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Just For You
Pipelines and Automation: 2 Energy Plays Built for Any Oil PriceReported by Chris Markoch. Publication Date: 4/26/2026. 
Key Points
- Kinder Morgan’s fee-based pipeline model provides stable cash flow largely insulated from oil price swings.
- Halliburton benefits from demand for efficiency-driven oilfield services, especially in lower price environments.
- Together, KMI and HAL offer diversified energy exposure with income and growth potential across market cycles.
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As recent events have shown, oil prices are volatile. They can swing wildly based on politics, supply decisions, or shifts in global demand. That volatility makes many energy stocks cyclical, particularly oil and gas companies focused on drilling and exploration. But some companies have business models that hold up even when oil prices fall. Kinder Morgan (NYSE: KMI) and Halliburton (NYSE: HAL) are two such names. Each is structured differently from a typical oil producer: one owns the pipelines that move energy, the other provides services that help wells produce more efficiently. Together, they offer a way to stay exposed to the energy sector without betting everything on daily crude-price swings. Why "Built for Any Oil Price" Matters
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Most energy companies rise and fall with crude prices. When oil rallies, profits often jump; when oil slumps, revenues can fall just as fast. Some businesses, however, reduce that commodity-price risk through their underlying models. Kinder Morgan earns most of its revenue from fixed fees: customers pay to use its pipelines regardless of whether oil is cheap or expensive. Halliburton sells technology and services that help producers get more from each well, and those services often remain in demand—especially when prices are low and producers focus on efficiency. Both companies therefore offer a level of stability that pure producers typically can't match. Kinder Morgan: The Pipeline GiantKinder Morgan is one of North America's largest energy-infrastructure companies. It owns roughly 79,000 miles of pipelines and about 700 billion cubic feet of natural gas storage capacity. That scale matters: U.S. natural gas demand hit record levels in 2025 and is expected to keep growing, and KMI sits squarely in the middle of that flow. The company's fee-based model is its biggest strength—most of KMI's cash flows come from fees and are not directly exposed to commodity prices. As a result, a drop in oil prices has only a limited impact on earnings. The company’s most recent earnings report illustrated the point. KMI reported adjusted EPS of 48 cents, a 41% increase from Q1 2025, beating analyst estimates of 40 cents by 20%. Revenue of $4.83 billion was also well ahead of expectations, with both numbers higher year-over-year. KMI's expansion backlog grew to $10.1 billion, driven by power and LNG demand. With Moody's upgrading its credit rating and leverage at its lowest level since 2014, the company's financial footing looks solid. The analyst forecasts on MarketBeat assign KMI an average rating of Hold and an average price target of $34.20, suggesting roughly 9%–10% upside from current levels. That upside appears accompanied by limited downside risk thanks to the fee-based cash flows. The board recently declared an increased quarterly dividend of 29 cents per share—$1.16 annualized—a 2% increase over 2025. At recent prices near $31, the yield is roughly 3.7%. Halliburton: The Oilfield Efficiency PlayHalliburton is the world's second-largest oilfield services company, providing drilling technology, completion tools, and reservoir services that oil producers rely on. When producers want to squeeze more output from existing wells—which they often do when prices are tight—Halliburton is the kind of company they call. The company delivered a strong earnings beat on April 21. For Q1 2026, Halliburton reported adjusted EPS of 55 cents, beating consensus by about 10.6%, with revenue of $5.4 billion, up 1.8%. Net income surged to $461 million for the quarter. HAL has now beaten estimates in three of the last four quarters, reinforcing a pattern of conservative analyst expectations and consistent outperformance. The analyst forecasts on MarketBeat give Halliburton a consensus rating of "Moderate Buy" and an average target price of $40.73. With the stock trading near $40, that implies modest near-term upside, while the "Moderate Buy" consensus reflects confidence in longer-term earnings growth. Halliburton paid a 17-cent-per-share quarterly dividend in Q1 2026 and repurchased approximately $100 million of common stock during the quarter. The annualized dividend of 68 cents per share yields roughly 1.7% at current prices. The combination of buybacks and dividends shows management returning cash to shareholders even in an uncertain macro environment. One risk: geopolitical tensions in the Middle East weighed on some international results. Still, Latin America revenue grew 22% in Q1, demonstrating meaningful diversification across regions. |
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