Kinder Morgan, Inc.’s (NYSE: KMI) board of directors today
approved a cash dividend of $0.2775 per share for the third quarter
($1.11 annualized), payable on November 15, 2022, to stockholders
of record as of the close of business on October 31, 2022. This
dividend is a 3% increase over the third quarter of 2021.
The company is reporting third quarter net income attributable
to KMI of $576 million, compared to net income attributable to KMI
of $495 million in the third quarter of 2021; and distributable
cash flow (DCF) of $1,122 million, compared to $1,013 million in
the third quarter of 2021. Adjusted Earnings were $575 million for
the quarter, versus $505 million in the third quarter of 2021.
“As we continue to witness the tragic consequences of the war in
Ukraine, including global economic turbulence and volatility, our
company and the U.S. energy sector as a whole can take some measure
of pride in continuing to provide both our citizens and those
around the world with natural gas, refined products and crude oil,”
said Executive Chairman Richard D. Kinder. “The great work of more
than 10,000 Kinder Morgan employees has contributed to another
strong quarter, as we generated robust earnings and strong coverage
of this quarter’s dividend. As always, the company remains
steadfast in our long-standing goals: to maintain a strong
investment-grade balance sheet, internally fund expansion
opportunities, pay an attractive and growing dividend, and further
reward our shareholders by repurchasing our shares on an
opportunistic basis.”
“The company continues to perform better than budget, well above
DCF plan for the quarter,” said Chief Executive Officer Steve Kean.
“Our Natural Gas Pipelines segment continues to see strong demand
for the extensive firm transport and storage services we offer, as
well as favorable contract renewals on multiple assets across our
network. We are also moving forward with projects to provide
additional transport capacity to liquefied natural gas (LNG)
facilities and remain focused on continuing to be the provider of
choice for that growing market. Given the proximity of our existing
assets to planned LNG expansions, we expect to maintain and
potentially expand on our approximately 50% share of transport
capacity to LNG export facilities.
“Domestically, we are seeing the market highly value our 700
billion cubic feet (Bcf) of working natural gas storage capacity,”
continued Kean. “Our customers are increasingly recognizing the
role storage must play in an energy system that requires flexible
deliverability as the contribution from intermittent renewable
sources continues to grow in the power sector.
“There is simply no question that the assets we operate and the
services we provide will be needed for a long time to come.
Similarly, it is indisputable that a lengthy transition to greater
deployment of low carbon energy sources is underway — and we are
responding to that. As we look ahead, roughly 80% of our project
backlog is in lower-carbon energy services, including natural gas,
renewable natural gas, renewable diesel and feedstocks associated
with renewable diesel and sustainable aviation fuel,” Kean
concluded.
“Our financial performance during the quarter was strong, as we
generated earnings per share of $0.25 and DCF per share of $0.49,”
said KMI President Kim Dang. “Earnings per share for the quarter
were up 14% and DCF per share was up 11% as compared to the third
quarter of 2021, and DCF per share was also up 7% versus budget. We
generated $492 million of excess DCF above our declared dividend
during the quarter.
“During the quarter, we took several steps to increase value for
our shareholders, including progressing expansion projects and
selling a 25.5% equity interest in Elba Liquefaction Company,
L.L.C. (ELC) for approximately $565 million, which implies an
approximately 13 times enterprise value to EBITDA multiple,”
continued Dang. “We used those proceeds to reduce short-term debt
and create additional capacity for attractive investments,
including opportunistic share repurchases. Regarding share
repurchases, year-to-date through October 18 we have repurchased
approximately 21.7 million shares at an average price of $16.94 per
share.”
For the first nine months of 2022, the company reported net
income attributable to KMI of $1,878 million, compared to $1,147
million for the first nine months of 2021 and DCF of $3,753
million, down 14% from $4,367 million for the comparable period in
2021. Net income is up in 2022 in part due to a non-cash impairment
charge taken in 2021. The DCF decrease compared to the prior period
is due primarily to nonrecurring earnings during the February 2021
winter storm. Without the Uri impact, DCF for the first nine months
is up 15% versus the prior year period.
