QUOTE AND NEWS
Market Intelligence Center  Jan 29  Comment 
Kinder Morgan (NYSE: KMP) closed yesterday at $62.62. So far the stock has hit a 52-week low of $40.19 and 52-week high of $65.49. Kinder Morgan stock has been showing support around 61.93 and resistance in the 63.79 range. Technical indicators...
Business Wire  Jan 27  Comment 
Kinder Morgan Energy Partners, L.P. (NYSE:KMP) today announced it has signed a definitive purchase and sale agreement to acquire four terminals from Slay Industries for approximately $98 million. The facilities include a marine terminal in Sauget,
Market Intelligence Center  Jan 27  Comment 
Kinder Morgan (NYSE: KMP) closed yesterday at $65.35. So far the stock has hit a 52-week low of $40.19 and 52-week high of $65.49. Kinder Morgan stock has been showing support around 64.79 and resistance in the 65.77 range. Technical indicators...
PR Newswire  Jan 27  Comment 
HOUSTON, Jan. 14 /PRNewswire-FirstCall/ -- (NYSE: KMP) What: 2010 Kinder Morgan Energy Partners Analyst Conference When: Thursday, January 28, 2010 @ 9:00 EST Where: http://www.videonewswire.com/event.asp?id=63368 How: Live over the Internet --Simply
Bulk Transporter  Jan 26  Comment 
Kinder Morgan Energy Partners LP announced a terminal venture designed specifically to handle renewable fuels. The transaction includes KMP’s acquisition of three unit train ethanol handling terminals in Linden NJ, Baltimore MD, and Dallas TX...
Market Intelligence Center  Jan 26  Comment 
Kinder Morgan (NYSE: KMP) closed yesterday at $65.18. So far the stock has hit a 52-week low of $40.19 and 52-week high of $65.48. The proprietary Key Risk Ranking for KMP has declined from a 4 KEY Low Relative Risk to a 3 KEY Moderate Relative...
StreetInsider.com  Jan 20  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Kinder+Morgan+Energy+Partners+%28KMP%29+Posts+Q4+Continuing+Ops+EPS+of+%240.34%2C+%240.42+Ex-Items%3B+Misses+EPS+Estimates/5261801.html for the full story.
Business Wire  Jan 20  Comment 
Kinder Morgan Energy Partners, L.P. (NYSE: KMP) today reported fourth quarter distributable cash flow before certain items of $341.8 million, up 62 percent from $211.0 million for the same period last year. Distributable cash flow per unit before
StreetInsider.com  Jan 19  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Equity+Offerings/Kinder+Morgan+%28KMP%29+Files+1.29M+Common+Unit+Offering+for+Selling+Unitholders/5258086.html for the full story.
Market Intelligence Center  Jan 19  Comment 
Kinder Morgan (NYSE: KMP) hit a new 52-Week high of $65.14 so far today. Currently the stock is up $1.67 (2.63%) to $65.12 on 520,940 shares traded. Today's high is up $24.93 from a 52-Week Low of $40.19. Kinder Morgan stock has been showing...



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KMP AT A GLANCE
 
 
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Kinder Morgan Energy Partners, L.P. (KMP) is a Master Limited Partnership (MLP) that is the largest independent owner and operator of petroleum product pipelines in the U.S., transporting more than two million barrels per day of gasoline, jet fuel, diesel fuel, and natural gas liquids. The partnership also has a capacity to transport 9 billion cubic feet/day of natural gas. It owns or operates more than 27,000 miles of pipelines and approximately 145 terminals. The partnership's terminals handle over 80 million tons of coal and other bulk materials annually and have a liquids storage capacity of about 70 million barrels for petroleum products and chemicals. The partnership is also the largest carbon dioxide marketer and transporter in the country.

The partnership divides its operations in four business segments: Product Pipelines (projected to contribute approximately 27% of the partnership's 2007 distributable cash flows), Natural Gas Pipelines (25%), Carbon Dioxide Pipelines (28% - CO2), and Terminals (20%). Knight Inc. (formerly Kinder Morgan, Inc.), one of the largest mid-stream energy companies in the U.S., owns the partnership's general partner interest and also maintains a roughly 10% limited partnership interest.

