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Kinder Morgan Seeks Shippers for Additional SFPP Capacity

Zacks Equity Research

Kinder Morgan, Inc. KMI recently launched a shipper solicitation for part expansion of its SFPP, L.P. (SFPP) system. The binding open season is expected to bring in commitments for additional capacity of the company’s pipeline.

Notably, the extension is anticipated to add accrual capacity of around 7,500 barrels per day (bpd) to the existing system. It will transport Mexican-grade gasoline and diesel to SFPP’s Annex Terminal located in Tucson, AZ from El Paso, TX. The company plans to use an enhanced pump capability at SFPP’s El Paso Station to increase the capacity.

The open season is estimated to conclude on Jun 24 and the elongated capacity is projected to come online by Feb 1, 2020. Notably, the company’s SFPP system incorporates the North Line that includes around 864 miles of trunk pipeline. Currently, the SFPP operations incorporate 13 truck-loading terminals, providing multiple services to its clients.

Kinder Morgan has the largest network of natural gas pipeline in North America, spreading across almost 84,000 miles. Most importantly, the company’s midstream properties are linked to all the prospective plays in the United States that are rich in natural gas. These stretched out networks of natural gas pipelines, for which the company has invested more than $32 billion to date, fetch it stable fee-based revenues. In fact, Kinder Morgan generated a significant cash flow from fees charged for using its midstream properties.

Price Performance

The Kinder Morgan stock has rallied 30.4% year to date outperforming the 17.2% collective growth of the industry it belongs to.

Zacks Rank and Stocks to Consider

Currently, the stock carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Apache Corporation APA, Hess Corporation HES and Holly Energy Partners, L.P. HEP. While Apache sports a Zacks Rank #1 (Strong Buy), Hess and Holly Energy hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Apache’s earnings beat estimates in all the trailing four quarters, the average being 31.1%.

Hess’ earnings are expected to soar more than 130% through 2019.

Holly Energy’ earnings growth is projected at 6.5% through 2019.

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Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
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Hess Corporation (HES) : Free Stock Analysis Report
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