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’ll begin with a quick recap of Part 1 of this series, where we reviewed the company’s history and outlined its new strategic initiatives. Since its founding in 1997, Kinder Morgan has employed a variety of industry-leading structures and strategies, including a master limited partnership (MLP), a leveraged buyout, an initial public offering, and a consolidation of its holdings into a C-Corp, to grow into a midstream colossus with a market cap that neared $100 billion in early 2015. However, in 2014-15, investors concerned about plunging oil prices began abandoning the sector. KMI’s stock price was hit particularly hard, plummeting 66% between the fall of 2014 and the fall of 2015 on concerns about its elevated debt load. Unable to fund future expansion as its stock price cratered and debt soared, the company slashed its dividend by 75% in late 2015 in order to preserve cash to fund its sizable project backlog, which triggered an ice-cold response from shareholders.
KMI’s management responded with a commitment to stabilize the company’s balance sheet, fund growth internally, and rebuild shareholder returns. Since 2016, KMI has slashed debt by 20%, reduced is leverage ratio below its 4.5x target, generated sufficient cash flow to internally fund expansion projects, and instituted a stock-buyback program. It has also increased its annual dividend from $0.50 per share to $1.08 per share, and has budgeted to increase the dividend to $1.11 per share in 2022. Despite all these moves, KMI’s stock price today is little changed from its price of $16.45 per share on January 1, 2016, and down about $25 per share from its April 2015 peak. Just as worrisome, its stock performance has lagged some major midstream competitors.
Join Backstage Pass to Read Full Article
About the song
“I Can’t Make You Love Me” was written by Mike Reid and Allen Shamblin and is the third track on Bonnie Raitt's 11th studio album, Luck of the Draw. Raitt’s vocal performance on the song was done on the first take. She thought that the feel and authenticity for the sad song wouldn’t be duplicated if they tried for a “perfect” take later. The song was released as the third single from Luck of the Draw in October 1991 and went to #6 on the Billboard Adult Contemporary chart and #18 on the Billboard Hot 100. In November 2016, the song was inducted into the Grammy Hall of Fame.
Luck of the Draw was recorded at Ocean Way Recording, Capitol Studios and Conway Studios in Los Angeles, with Bonnie Raitt and Don Was producing. The LP was released in June 1991 and went to #2 on the Billboard Top 200 Albums chart. Three charting singles were released from the album, and it has been certified 7x Platinum by the Recording Industry Association of America. The album was dedicated to Stevie Ray Vaughan, who had recently died in a helicopter accident following a show in Wisconsin. More than 40 musicians were involved in the recording of the LP, which featured Raitt on lead and backing vocals; electric, slide and acoustic guitars; and electric piano. The second cut from the album, “Good Man, Good Woman,” was a duet with Delbert McClinton, and also appeared on his Never Been Rocked Enough album. The song won a Grammy Award in 1992 for Best Rock Performance by a Duo. Luck of the Draw won a Grammy Award for Best Female Rock Vocal Performance, and the single from the album, “Something to Talk About,” won a Grammy Award for Best Female Pop Vocal Performance in 1991.
Bonnie Raitt is an American blues singer, guitarist and songwriter. She has released 17 studio albums, one live album, three compilation albums and 29 singles. Raitt has won 11 Grammy Awards and one Americana Music Award, and was awarded an Honorary Doctor of Music Degree from Berklee College of Music. She also has received the Harvard Arts Medal and a Lifetime Achievement Award from the National Guitar Museum and was inducted into the Rock and Roll Hall of Fame in 2000. She still records and tours.