2022 Outlook
For 2022, KMI budgeted to generate net income attributable to
KMI of $2.5 billion and declare dividends of $1.11 per share, a 3%
increase from the dividends declared for 2021. The company also
budgeted to generate 2022 DCF of $4.7 billion and Adjusted EBITDA
of $7.2 billion and to end 2022 with a Net Debt-to-Adjusted EBITDA
ratio of 4.3 times. KMI now expects net income attributable to KMI
to be favorable to budget by approximately 3% and Adjusted EBITDA
and DCF to be favorable to budget by approximately 4%-5%. Net
income is impacted by unsettled hedges, which we treat as Certain
Items.
Overview of Business
Segments
“The Natural Gas Pipelines segment’s financial
performance was up in the third quarter of 2022 relative to the
third quarter of 2021, primarily on increased volumes on our
KinderHawk gathering system; continued strong demand for transport
and storage services on Natural Gas Pipeline Company of America,
Southern Natural Gas (SNG) and Midcontinent Express Pipeline;
higher contributions from our Texas Intrastate system; and
favorable pricing on the Altamont gathering system,” said Dang.
Natural gas transport volumes were flat compared to the third
quarter of 2021, with declines on the Texas Intrastate system
primarily due to the Freeport LNG terminal outage, on El Paso
Natural Gas due to a partial pipeline outage, and on CIG and
Cheyenne Plains Gas Pipeline due to continued declining production
in the Rockies basins. These declines were partially offset by
increases on Kinder Morgan Louisiana Pipeline and Elba Express due
to increased deliveries to LNG customers and on SNG due to higher
demand from power generation customers. Natural gas gathering
volumes were up 13% from the third quarter of 2021 with higher
volumes primarily on KinderHawk (which serves the Haynesville
shale).
“Contributions from the Products Pipelines segment were
down compared to the third quarter of 2021 due to a decline in
commodity prices that impacted inventory values on our transmix and
crude and condensate assets,” Dang said. “Total refined products
volumes were down 2%, while crude and condensate pipeline volumes
were down 5% compared to the third quarter of 2021. Gasoline
volumes were below the comparable period last year by 3% and diesel
volumes were down 5%. Jet fuel volumes continued their strong
rebound, up 11% versus the third quarter of 2021. These impacts
were partially offset by higher average rates as well as increased
volumes through our petroleum condensate processing facility in the
Houston Ship Channel.
“Terminals segment earnings were up compared to the third
quarter of 2021, driven by gains in our bulk business, which
benefited from continued strength in both handling rates and
volumes for export coal and petroleum coke. In our liquids
business, while volumes at our refined product hub facilities were
up versus the prior year period, increased property taxes and
weakness at our New York Harbor hub contributed to lower earnings
year-over-year,” continued Dang. “In our Jones Act tanker business,
where fundamentals continue to improve, the benefit from higher
fleet utilization was more than offset by lower average charter
rates compared to the third quarter of 2021 as vessels were
previously recontracted into a lower, albeit significantly
improving, rate environment. Notably, average charter rates and
earnings improved this quarter versus the second quarter of
2022.
“CO2 segment earnings were well up compared to the third
quarter of 2021 primarily due to higher realized crude, natural gas
liquids (NGL) and CO2 prices. Our realized weighted average crude
oil price for the quarter was up 25% at $66.34 per barrel, while
our weighted average NGL price for the quarter was up 35% from the
third quarter of 2021 at $37.68 per barrel, and CO2 prices were up
$0.39 or 33%,” said Dang. “Third quarter 2022 combined net oil
production across our fields was 7% above plan but down 3% compared
to the same period in 2021. NGL sales volumes net to KMI were up 1%
versus the third quarter of 2021, while CO2 sales volumes were down
11% on a net to KMI basis compared to the third quarter of 2021,
due to the expiration of a carried interest following payout on a
project in 2021.”
Other News
Corporate
- Year-to-date through October 18, KMI has repurchased
approximately 21.7 million shares of its common stock at an average
price of $16.94 per share.
- In August 2022, KMI issued $750 million of 4.80% notes due
February 2033 and $750 million of 5.4% notes due August 2052 to
repay maturing debt and for general corporate purposes.
