HOUSTON--(BUSINESS WIRE)--Kinder Morgan, Inc. (NYSE: KMI) today announced that its board of
directors approved a cash dividend of $0.125 per share for the fourth
quarter ($0.50 annualized) payable on February 15, 2018, to common
stockholders of record as of the close of business on January 31, 2018.
KMI continues to expect to increase its dividend to $0.80 per share for
2018 ($0.20 per share for Q1 2018). KMI also continues to expect to use
cash in excess of dividend payments to fully fund growth investments,
further strengthening its balance sheet.
“Kinder Morgan thrived in 2017. We had very good financial performance
despite facing continued strong headwinds (including an epic rain
event), we strengthened the balance sheet beyond our original
projections, and we announced our plan to return value to shareholders
through an increasing dividend and a $2 billion share repurchase
program. Our previously announced 2018 guidance, with $0.80 dividends to
be declared for 2018, and the early start to our share repurchases,
which we began in December 2017, shows our commitment to that plan. We
are highly confident in our ability to maintain robust dividend coverage
while delivering a substantial dividend increase to stockholders out of
operating cash flows in excess of growth capital. And of course we will
continue the important work of strengthening our balance sheet by
funding all growth capital through operating cash flows with no need for
external funding for growth capital for the third straight year,” said
Richard D. Kinder, Executive Chairman.
President and CEO Steve Kean said, “During 2017 we completed the Elba
Liquefaction Project joint venture and the IPO of our Canadian pipelines
and terminals assets (KML). Those transactions helped us outperform our
original target for strengthening our balance sheet, leading to a
year-end 2017 Net Debt-to-Adjusted EBITDA ratio of 5.1 times versus our
plan of 5.4 times. We are committed to achieving or beating our longer
term leverage target of 5.0 times. We also placed almost $1.8 billion of
projects in service throughout the year and added a substantial
additional natural gas project in Gulf Coast Express. We had good
commercial and operating performance, slightly exceeding our plan for
the year. We are pleased with the strength and resiliency of the
company’s business and with our operational performance.”
“We also had a solid fourth quarter, but because of a non-cash
accounting charge resulting from the reduction in corporate income tax
rates, we are showing a fourth quarter loss of $0.47 in earnings per
common share. While the recently enacted Tax Cuts and Jobs Act of 2017
will ultimately be moderately positive for KMI, the reduced corporate
income tax rate causes certain deferred-tax assets to be revalued at 21
percent versus 35 percent. Although there is no impact to the underlying
related deductions, which can continue to be used to offset future
taxable income, KMI will take an estimated approximately $1.4 billion
non-cash accounting charge for the 4th quarter. This charge
is our initial estimate and may be refined in the future as permitted by
recent guidance from the Securities and Exchange Commission and the
Financial Accounting Standards Board. The positive impacts of the law
include the reduced corporate income tax rate and the fact that several
of our U.S. business units (essentially all but our interstate natural
gas pipelines) will be able to deduct 100 percent of their capital
expenditures through 2022. The net impact results in postponing the date
when KMI becomes a federal cash taxpayer by approximately one year, to
beyond 2024,” continued Kean.
For the quarter, we achieved distributable cash flow (DCF) of $0.53 per
common share, representing 4 percent growth over the fourth quarter of
2016, resulting in $910 million of excess DCF above our dividend. The
discrepancy between a reported net income loss and a DCF gain
illustrates why we and those who follow our businesses view the DCF
metric as an important measure of our financial performance.”
Kean added, “We continue to drive future growth by completing
significant infrastructure development projects that we track as part of
our project backlog. Our current project backlog is essentially flat
with last quarter at $11.8 billion, with a small decrease primarily due
to projects going into service, which was mostly offset by the addition
of our Gulf Coast Express joint venture. Excluding the CO2
segment projects, we expect the projects in our backlog to generate an
average capital-to-EBITDA multiple of approximately 6.5 times.”
KMI reported a fourth quarter net loss available to common stockholders
of $1,045 million, compared to net income available to common
stockholders of $170 million for the fourth quarter of 2016, and DCF of
$1,190 million, up 4 percent from $1,147 million for the comparable
period in 2016. The increase in DCF was driven by greater contributions
from the Natural Gas, Terminals and Products Pipelines Business Units,
as well as from Kinder Morgan Canada, partially offset by decreased
contributions from CO2. Net income available to common
stockholders was impacted by a $1,276 million unfavorable change in
total Certain Items (as described under “Non-GAAP Financial Measures”
below) compared to the fourth quarter of 2016. Fourth quarter 2017
Certain Items were driven largely by the non-cash accounting charge
resulting from the 2017 Tax Cuts and Jobs Act as previously discussed.
