Kinder Morgan, Inc.’s (NYSE: KMI) board of directors today
approved a cash dividend of $0.27 per share for the first quarter
($1.08 annualized), payable on May 17, 2021, to stockholders of
record as of the close of business on April 30, 2021. This dividend
represents a 3% increase over the fourth quarter of 2020.
KMI is reporting first quarter net income attributable to KMI of
$1,409 million, compared to a net loss attributable to KMI of $306
million in the first quarter of 2020; and distributable cash flow
(DCF) of $2,329 million, compared to $1,261 million in the first
quarter of 2020. The increases are primarily related to the
February winter storm and therefore largely nonrecurring. We
realized greater margins on KMI’s Texas intrastate pipeline systems
resulting from the temporary supply and demand imbalances and
substantial spot market price volatility caused by the storm; as
well as favorable contributions from the CO2 segment, which
curtailed oil production during the storm, allowing power it would
have used to be delivered to the grid. Net income for the first
quarter of 2021 is also higher relative to the prior year period
due to $971 million of impairment charges taken in the first
quarter of 2020.
“Apart from the storm and throughout the quarter, our assets
continued to provide strong cash flow as we remain guided by a
sound corporate philosophy: fund our capital needs internally,
maintain a healthy balance sheet, and return excess cash to our
shareholders through dividend increases and/or share repurchases,”
said KMI Executive Chairman Richard D. Kinder.
“The bulk of our improvement in net income and DCF is due to the
strong performance of our Natural Gas Pipelines segment in the face
of challenging circumstances presented by the February winter
storm. That performance was a result of actions we took following
previous weather events, as well as actions we took immediately
prior to and during this storm to ensure that our systems could
remain operational,” said KMI Chief Executive Officer Steve Kean.
“Those actions included enhanced weatherization at storage and
other facilities, ensuring critical facilities had backup
generation so they wouldn’t lose power, and deploying additional
personnel and equipment at normally automated facilities to
maintain operations and be positioned to make any necessary repairs
if roads became impassable.
“Our storage assets performed exceptionally well, allowing us to
deliver gas into the market throughout the storm. These storage
withdrawals, along with gas we purchased before and during the
event, enabled us to deliver significant volumes of gas at
contractual or prevailing prices. These volumes were directed
primarily to serve gas utilities and power plants, including some
customers who traditionally find their gas supplies elsewhere,”
continued Kean. “I am extremely proud of our co-workers throughout
the organization in commercial, control rooms, scheduling and
contract administration, field operations, and others, who ensured
that natural gas reached our wholesale customers even as their own
homes were without power and heat.”
“We generated first quarter earnings per share of $0.62, well up
compared to a loss per share of $0.14 in the first quarter of
2020,” said KMI President Kim Dang. “At $1.02 per share, DCF per
share was up $0.47 from the first quarter of 2020. We achieved
$1,714 million of excess DCF above our declared dividend.
“As noted above, that excess cash resulted largely from the
outstanding performance of the people in our Texas intrastate
pipeline systems and the facilities they kept operational
throughout the storm. In addition to the steps Steve outlined,
system deliverability and resiliency was also enhanced by our
investments in expansion projects and asset maintenance in Texas.
These investments, by Kinder Morgan and our joint venture partners,
totaled more than $5 billion in the last three years alone.
“We are particularly proud of the fact that the Permian Highway
Pipeline, which went into commercial service six weeks prior to the
storm, played a key role in keeping more lights and heat on in
Austin than would otherwise have been the case,” Dang
continued.
2021 Outlook
For 2021, KMI now expects to generate net income attributable to
KMI in a range of $2.7 billion to $2.9 billion, declared dividends
of $1.08 per share, a 3% increase from the 2020 declared dividends,
DCF in a range of $5.1 billion to $5.3 billion, and Adjusted EBITDA
in a range of $7.6 billion to $7.7 billion. KMI also now expects to
end 2021 with a Net Debt-to-Adjusted EBITDA ratio in a range of 3.9
to 4.0.
As of March 31, 2021, we had over $3.9 billion of borrowing
capacity under our $4 billion credit facility and over $1.3 billion
in cash and cash equivalents. We believe this borrowing capacity,
current cash on hand, and our cash from operations are more than
adequate to allow us to manage our cash requirements, including
maturing debt, through 2021.
Overview of Business
Segments
“The Natural Gas Pipelines segment’s financial
performance was well up for the first quarter of 2021 relative to
the first quarter of 2020,” said Dang. “The segment provided higher
contributions from the Texas intrastate systems and Tennessee Gas
Pipeline (TGP), due to their performance during the February winter
storm, partially offset by lower contributions from our Oklahoma
gathering systems, also due to the storm.”
