HOUSTON--(BUSINESS WIRE)--Kinder Morgan, Inc. (NYSE: KMI) today announced that its board of
directors approved an increase in its quarterly cash dividend to $0.45
($1.80 annualized) payable on Feb. 17, 2015, to shareholders of record
as of the close of business on Feb. 2, 2015. This represents a 10
percent increase over the fourth quarter 2013 dividend of $0.41 per
share ($1.64 annualized) and is up from $0.44 per share ($1.76
annualized) for the third quarter of 2014.
Chairman and CEO Richard D. Kinder said, “KMI had a good year and will
pay cash dividends of $1.74 per share for 2014, exceeding our annual
budget of $1.72 per share, and 9 percent higher than the 2013 declared
dividend of $1.60. While we experienced some headwinds in the fourth
quarter due primarily to commodity pricing, Kinder Morgan demonstrated
once again that our large diversified portfolio of mostly fee-based
assets can produce good results even in tumultuous market conditions. In
2014 our businesses generated $7.539 billion in segment earnings before
DD&A and certain items, a 9 percent increase over 2013, led by our
Natural Gas Pipelines, Products Pipelines, SACROC production and
Terminals assets. We also completed the transaction to merge the Kinder
Morgan entities into one company in late November 2014, which we believe
simplifies the company for investors and most importantly paves the way
for superior growth at KMI for many years to come. Our current project
backlog of expansion and joint venture investments is $17.6 billion.
Since the third quarter earnings release, we have placed $730 million of
completed projects into service, removed $785 million in projects
(primarily in the CO2 segment that have been delayed beyond
the time horizon of the backlog due to lower commodity prices), and
added $1.24 billion in new projects to the backlog. Projects in the
backlog have a high certainty of completion and will drive future growth
at the company across all of our business segments.”
KMI reported fourth quarter distributable cash flow before certain items
of $1.278 billion versus $482 million for the comparable period in 2013.
The increase over the fourth quarter 2013 is in part attributable to the
KMI merger transactions, which resulted in the payment of a single
dividend to all KMI shareholders in lieu of distributions to the former
limited partners in Kinder Morgan Energy Partners and El Paso Pipeline
Partners. Distributable cash flow per share before certain items was
$0.60 compared to $0.46 for the fourth quarter last year. Fourth quarter
net income before certain items was $664 million compared to $640
million for the same period in 2013. Net income was $566 million
compared to $704 million for the fourth quarter last year. Certain items
after tax in the fourth quarter totaled a net loss of $98 million
compared to a net gain of $64 million for the same period last year,
primarily due to a $235 million non-cash, pre-tax impairment charge on
one of the company’s oil and gas properties, partially offset by a
nonrecurring tax benefit.
For the full year, KMI reported distributable cash flow before certain
items of $2.618 billion, up from $1.713 billion for 2013. Distributable
cash flow per share before certain items was $2.00 compared to $1.65 the
previous year. Net income before certain items was $2.340 billion
compared to $2.044 billion for 2013. Net income was $2.443 billion
compared to $2.692 billion for the previous year, down primarily due to
a $558 million gain recorded in 2013 related to the re-measurement of
the company’s original 50 percent interest in the Eagle Ford joint
venture to fair market value.
Overview of Business Segments
The Natural Gas Pipelines business produced fourth quarter
segment earnings before DD&A and certain items of $1.057 billion, up 5
percent from $1.006 billion for the same period last year. For the full
year, Natural Gas Pipelines generated $4.069 billion in segment earnings
before DD&A and certain items, a 9 percent increase over 2013.
“This segment’s strong results and the increase in earnings compared to
the fourth quarter last year were attributable to strong performances at
Tennessee Gas Pipeline (TGP), El Paso Natural Gas (EPNG) and South Texas
Copano midstream assets,” Kinder said. “For the full year, these same
assets drove earnings growth and we benefited from a full year of
ownership of the Copano assets. TGP’s services continue to be in high
demand due primarily to ongoing production growth in the Marcellus and
Utica shale plays. Earnings were boosted by a number of TGP expansion
projects that came online in the fall of 2013 and during 2014, which
resulted in a 16 percent throughput increase on TGP for the full year
compared to the previous year. EPNG throughput was 10 percent higher
than the previous year due to increased deliveries to California for
storage refill and volumes on firm transportation contracts related to
increased demand in Mexico. South Texas Copano midstream assets
benefited from higher gathering volumes from the Eagle Ford Shale. These
positives more than offset the impact of previously announced rate case
settlements that resulted in lower rates on the Southern Natural Gas and
Wyoming Interstate Company pipelines.”
Natural gas continues to be the fuel of choice for America’s future
energy needs and certain industry experts are projecting gas demand
increases of about 40 percent to nearly 110 billion cubic feet per day
(Bcf/d) over the next 10 years. Since Dec. 1, 2013, KMI has entered into
new and pending firm transport capacity commitments totaling 6.7 Bcf/d,
and its pipelines currently move about one-third of the natural gas
consumed in America. Future opportunities include the need for more
capacity in the Northeast, demand for gas-fired power generation, LNG
exports and exports to Mexico. KMI currently has a backlog of natural
gas projects of approximately $4.6 billion.
The CO2 business produced fourth quarter
segment earnings before DD&A and certain items of $369 million, down
from $392 million for the same period in 2013. For the full year, the CO2
business generated $1.458 billion, up 2 percent over the previous year,
but below its published annual budget of 8 percent growth, primarily due
to lower commodity prices.
“Lower commodity prices obviously impacted earnings overall, but we had
some outstanding operational results in this segment,” Kinder said. “In
the fourth quarter our large SACROC Unit reported record quarterly oil
production averaging 35.5 thousand barrels per day (MBbl/d) and strong
NGL sales volumes of 20.4 MBbl/d at our Snyder Gas Plant, along with
record quarterly CO2 production in southwestern Colorado of
1.31 Bcf/d,” Kinder said. “We set annual records in these same areas,
with SACROC production up 8 percent, NGL volumes up almost 2 percent and
CO2 production up almost 5 percent compared to 2013. We also
achieved record annual throughput on the Cortez Pipeline, which
transports CO2 from southwestern Colorado to the Permian
Basin, and record annual throughput on the Wink Pipeline, which
transports crude from the Permian Basin to a refinery in El Paso, Texas.”
Combined gross oil production volumes averaged 60.3 MBbl/d for the
fourth quarter, up 6 percent versus the same period last year, led by an
increase in SACROC production of 10 percent. Combined gross oil
production volumes averaged 57.6 MBbl/d for the full year, led by the 8
percent increase at SACROC. SACROC was significantly above plan for
2014, Yates was slightly below plan, but consistent with last year’s
results, and Katz and Goldsmith were well below plan. For the full year,
net prices decreased $3.70 per barrel compared to the annual budget due
to lower West Texas Intermediate (WTI) crude oil prices and a higher
Midland to Cushing differential.
The Products Pipelines business produced fourth quarter segment
earnings before DD&A and certain items of $225 million, up 11 percent
from $203 million from the comparable period in 2013. For the full year,
Products Pipelines generated $860 million, up 10 percent over the
previous year, but below its published annual budget of 18 percent
growth.
“Fourth quarter growth in this segment compared to the same period last
year was driven by higher volumes on the Kinder Morgan Crude and
Condensate Pipeline (KMCC), which continued to ramp up, and higher
volumes and margins on our Pacific system, offset somewhat by lower
transmix results due to unfavorable inventory pricing,” Kinder said.
“Additional fourth quarter highlights included record throughput volumes
on the Plantation pipeline and at our Southeast Terminals, and the
completion of a successful open season in which we secured sufficient
volume commitments to proceed with the new Palmetto pipeline project and
an expansion of Plantation. Earnings versus our budget were impacted by
the continued delay in the startup of the petroleum condensate
processing facility on the Houston Ship Channel, which is now expected
to be in service in March of this year.”