For the full year, KMI reported net income available to common
stockholders of $27 million, versus $552 million for 2016, and DCF of
$4,482 million ($2.00 per share) that was down slightly from $4,511
million for the comparable period in 2016. The decrease in DCF was
driven by the sale of 50 percent of Southern Natural Gas (SNG) in 2016,
negative impacts of Hurricane Harvey, a contribution to KMI’s pension
plan, and the KML IPO, partially offset by increased contributions from
the Terminals Business Unit, growth projects in the Natural Gas Business
Unit, lower interest expense, and lower general and administrative
expenses. Excluding the impact of Hurricane Harvey, the SNG sale and the
KML IPO, DCF was up over 1 percent from 2016. Net income available to
common stockholders was also impacted by a $512 million increase in
total Certain Items compared to 2016. Certain Items in 2017 were driven
by the revaluation of certain deferred-tax assets described above,
partially offset by asset impairment charges taken during 2016.
2018 Outlook
For 2018, KMI’s budget is set to declare dividends of $0.80 per common
share, achieve DCF of approximately $4.57 billion ($2.05 per common
share) and Adjusted EBITDA of approximately $7.5 billion. KMI also
budgeted to invest $2.2 billion in growth projects during 2018
(excluding growth capital expected to be funded by KML), to be funded
with internally generated cash flow without the need to access equity
markets, and to end the year with a Net Debt-to-Adjusted EBITDA ratio of
approximately 5.1 times.
KMI previously announced it will further enhance shareholder value
through a $2 billion share buy-back program. KMI’s Board of Directors
authorized the program to begin in December 2017, and during that month
KMI repurchased approximately 14 million shares for approximately $250
million. In 2018, KMI plans to further utilize this program
opportunistically.
KMI does not provide budgeted net income attributable to common
stockholders (the GAAP financial measure most directly comparable to DCF
and Adjusted EBITDA) due to the inherent difficulty and impracticality
of predicting certain amounts required by GAAP, such as ineffectiveness
on commodity, interest rate and foreign currency hedges, unrealized
gains and losses on derivatives marked to market, and potential changes
in estimates for certain contingent liabilities.
KMI’s expectations assume average annual prices for West Texas
Intermediate (WTI) crude oil of $56.50 per barrel and Henry Hub natural
gas of $3 per MMBtu, consistent with forward pricing during the
company’s budget process. The vast majority of cash KMI generates is
fee-based and therefore not directly exposed to commodity prices. The
primary area where KMI has commodity price sensitivity is in its CO2 segment,
with the majority of the segment’s next 12 months of oil and NGL
production hedged to minimize this sensitivity. The segment is currently
hedged for 31,419 barrels per day (Bbl/d) at $59.58/Bbl in 2018; 17,401
Bbl/d at $54.85/Bbl in 2019; 9,300 Bbl/d at $52.86/Bbl in 2020; and
4,300 Bbl/d at $51.92/Bbl in 2021. For 2018, KMI estimates that every $1
per barrel change in the average West Texas Intermediate crude oil price
from the company’s budget of $56.50 would impact budgeted DCF by
approximately $7 million and each $0.10 per MMBtu change in the price of
natural gas from the company’s budget of $3 per MMBtu would impact
budgeted DCF by approximately $1 million.
Overview of Business Segments
“The Natural Gas Pipelines segment’s performance for the fourth
quarter of 2017 was 4 percent higher relative to the fourth quarter of
2016. The segment benefited from increased contributions from Tennessee
Gas Pipeline (TGP), driven by incremental short-term capacity sales and
projects placed in service; from Natural Gas Pipeline of America (NGPL)
due to lower interest expense; from the Elba Express pipeline resulting
from the completion of expansion projects; from SNG due to completion of
an expansion project and lower interest expense; and from Hiland
Midstream due to increased gathering volumes and the effect of
renegotiated contracts. These benefits were partially offset by lower
contributions from certain midstream gathering and processing assets and
from Colorado Interstate Gas Company (CIG) as a result of a 2016 rate
case settlement,” Kean said.