Natural gas transport volumes were down 3% compared to the first
quarter of 2020, with notable volume declines on Colorado
Interstate Gas Pipeline (CIG) due to production declines in the
Rockies basin; on El Paso Natural Gas due to lower Permian supplies
and power generation shifting to coal due to higher natural gas
prices (particularly during the winter storm), and milder weather
in the southwest later in the quarter; and on Fayetteville Express
Pipeline due to contract expirations. These declines were partially
offset by: increased volumes on TGP due primarily to
weather-related increased usage across the system and increased
deliveries to LNG and Mexico customers; on the Permian Highway
Pipeline going into service; and, on Elba Express due to increased
deliveries to Elba Island. Natural gas gathering volumes were down
25% from the first quarter of 2020 across nearly all our systems,
most notably on the KinderHawk and Eagle Ford systems.
“Contributions from the Products Pipelines segment were
down compared to the first quarter of 2020 on lower refined
products demand as well as lower crude and condensate volumes that
were exacerbated by temporary supply and demand interruptions from
the February winter storm,” Dang said. “Crude and condensate
pipeline volumes were down 28% and total refined products volumes
were down 10% compared to the first quarter of 2020. Gasoline
volumes were below the comparable period last year by 7% and jet
volumes were still very weak (down 40%) but diesel volumes were up
by 6% compared to the first quarter of 2020. We did see favorable
pricing impacts compared to the first quarter of 2020, when severe
declines in commodity prices necessitated inventory value
write-downs during that quarter in our transmix and crude and
condensate assets.
“Terminals segment earnings were down compared to the
first quarter of 2020. Extended refinery outages resulting from the
winter storm impacted refined product and petroleum coke volumes at
our Houston Ship Channel and Port Arthur, Texas-area facilities,
reducing associated ancillary and product handling fees for the
quarter. Lingering demand reduction attributable to the pandemic
continued to affect refined product volumes that move through our
terminals as well as demand for our Jones Act tankers, which
experienced lower fleet utilization in the quarter compared to the
prior year period,” said Dang. “Conversely, effective utilization
across our network of nearly 80 million barrels of storage capacity
remains near historic highs due to term contracts entered into
during the second quarter of 2020. Due to the structure of our
contracts, a much more significant portion of our revenue comes
from fixed monthly payments on tank leases versus the revenue we
receive for moving product through our terminals.”
“CO2 segment earnings were up compared to the first
quarter of 2020 due to its returning power to the grid by
curtailing oil production during the winter storm under its
existing contract with its power provider, partially offset by
lower CO2 sales and crude volumes and lower realized crude prices.
Our realized weighted average crude oil price for the quarter was
down 7% at $51.05 per barrel compared to $54.61 per barrel for the
first quarter of 2020,” said Dang. “First quarter 2021 combined oil
production across all of our fields was down 19% compared to the
same period in 2020 on a net to KMI basis, but only down 15% net of
curtailed volumes. CO2 sales volumes were down 26%.”
Other News
Corporate
- In February 2021, KMI issued $750 million in 3.60% senior notes
due February 2051.
- During the first quarter of 2021, KMI repaid a combined $1.9
billion in principal amount of senior notes consisting of (1) $750
million of senior notes due February 2021; (2) $400 million of
senior notes due March 2021; and (3) $750 million of senior notes
due March 2021 (which were repaid at the beginning of January
2021).
- On March 12, 2021, KMI announced the formation of a new Energy
Transition Ventures group within the company to identify, analyze
and pursue commercial opportunities emerging from the low-carbon
energy transition. The group, led by Jesse Arenivas, President of
Energy Transition Ventures and CO2, and Anthony Ashley, Vice
President of Energy Transition Ventures, will focus on broadening
KMI’s reach beyond the low-carbon energy initiatives currently in
development by our business units.
Natural Gas Pipelines
- Construction continues on Kinder Morgan Louisiana Pipeline’s
approximately $145 million Acadiana expansion project. The project
is designed to provide 945,000 dekatherms per day (Dth/d) of
capacity to serve Train 6 at Cheniere’s Sabine Pass Liquefaction
facility in Cameron Parish, Louisiana. The project is anticipated
to be placed into commercial service as early as the first quarter
of 2022.
- On March 8, 2021, KMI and Brookfield Infrastructure Partners
L.P. (Brookfield) completed the sale of a combined 25% interest in
Natural Gas Pipeline Company of America LLC (NGPL) to a fund
controlled by ArcLight Capital Partners, LLC. KMI received net
proceeds of $413 million for our proportionate share of the
interests sold. KMI and Brookfield now each hold a 37.5% interest
in NGPL. KMI will continue to operate the pipeline.
- NGPL’s Gulf Coast Southbound project was placed in service on
March 1, 2021. The approximately $203 million project (KMI’s share:
$101.5 million) increases southbound capacity on NGPL’s Gulf Coast
System by approximately 300,000 Dth/d to serve Cheniere’s Corpus
Christi Liquefaction facility in San Patricio County, Texas. It is
supported by a long-term take-or-pay contract, which commenced on
April 1, 2021.
