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Energy

Kinder Morgan Inc. (KMI)-Southern Company (SO) Close SNG Deal

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Kinder Morgan and Southern Company finally sealed the deal

Southern Company (NYSE:SO) and Kinder Morgan Inc. (NYSE:KMI) ended Friday’s trading on a high as both finished trading in the green. The Southern Company stock closed up 1.21% at $51.80 while Kinder Morgan stock closed up 1.43% at $21.92.

The gains in stock prices can be attributed to the sealing of the joint venture deal between Southern Company and Kinder Morgan. As reported in the Southern Company’s press release on Friday, it would acquire a 50% stake in the Southern Natural Gas (SNG) pipeline through its subsidiary, Southern Company Gas. Kinder Morgan would be responsible for operating the pipeline. Both companies would also work in collaboration to explore for further growth opportunities.

Another reason for the rise in stock prices may be due to an increase in oil prices. On Friday’s close, the US benchmark for crude oil, West Texas Intermediate (WTI) was up 2.97% at $44.44 per barrel, while the global benchmark for crude oil, Brent Crude was up 3.04% at $46.83 per barrel.

Despite the recent gains in oil prices, they are still far below the levels they were two years ago. In such a downturn, companies continue to engage in merger and acquisition activities in order to gain growth. Southern Company is considered the world’s largest natural gas distributor, while Kinder Morgan is known for pipeline development. An amalgamation of operations can take both the companies a long way.

The President and CEO of Southern Company Thomas A Fenning, regarding the issue said that: “This strategic venture aligns with Southern Company’s previously discussed infrastructure development strategy and builds on Southern Company Gas’ midstream pipeline experience.” Kinder Morgan’s South Region President Pipelines, Norman G Holmes also expressed optimism on the issue and said that: “The Southern Company system has been a valued customer of SNG for many years and this joint venture is expected to greatly benefit the shareholders of both companies,” He added: “We are very pleased to begin pursuing the growth opportunities this strategic relationship should provide.”

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