Natural gas transport volumes were up 8 percent compared to the fourth
quarter of 2016, driven by higher throughput on TGP and Elba Express due
to projects placed in service, on NGPL due to incremental demand from
LNG facilities and to Mexico, and on El Paso Natural Gas (EPNG) due to
additional Permian capacity sales. The increases were partially offset
by lower throughput on Cheyenne Plains due to mild weather and fuel
switching to coal in the Rockies market. Natural gas gathering volumes
were down 2 percent from the fourth quarter of 2016 due primarily to
lower natural gas volumes on multiple systems gathering from the Eagle
Ford Shale and on the KinderHawk system, partially offset by increases
in Hiland and Altamont volumes due to increased drilling activities in
the basins.
Natural gas is critical to the American economy and to meeting the
world’s evolving energy and manufacturing needs. Objective analysts
project U.S. natural gas demand, including net exports of liquefied
natural gas (LNG) and net exports to Mexico, will increase by more than
30 percent to approximately 105 billion cubic feet per day (Bcf/d) by
2027. Of the natural gas consumed in the U.S., about 40 percent moves on
KMI pipelines. While a substantial majority of natural gas is consumed
in industrial, commercial and residential heating uses, KMI expects
future natural gas infrastructure opportunities will also be driven by
greater demand for gas-fired power generation across the country, LNG
exports, exports to Mexico, and continued industrial development,
particularly in the petrochemical industry. Compared to the fourth
quarter of 2016, natural gas deliveries on KMI pipelines to Mexico were
up 6 percent, and deliveries to the Sabine Pass LNG facility increased
by 33 percent. KMI transports roughly 70 percent of all U.S. natural gas
exports destined for Mexico.
“The CO
2
segment was impacted by lower
commodity prices, as our realized weighted average oil price for the
quarter was $59.32 per barrel compared to $62.30 per barrel for the
fourth quarter of 2016,” Kean said. “Combined oil production across all
of our fields was up 2 percent compared to 2016 on a net to Kinder
Morgan basis. Fourth quarter 2017 net NGL sales volumes of 10.1 thousand
barrels per day (MBbl/d) were down 3 percent from 2016, due to an
operational interruption during the quarter.”
Combined gross oil production volumes averaged 54.1 MBbl/d for the
fourth quarter, up 1 percent from 53.5 MBbl/d for the same period last
year. SACROC’s fourth quarter gross production was 1 percent above
fourth quarter 2016 results and slightly above 2017 budget, and Yates
gross production was 5 percent below fourth quarter 2016 results and
below plan. Fourth quarter gross production from Katz, Goldsmith and
Tall Cotton was 18 percent above the same period in 2016, but below
plan. Gross NGL sales volumes were 20.5 MBbl/d during the quarter, 4
percent below fourth quarter 2016. Southwest Colorado and the Cortez
Pipeline set annual records in 2017.
“The Terminals segment earnings contributions were up 4 percent
compared to the fourth quarter of 2016 despite several divestitures and
a negative impact on earnings associated with Hurricane Harvey.
“Growth in the liquids business during the quarter versus the fourth
quarter of 2016 was primarily driven by increased contributions from our
Jones Act tankers, including the fourth quarter delivery of our final
new-build tanker, the American Pride, as well as various
expansions across our network, including the Kinder Morgan Export
Terminal and the Pit 11 project at our Pasadena Terminal, which combined
added 3.5 million barrels of storage to our best-in-class refined
products storage hub along the Houston Ship Channel,” Kean said.
A 9 percent increase in the bulk business during the quarter versus the
fourth quarter of 2016 was attributable primarily to increased volumes
and earnings from our petroleum coke and steel handling activities that
more than offset the impact of various non-core asset divestitures.
“The Products Pipelines segment contributions were up 2 percent
compared with fourth quarter 2016 performance due largely to increased
contributions from SFPP, CalNev, and Kinder Morgan Southeast Terminals,”
Kean said.
Total refined products volumes were up 4 percent for the fourth quarter
versus the same period in 2016. Crude and condensate pipeline volumes
were up 2 percent from the fourth quarter of 2016.
Kinder Morgan Canada contributions were up 22 percent in the
fourth quarter of 2017 compared to the fourth quarter of 2016. This was
largely due to higher capitalized equity financing costs associated with
spending on the Trans Mountain Expansion Project, timing of operating
costs, and foreign exchange effects driven by a stronger Canadian dollar
in 2017.