- On March 11, 2021, CIG joined in an announcement that it will
be a partner in a responsibly sourced gas (RSG) pilot project along
with Project Canary, Colorado Springs Utilities, Bayswater
Exploration & Production, LLC and Rimrock Energy Partners. RSG
is produced and transported by companies who have committed to
reducing methane emissions and whose operations have been
independently verified as meeting certain environmental, social and
governance standards. Project Canary is a company that provides
continuous emissions monitoring data and technologies. CIG will be
transporting the RSG to Colorado Springs Utilities for distribution
to local consumers and communities in Colorado. Kinder Morgan’s low
fugitive methane emissions rate, resulting from years of efforts to
reduce emissions across our systems, enabled us to participate in
this project. We are pursuing similar opportunities across the
Kinder Morgan footprint to bring lower carbon fuels to
markets.
Terminals
- Construction of the butane-on-demand blending system at KMI’s
Galena Park Terminal is complete. The project included the
construction of a 30,000-barrel butane sphere, a new inbound C4
pipeline, as well as tank and piping modifications that extended
butane blending capabilities to 25 tanks, two ship docks, and six
cross-channel pipelines. The approximately $48 million project is
supported by a long-term agreement with an investment-grade
midstream company.
CO2
- The CO2 segment’s ongoing production optimization focus
generated increased SACROC base production versus plan. Additional
volumes have also been realized due to lower decline rates in the
East Flank and Hawaii project areas. This trend overcame the winter
storm curtailment, as the operations groups were able to restore
production quickly with minimal impact to the reservoir and to
operating expenses. CO2 shipments were also up for the quarter
versus plan, a result of increased third party and KMI customer
demand.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy
infrastructure companies in North America. Access to reliable,
affordable energy is a critical component for improving lives
around the world. We are committed to providing energy
transportation and storage services in a safe, efficient and
environmentally responsible manner for the benefit of the people,
communities and businesses we serve. We own an interest in or
operate approximately 83,000 miles of pipelines and 144 terminals.
Our pipelines transport natural gas, refined petroleum products,
crude oil, condensate, CO2 and other products, and our terminals
store and handle various commodities including gasoline, diesel
fuel, chemicals, ethanol, metals and petroleum coke. For more
information, please visit www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. Eastern Time on
Wednesday, April 21, at www.kindermorgan.com for a LIVE webcast conference
call on the company’s first quarter earnings.
Non-GAAP Financial
Measures
The non-generally accepted accounting principles (non-GAAP)
financial measures of Adjusted Earnings and distributable cash flow
(DCF), both in the aggregate and per share for each; segment
earnings before depreciation, depletion, amortization (DD&A),
amortization of excess cost of equity investments and Certain Items
(Adjusted Segment EBDA); net income before interest expense, income
taxes, DD&A, amortization of excess cost of equity investments
and Certain Items (Adjusted EBITDA); Net Debt; Net Debt-to-Adjusted
EBITDA; and Free Cash Flow (FCF) in relation to our CO2 segment are
presented herein.
Our non-GAAP financial measures described below should not be
considered alternatives to GAAP net income (loss) attributable to
Kinder Morgan, Inc. or other GAAP measures and have important
limitations as analytical tools. Our computations of these non-GAAP
financial measures may differ from similarly titled measures used
by others. You should not consider these non-GAAP financial
measures in isolation or as substitutes for an analysis of our
results as reported under GAAP. Management compensates for the
limitations of these non-GAAP financial measures by reviewing our
comparable GAAP measures, understanding the differences between the
measures and taking this information into account in its analysis
and its decision-making processes.
Certain Items, as adjustments used
to calculate our non-GAAP financial measures, are items that are
required by GAAP to be reflected in net income (loss) attributable
to Kinder Morgan, Inc., but typically either (1) do not have a cash
impact (for example, asset impairments), or (2) by their nature are
separately identifiable from our normal business operations and in
our view are likely to occur only sporadically (for example,
certain legal settlements, enactment of new tax legislation and
casualty losses). We also include adjustments related to joint
ventures (see “Amounts from Joint
Ventures” below and the accompanying Tables 4 and 7.)
Adjusted Earnings is calculated by
adjusting net income (loss) attributable to Kinder Morgan, Inc. for
Certain Items. Adjusted Earnings is used by us and certain external
users of our financial statements to assess the earnings of our
business excluding Certain Items as another reflection of our
ability to generate earnings. We believe the GAAP measure most
directly comparable to Adjusted Earnings is net income (loss)
attributable to Kinder Morgan, Inc. Adjusted Earnings per share
uses Adjusted Earnings and applies the same two-class method used
in arriving at basic earnings (loss) per share. (See the
accompanying Tables 1 and 2.)
