Street Calls of the Week
HOUSTON - Phillips 66 (NYSE:PSX) and Kinder Morgan (NYSE:KMI), a $61.22 billion market cap infrastructure giant with a solid 4.27% dividend yield, announced Monday the start of a binding open season for their newly proposed Western Gateway Pipeline system, which will transport refined products from Texas to markets in Arizona and California, with connectivity to Las Vegas. According to InvestingPro data, KMI has maintained consistent dividend payments for 15 consecutive years, making it a notable player in the infrastructure sector.
The open season begins Monday and will run through December 19, 2025, allowing potential shippers to submit requests for additional information about the transportation service.
The project involves constructing a new pipeline from Borger, Texas to Phoenix, Arizona, and reversing Kinder Morgan’s existing SFPP pipeline between Colton, California and Phoenix to enable east-to-west product flows. The system will be supplied from sources connected to Borger as well as supplies already linked to SFPP’s system in El Paso.
Additionally, Phillips 66’s Gold Pipeline, which currently flows from Borger to St. Louis, will be reversed to allow refined products from midcontinent refineries to flow toward Borger and supply the Western Gateway Pipeline.
The project aims to create incremental capacity for refined products and connect Midwest refinery supply to Phoenix and California markets, with Las Vegas access via Kinder Morgan’s CALNEV Pipeline.
The companies did not disclose the expected capacity, investment amount, or timeline for the project in their press release statement.
Phillips 66 is a downstream energy provider headquartered in Houston that manufactures, transports and markets energy products. Kinder Morgan operates approximately 79,000 miles of pipelines and 139 terminals across North America, generating $15.97 billion in revenue over the last twelve months. Currently trading slightly above its Fair Value according to InvestingPro analysis, KMI maintains a GOOD financial health score and demonstrates consistently low price volatility. Discover more insights about KMI and access comprehensive Pro Research Reports covering 1,400+ top stocks through InvestingPro’s advanced analytics platform.
In other recent news, Kinder Morgan is preparing to release its third-quarter 2025 financial results on October 22nd, with RBC Capital maintaining a Sector Perform rating and a $28 price target ahead of the announcement. BMO Capital has initiated coverage on Kinder Morgan with an Outperform rating and a $32 price target, highlighting the company’s favorable positioning for growth due to increasing demand for gas infrastructure. UBS has reiterated its Buy rating with a $38 price target, though it slightly adjusted its third-quarter EBITDA estimate to $1,984 million from $2,004 million. Fitch Ratings upgraded Kinder Morgan’s Long-Term Issuer Default Ratings to ’BBB+’ from ’BBB’, citing a lower leverage outlook and management’s commitment to funding growth through internally generated cash flow. UBS also noted that despite placing $750 million of projects in service, Kinder Morgan’s project backlog increased by $500 million to $9.3 billion during the second quarter of 2025. These developments indicate a focus on growth and stability for the company amidst changing market demands.
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