For the full year, growth was driven by an increase in crude and
condensate volumes to over 100,000 barrels per day (bpd) compared to
approximately 35,000 bpd in 2013, and a 6 percent increase in overall
refined products volumes.
Total refined products volumes were up 5.3 percent for the fourth
quarter and 6 percent for the full year (4 percent excluding Parkway
which began service in September 2013) versus the same periods in 2013.
Volumes on Plantation and Parkway increased by 13.3 percent for the
fourth quarter and 16.8 percent for the full year compared to the same
periods last year, reflecting increased demand for refined products from
the Gulf Coast and the startup of Parkway. Segment gasoline volumes
(including transported ethanol on the Central Florida Pipeline) were up
6.5 percent for the fourth quarter and 6.7 percent for the year (4.4
percent for the year excluding Parkway). The company realized a 4.4
percent uptick in gasoline volumes on its Pacific system in the fourth
quarter, primarily in the southern California and Arizona markets.
Products Pipelines handled about 11.4 million barrels of biofuels
(ethanol and biodiesel) in the fourth quarter and 44.1 million barrels
for the full year, up almost 5 percent and over 7 percent compared to
the same periods in 2013. The increase was driven by volume growth at
our Tampa ethanol receipt facility and biodiesel blending projects
coming online this year on the West Coast. This segment continues to
make investments in assets across its operations to accommodate more
biofuels.
The Terminals business produced fourth quarter segment earnings
before DD&A and certain items of $277 million, up 25 percent from $221
million for the same period in 2013. For the full year, the Terminals
segment generated $979 million in segment earnings before DD&A and
certain items, up 23 percent over the previous year and ahead of its
published annual budget of 21 percent growth.
“Approximately two thirds of the fourth quarter and full year growth in
this segment was organic versus the same periods in 2013, with the
remainder coming from acquisitions,” Kinder said. “The increase in
fourth quarter earnings was driven by strong performance at our liquids
terminals, reflecting strong performance at our Gulf liquids facilities,
recent expansions at BOSTCO, Deepwater and Edmonton, plus the
acquisitions of our Jones Act tankers. Strong petcoke volumes also
contributed to the segment’s increase. While there was an uptick in
domestic coal volumes, export tonnage declined by 26 percent versus the
fourth quarter last year. However, the impact on segment earnings was
offset by the long-term minimum tonnage commitments the company has with
its customers.” For the full year, the increase in growth was led by
many of the same drivers noted above.
For the fourth quarter, Terminals and Products Pipelines combined
handled 29.1 million barrels of ethanol, up from 28.4 million barrels
for the same period last year. For the full year, the company handled
113.4 million barrels of ethanol, up 9 percent from 103.7 million
barrels for 2013. KMI currently handles approximately one-third of the
ethanol used in the United States.
Kinder Morgan Canada produced fourth quarter segment earnings
before DD&A and certain items of $44 million versus the $54 million it
reported for the same period in 2013. For the full year, Kinder Morgan
Canada generated $182 million compared to $200 million for the previous
year and below its published annual budget. While demand for capacity
remained high on Trans Mountain in both the fourth quarter and for the
full year, earnings were impacted primarily by an unfavorable foreign
exchange rate.
2015 Outlook
On Dec. 3, 2014, KMI issued its preliminary financial projections for
2015 and said it expected to declare dividends of $2.00 per share, an
approximately 16 percent increase over the 2014 budgeted dividend of
$1.72 per share, and generate additional cash of over $500 million in
excess of its dividend. These expectations assumed an average WTI crude
oil price of approximately $70 per barrel and a Henry Hub natural gas
price of $3.80 per MMBtu in 2015. Since that time the company finalized
its 2015 budget with approximately $650 million of excess coverage.
The overwhelming majority of cash generated by KMI’s assets is fee based
and is not sensitive to commodity prices. KMI does have some commodity
price sensitivity, primarily in its CO2 segment, and hedges
the majority of its next 12 months of oil production to minimize this
sensitivity. For 2015, the company estimates that every $1 per barrel
change in the average WTI crude oil price impacts distributable cash
flow by approximately $10 million (budget assumes WTI price of $70 per
barrel), and each $0.10 per MMBtu change in the price of natural gas
impacts distributable cash flow by approximately $3 million (budget
assumes natural gas price of $3.80 per MMBtu). This assumes the company
does not add additional hedges during the year which could reduce these
sensitivities. These sensitivities compare to total anticipated segment
earnings before DD&A in 2015 of approximately $8 billion (adding back
KMI’s share of joint venture DD&A). Even adjusting for current commodity
prices, the company expects to have significant excess coverage in 2015
and expects to increase its dividends by 10 percent each year from 2016
through 2020.
The company’s board of directors approved this budget and it will be
discussed in detail Jan. 28 during the company’s annual analyst
conference in Houston. The conference begins at 8 a.m. CT and will be
webcast live.
Steve Kean to Become CEO Effective June 1, 2015
The board of directors today announced that Steve Kean will become CEO
of Kinder Morgan effective June 1, 2015. At that time, Rich Kinder will
become Executive Chairman. “This will be a seamless transition, and we
will continue to operate the company with the same philosophy and in the
same manner,” Kinder said. “Good leadership includes taking steps to
assure that the future of the company is in good hands and involves
detailed and thoughtful succession planning. I’m delighted that Steve
will become our next CEO and have every confidence that he and the rest
of our executive management team will continue to do an outstanding job.
As for me, I’m not going anywhere and will remain involved in all major
company decisions, including acquisitions and capital projects. As the
largest shareholder of KMI, I remain very enthusiastic about the future
of the company. I have never sold a share of stock and don’t intend to
now. The Office of the Chairman will remain the same, consisting of
Steve, Chief Financial Officer Kim Dang and me.”
Other News
Natural Gas Pipelines
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TGP continues development of its proposed Northeast Energy Direct
Project. Anticipated capital required for both the market path and
supply path portions of the project is $4.5 to $5.5 billion. In late
November 2014 Liberty Utilities (Pipeline and Transmission) Corp., a
subsidiary of Algonquin Power & Utilities Corp., announced plans to
participate in development of the market path portion of the project,
for which there are nearly 500,000 dekatherms per day (Dth/d) of
executed precedent agreements. In December 2014, TGP filed with the
Federal Energy Regulatory Commission (FERC) to adopt two alternative
routes for the market path along existing power line rights-of-way to
minimize environmental impacts and allow for the expansion of natural
gas service into additional communities in southern New Hampshire.
Using existing utility corridors will lessen environmental impact on
the project. Approximately 91 percent of the 188-mile revised market
path mainline route will be within or adjacent to TGP’s existing
pipeline and/or existing power utility corridors in eastern New York,
western Massachusetts and southern New Hampshire, extending east to
Dracut, Massachusetts. TGP continues to negotiate with potential
shippers with respect to capacity commitments for both the market path
portion and the 171-mile supply path portion of the project. Subject
to regulatory approvals, a November 2018 in-service date is planned.
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In late November 2014, Elba Liquefaction Company received Shell’s
election to move forward with the final two liquefaction trains for
full, 10-train development of the planned project. The project has
already received Free Trade Agreement (FTA) LNG export authority and
an application to export to non-FTA countries is pending, but not a
requirement for completion. At full development, the Elba Liquefaction
Project is expected to have total capacity of approximately 350
million cubic feet per day of natural gas (MMcf/d) (2.5 million tonnes
per year of LNG). KMI’s expected investment in the project (including
related KMI owned pipeline and terminal facilities) is approximately
$1.3 billion. Subject to regulatory approvals, initial production from
the project is expected to occur in 2017.
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Work continues on the Elba Express Company and Southern Natural Gas
Company expansion projects to provide 854,000 Dth/d of incremental
natural gas transportation service to support the needs of customers
in Georgia, South Carolina and northern Florida. Expansion capacity
would also serve the proposed Elba Liquefaction Project. The project
will add north-to-south transportation capacity to the existing Elba
Express Pipeline in multiple phases. The combined capital costs of the
two projects will be approximately $282 million and the first phases
are expected to be in service in June 2016.