DCF is calculated by adjusting net
income (loss) attributable to Kinder Morgan, Inc. for Certain Items
(Adjusted Earnings), and further by DD&A and amortization of
excess cost of equity investments, income tax expense, cash taxes,
sustaining capital expenditures and other items. We also include
amounts from joint ventures for income taxes, DD&A and
sustaining capital expenditures (see “Amounts
from Joint Ventures” below). DCF is a significant
performance measure useful to management and external users of our
financial statements in evaluating our performance and in measuring
and estimating the ability of our assets to generate cash earnings
after servicing our debt, paying cash taxes and expending
sustaining capital, that could be used for discretionary purposes
such as dividends, stock repurchases, retirement of debt, or
expansion capital expenditures. DCF should not be used as an
alternative to net cash provided by operating activities computed
under GAAP. We believe the GAAP measure most directly comparable to
DCF is net income (loss) attributable to Kinder Morgan, Inc. DCF
per share is DCF divided by average outstanding shares, including
restricted stock awards that participate in dividends. (See the
accompanying Tables 2 and 3.)
Adjusted Segment EBDA is calculated
by adjusting segment earnings before DD&A and amortization of
excess cost of equity investments (Segment EBDA) for Certain Items
attributable to the segment. Adjusted Segment EBDA is used by
management in its analysis of segment performance and management of
our business. General and administrative expenses and certain
corporate charges are generally not under the control of our
segment operating managers, and therefore, are not included when we
measure business segment operating performance. We believe Adjusted
Segment EBDA is a useful performance metric because it provides
management and external users of our financial statements
additional insight into the ability of our segments to generate
cash earnings on an ongoing basis. We believe it is useful to
investors because it is a measure that management uses to allocate
resources to our segments and assess each segment’s performance. We
believe the GAAP measure most directly comparable to Adjusted
Segment EBDA is Segment EBDA. (See the accompanying Tables 3 and
7.)
Adjusted EBITDA is calculated by
adjusting net income (loss) attributable to Kinder Morgan, Inc.
before interest expense, income taxes, DD&A, and amortization
of excess cost of equity investments (EBITDA) for Certain Items. We
also include amounts from joint ventures for income taxes and
DD&A (see “Amounts from Joint
Ventures” below). Adjusted EBITDA is used by management and
external users, in conjunction with our Net Debt (as described
further below), to evaluate certain leverage metrics. Therefore, we
believe Adjusted EBITDA is useful to investors. We believe the GAAP
measure most directly comparable to Adjusted EBITDA is net income
(loss) attributable to Kinder Morgan, Inc.. In prior periods, Net
income (loss) was considered the comparable GAAP measure and has
been updated to Net income (loss) attributable to Kinder Morgan,
Inc. for consistency with our other non-GAAP performance measures.
(See the accompanying Tables 3 and 4.)
Amounts from Joint Ventures -
Certain Items, DCF and Adjusted EBITDA reflect amounts from
unconsolidated joint ventures (JVs) and consolidated JVs utilizing
the same recognition and measurement methods used to record
“Earnings from equity investments” and “Noncontrolling interests
(NCI),” respectively. The calculations of DCF and Adjusted EBITDA
related to our unconsolidated and consolidated JVs include the same
items (DD&A and income tax expense, and for DCF only, also cash
taxes and sustaining capital expenditures) with respect to the JVs
as those included in the calculations of DCF and Adjusted EBITDA
for our wholly-owned consolidated subsidiaries. (See Table 7,
Additional JV Information.) Although these amounts related to our
unconsolidated JVs are included in the calculations of DCF and
Adjusted EBITDA, such inclusion should not be understood to imply
that we have control over the operations and resulting revenues,
expenses or cash flows of such unconsolidated JVs.
Net Debt is calculated by
subtracting from debt (1) cash and cash equivalents, (2) debt fair
value adjustments, and (3) the foreign exchange impact on
Euro-denominated bonds for which we have entered into currency
swaps. Net Debt is a non-GAAP financial measure that management
believes is useful to investors and other users of our financial
information in evaluating our leverage. We believe the most
comparable measure to Net Debt is debt net of cash and cash
equivalents as reconciled in the notes to the accompanying
Preliminary Consolidated Balance Sheets in Table 6.
CO2 Segment FCF, as used in
relation to our CO2 business segment, is calculated by reducing
Segment EBDA (GAAP) for our CO2 business segment by Certain Items
and capital expenditures (sustaining and expansion). Management
uses FCF as an additional performance measure for our CO2 segment.
We believe the GAAP measure most directly comparable to FCF is
Segment EBDA (GAAP). (See the accompanying Table 7.)
