Kinder Morgan’s commodity price exposure

KMI estimates every $1 per barrel change in WTI (West Texas Intermediate) crude oil will impact its distributable cash flow by ~$7 million. (KMI – Analyst Report), has chose to buy out the 53% ownership interest of Myria Holdings, Inc.in Natural Gas Pipeline Company of America LLC (“NGPL”) for an aggregate value of $242 million.

Brookfield Infrastructure will pay about $106m and boost its ownership in the pipeline venture from 27% to 50%. NGPL, operated by Kinder Morgan, is one of the largest interstate pipeline system in the US, with about 9,200 miles of pipeline. KMI shares were down more than 3% at $22.76 apiece, or just 3 cents above their session low. Brookfield Infrastructure Partners is listed on the NY and Toronto stock exchanges.

In other news, VP Thomas A. Martin purchased 10,000 shares of Kinder Morgan stock in a transaction dated Friday, October 30th. (-) BBEP, (-21.0%) Suspends monthly distribution for its common equity units, effectively immediately, citing the ongoing weakness in commodity prices. The stock has an average rating of “Buy” and an average price target of $38.52.

The stock is down 4.75% or $1.12 after the news, hitting $22.45 per share.

Kinder Morgan, Inc. (KMI) owns and manages a diversified portfolio of energy transportation and storage assets. It has underperformed by 44.55% the S&P500. On average, equities analysts forecast that Kinder Morgan Inc will post $0.72 EPS for the current year. This means 74% are positive. For more information please visit www.kindermorgan.com. Brokerage firm Deutsche Bank maintains its rating on Kinder Morgan, Inc.

Kinder Morgan is extremely active in daily volume, it is still owned heavily by many MLP investors, and it is heavily owned by MLP closed-end funds that track the sector.

The negative outlook reflects Kinder Morgan’s increased business risk profile and additional pressure on its already high leverage that will result from its agreement to increase ownership in NGPL, a distressed company. The company was meeting debt obligations by drawing money from a short term revolver, and was unlikely to avoid default unless its two parent companies – Kinder Morgan and Brookfield Infrastructure – offered support or restructured the business. In recent market movement, the Kinder Morgan Incorporated stock was seen at a -4.29 change from the 50 day moving average, which is -16.05%. The Terminals segment includes the operations of its petroleum, chemical, ethanol and other liquids terminal facilities and all of its coal, petroleum coke, fertilizer, steel, ores and other dry-bulk material services facilities.