Natural Gas Pipelines
- Progress continues on an expansion project for Permian Highway
Pipeline, LLC (PHP), with activities to secure construction
contractors, land and materials underway. The required compression
equipment has been secured. The project will expand PHP’s capacity
by approximately 550 million cubic feet per day (MMcf/d). The
project will add compression on the PHP system to increase natural
gas deliveries from the Permian to U.S. Gulf Coast markets. The
target in-service date for the project is November 1, 2023. PHP is
jointly owned by subsidiaries of KMI, Kinetik Holdings Inc. and
ExxonMobil Corporation. Kinder Morgan is the operator of PHP.
- On September 27, 2022, KMI announced that it had closed on the
sale of a 25.5% equity interest in ELC to an undisclosed financial
buyer for approximately $565 million. The proceeds from this
transaction were used to reduce short-term debt and create
additional capacity for attractive investments, including
opportunistic share repurchases. As a result of this transaction,
KMI and the undisclosed financial buyer each hold a 25.5% interest
and Blackstone Credit continues to hold a 49% interest in ELC. The
ELC joint venture was formed in 2017 to construct and own the 10
modular liquefaction units in operation at Elba Island. KMI will
continue to operate the facility.
- On July 22, 2022, Tennessee Gas Pipeline (TGP) filed an
application with the Federal Energy Regulatory Commission for its
proposed Cumberland Project. Designed to support Tennessee Valley
Authority’s (TVA) proposed retirement and replacement of an
existing coal-fired power plant with a natural gas fired, combined
cycle power plant, the approximately $181 million project includes
a new 32-mile pipeline that will transport approximately 245 MMcf/d
of natural gas from the existing TGP system to TVA’s proposed 1,450
megawatt generation facility at an existing site in Cumberland,
Tennessee. This project is subject to the completion of TVA’s
environmental reviews and final executive approval of its
retirement and replacement project. Additionally, pending the
receipt of all required permits and clearances, construction is
scheduled to begin in August 2024, with an expected in-service date
of September 1, 2025.
Products Pipelines
- KMI’s Southern California renewable diesel hub is on target to
be fully in service in the first quarter of 2023. The Southern
California hub will connect marine and other delivered renewable
diesel supplies in the Los Angeles harbor area to the Colton and
San Diego areas via KMI’s SFPP pipeline. San Diego is on track to
be commissioned in November 2022, with Colton to follow. At Colton,
the project will allow customers to deliver renewable diesel for
blending with regular diesel and biodiesel for multiple
concentrations of renewable fuel at our truck racks. The Southern
California renewable diesel hub will accommodate, in aggregate, up
to 20,000 barrels per day of blended diesel throughput across the
two inland destination truck racks. This project is anchored by
customer commitments.
- With respect to KMI’s planned Northern California renewable
diesel hub, due to permitting challenges associated with rail, KMI
has reconfigured the project to deliver renewable diesel by pipe to
multiple locations in Northern California. Targeting the same first
quarter of 2023 in-service as the rail project, KMI has identified
the ability to move an aggregate of 20,000 barrels per day of
renewable diesel on its northern pipeline system from Concord to
the Bradshaw, San Jose, and Fresno markets. This project will
capitalize on existing infrastructure to allow for a first quarter
in-service, with potential capacity expandability available in
subsequent phases. KMI is in the process of securing the necessary
customer commitments to complete this transition.
- KMI continues construction work at its Carson Terminal to
connect marine supplies of renewable diesel coming into its Los
Angeles harbor hub to its truck rack for delivery of unblended
renewable diesel to local markets. This project is on track to be
in service in December 2022.
Terminals
- Tank conversion work continues on the initial phase of the
renewable feedstock storage and logistics hub under development at
KMI’s Harvey, Louisiana facility. Upon completion of the project,
the facility will serve as a hub in the United States where Neste,
a leading provider of renewable diesel and sustainable aviation
fuel, will store a variety of regionally sourced feedstocks such as
used cooking oil. Project scope additions, including for enhanced
modal capabilities, have contributed to an upward revision in the
expected project cost, which now stands at approximately $80
million. The project, which will produce an attractive return, is
supported by a long-term commercial commitment from Neste. It
remains on schedule and is expected to commence operations in the
first quarter of 2023.
- Field work continues on a previously-announced project that
will significantly reduce the emissions profile of KMI’s refined
products terminal hub along the Houston Ship Channel. The
approximately $64 million investment will address emissions related
to product handling activities at KMI’s Galena Park and Pasadena
terminals and will generate an attractive return on invested
capital. The expected Scope 1 & 2 CO2 equivalent emissions
reduction across the combined facilities is approximately 34,000
metric tons per year or a 38% reduction in total facility GHG
emissions versus 2019 (pre-pandemic). The project is expected to be
in service by the third quarter of 2023.
Energy Transition Ventures
- On August 11, 2022, KMI closed on the acquisition of North
American Natural Resources, Inc. and its sister companies, North
American Biofuels, LLC and North American-Central, LLC (NANR). The
$135 million acquisition includes seven landfill gas-to-power
facilities in Michigan and Kentucky. KMI has made a final
investment decision (FID) on the conversion of three of the seven
to renewable natural gas (RNG) facilities with a capital spend of
approximately $145 million. These facilities are expected to be in
service by mid-2024 and, once complete, are expected to generate
approximately 1.7 Bcf per year of RNG. The remaining four NANR
assets, projected to produce 8.0 megawatt-hours in 2023, further
diversify KMI’s renewable portfolio by adding electricity
generation to its landfill gas-to-power operations.
- Construction is ongoing at the Twin Bridges, Prairie View and
Liberty Landfills, the three sites comprising Kinetrex Energy’s
approximately $150 million landfill-based renewable natural gas
(RNG) projects in Indiana. The sites are expected to be placed in
service throughout 2023 and KMI will begin monetizing renewable
identification numbers (RINs) from the first of the new plants in
the first quarter of 2023. These projects will add approximately
3.5 Bcf to KMI’s total annual RNG gross production upon
completion.
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, 141 terminals, 700
billion cubic feet of working natural gas storage capacity and have
renewable natural gas generation capacity of approximately 2.2 Bcf
per year of gross production with an additional 5.2 Bcf in
development. Our pipelines transport natural gas, refined petroleum
products, renewable fuels, crude oil, condensate, CO2 and other
products, and our terminals store and handle various commodities
including gasoline, diesel fuel, renewable fuel feedstocks,
chemicals, ethanol, metals and petroleum coke. Learn more about our
renewables initiatives on the low carbon solutions page at
www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. ET on Wednesday,
October 19, at www.kindermorgan.com
for a LIVE webcast conference call on the company’s third quarter
earnings. An investor presentation update will be posted to the
Investor Relations page of KMI’s website prior to 9:30 a.m. ET on
October 20, 2022.
Non-GAAP Financial
Measures
This press release includes 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 and 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).
For reconciliations of budgeted DCF and budgeted Adjusted EBITDA
to budgeted net income attributable to KMI for 2022, please refer
to Table 9 and Table 10 included in KMI’s press release dated April
20, 2022.
Our non-GAAP financial measures described below should not be
considered alternatives to GAAP net 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 income attributable to
Kinder Morgan, Inc., but typically either (1) do not have a cash
impact (for example, unsettled commodity hedges and 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 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 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 per share. (See the accompanying Tables 1 and
2.)
DCF is calculated by adjusting net
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 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 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 income
attributable to Kinder Morgan, Inc. (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.
FCF is calculated by reducing cash
flow from operations for capital expenditures (sustaining and
expansion). FCF is used by external users as an additional leverage
metric. Therefore, we believe FCF is useful to our investors. We
believe the GAAP measure most directly comparable to FCF is cash
flow from operations.