Our guidance for 2021 includes a forecast of net income
attributable to KMI, which we previously have not provided due to
the impracticability of predicting certain components of net income
required by GAAP. As a result of changes to GAAP rules and guidance
and our 2019 sale of Kinder Morgan Canada Limited, the impact of
components related to commodity and interest rate hedge
ineffectiveness and foreign currency fluctuations will be
inconsequential. In addition, based on our current circumstances,
we do not expect that changes in unrealized gains and losses on
derivatives marked to market and potential changes in estimates for
certain contingent liabilities will materially impact our ability
to forecast net income for 2021. If the circumstances relating to
these items or other GAAP requirements change and we determine that
the difficulty of predicting components required by GAAP makes it
impracticable for us to forecast net income attributable to KMI, we
will cease to provide a forecast of net income attributable to KMI
and will disclose the factors affecting our ability to do so. (See
the accompanying Tables 8 and 9).
Important Information Relating to
Forward-Looking Statements
This news release includes forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities Exchange Act of 1934.
Generally the words “expects,” “believes,” “anticipates,” “plans,”
“will,” “shall,” “estimates,” “projects,” and similar expressions
identify forward-looking statements, which are generally not
historical in nature. Forward-looking statements in this news
release include, among others, express or implied statements
pertaining to: the long-term demand for KMI’s assets and services;
KMI’s expected Net income attributable to Kinder Morgan, Inc., DCF
and Adjusted EBITDA for 2021 and expected Net Debt-to-Adjusted
EBITDA ratio at the end of 2021; anticipated dividends; and KMI’s
capital projects, including expected completion timing and benefits
of those projects. Forward-looking statements are subject to risks
and uncertainties and are based on the beliefs and assumptions of
management, based on information currently available to them.
Although KMI believes that these forward-looking statements are
based on reasonable assumptions, it can give no assurance as to
when or if any such forward-looking statements will materialize nor
their ultimate impact on our operations or financial condition.
Important factors that could cause actual results to differ
materially from those expressed in or implied by these
forward-looking statements include: the impacts of the COVID-19
pandemic and the pace and extent of economic recovery; the timing
and extent of changes in the supply of and demand for the products
we transport and handle; commodity prices; counterparty financial
risk, potential disputed purchases and sales and potential
legislative or regulatory action in response to or litigation
arising out of the unprecedented circumstances of the winter storm;
and the other risks and uncertainties described in KMI’s reports
filed with the Securities and Exchange Commission (SEC), including
its Annual Report on Form 10-K for the year-ended December 31, 2020
(under the headings “Risk Factors” and “Information Regarding
Forward-Looking Statements” and elsewhere), and its subsequent
reports, which are available through the SEC’s EDGAR system at
www.sec.gov and on our website at ir.kindermorgan.com.
Forward-looking statements speak only as of the date they were
made, and except to the extent required by law, KMI undertakes no
obligation to update any forward-looking statement because of new
information, future events or other factors. Because of these risks
and uncertainties, readers should not place undue reliance on these
forward-looking statements.
Table 1
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Statements of Operations
(In millions, except per share
amounts, unaudited)
Three Months Ended
March 31,
% change
2021
2020
Revenues
$
5,211
$
3,106
Operating costs, expenses and other
Costs of sales
2,009
663
Operations and maintenance
514
620
Depreciation, depletion and
amortization
541
565
General and administrative
156
153
Taxes, other than income taxes
110
92
(Gain) loss on divestitures and
impairments, net
(4
)
971
Other income, net
(1
)
(1
)
Total operating costs, expenses and
other
3,325
3,063
Operating income
1,886
43
Other income (expense)
Earnings from equity investments
66
192
Amortization of excess cost of equity
investments
(22
)
(32
)
Interest, net
(377
)
(436
)
Other, net
223
2
Income (loss) before income taxes
1,776
(231
)
Income tax expense
(351
)
(60
)
Net income (loss)
1,425
(291
)
Net income attributable to NCI
(16
)
(15
)
Net income (loss) attributable to
Kinder Morgan, Inc.
1,409
(306
)
Class P Shares
Basic and diluted earnings (loss) per
share
$
0.62
$
(0.14
)
543
%
Basic and diluted weighted average shares
outstanding
2,264
2,264
—
%
Declared dividends per share
$
0.27
$
0.2625
3
%
Adjusted Earnings (1)
$
1,374
$
541
154
%
Adjusted Earnings per share (1)
$
0.60
$
0.24
150
%
Note
(1)
Adjusted Earnings is Net income (loss)
attributable to Kinder Morgan, Inc. adjusted for Certain Items, see
Table 2. Adjusted Earnings per share uses Adjusted Earnings and
applies the same two-class method used in arriving at basic
earnings (loss) per share.