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TGP is preparing the necessary regulatory applications for the Broad
Run Flexibility and Broad Run Expansion projects, which will move gas
north-to-south from a receipt point in West Virginia to delivery
points in Mississippi and Louisiana, and anticipates filing the FERC
certificate application for the Broad Run Expansion project by the end
of January. The estimated capital expenditure for the two projects is
approximately $751 million. Antero Resources was awarded 790,000 Dth/d
of long-term firm capacity for 15 years following a binding open
season in April 2014. TGP plans to place the two projects in service
in November 2015 and November 2017, respectively, pending regulatory
approvals.
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In October 2014, TGP announced a successful binding open season for
its South System Flexibility project and awarded all of the 500,000
Dth/d of capacity to MexGas Supply. The project will provide more than
900 miles of north-to-south transportation capacity on the TGP system
from Tennessee to South Texas and expand Kinder Morgan’s
transportation service to Mexico. Initial volume of 150,000 Dth/d for
the approximately $187 million project was placed into service Jan. 1,
and the remainder of the project is expected to be completed by
December 2016.
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TGP executed precedent agreements in the fourth quarter with two
customers for an expansion project to provide additional firm capacity
from the Marcellus supply basin to TGP’s interconnection with Columbia
Gas Transmission in Pike County, Pennsylvania. Pending negotiation
with other potential customers and the results of a binding open
season to be held during the first quarter of 2015, the capacity of
this expansion will be at least 135,000 Dth/d and the capital cost
will be at least $129 million. The project is expected to be in
service in June 2018.
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TGP’s approximately $74 million Rose Lake Project in northeastern
Pennsylvania was placed in service, on schedule and under budget, in
November 2014. The project is fully subscribed for 10-year terms by
South Jersey Resources and Statoil and provides an additional 230,000
Dth/d of capacity.
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Work continues on TGP’s proposed $82 million Connecticut Expansion
Project. The fully subscribed project will provide 72,000 Dth/d of
additional long-term capacity to three natural gas utility customers.
Subject to regulatory approvals, the project is expected to be in
service in November 2016.
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In December 2014, Kinder Morgan Texas Pipeline, Kinder Morgan Tejas
Pipeline and TGP entered into 15-year firm transportation agreements
and a multi-year storage agreement with Cheniere Energy, through its
subsidiary Corpus Christi Liquefaction. Under the agreements, Kinder
Morgan will provide 550,000 Dth/d of firm natural gas transportation
service, as well as 3 billion cubic feet of natural gas storage
capacity, to serve the LNG export facility being developed by Cheniere
near Corpus Christi, Texas. Kinder Morgan will expand its existing
Texas Intrastate Pipeline and TGP systems to coordinate with the
startup of the LNG export facility, which is expected in 2018-2019.
The company expects to invest approximately $200 million in these
projects.
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In December 2014, the company’s Texas Intrastate Pipelines group
entered into a 20-year firm transportation services agreement with SK
E&S LNG, LLC. Under the agreement, KMI will invest more than $150
million to provide more than 320,000 Dth/d of firm natural gas
transportation services to support SK LNG’s Train III liquefied
natural gas export capacity at Quintana Island, Texas. The project is
expected to be completed in the third quarter 2019. This train is part
of Freeport LNG Development’s export facility.
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Work is continuing on the next phase of KMI’s West Region natural gas
system expansion project. EPNG placed in service the first and smaller
phase of its approximately $529 million system expansion project in
Arizona in October 2014. The first phase involved system improvements
to deliver volumes to the Sierrita Pipeline, which began operation in
October. The second phase will result in incremental deliveries of
natural gas to Arizona and California and is expected to be completed
by October 2020. As part of this project, EPNG entered into long-term
contracts totaling 550,000 Dth/d of incremental firm natural gas
transport capacity.
CO2
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Construction is nearly a third complete at KMI’s approximately $344
million Cow Canyon expansion project in southwestern Colorado. This
expansion is expected to increase CO2 production in the Cow
Canyon area of the McElmo Dome source field by 200 MMcf/d. The project
is on track for 100 MMcf/d of CO2 to come online by July
2015, with the remaining 100 MMcf/d expected to be in service by the
end of 2015.
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KMI continues to move forward on its approximately $235 million
expansion of the northern portion of the Cortez Pipeline, which will
increase capacity from 1.35 Bcf/d to 1.7 Bcf/d. The pipeline
transports CO2 from southwestern Colorado to eastern New
Mexico and West Texas for use in enhanced oil recovery projects.
Pending regulatory approvals, this portion of the expansion is
expected to be completed by year end, with initial service this summer.
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KMI’s Tall Cotton Field pilot project in Gaines County, Texas,
initiated CO2 injection in November 2014. The approximately
$100 million project is the industry’s first greenfield Residual Oil
Zone CO2 project and encompasses 180 acres with potential
additional development, assuming success of this pilot project. First
oil response is expected in the second quarter of this year.
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Due to current market conditions related to the significant decline in
oil prices, KMI is re-evaluating the timing of its planned investment
of approximately $1 billion to develop the St. Johns CO2
source field in Apache County, Arizona, and the associated
construction of the Lobos Pipeline and expansion of the southern
portion of the Cortez Pipeline.
Products Pipelines
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In November 2014, the company announced the close of a successful
binding open season for its Palmetto Project, which will move
gasoline, diesel and ethanol from Louisiana, Mississippi and South
Carolina to points in South Carolina, Georgia and Florida. The
approximately $1 billion project (KMI investment net of partner
interest is $813 million) has a design capacity of 167,000 bpd and
will consist of a segment of expansion capacity on the Plantation
pipeline that Palmetto will lease from Plantation Pipe Line Company,
and a new 360-mile pipeline to be built from Belton, South Carolina,
to Jacksonville, Florida. The company anticipates an in-service date
of July 2017, pending regulatory approvals.
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Work continues on the company’s approximately $500 million Utopia East
pipeline. As previously announced by NOVA Chemicals Corporation, NOVA
has executed a long-term transportation agreement with KMI to support
the project. The Utopia East pipeline will have an initial design
capacity of 50,000 bpd, expandable to more than 75,000 bpd. The new
pipeline will connect with the existing Cochin Pipeline and will
transport ethane and ethane-propane mixtures eastward to Windsor,
Ontario, Canada. Subject to the receipt of permitting and regulatory
approvals, the project is expected to be in service by early 2018.
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The approximately $382 million petroleum condensate processing
facility near the company’s Galena Park terminal on the Houston Ship
Channel remains under construction. Due to bad weather and vendor
delays in 2014, the company now anticipates the first phase of the
splitter will begin service in March, with the second phase expected
to be operational this summer. The 100,000 bpd project is supported by
a long-term, fee-based agreement with BP North America.
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Kinder Morgan continues to develop its proposed Utica Marcellus Texas
Pipeline, which will provide connectivity to major processing and
fractionation hubs in the basin and terminate in Mont Belvieu, Texas.
The pipeline will have a maximum design capacity of 375,000 bpd for
transporting Y-grade natural gas liquids and discussions are ongoing
with potential shippers. The project involves the abandonment and
conversion of over 1,000 miles of natural gas service on TGP, the
construction of approximately 200 miles of new pipeline from Louisiana
to Texas and 155 miles of new laterals in Pennsylvania, Ohio and West
Virginia. Subject to customer commitments and regulatory approvals,
the pipeline is expected to be in service in 2018.
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KMCC continues to benefit from strong Eagle Ford crude and condensate
production and has long-term commitments for approximately 90 percent
of the 300,000 bpd of capacity, and is planning to expand the system
capacity to 360,000 bpd. Including joint ventures and other projects,
KMI’s planned investments related to Eagle Ford crude and condensate
opportunities currently total approximately $1 billion, all of which
are supported by long-term contracts with customers. These expansions
will further enhance the connectivity of the KMCC system to additional
Eagle Ford supplies and Texas Gulf Coast market outlets. The company
expects to bring these projects online as they are completed between
now and mid-2015.
