Billionaire Richard Kinder Weathers Oil Market Plunge With Mega Deal

Few have invested more in rise of shale oil and gas drilling in North America than billionaire Richard Kinder of pipeline giant Kinder Morgan . However, as rising U.S. production and a refusal by OPEC member states to cut their output roils oil markets, causing the commodity hitting a new four-year low on Friday, Mr. Kinder appears to be in an enviable position.

Shares in Kinder Morgan, which comprise the bulk of Kinder's over $10 billion fortune, have been insulated from a plunge in stocks across the energy sector as oil prices fall to levels not seen since the worst of global financial crisis. Kinder Morgan remains near record highs the company hit earlier in 2014 when it unveiled a $71 billion deal to consolidate its master limited partnership interests Kinder Morgan Energy Partners, Kinder Morgan Management and El Paso Pipeline Partners.

On Wednesday, that merger closed after roughly 95% of shareholders approved the deal. Richard Kinder's timing appears to have been impeccable.

Kinder Morgan announced the merger in mid-August, well before the worst of this fall's energy slump, and the company also secured debt financing for the deal at that time. With the merger now closed, Kinder Morgan is promising investors billions in cost savings, rising dividend payments and a more simple corporate structure in coming years.

Over the past six months, Kinder Morgan shares have risen over 23% as the Energy Select SPDR ETF has fallen over 15%. No one has benefited more from that relative out-performance than Richard Kinder, who owns nearly 24% of Kinder Morgan's outstanding shares, according to filings compiled by Bloomberg.

Had Mr. Kinder and the company waited on an MLP consolidation, one wonders whether a deal would be possible in the current market, as midstream giants like Enterprise Products Partners see their shares tumble amid the oil rout. Better yet, now instead of trying to managing Kinder Morgan and its associated MLPs through volatile times for oil markets, Kinder may now find himself holding one of the strongest hands in the industry.

Kinder said in August that the MLP consolidation reflected his frustration with a corporate structure had become unwieldy and a burden on growth. Paying the price to buyout MLP interests and convert Kinder Morgan to a more traditional corporate structure, Mr. Kinder said, would usher in a new era of growth and rising capital returns for the company. He also said the company would continue to look at acquisitions as a source of expansion.

'We are going to be able with this low cost of capital to do a lot more capital expenditure and be a more active acquirer,' Kinder said of the deal, on a call with analysts in August. 'Just watch what we could do now,' he added. Kinder said the company will be able to acquire MLP-structured companies and transform them to normal corporate structures, while also having the ability to scale its operations or expand to new transportation markets.

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