Table 2
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income (Loss)
attributable to Kinder Morgan, Inc. to Adjusted Earnings to DCF
Reconciliation
(In millions,
unaudited)
Three Months Ended
March 31,
% change
2021
2020
Net income (loss) attributable to Kinder
Morgan, Inc. (GAAP)
$
1,409
$
(306
)
Total Certain Items
(35
)
847
Adjusted Earnings (1)
1,374
541
154
%
DD&A and amortization of excess cost
of equity investments for DCF (2)
638
691
Income tax expense for DCF (1)(2)
419
181
Cash taxes (2)
1
(3
)
Sustaining capital expenditures (2)
(107
)
(141
)
Other items (3)
4
(8
)
DCF
$
2,329
$
1,261
85
%
Table 3
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Adjusted Segment
EBDA, Adjusted EBITDA and DCF
(In millions, except per share
amounts, unaudited)
Three Months Ended
March 31,
% change
2021
2020
Natural Gas Pipelines
$
2,094
$
1,179
78
%
Products Pipelines
263
273
(4
)%
Terminals
227
257
(12
)%
CO2
291
175
66
%
Adjusted Segment EBDA (1)
2,875
1,884
53
%
General and administrative and corporate
charges (1)
(148
)
(140
)
JV DD&A and income tax expense
(1)(2)
103
119
Net income attributable to NCI (1)
(16
)
(15
)
Adjusted EBITDA
2,814
1,848
52
%
Interest, net (1)
(383
)
(435
)
Cash taxes (2)
1
(3
)
Sustaining capital expenditures (2)
(107
)
(141
)
Other items (3)
4
(8
)
DCF
$
2,329
$
1,261
85
%
Weighted average shares outstanding for
dividends (4)
2,277
2,277
DCF per share
$
1.02
$
0.55
Declared dividends per share
$
0.27
$
0.2625
Notes
(1)
Amounts are adjusted for Certain Items.
See Tables 4 and 7 for more information.
(2)
Includes or represents DD&A, income
tax expense, cash taxes and/or sustaining capital expenditures (as
applicable for each item) from JVs. See Table 7 for more
information.
(3)
Includes non-cash compensation associated
with our restricted stock program, non-cash pension expense and
pension contributions.
(4)
Includes restricted stock awards that
participate in dividends.
Table 4
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income (Loss)
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
Reconciliation
(In millions,
unaudited)
Three Months Ended March
31,
% change
2021
2020
Net income (loss) attributable to
Kinder Morgan, Inc. (GAAP) (1)
$
1,409
$
(306
)
560
%
Certain Items:
Fair value amortization
(4
)
(8
)
Legal, environmental and taxes other than
income tax reserves
84
(8
)
Change in fair value of derivative
contracts (2)
14
(36
)
(Gain) loss on divestitures, impairments
and other write-downs, net (3)
(89
)
371
Loss on impairment of goodwill (4)
—
600
Income tax Certain Items
(40
)
(96
)
Other
—
24
Total Certain Items (5)
(35
)
847
DD&A and amortization of excess cost
of equity investments
563
597
Income tax expense (6)
391
156
JV DD&A and income tax expense
(6)(7)
103
119
Interest, net (6)
383
435
Adjusted EBITDA
$
2,814
$
1,848
52
%
Notes
(1)
In prior periods, Net income (loss) was
considered the comparable GAAP measure and has been updated to Net
income (loss) attributable to Kinder Morgan, Inc. for consistency
with our other non-GAAP performance measures.
(2)
Gains or losses are reflected in our DCF
when realized.
(3)
2021 amount includes a pre-tax gain of
$206 million associated with the sale of a partial interest in our
equity investment in NGPL Holdings LLC, offset partially by a
write-down of $117 million on a long-term subordinated note
receivable from an equity investee, Ruby Pipeline Holding Company,
L.L.C. 2020 amount includes a pre-tax non-cash impairment loss of
$350 million related to oil and gas producing assets in our CO2
business segment driven by low oil prices and $21 million for asset
impairments in our Products Pipelines business segment, which are
reported within “(Gain) loss on divestitures and impairments, net”
on the accompanying Preliminary Consolidated Statement of
Operations. (See Table 1.)
(4)
2020 amount represents an impairment of
goodwill associated with our CO2 reporting unit.
(5)
2021 amount includes $117 million and 2020
amount includes less than $1 million reported within “Earnings from
equity investments.”
(6)
Amounts are adjusted for Certain Items.
See Table 7 for more information.
