King Kinder Morgan Inc (KMI) Expands its Empire

According to the data released by EIA, the production of natural gas in the US is expected to rise by almost 44% to 33.1 trillion cubic feet by 2040 in comparison to 2011. More production will mean more movement of natural gas from the site of production to different processing units and export facilities. This is what Kinder Morgan is looking to cash in on. Moreover, the demand from Asian countries for natural gas has opened up new opportunities for Kinder Morgan, as more gas needs to be carried and processed.

Though the sudden boom in natural gas production led to a decrease in price, companies like Kinder Morgan and Copano work on a business model where revenues are linked to the volume processed and moved, rather than price. So it’s an all-gain and no-loss situation for the company.

Foolish Bottomline:

Copano is a company that operates in the same line of business as Kinder Morgan. This kind of horizontal acquisition is bound to benefit the market leader Kinder Morgan, and the fact that entry of competitors is restricted to government regulations will further solidify its position. This stock is something that you can’t take your eyes off of.

The article King Kinder Expands its Empire originally appeared on Fool.com and is written by Satarupa Bose.

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