unit and up 7% from its 2012 declared distribution of $4.98 per unit.
The Copano acquisition will facilitate Kinder Morgan to pursue development activities in the prolific Eagle Ford Shale areas of South Texas. It will mark Kinder Morgan’s entry into the Barnett Shale Combo in north Texas as well as the Mississippi Lime and Woodford shales in Okla.
The recent purchase will also help in augmenting Kinder Morgan’s midstream services’ footprint, which will benefit KMI shareholders and KMP unitholders. As a result of added cost savings the incremental impact from Copano is likely to be somewhat higher than the preliminary estimates at the time the transaction was announced.
Kinder Morgan – the largest midstream and the third largest energy company in North America – has a combined enterprise value of about $115 billion. It owns or operates more than 80,000 miles of pipelines and around 180 terminals. The pipelines carry natural gas, gasoline, crude oil, CO2 and other products, while the terminals store petroleum products and chemicals and handle products such as ethanol, coal, petroleum coke and steel.
Both Kinder Morgan Energy Partners LP and Kinder Morgan Inc. carry a Zacks Rank #3 (Hold). However, there are other Zacks Rank #1 (Strong Buy) stocks – Dawson Geophysical Company ( DWSN - Snapshot Report) and SM Energy Company ( SM - Analyst Report) – which are expected to perform better over the next few months.