(7)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
Table 5
Segment Volume and CO2 Segment
Hedges Highlights
(Historical data is pro forma
for acquired and divested assets, JV volumes at KMI share)
Three Months Ended March
31,
2021
2020
Natural Gas Pipelines
Transport volumes (BBtu/d)
37,222
38,328
Sales volumes (BBtu/d)
2,260
2,495
Gathering volumes (BBtu/d)
2,509
3,361
NGLs (MBbl/d) (1)
30
30
Products Pipelines (MBbl/d)
Gasoline (2)
892
961
Diesel fuel
379
358
Jet fuel
175
293
Total refined product volumes
1,446
1,612
Crude and condensate
507
702
Total delivery volumes (MBbl/d)
1,953
2,314
Terminals (1)
Liquids leasable capacity (MMBbl)
79.9
79.7
Liquids utilization %
94.6
%
93.6
%
Bulk transload tonnage (MMtons)
11.0
13.0
CO2
SACROC oil production
19.39
23.19
Yates oil production
6.14
7.04
Katz and Goldsmith oil production
2.56
3.36
Tall Cotton oil production
0.95
2.41
Total oil production - net (MBbl/d)
(3)
29.04
36.00
NGL sales volumes - net (MBbl/d) (3)
8.76
9.84
CO2 sales volumes - net (Bcf/d)
0.41
0.55
Realized weighted average oil price ($ per
Bbl)
$
51.05
$
54.61
Realized weighted average NGL price ($ per
Bbl)
$
20.14
$
19.74
CO2 Segment Hedges
Remaining 2021
2022
2023
2024
2025
Crude Oil (4)
Price ($ per Bbl)
$
50.38
$
51.03
$
49.30
$
45.11
$
46.89
Volume (MBbl/d)
25.70
13.80
8.65
2.85
0.80
NGLs
Price ($ per Bbl)
$
31.75
$
44.57
Volume (MBbl/d)
5.36
0.16
Midland-to-Cushing Basis Spread
Price ($ per Bbl)
$
0.26
$
0.73
Volume (MBbl/d)
24.55
10.25
Notes
(1)
Volumes for assets sold are excluded for
all periods presented.
(2)
Gasoline volumes include ethanol pipeline
volumes.
(3)
Net of royalties and outside working
interests.
(4)
Includes West Texas Intermediate
hedges.
Table 6
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Consolidated
Balance Sheets
(In millions,
unaudited)
March 31,
December 31,
2021
2020
Assets
Cash and cash equivalents
$
1,377
$
1,184
Other current assets
2,357
2,019
Property, plant and equipment, net
35,605
35,836
Investments
7,693
7,917
Goodwill
19,851
19,851
Deferred charges and other assets
4,325
5,166
Total assets
$
71,208
$
71,973
Liabilities, Redeemable Noncontrolling
Interest and Stockholders' Equity
Short-term debt
$
2,173
$
2,558
Other current liabilities
2,445
2,516
Long-term debt
30,007
30,838
Debt fair value adjustments
1,054
1,293
Other
2,221
2,202
Total liabilities
37,900
39,407
Redeemable Noncontrolling Interest
705
728
Other stockholders' equity
32,674
31,843
Accumulated other comprehensive loss
(487
)
(407
)
Total KMI stockholders' equity
32,187
31,436
Noncontrolling interests
416
402
Total stockholders' equity
32,603
31,838
Total liabilities, redeemable
noncontrolling interest and stockholders' equity
$
71,208
$
71,973
Net Debt (1)
$
30,694
$
32,042
Adjusted EBITDA Twelve Months
Ended
Reconciliation of Net Income
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
March 31,
December 31,
2021
2020
Net income attributable to Kinder
Morgan, Inc. (GAAP)
$
1,834
$
119
Total Certain Items
1,010
1,892
DD&A and amortization of excess cost
of equity investments
2,270
2,304
Income tax expense (2)
823
588
JV DD&A and income tax expense
(2)(3)
433
449
Interest, net (2)
1,558
1,610
Adjusted EBITDA
$
7,928
$
6,962
Net Debt-to-Adjusted EBITDA
3.9
4.6
Notes
(1)
Amounts exclude: (i) debt fair value
adjustments; and (ii) the foreign exchange impact on our Euro
denominated debt of $109 million and $170 million as of March 31,
2021 and December 31, 2020, respectively, as we have entered into
swaps to convert that debt to U.S.$.
(2)
Amounts are adjusted for Certain Items.
See Table 4 for more information.
