Date of Graduation

5-2015

Document Type

Thesis

Degree Name

Bachelor of Science in Business Administration

Degree Level

Undergraduate

Department

Finance

Advisor

Stamenov, Ventsislav

Reader

Rennie, Craig

Abstract

The main objective of this paper is to investigate the reorganization of Kinder Morgan’s (KMI) master limited partnership (MLP) structure. In October 2014, four publicly traded companies – Kinder Morgan, Inc. (NYSE: KMI), Kinder Morgan Energy Partners, L.P. (NYSE: KMP), Kinder Morgan Management, LLC (NYSE: KMR), and El Paso Pipeline Partners, L.P. (NYSE: EPB) – were merged under the Kinder Morgan, Inc. name. This study analyzes the consolidation of KMI through the use of qualitative and quantitative research. The qualitative research involves the study of the company’s 10-K reports, earnings call transcripts, and energy sector reports. The quantitative research includes the creation of a target price model and the study of Kinder Morgan’s financial statements from years 2008-2014, using the Bloomberg database and Morningstar Direct. The current trend in the midstream energy industry is the creation of MLPs, but Kinder Morgan has decided to contradict this movement after many years of use. Results suggest that the KMI’S consolidation into one C-corporation entity will have a positive effect on future growth in the midstream oil and gas industry. In conclusion, the target price model and qualitative research suggest KMI is undervalued at its current stock price. This means Kinder Morgan, Inc. stock is a good buying opportunity after the merger.