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Kinder Morgan Expands Terminal Biz

Zacks Equity Research

A leading master limited partnership Kinder Morgan Energy Partners L.P. (KMP) has embarked on a new business – Kinder Morgan Resources LLC – that will own mineral reserve interests and other assets in North America. The business will involve owning, leasing and acquiring natural resource reserves.

The new venture will form part of its Terminals business segment and entail leasing of properties to operators in exchange for royalty payments without actually owning the coal mine or other natural resources. The lessees of the properties and not Kinder Morgan will bear any commodity price risk related to the operations.

Kinder Morgan Resources LLC will be headed by, Richard M. Whiting, who has been appointed by the partnership as president. With over 35 years of experience in the coal industry, Whiting is expected to guide the new entity profitably.

Kinder Morgan’s other new ventures will offer enhanced services to its coal industry customers as well as other selected industry participants. The new business will also assist the partnership to fortify its presence among mineral producers and develop its terminal business.

Kinder Morgan Resources will function under the Kinder Morgan Terminals, which has over 180 terminals that store petroleum products and chemicals, as well as manage materials including coal, petroleum coke and steel products. Currently, the partnership has more than $450 million in ongoing coal terminals expansion projects and it is trailing additional opportunities.

According to market sources, in 2012, the partnership’s terminals business managed around 38 million tons of coal, as well as 11.6 tons of petroleum coke and 4.4 tons of soda ash, among other commodities.

Kinder Morgan carries a Zacks Rank #3 (Hold). However, Zacks Ranked #1 (Strong Buy) stocks – Enerplus Corporation (ERF), Newpark Resources Inc. (NR) and Gulfmark Offshore, Inc. (GLF) – are expected to perform impressively over the short term.

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