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 2022 expectations;
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 timing and extent of changes in the supply of and
demand for the products we transport and handle; commodity prices;
counterparty financial risk; 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, 2021 (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 Income
(In millions, except per share
amounts, unaudited)
Three Months Ended
September 30,
% change
Nine Months Ended September
30,
% change
2022
2021
2022
2021
Revenues
$
5,177
$
3,824
$
14,621
$
12,185
Operating costs, expenses and other
Costs of sales
2,717
1,559
7,294
4,504
Operations and maintenance
712
614
1,960
1,710
Depreciation, depletion and
amortization
551
526
1,632
1,595
General and administrative
162
174
470
490
Taxes, other than income taxes
113
106
340
324
(Gain) loss on divestitures and
impairments, net
(9
)
4
(30
)
1,602
Other income, net
—
(3
)
(6
)
(6
)
Total operating costs, expenses and
other
4,246
2,980
11,660
10,219
Operating income
931
844
2,961
1,966
Other income (expense)
Earnings from equity investments
195
169
564
392
Amortization of excess cost of equity
investments
(19
)
(21
)
(57
)
(56
)
Interest, net
(399
)
(368
)
(1,087
)
(1,122
)
Other, net
21
21
63
264
Income before income taxes
729
645
2,444
1,444
Income tax expense
(134
)
(134
)
(512
)
(248
)
Net income
595
511
1,932
1,196
Net income attributable to NCI
(19
)
(16
)
(54
)
(49
)
Net income attributable to Kinder
Morgan, Inc.
$
576
$
495
$
1,878
$
1,147
Class P Shares
Basic and diluted earnings per share
$
0.25
$
0.22
14
%
$
0.83
$
0.50
66
%
Basic and diluted weighted average shares
outstanding
2,253
2,267
(1
)%
2,262
2,265
—
%
Declared dividends per share
$
0.2775
$
0.27
3
%
$
0.8325
$
0.81
3
%
Adjusted Earnings (1)
$
575
$
505
14
%
$
1,928
$
2,395
(19
)%
Adjusted Earnings per share (1)
$
0.25
$
0.22
14
%
$
0.85
$
1.05
(19
)%
Note:
(1)
Adjusted Earnings is Net 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
earnings per share.
Table 2
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income
Attributable to Kinder Morgan, Inc. to Adjusted Earnings to DCF
Reconciliation
(In millions,
unaudited)
Three Months Ended
September 30,
% change
Nine Months Ended September
30,
% change
2022
2021
2022
2021
Net income attributable to Kinder
Morgan, Inc. (GAAP)
$
576
$
495
$
1,878
$
1,147
Total Certain Items
(1
)
10
50
1,248
Adjusted Earnings (1)
575
505
14
%
1,928
2,395
(19
)%
DD&A and amortization of excess cost
of equity investments for DCF (2)
647
612
1,897
1,854
Income tax expense for DCF (1)(2)
167
165
601
754
Cash taxes (2)
(15
)
(12
)
(63
)
(56
)
Sustaining capital expenditures (2)
(243
)
(241
)
(581
)
(558
)
Other items (3)
(9
)
(16
)
(29
)
(22
)
DCF
$
1,122
$
1,013
11
%
$
3,753
$
4,367
(14
)%
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
September 30,
% change
Nine Months Ended September
30,
% change
2022
2021
2022
2021
Natural Gas Pipelines
$
1,159
$
1,090
6
%
$
3,589
$
4,248
(16
)%
Products Pipelines
257
280
(8
)%
855
836
2
%
Terminals
240
233
3
%
731
706
4
%
CO2
195
154
27
%
614
596
3
%
Adjusted Segment EBDA (1)
1,851
1,757
5
%
5,789
6,386
(9
)%
General and administrative and corporate
charges (1)
(149
)
(167
)
(438
)
(465
)
JV DD&A and income tax expense
(1)(2)
90
84
262
270
Net income attributable to NCI (1)
(19
)
(16
)
(54
)
(49
)
Adjusted EBITDA
1,773
1,658
7
%
5,559
6,142
(9
)%
Interest, net (1)
(384
)
(376
)
(1,133
)
(1,139
)
Cash taxes (2)
(15
)
(12
)
(63
)
(56
)
Sustaining capital expenditures (2)
(243
)
(241
)
(581
)
(558
)
Other items (3)
(9
)
(16
)
(29
)
(22
)
DCF
$
1,122
$
1,013
11
%
$
3,753
$
4,367
(14
)%
Weighted average shares outstanding for
dividends (4)
2,267
2,279
2,275
2,278
DCF per share
$
0.49
$
0.44
$
1.65
$
1.92
Declared dividends per share
$
0.2775
$
0.27
$
0.8325
$
0.81
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 pension contributions, non-cash
pension expense and non-cash compensation associated with our
restricted stock program.
