Kinder Morgan (KMI) is one of the largest energy infrastructure companies in the world with a market cap of almost $40 billion. The company is one of the largest diversified energy companies in the North America, making it a strong play on North American energy. As we will see throughout this article, Kinder Morgan’s strong assets, growth potential, and financials make it a great investment.
Kinder Morgan Strong Assets
Kinder Morgan has an enormous array of assets. The company has the largest natural gas transmission network in North America and owns/operates 70 thousand miles of natural gas pipelines. As a result, the company is connected to every important U.S. natural gas resource play, as the largest independent transporter of petroleum products in North America.
The company also has massive terminal storage in North America. The company has 152 terminals and 16 Jones Act vessels for a total capacity of 147 million barrels of liquids and 59 million tonnes per annum of dry bulk products. As an add on, the company is also the largest transporter of CO2 in North America, moving 1.2 billion cubic feet per day.
Kinder Morgan Asset Locations - Kinder Morgan Investor Presentation
Looking closer at Kinder Morgan’s network of assets, we can see that the company is heavily connected to all major shale areas in the United States. Among these, the company has a strong network of assets through shale oil plays in the United States. The company’s network of assets will allow its volume to grow going forward.
As we can see on the top right, U.S. natural gas demand is anticipated to grow at close to double-digit volumes going forward. That will mean consistent demand for the products that Kinder Morgan moves around, and will help make the company a strong investment.
Kinder Morgan Growth Potential
On top of Kinder Morgan’s strong assets, the company also has enormous growth potential.
Kinder Morgan currently has $6.3 billion of capital projects underway. The company plans to pay for the entirety of these projects with internally generated cash flow, and plans to bring these projects online in the next free years. The most valuable project, the Elba project, should come online in late-2018 and early-2019 not far from now.
As we can see, Kinder Morgan has almost $3 billion of projects it plans to bring online in the next few years or so. Given that the company is worth almost $40 billion, that is almost 10% of the company’s market cap in new projects. That means these projects should help to grow earnings.
On top of this, looking at the long term, Kinder Morgan has several billion dollars of additional backlog. The company anticipates an extra $2-3 billion of opportunities on top of its currently recognized capital projects. Overall, this shows how Kinder Morgan’s growth should continue at an impressive clip going forward.
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