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In late December 2014, the California Public Utilities Commission
approved the global settlement between SFPP and its litigant shippers
ending 17 years of litigation. The settlement includes a total of $319
million in refunds and settlement payments (slightly below the amount
previously reserved) and a three-year moratorium on any SFPP rate
increases or rate challenges by litigant shippers.
Terminals
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The remainder of the second phase of the Edmonton Terminal expansion
was completed in the fourth quarter. Combined with phase one, the $412
million expansion added 4.6 million barrels of storage capacity for
crude oil and refined petroleum products. The project was supported by
long-term contracts with major producers and refiners.
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Work continues at the Pasadena and Galena Park terminals to help meet
growing demand for refined product storage and dock services along the
Houston Ship Channel. The combined investment of approximately $240
million will include construction of 2.1 million barrels of storage
between the two terminals. Kinder Morgan will also construct a new
ship dock capable of handling ocean going vessels. The project is
backstopped by long-term contracts with existing customers and is
expected to be phased into service in 2016-2017.
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Construction also continues at the Galena Park and Pasadena terminals
on a separate approximately $124 million project to build nine storage
tanks with a total capacity of 1.2 million barrels and a new barge
dock. In the fourth quarter, three additional storage tanks at Galena
Park were brought online. The final three tanks of the project are
expected to be placed into service in the first quarter of 2015, while
the Pasadena barge dock, which will provide capacity to handle up to
50 additional barges per month, is expected to be in service by year
end.
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Work continues at the Kinder Morgan Export Terminal along the Houston
Ship Channel to construct a new ship dock that will handle ocean going
vessels and provide 1.5 million barrels of liquids storage capacity.
The approximately $172 million project is supported by a long-term
contract with a major ship channel refiner and will connect to Kinder
Morgan’s nearby Galena Park Terminal. The project is now expected to
be in service in the first quarter of 2017 because of permit receipt
delays.
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KMI invested approximately $85 million and brought online additional
chemical storage in Louisiana on schedule in the second half of 2014.
The company added storage and infrastructure providing critical
marine, rail and truck access near its Geismar Liquids Terminal to
support Methanex Corporation’s relocated methanol production plants.
Separately, KMI added 65,000 barrels of chemical storage at its Harvey
facility, which remains fully leased, reflecting high chemical storage
demand in the region.
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In November 2014, Kinder Morgan completed its purchase of two tankers
from Crowley Maritime Corporation for approximately $270 million. The
MT Pennsylvania and the MT Florida engage in the marine transportation
of crude oil, condensate and refined products in the United States,
and are currently operating pursuant to multi-year charters with a
major integrated oil company. The vessels each have approximately
330,000 barrels of cargo capacity and increased KMI’s operational
fleet to seven tankers. In December 2014, steel was cut for the second
of five Jones Act tankers previously ordered by the company that are
slated for receipt between 2015 and mid-2017. These tankers are also
supported by long-term time charters with major shippers. Construction
of the first tanker, the Lone Star State, began last September.
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In the third quarter of 2014, Kinder Morgan announced that its 50-50
joint venture with Imperial Oil Limited entered into additional firm
take-or-pay agreements with strong, credit worthy oil company majors
sufficient to allow a planned expansion project to move forward that
will add incremental capacity of 110,000 bpd at the Edmonton Rail
Terminal. The project is under construction and will increase its
capacity at startup in the first quarter of 2015 to over 210,000 bpd
and potentially up to 250,000 bpd. The terminal will be connected via
pipeline to the Trans Mountain terminal and will be capable of
sourcing all crude streams handled by Kinder Morgan for delivery by
rail to North American markets and refineries.
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In late December 2014, Kinder Morgan signed a definitive agreement
with Watco Companies to contribute 31 smaller KMI terminals across the
United States (22 bulk, eight transload and one liquids facility) to
Watco in exchange for an incremental equity interest in Watco. The
transaction is expected to close in the first quarter of 2015. Watco
provides transportation services to customers, including terminal and
port services solutions, and also owns one of the largest short line
railroad holding companies in the country.
Kinder Morgan Canada
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Kinder Morgan Canada is currently engaged in the process of achieving
approval from the National Energy Board (NEB) for the Trans Mountain
Expansion Project. The company continues to engage extensively with
landowners, Aboriginal groups, communities and stakeholders along the
proposed expansion route, and marine communities. In August, based on
feedback from landowners and local residents, Trans Mountain
determined that tunneling or drilling under Burnaby Mountain was less
disruptive than constructing the pipe in road right-of-way and
landowners’ yards, and switched its preferred route from the roadway
to a route through the mountain. The NEB ruled that it was appropriate
to extend the timeline for consideration of the application by seven
months to permit examination of this route. Trans Mountain has now
completed the examination of the Burnaby Mountain route and has
confirmed to the NEB that tunneling under Burnaby Mountain is
feasible. The NEB decision is now scheduled for January 2016, and
accordingly the company expects the Trans Mountain expansion to be
completed in the third quarter of 2018. Thirteen companies in the
Canadian producing and oil marketing business signed firm long-term
contracts supporting the project for approximately 708,000 bpd. Kinder
Morgan Canada received approval of the commercial terms related to the
expansion from the NEB in May of 2013. The proposed $5.4 billion
expansion will increase capacity on Trans Mountain from approximately
300,000 to 890,000 bpd.
Financings
-
In connection with the merger transactions, KMI issued shares valued
at approximately $46 billion and issued $6 billion in senior notes on
Nov. 26, 2014.
Kinder Morgan, Inc. (NYSE: KMI) is the largest energy infrastructure
company in North America. It owns an interest in or operates
approximately 80,000 miles of pipelines and 180 terminals. The company’s
pipelines transport natural gas, gasoline, crude oil, CO2 and
other products, and its terminals store petroleum products and
chemicals, and handle bulk materials like coal and petroleum coke.
Kinder Morgan is the largest midstream and third largest energy company
in North America with an enterprise value of more than $125 billion. For
more information please visit www.kindermorgan.com.
Please join Kinder Morgan at 4:30 p.m. Eastern Time on Wednesday,
Jan. 21, at www.kindermorgan.com
for a LIVE webcast conference call on the company’s fourth quarter
earnings.
The non-generally accepted accounting principles, or non-GAAP,
financial measures of distributable cash flow before certain items, both
in the aggregate and per share, and segment earnings before
depreciation, depletion, amortization and amortization of excess cost of
equity investments, or DD&A, and certain items, are presented in this
news release.
Distributable cash flow before certain items is a significant metric
used by us and by external users of our financial statements, such as
investors, research analysts, commercial banks and others, to compare
basic cash flows generated by us to the cash dividends we expect to pay
our shareholders on an ongoing basis. Management uses this metric to
evaluate our overall performance. Distributable cash flow before
certain items is also an important non-GAAP financial measure for our
shareholders because it serves as an indicator of our success in
providing a cash return on investment. This financial measure
indicates to investors whether or not we are generating cash flow at a
level that can sustain or support an increase in the quarterly dividends
we are paying. Our dividend policy provides that, subject to
applicable law, we will pay quarterly cash dividends generally
representing the cash we receive less any cash disbursements and
reserves established by our board of directors. Distributable
cash flow before certain items is also a quantitative measure used in
the investment community because the value of a share of an entity like
KMI that pays out all or a substantial proportion of its cash flow is
generally determined by the dividend yield (which in turn is based on
the amount of cash dividends the corporation pays to its shareholders as
compared to its stock price). The economic substance behind our
use of distributable cash flow before certain items is to measure and
estimate the ability of our assets to generate cash flows sufficient to
pay dividends to our investors.
