Latest news with #TridentIntrastatePipeline
Yahoo
30-01-2025
- Business
- Yahoo
Kinder Morgan Announces the Advancement of $1.7B Gas Pipeline in Texas
Kinder Morgan KMI, a Houston-based midstream energy company, has announced that it will move forward with its $1.7 billion Trident Intrastate Pipeline project in Katy, TX. Once completed, this ambitious 216-mile pipeline will transport 1.5 billion cubic feet of natural gas per day to Port Arthur. The project is scheduled to go live by the first quarter of 2027, contingent upon securing the necessary permits and approvals. CEO Kim Dang highlighted that the pipeline's development is strongly connected to the increasing energy needs of Texas's growing AI data center sector, which has been a significant driver for the project. Kinder Morgan has already secured long-term contracts for the pipeline and two other major natural gas projects — South System Expansion 4 and Mississippi Crossing — with a combined projected cost of around $5 billion. In its commitment to responsible development, Kinder Morgan highlighted that the Trident Intrastate Pipeline project is backed by long-term contracts. Additionally, the company is working closely with impacted landowners to address concerns regarding the pipeline's route and construction. The Trident project is part of a broader trend in Texas, where several energy infrastructure developments are being announced. Last month, Energy Transfer approved the final investment decision for the Hugh Brinson Pipeline, which will deliver 2.2 billion cubic feet per day of natural gas to the Dallas-Fort Worth area. Similarly, WhiteWater Midstream revealed plans for a 2.5 billion cubic feet per day pipeline linking the Permian Basin to a gas hub near Corpus Christi. These projects reflect the increasing demand for natural gas in Texas and the ongoing efforts to expand the state's energy infrastructure. As Kinder Morgan advances with the Trident pipeline, the company is positioning itself to meet the future energy needs of both industrial growth and the digital economy, reinforcing Texas' role as a critical player in the U.S. energy landscape. Kinder Morgan currently carries a Zacks Rank #2 (Buy). Investors interested in the energy sector may look at some other top-ranked stocks like SM Energy Company SM, Sunoco LP SUN and Range Resources Corporation RRC. While SM Energy and Sunoco presently sport a Zacks Rank #1 (Strong Buy) each, Range Resources carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here. SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company's attractive oil and gas investments should create long-term value for shareholders. Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. Sunoco is poised to benefit from the strategic acquisitions aimed at diversifying its business portfolio. Range Resources is among the top 10 natural gas producers in the United States. Its diversified portfolio is spread between low-risk and long reserve-life Appalachian assets. The company's extensive inventory of Marcellus resources with low breakeven points is a significant asset. With expanded LPG export capacity, RRC is well-positioned to meet the rising global demand, capitalizing on natural gas's role as a clean-burning fuel amid a low-carbon shift. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Range Resources Corporation (RRC) : Free Stock Analysis Report Sunoco LP (SUN) : Free Stock Analysis Report SM Energy Company (SM) : Free Stock Analysis Report Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report To read this article on click here. Zacks Investment Research
Yahoo
29-01-2025
- Business
- Yahoo
Artificial Intelligence (AI) and More Give Kinder Morgan a Robust Backlog. Is the Stock a Buy?
