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Kinder Morgan (KMI) Gets Financial Assurance from Canada

Zacks

Kinder Morgan, Inc. KMI is going through a roller coaster ride with its Trans Mountain expansion project in Canada, where political uncertainty is playing a major role in deciding its future. Recently, the company received assurance from the Canadian government that losses related to politically-triggered delays in the project will be covered.

As the future of the project seemed in jeopardy, the company started to rethink over the matter. Kinder Morgan was thinking of walking away from the project if further delays would hamper the company’s plans. The recent bottleneck situation in Canada’s pipelines has forced the government to take steps in this expansion project. The New Democratic Party led government of British Columbia, however, criticized the decision. The party has support from the Green Party, an environment-focused federal political party in Canada.

Kinder Morgan — having already suspended any unnecessary spending on the project — stated that it has planned to abandon the project if the future of Trans Mountain still remains in the dark after May 31. Notably, Canada has suffered from five major pipeline project-scrapings due to delays, in the last three years. Currently, there are other pipeline projects in the country that are stuck with their progress like TransCanada Corporation’s TRP Keystone XL pipeline and the Line 3 replacement project of Enbridge Inc. ENB.

Canadian Finance Minister, Bill Morneau stated that if Kinder Morgan leaves the Trans Mountain project, the government will be ready to provide the financial assurances as and when any company steps in to take over. These measures mark the importance of the C$7.4 billion ($5.8 billion) project to the Canadian energy sector. The Canadian unit of Kinder Morgan owns the 1,150 km Trans Mountain Pipeline, which carries crude and refined oil from Alberta to the west coast of British Columbia. The new development will likely help Kinder Morgan to carry 890,000 barrels a day of crude from Edmonton, Alberta, to Barnaby, British Columbia.


Price Performance

Headquartered in Houston, TX, Kinder Morgan is engaged in energy transportation and storage in North America. The company has lost 15.9% in the past year against 15% growth of its industry.

Zacks Rank and Another Stock to Consider

Kinder Morgan currently has a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for a better-ranked stock in the same space like Nine Energy Service, Inc. NINE, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Nine Energy Service is an onshore service provider. For 2018, the bottom line is likely to be up 169.7%. In the last reported quarter, the company delivered a positive earnings surprise of 28.6%.

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