Other News
Natural Gas Pipelines
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Substantial progress is being made on the nearly $2 billion Elba
Liquefaction Project as construction is well underway. The federally
approved liquefaction project at the existing Southern LNG Company
facility at Elba Island near Savannah, Georgia, is supported by a
20-year contract with Shell. Total liquefaction capacity will be
approximately 2.5 million tonnes per year of LNG, equivalent to
approximately 350 million cubic feet per day of natural gas. Initial
in-service is expected in mid-2018 with final units coming on line by
mid-2019. Elba Liquefaction Company, L.L.C. (ELC), a KMI joint venture
with EIG Global Energy Partners as a 49 percent partner, will own 10
liquefaction units and other ancillary equipment. Certain other
facilities associated with the project are 100 percent owned by KMI.
Additional upstream compression facilities are being constructed by a
KMI affiliate at two compressor stations on the Elba Express pipeline
to facilitate transportation of ample feed gas for liquefaction.
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On Dec. 21, 2017, Kinder Morgan Texas Pipeline (KMTP), DCP Midstream
and an affiliate of Targa Resources Corp. announced their final
investment decision to proceed with the Gulf Coast Express Pipeline
Project (GCX Project) after having executed definitive joint venture
agreements and having secured sufficient firm transportation
agreements with shippers. Approximately 85 percent of the project
capacity is subscribed and committed under long-term, binding
transportation agreements, and the partners expect that the remaining
capacity will be subscribed by early 2018. The approximately $1.7
billion GCX Project is designed to transport up to 1.92 billion cubic
feet per day (Bcf/d) of natural gas from the Permian Basin to the Agua
Dulce, Texas, area. The project is expected to be in service in
October 2019, pending the receipt of necessary regulatory approvals.
As previously announced, KMTP will build, operate and own a 50 percent
interest in the GCX Project, and DCP Midstream and Targa will each
hold a 25 percent equity interest in the project. In addition to their
transportation agreements, shipper Apache Corporation has an option to
purchase up to a 15 percent equity stake in the project from KMI.
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On Nov. 20, 2017 and Dec. 15, 2017, the FERC issued two Certificates
of Public Convenience and Necessity to:
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Kinder Morgan Louisiana Pipeline (KMLP) for its proposed project
to provide 600,000 Dth/d of capacity to serve Train 5 at
Cheniere’s Sabine Pass LNG Terminal. The approximately $122
million KMLP project is expected to be placed into commercial
service as early as the first quarter of 2019, earlier than
initially planned, and
-
TGP for its Lone Star Project. The approximately $150 million
project will provide 300,000 Dth/d of capacity under a long-term
contract to Cheniere’s planned Corpus Christi Liquefaction Project
in South Texas and is anticipated to be placed into commercial
service in January 2019.
-
Construction is nearly complete on the approximately $178 million
Southwest Louisiana Supply Project, and it is expected to be placed
into commercial service with initial deliveries beginning in the first
quarter of 2018. The project will provide 900,000 Dth/d of capacity to
the Cameron LNG export facility in Cameron Parish, Louisiana.
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Three fully-subscribed TGP projects were made available for service in
the fourth quarter of 2017:
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The approximately $104 million Connecticut Expansion Project
provides 72,100 Dth/d of capacity for three local distribution
company customers in the Northeast. Deliveries under the long-term
contracts began in the fourth quarter of 2017.
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The approximately $104 million Orion Project provides 135,000
Dth/d of capacity for three customers. Deliveries under the
long-term contracts began in the fourth quarter of 2017.
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The approximately $57 million Triad Project provides 180,000 Dth/d
of capacity for one customer. Deliveries under the long-term
contract will begin on June 1, 2018.
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On Dec. 21, 2017, Sierrita Gas Pipeline, LLC filed a Certificate
Application with the FERC for its approximately $56 million Sierrita
Gas Pipeline Expansion. This expansion project will increase the
Sierrita pipeline’s capacity by approximately 323,000 Dth/d to 524,000
Dth/d and consists of a new 15,900 horsepower compressor station in
Pima County, Arizona. Pending regulatory approvals, the project is
expected to be placed into service in the second quarter of 2020. KMI
is a 35 percent owner and the operator of Sierrita Gas Pipeline.
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On Nov. 8, 2017, NGPL received a Certificate of Public Convenience and
Necessity for its approximately $212 million Gulf Coast Southbound
Expansion Project, and construction is underway following receipt of
FERC’s Notice to Proceed. The project, which is fully subscribed under
long-term contracts, is designed to transport 460,000 Dth/d of
incremental firm transportation service from NGPL’s interstate
pipeline interconnects in Illinois, Arkansas and Texas to points south
on NGPL’s pipeline system to serve growing demand in the Gulf Coast
area. The project is anticipated to be fully in service by the fourth
quarter of 2018.
