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Western Gas Vs. Kinder Morgan

Last night Cramer interviewed Jim Hackett, the CEO of Anadarko Petroleum, about how his company is turning into a major global player. Tonight the Mad Money host took a closer look at APC’s subsidiary, Western Gas Partners, which is further down the oil and gas food chain and has a 6 percent yield.

WES is a “midstream” operation, meaning it processes and transports oil and gas. Anadarko has been selling its midstream assets to the company as it focuses instead on growing its prodution. Now Western Gas has 10 natural gas gathering systems throughout the Rockies, Texas and the Mid Continent region, with the capacity to process 1.2 billion cubic feet of natural gas per day.

Plus, unlike companies that depend on the price of oil or gas to make their money, Western Gas gets its operating profit from fixed-price, long-term, fee-based businesses that depend on the volume of natural gas processed.

Western Gas has raised its distribution – that’s a term for a dividend from a master limited partnership – for three straight quarters, Cramer said. And currently the stock is trading at about half a point off its 52-week high. Yet he thinks there could be cause for concern over WES’s dependence on Anadarko, the stability of its dividend and whether natural gas will be adopted as the prime bridge fuel in this country.

To address these concerns and to find out how WES stacks up against the Kinder Morgan Energy Partners and Enterprise Products Partners of the world, which have better yields and aren't as dependent on sponsors, the Mad Money host invited Western Gas President and CEO Donald Sinclair on to the show. Watch the video for the full interview.

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