Thanks to the various shale oil and gas discoveries, the energy boom in North America also has its constructive spinoffs. Pipeline transportation and energy storage company Kinder Morgan Energy Partners
The Houston-based company rode the boom in natural gas production, and increasing demand for carbon dioxide, to post a 50% growth in operating income. As a result, income from continuing operations clocked in at $480 million, a fantastic 65% increase compared to the year-ago quarter.
Acquisitions: The best way to expand?
The company used small acquisitions and consolidations to build its asset portfolio, and this has proved to be successful so far. The natural gas pipelines business saw a 25% increase in earnings before depreciation, thanks mainly to the 50% buyout of Petrohawk's stake in midstream natural gas company KinderHawk. This move should bring long-term gains for Kinder Morgan. KinderHawk operates in the prolific Haynesville and Bossier natural gas shale plays, where it has gathering, treating, and dehydration facilities. With a total output capacity of more than 2 billion cubic feet (Bcf) per day, Kinder is well-positioned to exploit these shale plays.
The 185-mile long Fayetteville Express Pipeline, a $1.1 billion joint venture with Energy Transfer Partners
Carbon dioxide: Another huge potential?
The CO2 business also saw healthy growth due to rising demand in West Texas for carbon dioxide, which is used for enhanced oil recovery. Earnings in this segment grew 31% from the year-ago quarter before taking depreciation and amortization costs into account. Management sees enhanced oil recovery methods increasing CO2 demand and, in the process, potential opportunities for expansion. Currently, Kinder Morgan is working on the $255 million expansion of its Doe Canyon CO2 source field in Colorado. This will increase existing production capacity by more than 60%. The company also closed a deal in January to acquire the St. Johns CO2 source field in Arizona.
While other segments also witnessed growth, what I'm excited about is the impending $38 billion takeover of El Paso
Foolish bottom line
The natural gas boom should continue for a long time. And I feel that transportation and storage companies will definitely cash in. Kinder Morgan Energy Partners looks like a strong bet in this space. This company looks set to reap the harvest in the long run. Right now, to help you stay up to speed on the top news and analysis on Kinder Morgan Energy Partners, please add the company to your free personalized watchlist.
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Fool contributor Isac Simon does not own shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy.