Kinder Morgan, Inc.’s (NYSE: KMI) board of directors today
approved a cash dividend of $0.27 per share for the second quarter
($1.08 annualized), payable on August 16, 2021, to stockholders of
record as of the close of business on August 2, 2021. This dividend
represents a 3% increase over the second quarter of 2020.
KMI is reporting a second quarter net loss attributable to KMI
of $757 million, compared to a net loss attributable to KMI of $637
million in the second quarter of 2020; and distributable cash flow
(DCF) of $1,025 million, compared to $1,001 million in the second
quarter of 2020. This quarter’s net loss was primarily due to a
$1,600 million ($1,228 million after-tax), non-cash impairment
related to anticipated lower volumes and rates on contract renewals
on our South Texas natural gas processing and gathering assets.
Adjusted Earnings, which do not include that impairment, were $516
million for the quarter.
“As the global economy continues to recover from the pandemic,
our company generated substantial Adjusted Earnings and robust
coverage of this quarter’s dividend. Our shareholders continue to
benefit from the philosophy that guides our decision-making: fund
our expansion 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 fruits of that philosophy are clear, as we
have internally funded expansion projects and steadily increased
our dividend while at the same time reducing our Net Debt by more
than $12 billion in the last six years.”
“Our diversified portfolio again proved its worth as we saw
greater contributions relative to the second quarter of 2020 from
three business segments: Natural Gas Pipelines, Products Pipelines
and Terminals. The company’s performance continues to demonstrate
that the need for our assets remains very strong,” said KMI Chief
Executive Officer Steve Kean. “Our business segments are extremely
well-positioned in markets throughout the United States, and our
acquisition this quarter of the business of Stagecoach Gas Services
LLC (Stagecoach) will enable us to provide even greater levels of
service to our natural gas customers. With our strong participation
in the liquefied natural gas (LNG) value chain, we will also
increasingly benefit from growing global natural gas demand, as
analysts project U.S. LNG exports will double within the coming
decade.
“Closer to home, we are seeing greater interest in firm natural
gas transportation and storage contracts here in Texas and in other
states that suffered during the February winter storm. And we
continue to highlight our services in the growing market for
responsibly sourced natural gas by virtue of the low methane
emission intensity of our assets. All of this makes us confident in
the future of our business,” Kean said.
“While our financial performance during the quarter was quite
strong, due to the non-cash impairment noted above, we generated a
second quarter loss per share of $0.34, compared to a loss per
share of $0.28 in the second quarter of 2020, a quarter in which we
also took substantial non-cash impairments,” said KMI President Kim
Dang. “At $0.45 per share, DCF per share was up $0.01 from the
second quarter of 2020. We achieved $411 million of excess DCF
above our declared dividend.
“In addition to the continued strength of our interconnected
network of assets noted above, we made progress this quarter in
positioning the company for participation in the energy transition.
At only a little more than four months into its existence, our
Energy Transition Ventures Group has already signed its first
significant acquisition in Kinetrex Energy, a rapidly growing
leader in producing and supplying renewable natural gas (RNG),
which we expect to close in the third quarter. By capturing methane
produced by decomposing organic waste that would otherwise be
released into the atmosphere, the RNG production process reduces or
even eliminates greenhouse gas emissions. We are confident that
this is only the first of many opportunities that the team will
find in the ongoing energy transition,” said Dang.
For the first six months of 2021, KMI reported net income
attributable to KMI of $652 million, compared to a net loss
attributable to KMI of $943 million for the first six months of
2020; and DCF of $3,354 million, up 48% from $2,262 million for the
comparable period in 2020. The increases compared to the prior
period are primarily related to the February winter storm and are
therefore largely nonrecurring.
2021 Outlook
For 2021, KMI now expects to generate net income attributable to
KMI of $1.7 billion and declare dividends of $1.08 per share, a 3%
increase from the 2020 declared dividends. KMI expects to meet or
exceed the top end of the range provided last quarter for DCF and
Adjusted EBITDA. We currently anticipate generating 2021 DCF of
$5.4 billion and Adjusted EBITDA of $7.9 billion. KMI also now
expects to end 2021 with a Net Debt-to-Adjusted EBITDA ratio of
4.0.
As of June 30, 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. Our acquisition of Stagecoach, which
closed July 9, was funded out of this cash. 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 up in the second quarter of 2021 relative to the
second quarter of 2020,” said Dang. “The segment provided higher
contributions from the Texas intrastate systems and from the full
in-service of the Permian Highway Pipeline, as well as from
increased volumes on our Hiland Midstream systems. These were
partially offset by lower contributions from our KinderHawk and
Eagle Ford gathering and processing assets and from Fayetteville
Express Pipeline (FEP).”
Natural gas transport volumes were up 4% compared to the second
quarter of 2020, with the Permian Highway Pipeline going into
service; increased volumes on Tennessee Gas Pipeline (TGP) due
primarily to increased deliveries to LNG, power plant and Mexico
customers; on the Texas intrastate systems due to increased Gulf
Coast demand from industrial and LNG customers; and, on Elba
Express due to increased deliveries to Elba Island. These increases
were partially offset by declines on Colorado Interstate Gas
Pipeline due to continued declining production in the Rockies basin
and on FEP due to contract expirations. Natural gas gathering
volumes were down 12% from the second quarter of 2020 across many
of our systems, most notably on our KinderHawk and Eagle Ford
assets.
“Contributions from the Products Pipelines segment were
well up compared to the second quarter of 2020 as demand recovery
intensified with the opening up of the country,” Dang said. “Crude
and condensate pipeline volumes were up 6% and total refined
products volumes were up 37% compared to the second quarter of
2020. Gasoline volumes were themselves above the comparable period
last year by 37% and diesel volumes were up by 13%. Jet volumes are
rebounding nicely, up 129% versus the second quarter of 2020.
Compared to pre-pandemic levels, using the second quarter of 2019
as a reference point, road fuels (gasoline and diesel) were
essentially flat, while jet fuel was about 26% lower. All refined
products volumes saw significant recovery versus the first quarter
of 2021, with jet fuel up 28%, gasoline up 17%, and diesel up 10%
versus the prior quarter.
“Terminals segment earnings were up compared to the
second quarter of 2020. Volume across our liquids network continues
to improve and is approaching pre-pandemic levels. Corresponding
increases in variable throughput and ancillary service fees more
than offset a normalization in tank utilization to historical
levels and an elevated number of tanks temporarily off-lease for
routine inspection and maintenance. Our Jones Act tankers
experienced a decline in fleet utilization and average charter
rates during the quarter compared to the prior year period, despite
the ongoing economic recovery, as charter activity tends to lag
underlying supply and demand fundamentals,” said Dang. “Our bulk
business continued to improve in the quarter with strong commodity
pricing driving increased steel and export coal volumes compared to
the second quarter of 2020.
“CO2 segment earnings were down compared to the second
quarter of 2020 due to lower CO2 sales and crude volumes along with
increased well work costs, partially offset by higher realized
crude and NGL prices. Our realized weighted average crude oil price
for the quarter was up 4% at $52.50 per barrel compared to $50.31
per barrel for the second quarter of 2020. While NGL volumes were
up only 1% versus the second quarter of 2020, our weighted average
NGL price for the quarter was $22.58 per barrel, up 43% from the
second quarter of 2020,” said Dang. “Second quarter 2021 combined
oil production across all of our fields was down 9% compared to the
same period in 2020 on a net to KMI basis. CO2 sales volumes were
also down 10% on a net to KMI basis. However, crude and CO2 sales
volumes, as well as realized crude prices, are nicely above plan.
SACROC oil production is expected to exceed plan for the year
because of reduced base decline rates and improved performance on
recent projects. Additionally, Wink Pipeline achieved record
throughput during the quarter due to continued strong refinery
demand.”
Other News
Natural Gas Pipelines
- On July 9, 2021, KMI closed on its previously announced $1.2
billion acquisition of the business of Stagecoach Gas Services LLC,
a natural gas pipeline and storage joint venture between
Consolidated Edison, Inc., and Crestwood Equity Partners LP, that
serves Northeast market demand areas and Marcellus supply sources.
The Stagecoach assets consist of 4 natural gas storage facilities
with a total FERC-certificated working gas capacity of 41 billion
cubic feet and a network of FERC-regulated natural gas
transportation pipelines with multiple interconnects to major
interstate natural gas pipelines, including our Tennessee Gas
Pipeline (TGP).
- Construction continues on the compression component of TGP’s
$72 million Line 261 Upgrade project, located in Agawam,
Massachusetts. The project is expected to be placed in service in
November 2021.
- 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.
Products Pipelines
- KMI continues to advance the creation of premier biodiesel and
renewable diesel hubs in Northern and Southern California. These
hubs will allow customers to deliver renewable diesel and/or
biodiesel for blending with regular diesel for multiple
concentrations of renewable fuels.
CO2
- The CO2 segment received approval during the quarter from the
City of Snyder, Texas, to increase the size of the SACROC unit with
acreage immediately adjacent to it, further extending the useful
life of the asset. SACROC remains a significant contributor to
segment earnings.
Energy Transition Ventures
- In July, KMI announced that it had agreed to acquire
Indianapolis-based Kinetrex Energy from an affiliate of Parallel49
Equity for $310 million. Kinetrex is the leading supplier of
liquefied natural gas in the Midwest and a rapidly growing player
in producing and supplying renewable natural gas (RNG) under
long-term contracts to transportation service providers. Kinetrex
has a 50% interest in the largest RNG facility in Indiana as well
as signed commercial agreements to begin construction on three
additional landfill based RNG facilities. Once they all become
operational next year, total annual RNG production from the four
sites is estimated to be over 4 billion cubic feet. KMI expects the
investment to be accretive to its shareholders as the three RNG
facilities become operational over the next 18 months, with the
purchase price and additional development capital expenditures
representing less than six times expected 2023 EBITDA. The
transaction requires regulatory approval under Hart-Scott-Rodino
and is expected to close in the third quarter of 2021.
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, 144 terminals, and
700 billion cubic feet of working natural gas storage capacity. 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, July 21, at www.kindermorgan.com for a LIVE webcast conference
call on the company’s second 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 (loss) income 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 (loss) income 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 (loss) income 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 (loss) income
attributable to Kinder Morgan, Inc. Adjusted Earnings per share
uses Adjusted Earnings and applies the same two-class method used
in arriving at basic (loss) earnings per share. (See the
accompanying Tables 1 and 2.)
DCF is calculated by adjusting net
(loss) income 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 (loss) income 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 (loss) income 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 (loss)
income attributable to Kinder Morgan, Inc.. In prior periods, Net
(loss) income was considered the comparable GAAP measure and has
been updated to Net (loss) income 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;
energy transition-related opportunities; KMI’s expected Net income
attributable to KMI, 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
June 30,
% change
Six Months Ended
June 30,
% change
2021
2020
2021
2020
Revenues
$
3,150
$
2,560
$
8,361
$
5,666
Operating costs, expenses and other
Costs of sales
936
441
2,945
1,104
Operations and maintenance
582
606
1,096
1,226
Depreciation, depletion and
amortization
528
532
1,069
1,097
General and administrative
160
155
316
308
Taxes, other than income taxes
108
103
218
195
Loss on impairments and divestitures,
net
1,602
1,005
1,598
1,976
Other income, net
(2
)
—
(3
)
(1
)
Total operating costs, expenses and
other
3,914
2,842
7,239
5,905
Operating (loss) income
(764
)
(282
)
1,122
(239
)
Other income (expense)
Earnings from equity investments
157
176
223
368
Amortization of excess cost of equity
investments
(13
)
(35
)
(35
)
(67
)
Interest, net
(377
)
(395
)
(754
)
(831
)
Other, net
20
16
243
18
(Loss) income before income taxes
(977
)
(520
)
799
(751
)
Income tax benefit (expense)
237
(104
)
(114
)
(164
)
Net (loss) income
(740
)
(624
)
685
(915
)
Net income attributable to NCI
(17
)
(13
)
(33
)
(28
)
Net (loss) income attributable to
Kinder Morgan, Inc.
$
(757
)
$
(637
)
$
652
$
(943
)
Class P Shares
Basic and diluted (loss) earnings per
share
$
(0.34
)
$
(0.28
)
(21
)%
$
0.29
$
(0.42
)
169
%
Basic and diluted weighted average shares
outstanding
2,265
2,261
—
%
2,264
2,263
—
%
Declared dividends per share
$
0.27
$
0.2625
3
%
$
0.54
$
0.525
3
%
Adjusted Earnings (1)
$
516
$
381
35
%
$
1,890
$
922
105
%
Adjusted Earnings per share (1)
$
0.23
$
0.17
35
%
$
0.83
$
0.40
108
%
Note
(1)
Adjusted Earnings is Net (loss) income
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 (loss)
earnings per share.
Table 2
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net (Loss) Income
Attributable to Kinder Morgan, Inc. to Adjusted Earnings to DCF
Reconciliation
(In millions,
unaudited)
Three Months Ended
June 30,
% change
Six Months Ended
June 30,
% change
2021
2020
2021
2020
Net (loss) income attributable to
Kinder Morgan, Inc. (GAAP)
$
(757
)
$
(637
)
$
652
$
(943
)
Total Certain Items
1,273
1,018
1,238
1,865
Adjusted Earnings (1)
516
381
35
%
1,890
922
105
%
DD&A and amortization of excess cost
of equity investments for DCF (2)
604
659
1,242
1,350
Income tax expense for DCF (1)(2)
170
132
589
313
Cash taxes (2)
(45
)
(5
)
(44
)
(8
)
Sustaining capital expenditures (2)
(210
)
(159
)
(317
)
(300
)
Other items (3)
(10
)
(7
)
(6
)
(15
)
DCF
$
1,025
$
1,001
2
%
$
3,354
$
2,262
48
%
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
June 30,
% change
Six Months Ended
June 30,
% change
2021
2020
2021
2020
Natural Gas Pipelines
$
1,064
$
1,016
5
%
$
3,158
$
2,195
44
%
Products Pipelines
293
227
29
%
556
500
11
%
Terminals
246
229
7
%
473
486
(3
)%
CO2
151
156
(3
)%
442
331
34
%
Adjusted Segment EBDA (1)
1,754
1,628
8
%
4,629
3,512
32
%
General and administrative and corporate
charges (1)
(150
)
(157
)
(298
)
(297
)
JV DD&A and income tax expense
(1)(2)
83
110
186
229
Net income attributable to NCI (1)
(17
)
(13
)
(33
)
(28
)
Adjusted EBITDA
1,670
1,568
7
%
4,484
3,416
31
%
Interest, net (1)
(380
)
(396
)
(763
)
(831
)
Cash taxes (2)
(45
)
(5
)
(44
)
(8
)
Sustaining capital expenditures (2)
(210
)
(159
)
(317
)
(300
)
Other items (3)
(10
)
(7
)
(6
)
(15
)
DCF
$
1,025
$
1,001
2
%
$
3,354
$
2,262
48
%
Weighted average shares outstanding for
dividends (4)
2,277
2,274
2,277
2,275
DCF per share
$
0.45
$
0.44
$
1.47
$
0.99
Declared dividends per share
$
0.27
$
0.2625
$
0.54
$
0.525
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 (Loss) Income
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
Reconciliation
(In millions,
unaudited)
Three Months Ended
June 30,
% change
Six Months Ended
June 30,
% change
2021
2020
2021
2020
Net (loss) income attributable to
Kinder Morgan, Inc. (GAAP) (1)
$
(757
)
$
(637
)
(19
)%
$
652
$
(943
)
169
%
Certain Items:
Fair value amortization
(4
)
(4
)
(8
)
(12
)
Legal, environmental and taxes other than
income tax reserves
28
—
112
(8
)
Change in fair value of derivative
contracts (2)
28
32
42
(4
)
Loss on impairments, divestitures and
other write-downs, net (3)
1,600
—
1,511
371
Loss on impairments of goodwill (4)
—
1,000
—
1,600
Income tax Certain Items
(387
)
(10
)
(427
)
(106
)
Other
8
—
8
24
Total Certain Items (5)
1,273
1,018
1,238
1,865
DD&A and amortization of excess cost
of equity investments
541
567
1,104
1,164
Income tax expense (6)
150
114
541
270
JV DD&A and income tax expense
(6)(7)
83
110
186
229
Interest, net (6)
380
396
763
831
Adjusted EBITDA
$
1,670
$
1,568
7
%
$
4,484
$
3,416
31
%
Notes
(1)
In prior periods, Net (loss) income was
considered the comparable GAAP measure and has been updated to Net
(loss) income 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)
Three and six months ended June 30, 2021
amounts include a pre-tax non-cash impairment loss of $1,600
million related to our South Texas gathering and processing assets
within our Natural Gas Pipelines business segment resulting from
anticipated lower volumes and rates on contract renewals. Six
months ended June 30 2021 amount also 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. Six months ended June 30, 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. These amounts are reported within “Loss
on impairments and divestitures, net” on the accompanying
Preliminary Consolidated Statement of Operations. (See Table
1.)
(4)
Three and six months ended June 30, 2020
amounts include a non-cash impairment of goodwill associated with
our Natural Gas Pipelines Non-Regulated reporting unit. Six months
ended June 30, 2020 amount also includes a non-cash impairment of
goodwill associated with our CO2 reporting unit.
(5)
2021 amount includes $127 million and 2020
amount includes less than $1 million reported within “Earnings from
equity investments” on the accompanying Preliminary Consolidated
Statement of Operations.
(6)
Amounts are adjusted for Certain Items.
See Table 7 for more information.
(7)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
Table 5
Segment Volume and CO2 Segment
Hedges Highlights
(Historical data is pro forma
for acquired and divested assets, JV volumes at KMI share)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Natural Gas Pipelines
Transport volumes (BBtu/d)
36,537
35,080
36,878
36,704
Sales volumes (BBtu/d)
2,561
2,112
2,411
2,303
Gathering volumes (BBtu/d)
2,667
3,043
2,588
3,202
NGLs (MBbl/d) (1)
30
29
30
30
Products Pipelines (MBbl/d)
Gasoline (2)
1,046
762
969
862
Diesel fuel
418
371
398
365
Jet fuel
224
98
200
196
Total refined product volumes
1,688
1,231
1,567
1,423
Crude and condensate
510
479
508
590
Total delivery volumes (MBbl/d)
2,198
1,710
2,075
2,013
Terminals (1)
Liquids leasable capacity (MMBbl)
79.9
79.6
79.9
79.6
Liquids utilization %
93.6
%
95.6
%
93.6
%
95.6
%
Bulk transload tonnage (MMtons)
13.6
11.1
24.6
24.0
CO2
SACROC oil production
20.18
22.03
19.79
22.61
Yates oil production
6.70
6.62
6.42
6.83
Katz and Goldsmith oil production
2.26
2.48
2.41
2.92
Tall Cotton oil production
0.99
1.82
0.97
2.12
Total oil production - net (MBbl/d)
(3)
30.13
32.95
29.59
34.48
NGL sales volumes - net (MBbl/d) (3)
9.52
9.39
9.14
9.61
CO2 sales volumes - net (Bcf/d)
0.38
0.42
0.40
0.49
Realized weighted average oil price ($ per
Bbl)
$
52.50
$
50.31
$
51.79
$
52.56
Realized weighted average NGL price ($ per
Bbl)
$
22.58
$
15.84
$
21.42
$
17.84
CO2 Segment Hedges
Remaining 2021
2022
2023
2024
2025
Crude Oil (4)
Price ($ per Bbl)
$
50.38
$
52.68
$
49.86
$
47.76
$
49.95
Volume (MBbl/d)
25.70
16.20
9.25
3.80
1.40
NGLs
Price ($ per Bbl)
$
33.81
$
48.06
Volume (MBbl/d)
5.70
1.36
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)
June 30,
December 31,
2021
2020
Assets
Cash and cash equivalents
$
1,365
$
1,184
Other current assets
2,918
2,019
Property, plant and equipment, net
34,570
35,836
Investments
7,650
7,917
Goodwill
19,851
19,851
Deferred charges and other assets
3,821
5,166
Total assets
$
70,175
$
71,973
Liabilities, Redeemable Noncontrolling
Interest and Stockholders' Equity
Short-term debt
$
2,183
$
2,558
Other current liabilities
2,876
2,516
Long-term debt
30,008
30,838
Debt fair value adjustments
1,069
1,293
Other
2,216
2,202
Total liabilities
38,352
39,407
Redeemable Noncontrolling Interest
683
728
Other stockholders' equity
31,320
31,843
Accumulated other comprehensive loss
(609
)
(407
)
Total KMI stockholders' equity
30,711
31,436
Noncontrolling interests
429
402
Total stockholders' equity
31,140
31,838
Total liabilities, redeemable
noncontrolling interest and stockholders' equity
$
70,175
$
71,973
Net Debt (1)
$
30,195
$
32,042
Adjusted EBITDA Twelve Months
Ended
Reconciliation of Net Income
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
June 30,
December 31,
2021
2020
Net income attributable to Kinder
Morgan, Inc. (GAAP)
$
1,714
$
119
Total Certain Items
1,265
1,892
DD&A and amortization of excess cost
of equity investments
2,244
2,304
Income tax expense (2)
859
588
JV DD&A and income tax expense
(2)(3)
407
449
Interest, net (2)
1,542
1,610
Adjusted EBITDA
$
8,031
$
6,962
Net Debt-to-Adjusted EBITDA
3.8
4.6
Notes
(1)
Amounts exclude: (i) debt fair value
adjustments; and (ii) the foreign exchange impact on our Euro
denominated debt of $125 million and $170 million as of June 30,
2021 and December 31, 2020, respectively, as we have entered into
swaps to convert that debt to U.S.$. 2021 net debt amount includes
a decrease of $506 million reflecting restricted cash reported in
"Other current assets" above for cash held in escrow as of June 30,
2021 and used on July 1, 2021 for the redemption of $500 million of
senior notes plus associated accrued interest.
(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
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Segment EBDA
Natural Gas Pipelines (GAAP)
$
(570
)
$
(3
)
$
1,533
$
1,193
Certain Items
1,634
1,019
1,625
1,002
Natural Gas Pipelines Adjusted Segment
EBDA
1,064
1,016
3,158
2,195
Products Pipelines (GAAP)
265
227
513
496
Certain Items
28
—
43
4
Products Pipelines Adjusted Segment
EBDA
293
227
556
500
Terminals (GAAP)
246
229
473
486
Certain Items
—
—
—
—
Terminals Adjusted Segment EBDA
246
229
473
486
CO2 (GAAP)
150
146
436
(609
)
Certain Items
1
10
6
940
CO2 Adjusted Segment EBDA
151
156
442
331
Total Segment EBDA (GAAP)
91
599
2,955
1,566
Total Segment EBDA Certain Items
1,663
1,029
1,674
1,946
Total Adjusted Segment EBDA
$
1,754
$
1,628
$
4,629
$
3,512
Depreciation, depletion and amortization
(GAAP)
$
(528
)
$
(532
)
$
(1,069
)
$
(1,097
)
Amortization of excess cost of equity
investments (GAAP)
(13
)
(35
)
(35
)
(67
)
DD&A and amortization of excess cost
of equity investments