Kinder Morgan (NYSE: KMI) recently reported solid fourth-quarter results and issued 2025 guidance. However, most notable from the report was the increasing project backlog the company was seeing as a result of natural gas demand coming for LNG (liquefied natural gas) exports, power plants, and artificial intelligence (AI). Let's look at the pipeline company's most recent results and guidance to see if this is a good time to buy the stock. One of the biggest things to come out of Kinder Morgan's latest earnings report was the company's growing project backlog. Its project backlog increased a whopping 60% compared to its third quarter, going from $5.1 billion to $8.1 billion. Projects related to natural gas accounted for 89% of its backlog. In expects the EBITDA multiple on most of its projects (those not associated with carbon dioxide enhanced oil recovery) to be 5.8 times. This means that for every $100 million it spends, it expects to generate an incremental $17.24 million in EBITDA from these projects. Midstream projects are often done between 6x to 8x EBITDA multiples, so this is a very solid expected return on these projects. Kinder Morgan highlighted three big natural gas projects it has recently secured: South System Expansion 4, Mississippi Crossing, and the Trident Intrastate Pipeline. The company said it is very well positioned for the trends driving natural gas volumes, with it serving 45% of the LNG export demand, 50% of natural gas exports to Mexico, and 45% of the power demand in the desert Southwest, Texas, and Southeast regions. It also noted that we are still in the very early innings of AI data centers and the power needed for them. It sees natural gas demand in the U.S. rising by 28 billion cubic feet (BCF) a day by 2030. This projection is very similar to the 28.5 BCF a day increase that natural gas producer Antero Resources recently provided. While U.S. natural gas consumption has gradually been increasing, these projections are close to doubling recent consumption within five years, which would be an enormous increase. Turning to its results, Kinder Morgan's adjusted earnings per share (EPS) jumped 14% to $0.32. That was just below analyst expectations for EPS of $0.34. It adjusted EBITDA, meanwhile, rose 7% to $2.06 billion. Its distributable cash flow (DCF), which is operating cash flow minus maintenance capital expenditures (capex), climbed by 8% to $1.26 billion. Its DCF per share rose 10% to $0.57. Adjusted EBITDA and DCF are two of the most common metrics used to evaluate midstream companies. Kinder Morgan declared a dividend of $0.2875 per share, a 2% increase compared to a year ago. Its forward yield is about 3.8%. For the year, it generated free cash flow of after dividend payments of $449 million, so the dividend is well covered. The company ended the year with leverage (net debt divided by trailing-12-month adjusted EBITDA) of 4 times. That is within the typical 3 times to 4.5 times range for midstream companies, and its own leverage target of 3.5 times to 4.5 times. Looking ahead, Kinder Morgan forecasts a 4% increase in adjusted EBITDA to $8.3 billion and a 10% jump in adjusted EPS to $1.27. It is looking to reduce its leverage to 3.8 times by year-end while increasing its dividend by 2% to $1.17 for the year. The guidance does not include its recently announced $640 million Outrigger Energy II acquisition to expand its footprint in the Bakken oil formation. It said the acquisition was being done at a multiple of 8 times 2025 expected EBITDA, which would be about $80 billion if it owned it for the entire year. Moving forward, Kinder Morgan plans to now spend $2.5 billion a year in growth capex over the next several years, up from a prior budget of $2 billion. Kinder Morgan's Q4 results and guidance were generally solid, but it is its strong project backlog and expected return on these projects that is exciting. The industry is expecting huge natural gas demand over the next several years, and Kinder Morgan is well positioned to take advantage of these increased volumes. In addition to increasing demand in the in the U.S. stemming from AI data centers, there is also huge demand to export natural gas to Mexico and to ship it overseas as well. Kinder Morgan has strong ties to the Texas utility market and also has pipelines near Abilene, Texas, which will be the first data center site of the proposed $500 billion Stargate AI data center project. As such, it is in a good spot to be an AI winner, as Texas appears to be at the heart of the AI data center buildout given its proximity to cheap associated gas coming from the Permian basin. While the market was roiled Monday by DeepSeek, a new Chinese AI player whose model is said to be very cheap to train, there is still much not known about the accuracy of that claim, and I would not see this derailing U.S. AI projects based on speculation. From a valuation perspective, Kinder Morgan trades at an enterprise value-to-EBITDA ratio of just over 11 times. That's below where midstream companies have traded at in the past and is an attractive valuation given the growth opportunities in front of the company. As such, Kinder Morgan is a solid stock to consider at current levels. Before you buy stock in Kinder Morgan, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Kinder Morgan wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $725,740!* Now, it's worth noting Stock Advisor's total average return is 894% — a market-crushing outperformance compared to 175% for the S&P 500. Don't miss out on the latest top 10 list. Learn more » *Stock Advisor returns as of January 27, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kinder Morgan. The Motley Fool has a disclosure policy. Artificial Intelligence (AI) and More Give Kinder Morgan a Robust Backlog. Is the Stock a Buy? was originally published by The Motley Fool Sign in to access your portfolio