(4)
Includes restricted stock awards that
participate in dividends.
Table 4
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Net Income
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
Reconciliation
(In millions,
unaudited)
Three Months Ended
September 30,
% change
Nine Months Ended September
30,
% change
2022
2021
2022
2021
Net income attributable to Kinder
Morgan, Inc. (GAAP)
$
576
$
495
16
%
$
1,878
$
1,147
64
%
Certain Items:
Fair value amortization
(4
)
(7
)
(11
)
(15
)
Legal, environmental and taxes other than
income tax reserves
23
—
23
112
Change in fair value of derivative
contracts (1)
(6
)
22
49
64
Loss on impairments, divestitures and
other write-downs, net (2)
—
4
—
1,515
Income tax Certain Items
(20
)
(12
)
(35
)
(439
)
Other
6
3
24
11
Total Certain Items (3)
(1
)
10
50
1,248
DD&A and amortization of excess cost
of equity investments
570
547
1,689
1,651
Income tax expense (4)
154
146
547
687
JV DD&A and income tax expense
(4)(5)
90
84
262
270
Interest, net (4)
384
376
1,133
1,139
Adjusted EBITDA
$
1,773
$
1,658
7
%
$
5,559
$
6,142
(9
)%
Notes
(1)
Gains or losses are reflected in our DCF
when realized.
(2)
Nine months ended September 30, 2021
amount includes 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 reported within
"(Gain) loss on divestitures and impairments, net" and 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., reported within "Other, net" and "Earnings from equity
investments," respectively, on the accompanying Preliminary
Consolidated Statement of Income (see Table 1).
(3)
Three months ended September 30, 2022 and
2021 amounts include less than $1 million and $2 million,
respectively, and nine months ended September 30, 2022 and 2021
amounts include $4 million and $129 million, respectively, reported
within “Earnings from equity investments” on the accompanying
Preliminary Consolidated Statements of Income.
(4)
Amounts are adjusted for Certain Items.
See Table 7 for more information.
(5)
Represents JV DD&A and income tax
expense. See Table 7 for more information.
Table 5
Segment Volume and CO2 Segment
Hedges Highlights
(Historical data is pro forma
for acquired and divested assets, JV volumes at KMI share)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Natural Gas Pipelines (1)
Transport volumes (BBtu/d)
38,637
38,527
38,726
38,593
Sales volumes (BBtu/d)
2,469
2,616
2,521
2,480
Gathering volumes (BBtu/d)
3,179
2,808
2,999
2,662
NGLs (MBbl/d) (1)
24
29
29
30
Products Pipelines (MBbl/d)
Gasoline (2)
989
1,023
982
987
Diesel fuel
368
389
370
395
Jet fuel
278
250
262
217
Total refined product volumes
1,635
1,662
1,614
1,599
Crude and condensate
467
491
477
503
Total delivery volumes (MBbl/d)
2,102
2,153
2,091
2,102
Terminals (1)
Liquids leasable capacity (MMBbl)
78.9
79.0
78.9
79.0
Liquids utilization %
91.1
%
94.7
%
91.1
%
94.7
%
Bulk transload tonnage (MMtons)
13.4
13.4
40.0
37.9
CO2
SACROC oil production
19.91
20.13
19.62
19.90
Yates oil production
6.43
6.52
6.52
6.45
Katz and Goldsmith oil production
1.77
2.06
1.82
2.29
Tall Cotton oil production
0.97
1.12
1.00
1.02
Total oil production - net (MBbl/d)
(3)
29.08
29.83
28.96
29.66
NGL sales volumes - net (MBbl/d) (3)
9.74
9.68
9.47
9.32
CO2 sales volumes - net (Bcf/d)
0.33
0.37
0.35
0.39
Realized weighted average oil price ($ per
Bbl)
$
66.34
$
53.03
$
67.91
$
52.21
Realized weighted average NGL price ($ per
Bbl)
$
37.68
$
28.01
$
41.01
$
23.73
