I Can't Make You Love Me - Kinder Morgan Woos Investors with Financial Discipline, ESG Commitments

Over the last decade and a half, oil and gas companies have taken investors on a wild roller coaster ride as their ambitious growth strategies and stock prices have been boosted, then badly battered, by volatile demand and commodity prices. With sentiment toward the old-school energy industry turning negative, producers and midstreamers shifted course to emphasize value over volume, prioritizing solid cash flow generation and substantial shareholder returns. Midstream giant Kinder Morgan has found it especially difficult to win back investor confidence despite its largely successful efforts to stabilize its balance sheet, internally fund growth, and gradually restore its dividend. But will that be enough to improve the company’s prospects? In today’s RBN blog, we draw on more highlights from our recent Spotlight report on KMI’s portfolio, performance, and near-term growth potential, with an emphasis on the opportunities ahead.

We’ve written a lot lately about how U.S. E&Ps, whipsawed over the last decade by extreme price volatility and negative investor sentiment, have adopted a new fiscal discipline that de-emphasizes production growth and prioritizes generation of free cash flow to reduce debt and reward shareholders. But what about midstreamers? They too have been buffeted in recent years by volatile commodity prices, eroding investor support, shifting upstream investment patterns, and finally, a global pandemic. Midstream companies face a different set of challenges than oil and gas producers in repairing their balance sheet and restoring investor confidence, however, mostly because midstream investment decisions are determined both by downstream market changes and by E&Ps’ development and production activity — including producers’ ever-increasing focus on the Permian at the expense of other basins. In today’s RBN blog, we discuss highlights from RBN and East Daley’s Spotlight Report on Western Midstream Partners and how the master limited partnership has been working to reduce its debt and make the most of its strong base in the Permian’s Delaware Basin.

We’ve written a lot lately about how U.S. E&Ps, whipsawed over the last decade by extreme price volatility and negative investor sentiment, have adopted a new fiscal discipline that de-emphasizes production growth and prioritizes generation of free cash flow to reduce debt and reward shareholders. But what about midstreamers? They too have been buffeted in recent years by volatile commodity prices, eroding investor support, shifting upstream investment patterns, and finally, a global pandemic. Midstream companies face a different set of challenges than oil and gas producers in repairing their balance sheet and restoring investor confidence, however, mostly because midstream investment decisions are determined both by downstream market changes and by E&Ps’ development and production activity — including producers’ ever-increasing focus on the Permian at the expense of other basins. In the encore edition of today’s RBN blog, we discuss highlights from RBN and East Daley’s Spotlight Report on Western Midstream Partners and how the master limited partnership has been working to reduce its debt and make the most of its strong base in the Permian’s Delaware Basin.