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Chesapeake Energy Corporation (NYSE:CHK) has created a 50/50 midstream joint venture with Global Infrastructure Partners that includes a significant portion of Chesapeake’s midstream assets in exchange for $588 million in cash. The new venture is called Chesapeake Midstream Partners, L.L.C. Read More
Posts for Ticker ‘KMP’
Chesapeake Trades More Assets for Cash (CHK, KMP, EPD)
Pipeline to Profits is Clogged (EPD, KMP, PAA, BSR)
Enterprise Products Partners LP (NYSE:EPD) reported first quarter earnings of $237.3 million (earnings per unit of $0.41) on revenues of $3.42 billion. In the first quarter of 2008, the company reported earnings of $272 million, per unit earnings of $0.51, and revenues of $5.68 billion. The 40% drop in revenues was attributed to lower commodity prices during the first quarter of 2009.
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Kinder Morgan And Broader LP Distribution Conundrum (KMP, EPD, ENB, BSR)
There could be some trouble ahead in at least some of the entities in the pipeline business and the practice of distributions from LP’s if you look at operating numbers and the trends in oil and energy prices versus distributions to holders of the companies. Kinder Morgan Energy Partners, L.P. (NYSE: KMP) has reported a cash distribution per common unit of $1.05 per unit and distributable cash flow of $0.97 per unit, compared with a distribution of $0.96 per unit and distributable cash flow of $1.12 per unit in the first quarter of 2008. The company reported net income of $0.15 per common unit, less than half analysts’ expectations of $0.31 per common unit. Revenue of $1.79 billion was also way off estimates of $2.87 billion.
Kinder Morgan attributed the declines to low prices for crude oil, lower transportation volumes in the refined products business, and reduced steel handling in the company’s bulk terminals business. We wanted to see how this compares to what is expected for earnings and distributions (dividends) competitors such as Enterprise Products Partners LP (NYSE: EPD) and Plains All American Pipeline LP (NYSE: PAA). Given the results for Kinder Morgan, there are still questions on the earnings versus the dividends.
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Cash Pipeline Still Flows at Kinder Morgan (KMP, SRE, COP)
Kinder Morgan Energy Partners L.P. (NYSE:KMP) reported earnings yesterday, and handily missed analysts expectations of $3.4 billion in revenue and earnings per limited partner unit of $0.53. Revenue for the fourth quarter totaled nearly $2.3 billion and earnings per unit came in at $0.26. Still, the stock rose about $2/unit before closing the day at $48.49/unit. The quarterly distribution to limited partners will amount to $1.05/common unit.
Pipeline Partnerships Face Credit Crunch (EPB, EPD, KMP)
We’ve noted before that pipeline master limited partnerships must grow if they are to attract investors. For nearly all MLPs, that means access to credit at low interest rates. Does that sound like today’s credit market?
Rigzone.com carried a Dow Jones Newswires story that tight credidt is making it difficult to raise money for new pipeline construction or acquisitions. Even though natural gas prices are low, volumes flowing through the pipelines remain high. That means that revenues to the pipeline companies remains high or even increases because MLP revenue is not tied to the commodity price.
Cash Pipeline is Flowing, But Rates are Up (ETP, KMP)
Energy Transfer Partners L.P. (NYSE:ETP) has priced an offering of $600 million in 9.7% senior notes due 2019, and the paper has been rated ‘BBB-’ with a ’stable’ outlook by Fitch Ratings. Earlier this year, Energy Transfer issued $1.5 billion in senior notes in three offerings. The proceeds from those offerings were used to repay existing debt. The new note will pay outstanding borrowing on the company’s revolving credit facility.
Which Major Energy Stock Is Best For 2009? (XOM, VLO, SLB, CHK, KMP, KMR)
Energy stocks have taken a pounding since crude oil prices started falling in July. In virtually every part of the energy business, share prices for the premiere companies are off by as much as 70%. We have reviewed Exxon Mobil Corp. (NYSE:XOM), Valero Energy Corp. (NYSE:VLO), Schlumberger Limited (NYSE:SLB), Chesapeake Energy Corp. (NYSE:CHK), Kinder Morgan Energy Partners LP (NYSE:KMP), and Kinder Morgan Management LLC (NYSE:KMR) to see which of the majors in each group may offer the best returns or the most safety in 2009. While the price of oil may be the largest factor, each company has its own merits and pitfalls that could affect shares in 2009.
Kinder Morgan Starts Ethanol Pipeline (KMP)
Until today, every drop of ethanol used in transportation fuel has been moved by trucks or train cars. This added to the cost of getting ethanol to market and to the amount of total carbon emitted in the production and use of ethanol. No longer. Kinder Morgan (NYSE:KMP) today announced the start-up of its 16-inchethanol product pipeline on its Central Florida Pipeline between Tampaand Orlando.