Tax Considerations

As an MLP, KMP must distrubute at least 90% of its income from qualifying sources such as natural resource activities, interest, dividends, real estate rents, income from sale of real property, gain on sale of assets, and income and gain from commodities or commodity futures. Much of the distrubution is typically treated as 'return of capital', which causes a downward adjustment to U.S. taxable investor's cost basis. It is not taxable in the year it is recieved, but increases capital gains taxes in the year the MLP units are sold.

Kinder Morgan does business (e.g. owns/manages pipelines) in many states; owners may be required to file income tax returns in each state in which the MLP conducts business, even when no taxes are owed.

MLPs aren't suitable for U.S. investor's IRA accounts because earnings above $1,000 will be considered unrelated business taxable income by the IRS. Tax consequences for foreign owners are generally onerous.

Investors wanting exposure to KMP, but without the tax filing complications, can purchase shares in Kinder Morgan Management LLC (KMR), a NYSE listed company that owns KMP units. KMR usually trades at a discount to the KMP share price, but there is no apparant reason for this.




Business Financials

Trends and Forces

Fluctuations in Oil Prices will impact cash flow

The majority of cash generated by KMP is fee based and is not sensitive to commodity prices. However, in its CO2 segment, the company hedges the majority of its oil production but does have exposure to unhedged volumes, most of which are natural gas liquids.

"The 2009 budget assumes an average West Texas Intermediate (WTI) crude oil price of $68 per barrel for the year ... every $1 change in the average WTI crude oil price per barrel is expected to impact the CO2 segment by approximately $6 million (or about 0.2 percent of our combined business segments' anticipated distributable cash flow). If the average WTI crude oil price per barrel in 2009 were the same as the price experienced in 2008 (about $100 per barrel), then KMP would generate distributable cash flow that could support cash distributions of approximately $4.52 per unit for 2009. This sensitivity to the WTI price is very similar to what the company experienced in 2008." Company press release.

Interest Rates affect current unit value and distribution growth

Calculating Net present value (NPV) is one common method for estimating the intrensic value for a time series of cash flows such as MLP distributions. Interest rate assumptions are crucial to the NPV equation.

Because MLPs distribute virtually all available cash to unit holders, they must access the capital markets to finance growth. This dynamic can cause MLPs to be disciplined acquirers, at least compared to traditional corporations, because management teams must demonstrate to unit holders that acquisitions and projects are immediately accretive to earnings. Internal Rate of Return (IRR) is often used in capital budgeting; interest rates figure prominently in this equation as well. Simply: higher interest rates limit growth opportunities.

Competition

oil & gas pipelines

Competition Williams Companies (WMB)[1] El Paso (EP)[2] Kinder Morgan Energy Partners, L.P. (KMP)[3] ENBRIDGE (ENB)[4] Spectra Energy (SE)[5] Questar (STR)[6]
Market Cap $Mil 10,570.00 5,600.00 13,250.00 11,610.00 11,180.00 4,640.00
Revenue $Mil 10,558.00 4,648.00 9,217.70 11,919.40 4,742.00 2,726.60
Gross Profit $Mil 5,437.00 4,403.00 2,145.80 2,909.90 1,926.00 1,394.60
Net Profit Margin % 8.02% 9.38% 9.52% 6.32% 19.91% 18.61%
Operating Margin % 17.48% 29.13% 8.76% 9.64% 30.41% 31.10%
Miles of Interstate Pipeline 14,200.00 42,000.00 25,000.00 2,505.00
Yield % [7] 0.39 / 35.78 = 1.1% 0.16 / 17.24 = 0.9% 3.48 / 53.99 = 6.4%

References

  1. WMB 2007 10-k, Item 6: Selected Financial Data, page 34
  2. EP 2007 10-k, Item 6: Selected Financial Data, page 40
  3. KMP 2007 10-k, Item 6: Selected Financial Data, page 48
  4. Enbridge 2007 Annual Report
  5. SE 2007 10-k, Item 6: Selected Financial Data, page 30
  6. STR 2007 10-k, Item 6: Selected Financial Data, page 23
  7. = yearly Cash Distribution or Dividend (from Form 10-K) / year-end price
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