Here Is Where Kinder Morgan's Capital Would Do the Most Good

NEW YORK (TheStreet) -- The question few have asked about Kinder Morgan’s (KMIroll-up of its master limited partnerships into a single company is what happens next.

What happens next is a buying spree.

It may be difficult to identify potential targets. There are more than 120 MLPs in the pipeline arena with a combined market cap of $875 billion -- the buffet table is too big even for a man with Rich Kinder’s financial appetite. Still, we can speculate.

As I wrote yesterday, a key to the future may be Kinder Morgan’s own "asset map," which shows a big hole in the Bakken Field of North Dakota, and limited participation in the eastern Marcellus gas field. The Bakken is where I think KMI is going first, because the state remains short on oil and gas infrastructure, as Gov. Jack Dalrymple noted at his second "Pipeline Summit" in June.

Based on that there are two obvious targets: Crestwood Midstream Partners (CMLP) and MDU Resources (MDU).

I wrote about Crestwood just last month. CMLP made two acquisitions during 2013, becoming a major Bakken midstream player. The news peg was a brine leak -- new investment would shore up operations quickly. Crestwood has a market cap of about $4 billion, it would be accretive to earnings, and its debt levels of 25% aren’t bad, either. A Crestwood deal would immediately make KMI a major player in the business of moving oil, gas and liquids in the Bakken, which is what Kinder has acknowledged he wants to be.

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