ok, so ocelotz is generally recognized (hopefully) as a short who is providing biased information. Somehow I wasn't picking that up. It can get to be as if a person receives a phone call each day asking if their refrigerator is running. ocelotz deserves abuse heaped on him.
"Affecting future growth projects can impact current transport rates given that those rates include construction of future pipelines."
The rates charged to current gas transportation customers include the cost of constructing future pipelines? I don't think so. Customers paying for the cost of a new pipeline in some other part of the United States that won't even be serving them? So why was it necessary to divert DCF from dividends to capex if current customers are paying for the capex already?
ocelotz, could you explain your rambling, always negative comments? You want to help with the bigger picture? If you are over 80 years old, I will give you a pass.
unkaphil60, insider purchases is one area where I am disappointed with KMI management. They did a lot of buying in late September or early to mid October of last year at prices in the mid to high 20's. They all bought about the same time, as if it was coordinated. I can't recall if RK bought at the same time. Either it was a mistake, and they thought they were buying at the bottom when the stock was badly mispriced, and they believed that, once the facts get out, the stock would spring back up. Or it was a last ditch effort to hault the decline, and they knew that it may or may not work, but at least they have to try. Once it didn't work and the stock was further cut in half, there was no point trying to bolster the stock anymore. By then, the preferred had to be issued, and the dividend cut.
The CEO and the CFO hold tens and tens of millions $ in KMI stock, so I am surprised to see them acting as if they were merely career employees who are not out to build their personal fortunes by individual stock activity. I realize that as insiders, they can't be too active in trading the stock. But them not making investments of any size after the severe crash is surprising and disappointing.
RK may be at the point where he has big financial commitments to his foundation, and can't be diverted in efforts to make a large fortune even larger. He is already there.
unkaphil60, there is no way that a large decades old interstate pipeline serving profitable and growing markets can be purchased without generating a large amount of goodwill. The current market value of the pipeline will much higher than the the value that is carried on the books of the seller. It was so much cheaper to build pipelines in the past, and depreciation expense has reduced the carried value further. The difference between the sales price of the pipeline (deemed sales price, since these are stock transactions, not physical asset sales) and its carried value on the seller's books is goodwill.
I'm sure ganadero is well aware of this fact. His object is to post negative comments. He will never enter into a discussion with anyone in order to reconcile differences in understanding. He won't be troubled by the facts. It would be pointless for him to try to explain his comments in further detail.
Most of us on this board are dealing in good faith, writing only what we believe to be true. Ganadero and ocelotz are not, yet they are tolerated and treated as if their comments represented valid opinions. I am becoming very intolerant of dishonesty.
unkaphil60, it would be interesting to know how much, if any, gathering volumes have changed since the oil price crash. Same with interstate pipeline volumes. Also, in the long term, low NG prices result in additional gas usage. New petchem plants, coal fired power generators confidently switching to NG because of it low price.
As for producers, there is also the factor that when they have their back to the wall financially, they produce as much as possibly from wells that are already producing to maintain or increase cash flow. They just don't drill more new wells.
unkaphil, do you happen to know the revenue amounts that KMI generates from oil sales as opposed to gas sales? I would have thought their oils sales are larger than NG sales.
ocelotz, as I've told you before. You have a special talent for talking in circles, stating unrelated conclusions, hopping from one reason to another, never explaining anything in enough detail for a person to even judge the basis for your conclusions. You never reply back to answer questions. You just retort with more unexpected statements casting KMI's prospects in a dim light.
KMI's 2016 budget in the January analysts presentation showed that KMI's priced sensitivity to natural gas prices within the realm of possible prices is very small over the next two years due to hedging, as well as the relatively small portion of KMI's revenue that is derived from nat gas sales.
Tell us why the price sensitivity claimed by KMI is inaccurate. But you won't do that. You are just writing your posts as some kind of joke. Nobody is going to make money shorting KMI at this point. Your argument is that with low NG prices, producers will reduce production without impacting the price of NG, and users will reduce their use of NG.
unkaphil60, l like your way of thinking about what the future holds for KMI and its investors. Four or five months ago, the argument for KMI was that it wouldn't matter what KMI did with the cash flow long-term. Share buybacks, debt repayment, capex funding, it wouldn't matter, was the argument. Now I think its starting to gel in the blogosphere that its got to be dividends.
The promise of future growth doesn't do much for KMI's current share price. Too much of a reminder of how high tech growth companies used to plow everything back into the company to build market share. Most of the money was just wasted. That's not KMI's way, but future growth of energy companies doesn't command much today.
I think KMI does (did?) have a rather narrow range of appeal to investors. Overwhelmingly, I think, KMI's investor base was/is made up of retired males, some way beyond recent retirement. So many seem overly focused on the dividend and the share price. They don't seem to have experienced market turbulence or setbacks before, although they must have been invested during the financial crisis. No amount of explanation can reach them or change their minds when they pick up a notion from the likes of Brian Nelson. Nothing seems to sink into their minds about what the company has done, is doing, and why. Why someone would hang around here posting negative and erroneous statements about KMi is beyond me. Being short KMI does not make sense this far past the meltdown. Doogoo1 was right about KMI's investor base (admittedly the distorted view that I am getting from Yahoo and Seeking Alpha).
The years will quickly fly by, but to a young child, or an oldster like we have here, a year or two might as well be forever.
There was the MLP meltdown, and it had to catch KMI along with the other midstreams. If KMI went down with crude oil, I hope it stays connected and rides it back up, if oil goes up and stays up.