CO2 Segment Hedges
Remaining 2022
2023
2024
2025
2026
Crude Oil (4)
Price ($ per Bbl)
$
62.42
$
63.28
$
61.04
$
61.08
$
65.67
Volume (MBbl/d)
26.40
21.10
13.40
8.95
3.00
NGLs
Price ($ per Bbl)
$
56.02
$
61.39
Volume (MBbl/d)
4.57
2.04
Midland-to-Cushing Basis Spread
Price ($ per Bbl)
$
0.53
$
0.87
Volume (MBbl/d)
23.65
14.50
Notes
(1)
Volumes for acquired pipelines are
included for all periods, however, EBDA contributions from
acquisitions are included only for periods subsequent to their
acquisition. Volumes for facilities divested, idled and/or held for
sale 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)
September 30,
December 31,
2022
2021
Assets
Cash and cash equivalents
$
483
$
1,140
Other current assets
3,336
2,689
Property, plant and equipment, net
35,534
35,653
Investments
7,465
7,578
Goodwill
19,965
19,914
Deferred charges and other assets
3,209
3,442
Total assets
$
69,992
$
70,416
Liabilities and Stockholders'
Equity
Short-term debt
$
2,634
$
2,646
Other current liabilities
3,514
3,175
Long-term debt
29,000
29,772
Debt fair value adjustments
107
902
Other
2,602
2,000
Total liabilities
37,857
38,495
Other stockholders' equity
31,119
31,234
Accumulated other comprehensive loss
(363
)
(411
)
Total KMI stockholders' equity
30,756
30,823
Noncontrolling interests
1,379
1,098
Total stockholders' equity
32,135
31,921
Total liabilities and stockholders'
equity
$
69,992
$
70,416
Net Debt (1)
$
31,204
$
31,214
Adjusted EBITDA Twelve Months
Ended
Reconciliation of Net Income
Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
September 30,
December 31,
2022
2021
Net income attributable to Kinder
Morgan, Inc. (GAAP)
$
2,515
$
1,784
Total Certain Items
22
1,220
DD&A and amortization of excess cost
of equity investments
2,250
2,213
Income tax expense (2)
720
860
JV DD&A and income tax expense
(2)(3)
344
351
Interest, net (2)
1,512
1,518
Adjusted EBITDA
$
7,363
$
7,946
Net Debt-to-Adjusted EBITDA
4.2
3.9
Notes
(1)
Amounts exclude (i) debt fair value
adjustments; and (ii) the foreign exchange impact on our Euro
denominated debt of $(53) million and $64 million as of September
30, 2022 and December 31, 2021, respectively, as we have entered
into swaps to convert that debt to U.S.$. In March 2022, one series
of our Euro denominated debt matured and as of September 30, 2022,
we have one remaining series of Euro denominated debt
outstanding.
(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 (continued)
Kinder Morgan, Inc. and
Subsidiaries
Preliminary Supplemental
Information
(In millions,
unaudited)
Three Months Ended
September 30,
Nine Months Ended September
30,
2022
2021
2022
2021
Segment EBDA
Natural Gas Pipelines (GAAP)
$
1,135
$
1,069
$
3,453
$
2,602
Certain Items
24
21
136
1,646
Natural Gas Pipelines Adjusted Segment
EBDA
1,159
1,090
3,589
4,248
Products Pipelines (GAAP)
257
279
855
792
Certain Items
—
1
—
44
Products Pipelines Adjusted Segment
EBDA
257
280
855
836
Terminals (GAAP)
240
216
731
689
Certain Items
—
17
—
17
Terminals Adjusted Segment EBDA
240
233
731
706
CO2 (GAAP)
215
163
619
599
Certain Items
(20
)
(9
)
(5
)
(3
)
CO2 Adjusted Segment EBDA
195
154
614
596
Total Segment EBDA (GAAP)
1,847
1,727
5,658
4,682
Total Segment EBDA Certain Items
4
30
131
1,704
Total Adjusted Segment EBDA
$
1,851
$
1,757
$
5,789
$
6,386
Depreciation, depletion and amortization
(GAAP)
$
(551
)
$
(526
)
$
(1,632
)
$
(1,595
)
Amortization of excess cost of equity
