Kinder Morgan Predicts Future (KMP)

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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 noted that if crude prices averaged about $100, as theydid in 2008, it’s distributable cash flow would increase to around$4.52/unit. That’s about a penny of cash for each dollar increase inthe price of crude. Or a penny less for each dollar below decrease.

Either way, it won’t make much difference. Kinder Morgan includes itscommodity oil revenues in its CO2 segment, but the amount is smallcompared with the company’s fee-based pipeline and storage business.The company’s stock closed at $45.93 yesterday, off about 25% from its52-week high.

Paul Ausick
November 26, 2008