We believe the GAAP measure most directly comparable to distributable
cash flow before certain items is net income. A reconciliation of
distributable cash flow before certain items to net income is provided
in this release. Distributable cash flow before certain items per share
is distributable cash flow before certain items divided by average
outstanding shares, including restricted shares that participate in
dividends. “Certain items” are items that are required by GAAP to
be reflected in net income, but typically either (1) do not have a cash
impact, for example, goodwill 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, hurricane impacts and casualty losses. Management
uses this measure and believes it is important to users of our financial
statements because it believes the measure more effectively reflects our
business’ ongoing cash generation capacity than a similar measure with
the certain items included.
For similar reasons, management uses segment earnings before DD&A and
certain items in its analysis of segment performance and management of
our business. General and administrative expenses are generally
not controllable by our segment operating managers, and therefore, are
not included when we measure business segment operating performance. We
believe segment earnings before DD&A and certain items is a significant
performance metric because it enables us and external users of our
financial statements to better understand the ability of our segments to
generate cash on an ongoing basis. We believe it is useful to
investors because it is a measure that management believes is important
and that our chief operating decision makers use for purposes of making
decisions about allocating resources to our segments and assessing the
segments’ respective performance.
We believe the GAAP measure most directly comparable to segment
earnings before DD&A and certain items is segment earnings before DD&A.
Segment earnings before DD&A and certain items is calculated by
adjusting for the certain items attributable to a segment, which are
specifically identified in the footnotes to the accompanying tables,
from segment earnings before DD&A. Segment earnings before
DD&A as presented in our GAAP financials are included on the first page
of the tables presenting our financial results.
Our non-GAAP measures described above should not be considered
alternatives to GAAP net income or other GAAP measures and have
important limitations as analytical tools. Our computations of
distributable cash flow before certain items, and segment earnings
before DD&A and certain items may differ from similarly titled measures
used by others. You should not consider these non-GAAP 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
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.
This news release includes forward-looking statements. These
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 Kinder Morgan believes
that these forward-looking statements are based on reasonable
assumptions, it can give no assurance that such assumptions will
materialize. Important factors that could cause actual results to
differ materially from those in the forward-looking statements herein
include those enumerated in Kinder Morgan’s reports filed with the
Securities and Exchange Commission. Forward-looking statements
speak only as of the date they were made, and except to the extent
required by law, Kinder Morgan undertakes no obligation to update or
review any forward-looking statement because of new information, future
events or other factors. Because of these uncertainties, readers
should not place undue reliance on these forward-looking statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kinder Morgan, Inc. and Subsidiaries
Preliminary
Consolidated Statements of Income
(Unaudited)
(In
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
3,951
|
|
|
|
$
|
3,872
|
|
|
|
$
|
16,226
|
|
|
|
$
|
14,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs, expenses and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
1,960
|
|
|
|
|
2,019
|
|
|
|
|
8,435
|
|
|
|
|
7,365
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
522
|
|
|
|
|
479
|
|
|
|
|
2,040
|
|
|
|
|
1,806
|
|
|
General and administrative
|
|
|
|
|
149
|
|
|
|
|
132
|
|
|
|
|
610
|
|
|
|
|
613
|
|
|
Taxes, other than income taxes
|
|
|
|
|
92
|
|
|
|
|
100
|
|
|
|
|
418
|
|
|
|
|
395
|
|
|
Loss on impairments of long-lived assets
|
|
|
|
|
272
|
|
|
|
|
-
|
|
|
|
|
272
|
|
|
|
|
-
|
|
|
Other expense (income)
|
|
|
|
|
-
|
|
|
|
|
(18
|
)
|
|
|
|
3
|
|
|
|
|
(99
|
)
|
|
|
|
|
|
|
2,995
|
|
|
|
|
2,712
|
|
|
|
|
11,778
|
|
|
|
|
10,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
956
|
|
|
|
|
1,160
|
|
|
|
|
4,448
|
|
|
|
|
3,990
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from equity investments
|
|
|
|
|
100
|
|
|
|
|
33
|
|
|
|
|
406
|
|
|
|
|
327
|
|
|
Amortization of excess cost of equity investments
|
|
|
|
|
(12
|
)
|
|
|
|
(10
|
)
|
|
|
|
(45
|
)
|
|
|
|
(39
|
)
|
|
Interest, net
|
|
|
|
|
(478
|
)
|
|
|
|
(428
|
)
|
|
|
|
(1,798
|
)
|
|
|
|
(1,675
|
)
|
|
Gain on remeasurement of net assets to fair value
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
558
|
|
|
Gain on sale of investments in Express
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
224
|
|
|
Other, net
|
|
|
|
|
24
|
|
|
|
|
18
|
|
|
|
|
80
|
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
|
|
590
|
|
|
|
|
773
|
|
|
|
|
3,091
|
|
|
|
|
3,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
(24
|
)
|
|
|
|
(67
|
)
|
|
|
|
(648
|
)
|
|
|
|
(742
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
|
|
566
|
|
|
|
|
706
|
|
|
|
|
2,443
|
|
|
|
|
2,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of tax
|
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
|
|
-
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
566
|
|
|
|
|
704
|
|
|
|
|
2,443
|
|
|
|
|
2,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
|
|
(440
|
)
|
|
|
|
(366
|
)
|
|
|
|
(1,417
|
)
|
|
|
|
(1,499
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to KMI
|
|
|
|
$
|
126
|
|
|
|
$
|
338
|
|
|
|
$
|
1,026
|
|
|
|
$
|
1,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class P Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Earnings Per Common Share from Continuing
Operations
|
|
|
|
$
|
0.08
|
|
|
|
$
|
0.33
|
|
|
|
$
|
0.89
|
|
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Weighted-Average Number of Shares Outstanding
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class P Shares
|
|
|
|
|
1,457
|
|
|
|
|
1,035
|
|
|
|
|
1,137
|
|
|
|
|
1,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared dividend per common share
|
|
|
|
$
|
0.45
|
|
|
|
$
|
0.41
|
|
|
|
$
|
1.74
|
|
|
|
$
|
1.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas pipelines
|
|
|
|
$
|
1,051
|
|
|
|
$
|
926
|
|
|
|
$
|
4,259
|
|
|
|
$
|
4,207
|
|
|
CO2
|
|
|
|
|
157
|
|
|
|
|
395
|
|
|
|
|
1,240
|
|
|
|
|
1,435
|
|
|
Products pipelines
|
|
|
|
|
224
|
|
|
|
|
203
|
|
|
|
|
856
|
|
|
|
|
602
|
|
|
Terminals
|
|
|
|
|
259
|
|
|
|
|
227
|
|
|
|
|
955
|
|
|
|
|
836
|
|
|
Kinder Morgan Canada
|
|
|
|
|
44
|
|
|
|
|
54
|
|
|
|
|
182
|
|
|
|
|
340
|
|
|
Other
|
|
|
|
|
-
|
|
|
|
|
(1
|
)
|
|
|
|
13
|
|
|
|
|
(5
|
)
|
|
Total Segment EBDA
|
|
|
|
$
|
1,735
|
|
|
|
$
|
1,804
|
|
|
|
$
|
7,505
|
|
|
|
$
|
7,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Outstanding KMI warrants and convertible preferred securities
were anti-dilutive during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kinder Morgan, Inc. and Subsidiaries
Preliminary
Earnings Contribution by Business Segment
(Unaudited)
(In
millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2014
|
|
|
|
2013 (19)
|
|
|
|
2014
|
|
|
|
2013 (19)
|
|
Segment earnings before DD&A and amort. of excess investments (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Pipelines
|
|
|
|
$
|
1,057
|
|
|
|
|
$
|
1,006
|
|
|
|
|
$
|
4,069
|
|
|
|
|
$
|
3,717
|
|
|
CO2
|
|
|
|
|
369
|
|
|
|
|
|
392
|
|
|
|
|
|
1,458
|
|
|
|
|
|
1,432
|
|
|
Products Pipelines
|
|
|
|
|
225
|
|
|
|
|
|
203
|
|
|
|
|
|
860
|
|
|
|
|
|
784
|
|
|
Terminals
|
|
|
|
|
277
|
|
|
|
|
|
221
|
|
|
|
|
|
979
|
|
|
|
|
|
798
|
|
|
Kinder Morgan Canada
|
|
|
|
|
44
|
|
|
|
|
|
54
|
|
|
|
|
|
182
|
|
|
|
|
|
200
|
|
|
Other
|
|
|
|
|
-
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
(9
|
)
|
|
|
|
|
(5
|
)
|
|
Subtotal
|
|
|
|
|
1,972
|
|
|
|
|
|
1,874
|
|
|
|
|
|
7,539
|
|
|
|
|
|
6,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DD&A and amortization of excess investments
|
|
|
|
|
(534
|
)
|
|
|
|
|
(489
|
)
|
|
|
|
|
(2,085
|
)
|
|
|
|
|
(1,845
|
)
|
|
General and administrative (1) (2)
|
|
|
|
|
(150
|
)
|
|
|
|
|
(140
|
)
|
|
|
|
|
(602
|
)
|
|
|
|
|
(585
|
)
|
|
Interest, net (1) (3)
|
|
|
|
|
(472
|
)
|
|
|
|
|
(443
|
)
|
|
|
|
|
(1,810
|
)
|
|
|
|
|
(1,720
|
)
|
|
Subtotal
|
|
|
|
|
816
|
|
|
|
|
|
802
|
|
|
|
|
|
3,042
|
|
|
|
|
|
2,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book taxes (4)
|
|
|
|
|
(152
|
)
|
|
|
|
|
(162
|
)
|
|
|
|
|
(702
|
)
|
|
|
|
|
(732
|
)
|
|
Certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related items (5)
|
|
|
|
|
-
|
|
|
|
|
|
6
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
(17
|
)
|
|
KMI merger transactions related financing expense (6)
|
|
|
|
|
(25
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
-
|
|
|
Pension plan net benefit credit
|
|
|
|
|
10
|
|
|
|
|
|
15
|
|
|
|
|
|
39
|
|
|
|
|
|
59
|
|
|
Debt fair value amortization partially offset by non-cash
interest expense
|
|
|
|
|
17
|
|
|
|
|
|
12
|
|
|
|
|
|
44
|
|
|
|
|
|
32
|
|
|
Contract early termination revenue (7)
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
198
|
|
|
|
|
|
-
|
|
|
Legal and environmental reserves (8)
|
|
|
|
|
(1
|
)
|
|
|
|
|
(5
|
)
|
|
|
|
|
(26
|
)
|
|
|
|
|
(211
|
)
|
|
Mark to market, ineffectiveness, and amortization of certain
derivatives (9)
|
|
|
|
|
28
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
23
|
|
|
|
|
|
(13
|
)
|
|
(Loss) gain on asset disposals or impairments, net of insurance
recoveries
|
|
|
|
|
(277
|
)
|
|
|
|
|
(69
|
)
|
|
|
|
|
(299
|
)
|
|
|
|
|
211
|
|
|
Remeasurement gain upon acquisition of remaining equity interests
(10)
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
558
|
|
|
Other
|
|
|
|
|
5
|
|
|
|
|
|
1
|
|
|
|
|
|
43
|
|
|
|
|
|
(10
|
)
|
|
Subtotal certain items before tax
|
|
|
|
|
(243
|
)
|
|
|
|
|
(43
|
)
|
|
|
|
|
(14
|
)
|
|
|
|
|
609
|
|
|
Book tax certain items
|
|
|
|
|
145
|
|
|
|
|
|
107
|
|
|
|
|
|
117
|
|
|
|
|
|
39
|
|
|
Total certain items
|
|
|
|
|
(98
|
)
|
|
|
|
|
64
|
|
|
|
|
|
103
|
|
|
|
|
|
648
|
|
|
Net income
|
|
|
|
$
|
566
|
|
|
|
|
$
|
704
|
|
|
|
|
$
|
2,443
|
|
|
|
|
$
|
2,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before certain items
|
|
|
|
$
|
664
|
|
|
|
|
$
|
640
|
|
|
|
|
$
|
2,340
|
|
|
|
|
$
|
2,044
|
|
|
Net income attributable to 3rd party noncontrolling interests (11)
|
|
|
|
|
(5
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
|
(12
|
)
|
|
|
|
|
(5
|
)
|
|
Depreciation, depletion and amortization (12)
|
|
|
|
|
610
|
|
|
|
|
|
564
|
|
|
|
|
|
2,390
|
|
|
|
|
|
2,142
|
|
|
Book taxes (13)
|
|
|
|
|
185
|
|
|
|
|
|
190
|
|
|
|
|
|
840
|
|
|
|
|
|
847
|
|
|
Cash taxes (14)
|
|
|
|
|
(11
|
)
|
|
|
|
|
(137
|
)
|
|
|
|
|
(448
|
)
|
|
|
|
|
(552
|
)
|
|
Other items (15)
|
|
|
|
|
(9
|
)
|
|
|
|
|
5
|
|
|
|
|
|
17
|
|
|
|
|
|
6
|
|
|
Sustaining capital expenditures (16)
|
|
|
|
|
(156
|
)
|
|
|
|
|
(151
|
)
|
|
|
|
|
(509
|
)
|
|
|
|
|
(414
|
)
|
|
MLP declared distributions (17)
|
|
|
|
|
-
|
|
|
|
|
|
(627
|
)
|
|
|
|
|
(2,000
|
)
|
|
|
|
|
(2,355
|
)
|
|
DCF before certain items
|
|
|
|
$
|
1,278
|
|
|
|
|
$
|
482
|
|
|
|
|
$
|
2,618
|
|
|
|
|
$
|
1,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding for Dividends (18)
|
|
|
|
|
2,133
|
|
|
|
|
|
1,041
|
|
|
|
|
|
1,312
|
|
|
|
|
|
1,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DCF per share before certain items
|
|
|
|
$
|
0.60
|
|
|
|
|
$
|
0.46
|
|
|
|
|
$
|
2.00
|
|
|
|
|
$
|
1.65
|
|
|
Declared dividend per common share
|
|
|
|
$
|
0.45
|
|
|
|
|
$
|
0.41
|
|
|
|
|
$
|
1.74
|
|
|
|
|
$
|
1.60
|
|
|
|
|
Notes ($ million)
|
|
(1)
|
|
Excludes certain items:
|
|
|
|
4Q 2014 - Natural Gas Pipelines $(6), CO2 $(212), Products
Pipelines $(1), Terminals $(18), general and administrative
expense $10, interest expense $(10).
|
|
|
|
4Q 2013 - Natural Gas Pipelines $(80), CO2 $3, Terminals $6,
Other $1, general and administrative expense $17, interest expense
$12.
|
|
|
|
YTD 2014 - Natural Gas Pipelines $190, CO2 $(218), Products
Pipelines $(4), Terminals $(24), Other $22, general and
administrative expense $28, interest expense $3.
|
|
|
|
YTD 2013 - Natural Gas Pipelines $490, CO2 $3, Products
Pipelines $(182), Terminals $38, Kinder Morgan Canada $140,
general and administrative expense $8, interest expense $32.
|
|
(2)
|
|
General and administrative expense is net of certain management
fee revenues from an equity partner: 4Q 2014 - $(9), 4Q 2013 -
$(9), YTD 2014 - $(36), YTD 2013 - $(36).
|
|
(3)
|
|
Interest expense excludes interest income that is allocable to
the segments:
|
|
|
|
4Q 2014 - Natural Gas Pipelines $1, Products Pipelines $1,
Other $2.
|
|
|
|
4Q 2013 - Products Pipelines $1, Other $2.
|
|
|
|
YTD 2014 - Natural Gas Pipelines $1, Products Pipelines $2,
Other $6.
|
|
|
|
YTD 2013 - Products Pipelines $2, Kinder Morgan Canada $3,
Other $8.
|
|
(4)
|
|
Book tax expense excludes tax certain items (see Book taxes on
certain items below). Also excludes income tax that is allocated
to the segments:
|
|
|
|
4Q 2014 - Natural Gas Pipelines $2, CO2 $(2), Products
Pipelines $(1), Terminals $(9), Kinder Morgan Canada $(7).