-
On Nov. 27, 2017, the FERC approved Wyoming Interstate Company, LLC’s
Offer of Settlement in a proceeding pursuant to Section 5 of the
Natural Gas Act, and on Jan. 5, 2018, the FERC approved NGPL’s Offer
of Settlement in a separate proceeding pursuant to Section 5 of the
Natural Gas Act. These settlements will not have a material adverse
impact on KMI’s results of operations or cash flows from operations.
CO
2
-
The approximately $66 million second phase of KMI’s Tall Cotton field
project is more than 90 percent complete and the field is experiencing
continued strong production results of approximately 3,000 Bbls/d of
oil. Tall Cotton is the industry’s first greenfield Residual Oil Zone
CO2 project, marking the first time CO2 has been
used for enhanced oil recovery in a field without a main pay zone.
-
KMI continues to find high-return enhanced oil recovery projects in
the current price environment across its robust portfolio of assets.
Terminals
-
At the Base Line Terminal, a 50-50 joint venture crude oil merchant
storage terminal being developed in Edmonton, Alberta, Canada, by KML
and Keyera, construction of all major facilities is materially
complete, including off-site pipe rack and bridges required to connect
the terminal with the North 40 Terminal, Edmonton South Terminal, and
Edmonton Rail Terminal. Commissioning of the 12-tank, 4.8 million
barrel new-build facility, which is fully contracted with long-term,
firm take-or-pay agreements with creditworthy customers, is underway,
and the first 4 tanks were placed into service in January 2018 with
the balance to be phased into service throughout the year. KMI and
KML’s investment in the joint venture terminal is approximately C$398
million, including costs associated with the construction of a
pipeline segment funded solely by KML. The project is forecast to be
on schedule and on budget.
-
Construction is complete on the Pit 11 expansion project at KMI’s
Pasadena terminal. The approximately $186 million project,
back-stopped by long-term commitments from existing customers, adds
2.0 million barrels of storage to KMI’s best-in-class refined products
storage hub along the Houston Ship Channel.
-
On Nov. 20, 2017, KMI’s American Petroleum Tankers (APT) took delivery
of its final product tanker, the American Pride, from Philly
Shipyard, Inc. (PSI) and later in the fourth quarter placed the vessel
on-hire pursuant to a term charter agreement with a major refiner.
APT’s construction program at PSI is complete following the delivery
of the final tanker, bringing APT’s best-in-class fleet to 16 vessels.
The entire fleet, including each of the 330,000-barrel capacity and
LNG conversion-ready new-build tankers, is fixed under charter with
major energy companies.
Products Pipelines
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Construction is nearing completion on the $550 million Utopia Pipeline
Project, and the pipeline is expected to be placed in service in
January 2018. With an initial design capacity of 50,000 Bbls/d, the
267-mile Utopia Pipeline transports ethane from Ohio to Windsor,
Ontario, Canada. The project is fully supported by a long-term,
fee-based transportation agreement with a petrochemical customer.
Kinder Morgan Canada
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On Dec. 15, 2017, KML completed its offering of cumulative redeemable
minimum rate reset preferred shares, Series 3 (the “Series 3 Preferred
Shares”) for aggregate gross proceeds of $250 million. KML issued 10
million Series 3 Preferred Shares with a coupon rate of 5.20 percent,
including 2 million Series 3 shares issued due to the full exercise of
the underwriter's option, as a result of strong investor demand. KML
ended the year with no outstanding debt by carefully managing funds
while seeking clarity on the remaining permitting, regulatory and
judicial review processes for TMEP.
-
On Dec. 4, 2017, KML announced that TMEP had made incremental progress
during 2017 on permitting, regulatory condition satisfaction and land
access. However the scope and pace of the permits and approvals
received to date does not allow for significant additional
construction to begin at this time. KML also stated that it must have
a clear line of sight on the timely conclusion of the permitting and
approvals processes before it will commit to full construction
spending. Consistent with its primarily permitting strategy and to
mitigate risk, KML set its 2018 budget assuming TMEP spend in the
first part of 2018 will be focused primarily on advancing the
permitting process, rather than spending at full construction levels,
until KML has greater clarity on key permits, approvals and judicial
reviews. KML previously announced a potential unmitigated delay to
project completion of nine months (to September 2020) due primarily to
the time required to file for, process and obtain necessary permits
and regulatory approvals. KML indicated that the September 2020
in-service date could extend beyond September 2020, depending on
progress on regulatory, permit and legal approvals, and now projects
an unmitigated delay to a December 2020 in-service date. Trans
Mountain continues to proceed in water work at Westridge Terminal. As
of the end of the fourth quarter 2017, a cumulative C$930 million has
been spent on the project.