(541
)
(567
)
(1,104
)
(1,164
)
JV DD&A
(63
)
(92
)
(138
)
(186
)
DD&A and amortization of excess cost
of equity investments for DCF
$
(604
)
$
(659
)
$
(1,242
)
$
(1,350
)
General and administrative (GAAP)
$
(160
)
$
(155
)
$
(316
)
$
(308
)
Corporate benefit (charges)
10
(2
)
18
(14
)
Certain Items
—
—
—
25
General and administrative and corporate
charges (1)
$
(150
)
$
(157
)
$
(298
)
$
(297
)
Interest, net (GAAP)
$
(377
)
$
(395
)
$
(754
)
$
(831
)
Certain Items
(3
)
(1
)
(9
)
—
Interest, net (1)
$
(380
)
$
(396
)
$
(763
)
$
(831
)
Income tax benefit (expense) (GAAP)
$
237
$
(104
)
$
(114
)
$
(164
)
Certain Items
(387
)
(10
)
(427
)
(106
)
Income tax expense (1)
(150
)
(114
)
(541
)
(270
)
Unconsolidated JV income tax expense
(1)(2)
(20
)
(18
)
(48
)
(43
)
Income tax expense for DCF (1)
$
(170
)
$
(132
)
$
(589
)
$
(313
)
Net income attributable to NCI (GAAP)
$
(17
)
$
(13
)
$
(33
)
$
(28
)
NCI associated with Certain Items (3)
—
—
—
—
Net income attributable to NCI (1)
$
(17
)
$
(13
)
$
(33
)
$
(28
)
Additional JV information
Unconsolidated JV DD&A
$
(74
)
$
(102
)
$
(160
)
$
(205
)
Less: Consolidated JV partners'
DD&A
(11
)
(10
)
(22
)
(19
)
JV DD&A
(63
)
(92
)
(138
)
(186
)
Unconsolidated JV income tax expense
(1)(2)
(20
)
(18
)
(48
)
(43
)
JV DD&A and income tax expense (1)
$
(83
)
$
(110
)
$
(186
)
$
(229
)
Unconsolidated JV cash taxes (2)
$
(34
)
$
(6
)
$
(34
)
$
(10
)
Unconsolidated JV sustaining capital
expenditures
$
(32
)
$
(26
)
$
(52
)
$
(52
)
Less: Consolidated JV partners' sustaining
capital expenditures
(2
)
(1
)
(3
)
(2
)
JV sustaining capital expenditures
$
(30
)
$
(25
)
$
(49
)
$
(50
)
CO2 Segment EBDA (GAAP) to CO2 Segment
FCF Reconciliation
CO2 Segment EBDA (GAAP)
$
150
$
146
$
436
$
(609
)
Certain Items:
Change in fair value of derivative
contracts
1
10
6
(10
)
Loss on impairments
—
—
—
950
CO2 Segment Certain Items
1
10
6
940
Capital expenditures (4)
(45
)
(53
)
(84
)
(123
)
CO2 Segment FCF (1)
$
106
$
103
$
358
$
208
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 and six months ended June 30, 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
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
1.7
Total Certain Items
1.2
DD&A and amortization of excess cost
of equity investments for DCF (1)
2.6
Income tax expense for DCF (1)(2)
0.9
Cash taxes (1)
(0.1
)
Sustaining capital expenditures (1)
(0.9
)
Other items (3)
—
DCF
$
5.4
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
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
1.7
Total Certain Items
1.2
DD&A and amortization of excess cost
of equity investments
2.2
Income tax expense (2)
0.8
JV DD&A and income tax expense (1)
0.5
Interest, net (2)
1.5
Adjusted EBITDA
$
7.9
Notes
(1)
Includes or represents DD&A, income
tax expense, cash taxes and/or sustaining capital expenditures (as
applicable for each item) from JVs.
(2)
Amounts are adjusted for Certain
Items.
(3)
Aggregate adjustments for 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210721005717/en/
Dave Conover Media Relations Newsroom@kindermorgan.com
Investor Relations (800) 348-7320 km_ir@kindermorgan.com
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