|
|
|
|
4Q 2013 - Natural Gas Pipelines $(2), CO2 $(3), Products
Pipelines $2, Terminals $(5), Kinder Morgan Canada $(4).
|
|
|
|
YTD 2014 - Natural Gas Pipelines $(6), CO2 $(8), Products
Pipelines $(2), Terminals $(29), Kinder Morgan Canada $(18).
|
|
|
|
YTD 2013 - Natural Gas Pipelines $(9), CO2 $(7), Products
Pipelines $2, Terminals $(14), Kinder Morgan Canada $(21).
|
|
(5)
|
|
Acquisition expenses relate to closed acquisitions and include
severance.
|
|
(6)
|
|
2014 amounts primarily represent expense for the early
retirement of certain debt and $5 billion bridge credit facility
associated with the recent KMI merger transactions.
|
|
(7)
|
|
Earnings from the early termination of a long-term natural gas
transportation contract with a customer.
|
|
(8)
|
|
Legal reserve adjustments related to certain litigation and
environmental matters.
|
|
(9)
|
|
Gain or loss is reflected in earnings before DD&A at time of
physical transaction.
|
|
(10)
|
|
Gain from remeasurement of our previously held 50% equity
interest in Eagle Ford to fair value in connection with the
acquisition of Copano.
|
|
(11)
|
|
Represents net income allocated to third-party ownership
interests in consolidated subsidiaries other than the MLPs.
|
|
(12)
|
|
Includes KMI's share of certain equity investees' DD&A:
|
|
|
|
4Q 2014 - $76
|
|
|
|
4Q 2013 - $75
|
|
|
|
YTD 2014 - $305
|
|
|
|
YTD 2013 - $297
|
|
(13)
|
|
Includes KMI's share of taxable equity method investees' book
tax expense and excludes Book tax on certain items above:
|
|
|
|
4Q 2014 - $16
|
|
|
|
4Q 2013 - $16
|
|
|
|
YTD 2014 - $75
|
|
|
|
YTD 2013 - $66
|
|
(14)
|
|
Includes KMI's share of taxable equity method investees' cash
taxes:
|
|
|
|
4Q 2014 - $(9)
|
|
|
|
4Q 2013 - $(7)
|
|
|
|
YTD 2014 - $(26)
|
|
|
|
YTD 2013 - $(30)
|
|
(15)
|
|
Consists primarily of book to cash timing differences related
to certain defined benefit plans and other items, and for periods
prior to 4Q 2014 includes differences between earnings and cash
from our former MLPs.
|
|
(16)
|
|
Includes KMI's share of certain equity investees' sustaining
capital expenditures (the same equity investees for which we add
back DD&A):
|
|
|
|
4Q 2014 - $(21)
|
|
|
|
4Q 2013 - $(17)
|
|
|
|
YTD 2014 - $(59)
|
|
|
|
YTD 2013 - $(48)
|
|
(17)
|
|
Represents distributions to KMP and EPB limited partner units
formerly owned by the public. Not applicable for 4Q 2014.
|
|
(18)
|
|
Includes restricted shares that participate in dividends. 4Q
2014 based on shares outstanding as of December 31, 2014.
|
|
(19)
|
|
Certain amounts have been reclassified to conform to the
current presentation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume Highlights
(historical pro forma for acquired
assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Year Ended December 31,
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Natural Gas Pipelines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transport Volumes (BBtu/d) (1) (2)
|
|
|
|
|
33,119
|
|
|
|
|
30,544
|
|
|
|
|
32,627
|
|
|
|
|
30,647
|
|
|
Sales Volumes (BBtu/d) (3)
|
|
|
|
|
2,424
|
|
|
|
|
2,547
|
|
|
|
|
2,334
|
|
|
|
|
2,458
|
|
|
Gathering Volumes (BBtu/d) (2) (4)
|
|
|
|
|
3,180
|
|
|
|
|
2,858
|
|
|
|
|
3,080
|
|
|
|
|
2,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CO2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southwest Colorado Production - Gross (Bcf/d) (5)
|
|
|
|
|
1.31
|
|
|
|
|
1.30
|
|
|
|
|
1.28
|
|
|
|
|
1.22
|
|
|
Southwest Colorado Production - Net (Bcf/d) (5)
|
|
|
|
|
0.55
|
|
|
|
|
0.55
|
|
|
|
|
0.54
|
|
|
|
|
0.50
|
|
|
Sacroc Oil Production - Gross (MBbl/d) (6)
|
|
|
|
|
35.54
|
|
|
|
|
32.28
|
|
|
|
|
33.16
|
|
|
|
|
30.65
|
|
|
Sacroc Oil Production - Net (MBbl/d) (7)
|
|
|
|
|
29.59
|
|
|
|
|
26.88
|
|
|
|
|
27.61
|
|
|
|
|
25.52
|
|
|
Yates Oil Production - Gross (MBbl/d) (6)
|
|
|
|
|
19.68
|
|
|
|
|
19.97
|
|
|
|
|
19.53
|
|
|
|
|
20.36
|
|
|
Yates Oil Production - Net (MBbl/d) (7)
|
|
|
|
|
9.22
|
|
|
|
|
8.85
|
|
|
|
|
8.79
|
|
|
|
|
9.03
|
|
|
Katz Oil Production - Gross (MBbl/d) (6)
|
|
|
|
|
3.83
|
|
|
|
|
3.49
|
|
|
|
|
3.64
|
|
|
|
|
2.69
|
|
|
Katz Oil Production - Net (MBbl/d) (7)
|
|
|
|
|
3.19
|
|
|
|
|
2.91
|
|
|
|
|
3.03
|
|
|
|
|
2.24
|
|
|
Goldsmith Oil Production - Gross (MBbl/d) (6)
|
|
|
|
|
1.29
|
|
|
|
|
1.29
|
|
|
|
|
1.26
|
|
|
|
|
0.75
|
|
|
Goldsmith Oil Production - Net (MBbl/d) (7)
|
|
|
|
|
1.11
|
|
|
|
|
1.12
|
|
|
|
|
1.09
|
|
|
|
|
0.65
|
|
|
NGL Sales Volumes (MBbl/d) (8)
|
|
|
|
|
10.18
|
|
|
|
|
10.01
|
|
|
|
|
10.09
|
|
|
|
|
9.88
|
|
|
Realized Weighted Average Oil Price per Bbl (9) (10)
|
|
|
|
$
|
85.71
|
|
|
|
$
|
93.65
|
|
|
|
$
|
88.41
|
|
|
|
$
|
92.70
|
|
|
Realized Weighted Average NGL Price per Bbl (10)
|
|
|
|
$
|
29.23
|
|
|
|
$
|
48.24
|
|
|
|
$
|
41.87
|
|
|
|
$
|
46.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products Pipelines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific, Calnev, and CFPL (MMBbl)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline (11)
|
|
|
|
|
70.6
|
|
|
|
|
68.3
|
|
|
|
|
277.6
|
|
|
|
|
273.6
|
|
|
Diesel
|
|
|
|
|
27.1
|
|
|
|
|
26.8
|
|
|
|
|
106.9
|
|
|
|
|
107.0
|
|
|
Jet Fuel
|
|
|
|
|
21.3
|
|
|
|
|
22.3
|
|
|
|
|
87.1
|
|
|
|
|
86.0
|
|
|
Sub-Total Refined Product Volumes - excl. Plantation and Parkway
|
|
|
|
|
119.0
|
|
|
|
|
117.4
|
|
|
|
|
471.6
|
|
|
|
|
466.6
|
|
|
Plantation (MMBbl) (12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