Kinder Morgan Predicts Future (KMP)
Kinder Morgan Energy Partners (NYSE:KMP) announced this week that it expects to distribute $4.20/common unit as its dividend in 2009. The company will distribue $4.02/unit in 2008. The company based its projections on a crude oil price of $68/b in 2009.
Kinder Morgan Hiking Payout, Yet Misses Targets (KMP, KMR)
After the market closed yesterday, Kinder Morgan Energy Partners (NYSE:KMP) reported EPS of $0.48 on revenue of $3.23 billion for the third quarter. This is a gain of more than 50% in earnings but analysts had estimated EPS of $0.59 on revenue of $3.41 billion. A clear miss. What is interesting is that the dividend is heading north.
Goldman Sachs Hits Oil Sector (BHI, EP, XOM, KMP, MMP, EPB, MRO, MUR, KGS, SLB)
In a perhaps late research call in the oilpatch, Goldman Sachs has downgraded the exploration & production sector to Neutral from attractive and downgraded the oil services sector to Neutral from Attractive. Interestingly enough. in all of the downgrades for these sub-sectors there are actually some upgrades in the group. Below are some of these top calls in the sector from Goldman Sachs:
Tracking Dividends: Kinder Morgan Energy Partners, L.P. (KMP)
Kinder Morgan Energy Partners LP (NYSE: KMP) expects to increase its third quarter cash distribution to its limited partners to $1.02/common unit. That’s 16% more than the cash distribution of $0.88/unit for the third quarter of 2007. Many MLP’s are in unique positions in today’s economy and some of these dividend payments appear safer than elsewhere in the market.
New Major Gas Pipeline From Fayetteville Heads North (KMP, ETP, SWN, CHK, BP)
Kinder Morgan Energy Partners (NYSE:KMP) and Energy Transfer Partners (NYSE:ETP) are teaming up again, this time on a joint venture to move up to 2 billion cubic feet of natural gas per day from the Fayetteville Shale to the upper Midwest. The two companies announced the formation of the Fayetteville Express Pipeline LLC (FEP), a 50/50 venture that will carry natural gas 187 miles from Conway county, Arkansas, to an interconnection to the Trunkline Gas Company pipeline that goes north to Chicago and on into Michigan. The projected cost for the FEP is $1.3 billion, and the pipeline is expected to be in service by late 2010 or early 2011.
Implications of New Natural Gas Pipeline Joint Venture (OGE, ETP, KMP)
A 50/50 joint venture between OGE Energy (NYSE:OGE) and Energy Transfer Partners (NYSE:ETP) will create a new midstream company, currently called ETP Enogex Partners LLC, to transport natural gas from Texas and Oklahoma to markets in California and the northeastern US. OGE is contributing all of its Enogex interests to the new JV, and ETP is contributing all its interests in its Transwestern Pipeline, the ETC Canyon Pipeline, and its 50% interest in the Midcontinent Express Pipeline (the other 50% is owned by Kinder Morgan (NYSE:KMP).
Updated Energy Production Outages From Hurricane Ike (XOM, CVX, COP, KMP, TPP, EPD, DO)
The effects of Hurricane Ike on the Gulf Coast are still being sorted out, but, so far reported infrastructure damage is light. That may change as producers, refiners, and pipeline operators begin more detailed examinations today. But this is part of why oil prices have sold off so much despite the outages and interruptions. Below you can see an update on which major oil and gas companies have released date regarding their facilities which were in Ike’s path.
Energy Watch Part IV: Pipelines (DPM, BGH, APL, AHD, EPD, KMP)
Just looking at the drop in price for common units of pipeline master limited partnerships could lead one to believe the midstream business is going to hell in a handbasket. DPC Midstream Partners (NYSE:DPM) is down 48% from its 52-week high, Buckeye GP Holdings (NYSE:BGH) is down 44%, Atlas Pipeline Partners (NYSE:APL) is down 32%, and Atlas Pipeline Holdings (NYSE:AHD) is down 30%. Even the two largest companies are lower — Enterprise Products Partners is down 12% and Kinder Morgan (NYSE:KMP) is off 6%.
Occidental To Try Enhanced Oil Recovery in Permian Basin (OXY, KMP)
Occidental Petroleum (NYSE:OXY) plans to spend $1.1 Billion on a natural gas processing plant and related pipelines. The company expects the enhanced oil recovery (EOR) program to increase it’s Permian Basin production by a "minimum" of 50,000 b/d within five years. The project ups Oxy’s developed reserves in the Permian Basin from 1.2 barrels of oil equivalent (boe) to approximately 1.7 billion boe. A very nice jump indeed.
The new processing plant will produce about 500 million cubic feet of CO2 per day, and a new pipeline will connect the plant to the Denver City, Texas, CO2 hub. That’s important, because it gives Occidental access to additional commercial supplies of CO2 if needed.
