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

Tickers in this article: CMLP DPM KMI MDU NRG SMLP

NEW YORK ( TheStreet) -- The question few have asked about Kinder Morgan’s  roll-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.

Read More: Kinder Morgan Deal May Not Be the Game Changer You Think It Is

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 and MDU Resources .

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.

MDU Resources has been selling assets recently  and is an operating electricity and natural gas utility in eight states. The whole company has a market cap of $5.86 billion, is profitable and has a debt-to-equity ratio of less than 25%.

Of greatest interest to KMI might be its WTI Pipeline unit , whose network collects gas in North Dakota, Wyoming and Montana, with interconnects into Canada. It held an open season for a new gas pipeline that would run across the state early this year , but since it ended in May, the company has not made a public comment on it. KMI might just buy WTI and push that pipeline through without firm commitments from suppliers.

There are other large midstream players KMI might buy that have assets including CEOs in their 40s. KMI's COO is Steven Kean, only 52, but young talent is always at a premium in the oilpatch. Summit Midstream has assets in both Colorado and in the Marcellus, and CEO Steven Newby is well-named at only 40. With a market cap of just a bit less than $3 billion it would be an easy deal to make. DCP Midstream Partners has done a lot of work with natural gas liquids, has eastern assets and CEO Wouter van Kempen is 44. Its market cap is less than $6 billion.