investments (GAAP)
(19
)
(21
)
(57
)
(56
)
DD&A and amortization of excess cost
of equity investments
(570
)
(547
)
(1,689
)
(1,651
)
JV DD&A
(77
)
(65
)
(208
)
(203
)
DD&A and amortization of excess cost
of equity investments for DCF
$
(647
)
$
(612
)
$
(1,897
)
$
(1,854
)
General and administrative (GAAP)
$
(162
)
$
(174
)
$
(470
)
$
(490
)
Corporate benefit
13
7
32
25
Certain Items
—
—
—
—
General and administrative and corporate
charges (1)
$
(149
)
$
(167
)
$
(438
)
$
(465
)
Interest, net (GAAP)
$
(399
)
$
(368
)
$
(1,087
)
$
(1,122
)
Certain Items
15
(8
)
(46
)
(17
)
Interest, net (1)
$
(384
)
$
(376
)
$
(1,133
)
$
(1,139
)
Income tax expense (GAAP)
$
(134
)
$
(134
)
$
(512
)
$
(248
)
Certain Items
(20
)
(12
)
(35
)
(439
)
Income tax expense (1)
(154
)
(146
)
(547
)
(687
)
Unconsolidated JV income tax expense
(1)(2)
(13
)
(19
)
(54
)
(67
)
Income tax expense for DCF (1)
$
(167
)
$
(165
)
$
(601
)
$
(754
)
Net income attributable to NCI (GAAP)
$
(19
)
$
(16
)
$
(54
)
$
(49
)
NCI associated with Certain Items (3)
—
—
—
—
Net income attributable to NCI (1)
$
(19
)
$
(16
)
$
(54
)
$
(49
)
Additional JV information
Unconsolidated JV DD&A
$
(89
)
$
(76
)
$
(242
)
$
(236
)
Less: Consolidated JV partners'
DD&A
(12
)
(11
)
(34
)
(33
)
JV DD&A
(77
)
(65
)
(208
)
(203
)
Unconsolidated JV income tax expense
(1)(2)
(13
)
(19
)
(54
)
(67
)
JV DD&A and income tax expense (1)
$
(90
)
$
(84
)
$
(262
)
$
(270
)
Unconsolidated JV cash taxes (2)
$
(12
)
$
(13
)
$
(51
)
$
(47
)
Unconsolidated JV sustaining capital
expenditures
$
(38
)
$
(29
)
$
(89
)
$
(81
)
Less: Consolidated JV partners' sustaining
capital expenditures
(2
)
(2
)
(6
)
(5
)
JV sustaining capital expenditures
$
(36
)
$
(27
)
$
(83
)
$
(76
)
KMI FCF
Net income attributable to Kinder Morgan,
Inc. (GAAP)
$
576
$
495
$
1,878
$
1,147
Net income attributable to noncontrolling
interests
19
16
54
49
DD&A and amortization of excess cost
of equity investments
570
547
1,689
1,651
Deferred income taxes
130
131
499
236
Earnings from equity investments
(195
)
(169
)
(564
)
(392
)
Distribution of equity investment earnings
(4)
200
189
548
535
Working capital and other items (5)
(385
)
(80
)
(541
)
1,214
Cash flow from operations (GAAP)
915
1,129
3,563
4,440
Capital expenditures (GAAP)
(365
)
(349
)
(1,144
)
(894
)
FCF
550
780
2,419
3,546
Dividends paid
(629
)
(616
)
(1,876
)
(1,828
)
FCF after dividends
$
(79
)
$
164
$
543
$
1,718
Notes
(1)
Amounts are adjusted for Certain
Items.
(2)
Amounts are associated with our Citrus,
NGPL and Products (SE) Pipe Line equity investments.
(3)
Nine months ended September 30, 2021
amount includes less than $1 million of noncontrolling interests
associated with Certain Items.
(4)
Excludes distributions from equity
investment in excess of cumulative earnings of $22 million and $73
million for the three months ended September 30, 2022 and 2021,
respectively, and $126 million and $121 million for the nine months
ended September 30, 2022 and 2021, respectively. These are included
in cash flows from investing activities on our consolidated
statement of cash flows.
(5)
Includes non-cash impairments recognized.
See Table 4 for more information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221019005839/en/
Dave Conover Media Relations Newsroom@kindermorgan.com
Investor Relations (800) 348-7320 km_ir@kindermorgan.com
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