Kinder Morgan (KMI) stocks reeled the pressure during Monday market because of Iranian minister’s remark to increase oil production. Stocks fell 0.41% to $17.68 on Monday and Street Rating Agency has given “Sell” rating to its stock with grade of D+.
Company’s performance was lackluster over the past few years making it unfavorable to investors. With return on equity are low, high debt risk, weak operation cash flow and downward movement of earnings per share made stock marked in negative category.
Crude oil fell 0.89% to $47.98 per barrel and Brent crude fell to $48.25 and sliding 0.96%. Up from 2 million barrels a day it is going to increase and during middle summer it could reach up to 2.2 million barrels a day, said the Iranian deputy oil minister Rokneddin Javadi as per correspondent reports. Ok delivery hub has seen drop in inventory of 978,862 barrels at the end of week on 20th May.
The analysts have downgraded stock on 12 months data research and not on any particular day. Oil future trading is also under pressure of selloffs. According to analysts, this is the first time this year that oil rigs operated by U.S. drillers held steady.
The KMI has already announced a budget cut this year due to 27% decrease in earnings. Capital spending plan reduced to $2.9 billion, according to chief executive Steve Kean. The company also has already announced spending cuts by $900 millions in January. Company has reduced backlog to $14.1 billion at the end of first quarter compare to fourth quarter of $18.2 billion. Backlog reduction happened due to removal of inefficient contractual commitments by England customers, Northeast Energy Direct Market project and removal of Palmetto pipeline project. KMI has reduced its dividend by 75% to keep cash flow for growth.
Kinder Morgan reported profit for the year ended were $315 million down $429 billion and earnings per share were $0.12, revenue was down to 11% to $3.2 billion. A recently conducted poll’s results predicted profit of 19 cents per share and revenue of $3.74 billion.
Company’s carbon – dioxide business which has more exposure to declining prices reported profit fell to $223 million down 21%. However, volume made upward direction of 2%.
Hans Van Cleef of ABN Amro bank who is also senior energy economist said, “People are waiting to see how supply translates in actual numbers from Iraq and Iran.”
Kinder Morgan is an energy and energy infrastructure company based in Houston, North America. With this plunge in the oil prices, they are undoubtedly affected. The next few weeks would be very critical for this company and they would be keeping a close eye at the oil prices.