|
|
|
|
44.3
|
|
|
|
|
41.4
|
|
|
|
|
163.3
|
|
|
|
|
148.7
|
|
|
Diesel
|
|
|
|
|
9.7
|
|
|
|
|
8.7
|
|
|
|
|
40.3
|
|
|
|
|
34.8
|
|
|
Jet Fuel
|
|
|
|
|
6.9
|
|
|
|
|
6.0
|
|
|
|
|
26.2
|
|
|
|
|
24.6
|
|
|
Sub-Total Refined Product Volumes - Plantation
|
|
|
|
|
60.9
|
|
|
|
|
56.1
|
|
|
|
|
229.8
|
|
|
|
|
208.1
|
|
|
Parkway (MMBbl) (12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
|
|
|
|
3.1
|
|
|
|
|
1.1
|
|
|
|
|
10.9
|
|
|
|
|
1.1
|
|
|
Diesel
|
|
|
|
|
1.2
|
|
|
|
|
0.4
|
|
|
|
|
4.3
|
|
|
|
|
0.6
|
|
|
Jet Fuel
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Sub-Total Refined Product Volumes - Parkway
|
|
|
|
|
4.3
|
|
|
|
|
1.5
|
|
|
|
|
15.2
|
|
|
|
|
1.7
|
|
|
Total (MMBbl)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline (11)
|
|
|
|
|
118.1
|
|
|
|
|
110.8
|
|
|
|
|
451.8
|
|
|
|
|
423.4
|
|
|
Diesel
|
|
|
|
|
38.0
|
|
|
|
|
35.9
|
|
|
|
|
151.5
|
|
|
|
|
142.4
|
|
|
Jet Fuel
|
|
|
|
|
28.3
|
|
|
|
|
28.3
|
|
|
|
|
113.3
|
|
|
|
|
110.6
|
|
|
Total Refined Product Volumes
|
|
|
|
|
184.4
|
|
|
|
|
175.0
|
|
|
|
|
716.6
|
|
|
|
|
676.4
|
|
|
NGLs (13)
|
|
|
|
|
11.7
|
|
|
|
|
10.6
|
|
|
|
|
35.2
|
|
|
|
|
37.3
|
|
|
Condensate (14)
|
|
|
|
|
14.6
|
|
|
|
|
3.6
|
|
|
|
|
36.8
|
|
|
|
|
12.6
|
|
|
Total Delivery Volumes (MMBbl)
|
|
|
|
|
210.7
|
|
|
|
|
189.2
|
|
|
|
|
788.6
|
|
|
|
|
726.3
|
|
|
Ethanol (MMBbl) (15)
|
|
|
|
|
10.7
|
|
|
|
|
10.1
|
|
|
|
|
41.6
|
|
|
|
|
38.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquids Leasable Capacity (MMBbl)
|
|
|
|
|
78.0
|
|
|
|
|
68.0
|
|
|
|
|
78.0
|
|
|
|
|
68.0
|
|
|
Liquids Utilization %
|
|
|
|
|
95.3
|
%
|
|
|
|
94.6
|
%
|
|
|
|
95.3
|
%
|
|
|
|
94.6
|
%
|
|
Bulk Transload Tonnage (MMtons) (16)
|
|
|
|
|
21.5
|
|
|
|
|
21.8
|
|
|
|
|
88.0
|
|
|
|
|
89.9
|
|
|
Ethanol (MMBbl)
|
|
|
|
|
18.4
|
|
|
|
|
18.3
|
|
|
|
|
71.8
|
|
|
|
|
65.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trans Mountain (MMBbls - mainline throughput)
|
|
|
|
|
27.3
|
|
|
|
|
23.6
|
|
|
|
|
106.8
|
|
|
|
|
101.1
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes Texas Intrastates, Copano South Texas, KMNTP,
Monterrey, TransColorado,
|
|
|
|
(7)
|
|
Represents KMI's net share of the production from the field.
|
|
|
|
MEP (100%), KMLA, FEP (100%), TGP, EPNG, CIG, WIC, Cheyenne
Plains,
|
|
|
|
(8)
|
|
Net to KMI.
|
|
|
|
SNG, Elba Express, Ruby, NGPL (100%), and Citrus (100%) pipeline
volumes.
|
|
|
|
(9)
|
|
Includes all KMI crude oil properties.
|
|
(2)
|
|
Volumes for acquired pipelines are included for all periods.
|
|
|
|
(10)
|
|
Hedge gains/losses for Oil and NGLs are included with Crude Oil.
|
|
(3)
|
|
Includes Texas Intrastates and KMNTP.
|
|
|
|
(11)
|
|
Gasoline volumes include ethanol pipeline volumes.
|
|
(4)
|
|
Includes Copano Oklahoma, Copano South Texas, Eagle Ford
Gathering, Copano
|
|
|
|
(12)
|
|
Plantation and Parkway reported at 100%.
|
|
|
|
North Texas, Altamont, KinderHawk, Camino Real, Endeavor,
Bighorn, Webb/Duval
|
|
|
|
(13)
|
|
Includes Cochin and Cypress (100%).
|
|
|
|
Gatherers, Fort Union, EagleHawk, and Red Cedar throughput
volumes. Joint
|
|
|
|
(14)
|
|
Includes KMCC and Double Eagle (100%).
|
|
|
|
Venture throughput reported at KMI share.
|
|
|
|
(15)
|
|
Total ethanol handled including pipeline volumes included in
|
|
(5)
|
|
Includes McElmo Dome and Doe Canyon sales volumes.
|
|
|
|
|
|
gasoline volumes above.
|
|
(6)
|
|
Represents 100% production from the field.
|
|
|
|
(16)
|
|
Includes KMI's share of Joint Venture tonnage.
|
|
|
|
|
|
|
|
Kinder Morgan, Inc. and Subsidiaries
|
|
Preliminary Consolidated Balance Sheets
|
|
(Unaudited)
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2014
|
|
2013
|
|
ASSETS
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
315
|
|
|
$
|
598
|
|
|
Other current assets
|
|
|
3,559
|
|
|
|
3,270
|
|
|
Property, plant and equipment, net
|
|
|
38,426
|
|
|
|
35,847
|
|
|
Investments
|
|
|
6,036
|
|
|
|
5,951
|
|
|
Goodwill
|
|
|
24,654
|
|
|
|
24,504
|
|
|
Deferred charges and other assets
|
|
|
10,252
|
|
|
|
5,015
|
|
|
TOTAL ASSETS
|
|
$
|
83,242
|
|
|
$
|
75,185
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Short-term debt
|
|
$
|
2,717
|
|
|
$
|
2,306
|
|
|
Other current liabilities
|
|
|
3,629
|
|
|
|
3,769
|
|
|
Long-term debt
|
|
|
38,212
|
|
|
|
31,810
|
|
|
Preferred interest in general partner of KMP
|
|
|
100
|
|
|
|
100
|
|
|
Debt fair value adjustments
|
|
|
1,934
|
|
|
|
1,977
|
|
|
Deferred income taxes
|
|
|
-
|
|
|
|
4,651
|
|
|
Other
|
|
|
2,224
|
|
|
|
2,287
|
|
|
Total liabilities
|
|
|
48,816
|
|
|
|
46,900
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(17
|
)
|
|
|
(24
|
)
|
|
Other shareholders' equity
|
|
|
34,093
|
|
|
|
13,117
|
|
|
Total KMI equity
|
|
|
34,076
|
|
|
|
13,093
|
|
|
Noncontrolling interests
|
|
|
350
|
|
|
|
15,192
|
|
|
Total shareholders' equity
|
|
|
34,426
|
|
|
|
28,285
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
$
|
83,242
|
|
|
$
|
75,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt, net of cash (1)
|
|
$
|
40,614
|
|
|
$
|
33,518
|
|
|
|
|
|
|
|
|
EBITDA (2)
|
|
$
|
7,368
|
|
|
$
|
6,726
|
|
|
|
|
|
|
|
|
Debt to EBITDA
|
|
|
5.5
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
(1) Amounts exclude the preferred interest in general partner of
KMP and Debt fair value adjustments.
|
|
(2) EBITDA includes add back of our share of certain equity
investees' DD&A and is before certain items.
|