Occidental is not the only company pushing EOR in the Permian Basin. Kinder Morgan Energy Partners (NYSE:KMP) has for several years been transporting CO2 to properties it owns or operates in the Permian from its McElmo and Bravo Dome CO2 projects, which straddle the Colorado-New Mexico border. In 2007, Kinder Morgan produced almost 55,000 b/d from its Permian Basin properties, and pumped more than 600 billion cf of CO2 into the region. The company is expanding its CO2 operations, and expects to produce another 200 million cf/d. This is about five times the amount of CO2 that Oxy plans to produce.
However, Occidental’s reserves in the Permian Basin are much larger than Kinder Morgan’s, and the investment that Oxy is making now will reduce its per barrel production costs to levels similar to Kinder Morgan’s — $16.22/boe in 2007. That makes for very handsome profit margins with crude over $130.00 per barrel.
Paul Ausick
July 1, 2008
Final Leg of Huge Natural Gas Pipeline Approved (KMP, SRE, COP)
Rockies Express Pipeline, LLC today announced that it has received certification from the FERC for the third and final phase of it’s 1,697-mile, 42-inch natural gas pipeline running from western Wyoming to eastern Ohio. The project is jointly owned by Kinder Morgan Energy Partners (NYSE:KMP), a division of Sempra Energy (NYSE:SRE), and ConocoPhillips (NYSE:COP). Since it was first announced in November 2005, the first two phases of the project have been completed, and the pipeline now transports 1.8 billion cubic feet/day of natural gas to Audrain County, Missouri. The final 638-mile segment is expected to become partially operational by the end of this year.
Kinder Morgan originally owned 67.7% of the project and SRE owned 33.3%. In June 2006, ConocoPhillips purchased 24% from Kinder Morgan and may purchase an additional 1% once the pipeline is completed. This is one of the largest natural gas pipelines ever built in the US, and is expected to close the price differential (about $3/thousand cubic feet) between Rocky Mountain gas and Gulf of Mexico gas. The state of Wyoming was so eager for the pipeline that it agreed to ship 200 million cubic feet/day on the new line.
The pipeline is expected to exceed its current projected cost of about $5 billion by 5%-10%. The first cost estimate tagged the project at about $3 billion, with an expected in-service date of December 2007. But the project partners can certainly afford it, and the eventual payoff will certainly be a positive addition to cash flow. That’s what makes pipelines so attractive: they’re not really transporting oil or gas, but cash.
Paul Ausick
June 2, 2008
Kinder Morgan Juices Secondary Offering (KMP)
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) reported that its secondary offering of additional common units has been raised to a value of approximately $282 million due to a 15% increase in the number of shares to 5,000,000. The offering represents limited partner interests and allows underwriters to purchase up to 750,000 more units.
Lead underwriters includes Lehman Brothers and Morgan Stanley, while the co-managers are Citibank, Deutsche Bank, Goldman Sachs, UBS, Wachovia, Morgan Keegan, Raymond James, RBC Capital Markets, and Sanders Morris Harris.
Kinder Morgan, a master limited partnership, has enjoyed an increasing share price over the last month, rising by over $2 to from $56.14 at close on January 26 to $58.58 at close yesterday. Shares are now down roughly 2% to $57.14 in early trading.
JPMorgan recently raised its rating on this to an outperform rating.
Rachel Lopez
February 27, 2008
Top 10 Pre-Market Analyst Calls (CSIQ, COLM, DTE, ERTS, KMP, MER, MU, NKE, ZQK, YHOO)
These are not the only research calls we are looking at in pre-market trading, although these are the initial calls that grabbed our attention early on:
- Canadian Solar (NASDAQ: CSIQ) raised to Outperform from Market Perform at Oppenheimer.
- Columbia Sportswear (NASDAQ: COLM) downgraded to Neutral from Overweight at JPMorgan.
- DTE Energy (NYSE: DTE) and NRG Energy (NYSE: NRG) both were raised to Buy at UBS.
- Electronic Arts (NASDAQ: ERTS) raised to Outperform from Peer Perform at Bear Stearns.
- Kinder Morgan partners (NYSE: KMP) raised to Overweight from Neutral at JPMorgan.
- Merrill Lynch (NYSE: MER) downgraded to Underperform from Market Perform at Oppenheimer.
- Micron Tech (NYSE: MU) started as Buy at UBS.
- Nike (NYSE: NKE) raised to Overweight from Neutral at JPMorgan.
- Quicksilver (NYSE: ZQK) raised to Overweight from Neutral at JPMorgan.
- Yahoo! (NASDAQ: YHOO) cut to Hold from Buy at Citigroup; cut to Market Perform from Outperform at Oppenheimer.
Jon C. Ogg
January 30, 2008
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