(3)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
Table 7
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Supplemental
Information
(In millions,
unaudited)
Three Months Ended March
31,
2021
2020
Segment EBDA
Natural Gas Pipelines (GAAP)
$
2,103
$
1,196
Certain Items
(9
)
(17
)
Natural Gas Pipelines Adjusted Segment
EBDA
2,094
1,179
Products Pipelines (GAAP)
248
269
Certain Items
15
4
Products Pipelines Adjusted Segment
EBDA
263
273
Terminals (GAAP)
227
257
Certain Items
—
—
Terminals Adjusted Segment EBDA
227
257
CO2 (GAAP)
286
(755
)
Certain Items
5
930
CO2 Adjusted Segment EBDA
291
175
Total Segment EBDA (GAAP)
2,864
967
Total Segment EBDA Certain Items
11
917
Total Adjusted Segment EBDA
$
2,875
$
1,884
Depreciation, depletion and amortization
(GAAP)
$
(541
)
$
(565
)
Amortization of excess cost of equity
investments (GAAP)
(22
)
(32
)
DD&A and amortization of excess cost
of equity investments
(563
)
(597
)
JV DD&A
(75
)
(94
)
DD&A and amortization of excess cost
of equity investments for DCF
$
(638
)
$
(691
)
General and administrative (GAAP)
$
(156
)
$
(153
)
Corporate benefit (charges)
8
(12
)
Certain Items
—
25
General and administrative and corporate
charges (1)
$
(148
)
$
(140
)
Interest, net (GAAP)
$
(377
)
$
(436
)
Certain Items
(6
)
1
Interest, net (1)
$
(383
)
$
(435
)
Income tax expense (GAAP)
$
(351
)
$
(60
)
Certain Items
(40
)
(96
)
Income tax expense (1)
(391
)
(156
)
Unconsolidated JV income tax expense
(1)(2)
(28
)
(25
)
Income tax expense for DCF (1)
$
(419
)
$
(181
)
Net income attributable to NCI (GAAP)
$
(16
)
$
(15
)
NCI associated with Certain Items (3)
—
—
Net income attributable to NCI (1)
$
(16
)
$
(15
)
Additional JV information
Unconsolidated JV DD&A
$
(86
)
$
(103
)
Less: Consolidated JV partners'
DD&A
(11
)
(9
)
JV DD&A
(75
)
(94
)
Unconsolidated JV income tax expense
(1)(2)
(28
)
(25
)
JV DD&A and income tax expense (1)
$
(103
)
$
(119
)
Unconsolidated JV cash taxes (2)
$
—
$
(4
)
Unconsolidated JV sustaining capital
expenditures
$
(20
)
$
(26
)
Less: Consolidated JV partners' sustaining
capital expenditures
(1
)
(1
)
JV sustaining capital expenditures
$
(19
)
$
(25
)
CO2 Segment EBDA (GAAP) to CO2 Segment
FCF Reconciliation
CO2 Segment EBDA (GAAP)
$
286
$
(755
)
Certain Items:
Change in fair value of derivative
contracts
5
(20
)
Loss on impairments
—
950
CO2 Segment Certain Items
5
930
Capital expenditures (4)
(39
)
(70
)
CO2 Segment FCF (1)
$
252
$
105
Notes
(1)
Amounts are adjusted for Certain
Items.
(2)
Amounts are associated with our Citrus,
NGPL and Products (SE) Pipe Line equity investments.
(3)
Three months ended March 31, 2021 and 2020
amounts each include less than $1 million of noncontrolling
interests associated with Certain Items.
(4)
Includes sustaining and expansion capital
expenditures for our CO2 segment.
Table 8
Kinder Morgan, Inc. and
Subsidiaries
Reconciliation of Projected
Net Income Attributable to Kinder Morgan, Inc. to Projected
DCF
(In billions,
unaudited)
2021 Projected Guidance
Range
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
2.7
$
2.9
Total Certain Items (1)
—
—
DD&A and amortization of excess cost
of equity investments for DCF (2)
2.5
2.5
Income tax expense for DCF (2)(3)
0.9
0.9
Cash taxes (2)
(0.1
)
(0.1
)
Sustaining capital expenditures (2)
(0.9
)
(0.9
)
Other items (1)
—
DCF
$
5.1
$
5.3
Table 9
Kinder Morgan, Inc. and
Subsidiaries
Reconciliation of Projected
Net Income Attributable to Kinder Morgan, Inc. to Projected
Adjusted EBITDA
(In billions,
unaudited)
2021 Projected Guidance
Range
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
2.7
$
2.9
Total Certain Items (1)
—
—
DD&A and amortization of excess cost
of equity investments
2.2
2.2
Income tax expense (3)
0.8
0.8
JV DD&A and income tax expense (2)
0.4
0.3
Interest, net (3)
1.5
1.5
Adjusted EBITDA
$
7.6
$
7.7
Notes
(1)
Aggregate adjustments for Total Certain
Items and Other items (such as non-cash pension expense and
non-cash compensation associated with our restricted stock program)
are currently estimated to be less than $100 million.
(2)
Includes or represents DD&A, income
tax expense, cash taxes and/or sustaining capital expenditures (as
applicable for each item) from JVs.
(3)
Amounts are adjusted for Certain
Items.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210421005903/en/
Dave Conover Media Relations (713) 420-6397
Newsroom@kindermorgan.com
Investor Relations (800) 348-7320 km_ir@kindermorgan.com
www.kindermorgan.com
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