It would be hard for KMI to make money that way, waiting for certain regions to realize the mistake they are making. Its better to be able to move the gas to locations where it is wanted, and where the pipelines can be built to get it there. I'm glad that KMI can move Marcellus and Utica gas to Chicago and the Gulf Coast.
"It will depend on if KMI can build a business case for the project, it always does. Two projects have been canceled because a business case could not be made."
Regarding Palmetto, was the "business case" immediately lost when the State of Georgia said that it would not allow eminent domain to be used by KMI to acquire right of way?
Regarding NED market path, was the business case lost when a crucial customer decided to commit to a competing project?
As for Trans Mountain, presumably if the shippers want a pipeline that allows their product to reach global markets, and KMI wants to build and own that pipeline, the business case is made. What on earth could your thinking be if you wonder whether or not the business case is made?
sleepym, I don't think you've been reading the 10-K. Pages 6 and 7 of this form show that KMI acquired or built and placed in service 10 different assets in 2015. Total cost was around $6 billion. $3 billion was for the Hiland acquisition and the other $3 billion went to 9 different projects, none of them costing over $800 million, most in the $200 million range.
Please give an example where KMI passed on a more promising, lower cost project because it didn't move the needle enough or it threatened an existing pipeline of KMI.
sleepym, generally a 42 gallon barrel of crude oil can be refined into 17 different products with a total volume of 45 gallons. So refining crude at a remote site would just increase the transportation cost of getting that greater volume out of the local area and into the various markets. Tar sands crude probably has less than 17 products, but its still multiply products, and they probably can't be comingled in one pipeline. Where before, one large pipeline was needed, after refinement, numerous pipelines would be needed.
paidtopump,2001, you are a difficult guy to follow. You are writing at a level of understanding about the tar sands and the Alberta government that isn't found on this message board. An upgrader refines bitumen so that it is more like normal crude oil that a refiner would use?
Would you explain what meant about Kinder being an obvious industry leader when it comes to natgas conversion? Conversion? And what a small sliver of KMI the natgas part really was? ?????
paidtopump, have you ever read about Asperger's Syndrome? The strong focus on one thing can be a great advantage. It is also helpful to be aware of how your mind is working. It helps me.
sm.stephenson, is the 20% increase in BPD a meaningful statistic? What should matter is the earnings derived from the increased crude oil volumes.
As for the NEB decision, I believe this decision has to be based upon objective standards and existing rules. Thus, there is no basis for not getting approval. The Canadian government's decision in late December is the one that can be based upon politics, subjectivity, and also fortunately, Canada's financial situation.
I actually did some checking this time, and learned that the Trans Alaska Pipeline System is owned by the big oil company shippers, including Exxon. Trans Alaska is FERC regulated. Also, I found a proposed "Permian Longview and Louisiana Extension" pipeline project owned by Exxon and Sun Oil and it would be a FERC regulated common carrier.
But its safe to say that Exxon and KMI generally aren't competing in the same space regarding pipelines.
Considering the fact that no one can name even one pipeline that Exxon owns should cause us to wonder if Exxon owns any pipelines at all. I'm talking about FERC regulated common carrier pipelines. I'm thinking that Exxon owns some big crude oil pipelines, but it uses them for moving its own oil. It does not ship for customers, or, if it does, its a joint venture basis where another oil producer ships its own oil in the same pipeline at the same time, and that other producer would share in the costs of the pipeline on a breakeven basis.
A reason rate regulated pipelines are usually not owned by non-pipeline companies is that the regulatory agency can be tempted to look at the profits of the parent company (primarily in an unrelated business) and conclude that the pipeline does not need a rate increase (when it actually does) because the parent is making great profits in its main non-pipeline business. A pure pipeline owner can claim that without adequate rates, it can't afford to safely run the pipeline. It has no other sourced of income. KMI, of course, has E&P, terminals, product pipelines, gathering lines, etc., so its not purely rate regulated.
Exxon does own 9.55% of Spectra, but it probably got that ownership when it sold Spectra some gathering or product pipelines that weren't rate regulated.
"I think you hold it I don't have a lot of faith in it, but that group is moving up. That one hasn't moved up yet because it does have a trust problem is the way I look at it."
I suppose it is a true statement. KMI does have a trust "problem" rightly or wrongly, as evidenced by so many posts here and Seeking alpha, etc.
Cramer has to pander to his viewers, who mostly believe that they were lied to. This group of won't think deeper about this issue, so their minds can't be changed anyway. It doesn't help to try to explain that KMI management could not have done anything differently. KMI's business is still doing fine, but the stock price collapsed. Transforming the company's infrastructure to be positioned for success following the shale revolution is absolutely essential, yet many in the older shareholder base seem to think that maintaining their high dividend was more important.
KMI can easily buy its way out of the share price slump, once capex is funded, by raising its dividend. Long term investors should just buy more KMI stock if they don't already have enough.
Anti-trust? Does Exxon already own a large share of this nation's interstate gas pipelines? They own almost none of it. KMI is not an integrated oil company. Their oil production is only a small fraction of Exxon's total annual production.
But, can you imagine what would happen at Exxon's gas station's any place where they tried to build a new pipeline? Environmentalists would urge a boycott, picketing the stations and harassing the customers. KMI doesn't sell at retail, so they are insulated from business boycotts.
c.note08, thanks for the reply. I understand that anchor stores in the malls get very low cost leases because they act as a draw for people who then shop at the smaller stores within the mall.
I've been a REIT investor for 20 years. There was a scare back in year 2000 that "all shopping will move to the internet." Malls survived that one, but maybe the day will come when they don't.
There is something to be said about the human need and desire to go to the "marketplace" to see and be among other people. I'm hoping that need doesn't die out.