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On Nov. 14, 2017, KML filed motions with the National Energy Board
(NEB) to resolve delays as they relate to the City of Burnaby, and to
establish a fair, transparent and expedited backstop process for
resolving any similar delays in other provincial and municipal
permitting processes. On Dec. 7, 2017, the NEB granted KML’s motion in
respect to the City of Burnaby and indicated that Trans Mountain is
not required to comply with two sections of the city’s bylaws, thereby
allowing Trans Mountain to start work at its pipeline terminals
subject to other permits or authorizations that may be required. The
NEB indicated that it would release its reasons for decision at a
later date. The NEB has not yet issued a decision on establishing an
expedited NEB process that will backstop provincial and municipal
processes.
-
TMEP was approved by Order in Council on Dec. 1, 2016, with 157
conditions. The Province of British Columbia (BC) stated its approval
of the Project on Jan. 11, 2017, with 37 conditions. Trans Mountain
has made filings with the NEB and BC Environment with respect to all
of the federal and provincial conditions required prior to general
construction. The BC Environmental Assessment Office (EAO) has now
released all condition filings required prior to general construction.
The NEB has released sufficient approvals for proceeding with
Westridge Terminal and Temporary Infrastructure work phase. Trans
Mountain is now in receipt of a number of priority permits from
regulatory authorities in Alberta and British Columbia, including
access to British Columbia northern interior Crown lands. KML
continues to make progress on approvals from the NEB, government of BC
and government of Alberta. However, as of the end of 2017, even with
this progress, TMEP has yet to obtain numerous provincial and
municipal permits and federal condition approvals necessary for
construction.
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Hearings were held in October and November 2017 related to two
judicial reviews underway in the British Columbia Supreme Court with
respect to the environmental certificate granted to TMEP by the
province of British Columbia. Separate judicial reviews pending in the
Federal Court of Appeal challenging the process leading to the federal
government’s approval of TMEP were heard by the court from Oct. 2 to
Oct. 13, 2017. Decisions from the courts are expected in the coming
months. KMI is confident that the NEB, the Federal Government, and the
BC Government properly assessed and weighed the various scientific and
technical evidence through a comprehensive review process, while
taking into consideration varying interests on the Project. The
approvals granted followed many years of engagement and consultation
with communities, Aboriginal groups and individuals.
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy
infrastructure companies in North America. It owns an interest in or
operates approximately 85,000 miles of pipelines and 152 terminals.
KMI’s pipelines transport natural gas, refined petroleum products, crude
oil, condensate, CO2 and other products, and its terminals
transload and store petroleum products, ethanol and chemicals, and
handle such products as steel, coal and petroleum coke. It is also a
leading producer of CO2 that we and others use for enhanced
oil recovery projects primarily in the Permian basin. For more
information please visit www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. Eastern Time on
Wednesday, January 17, at
www.kindermorgan.com
for a LIVE webcast conference call on the company’s fourth quarter
earnings.
Non-GAAP Financial Measures
The non-generally accepted accounting principles (non-GAAP) financial
measures of distributable cash flow (DCF), both in the aggregate and per
share, segment earnings before depreciation, depletion, amortization and
amortization of excess cost of equity investments (DD&A) and Certain
Items (Segment EBDA before Certain Items), net income before interest
expense, taxes, DD&A and Certain Items (Adjusted EBITDA), Adjusted
Earnings and Adjusted Earnings per common share are presented herein.
Certain Items
as used to
calculate our Non-GAAP measures, 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, 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).
DCF
is calculated by adjusting
net income available to common stockholders before Certain Items for
DD&A, total book and cash taxes, sustaining capital expenditures and
other items. DCF is a significant performance measure useful to
management and by external users of our financial statements in
evaluating our performance and to measure and estimate the ability of
our assets to generate cash earnings after servicing our debt and
preferred stock dividends, paying cash taxes and expending sustaining
capital, that could be used for discretionary purposes such as common
stock dividends, stock repurchases, retirement of debt, or expansion
capital expenditures. We believe the GAAP measure most directly
comparable to DCF is net income available to common stockholders. A
reconciliation of net income available to common stockholders to DCF is
provided herein. DCF per share is DCF divided by average
outstanding shares, including restricted stock awards that participate
in dividends.
Segment EBDA before Certain Items
is used by management in its analysis of segment performance and
management of our business. General and administrative expenses
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 Segment EBDA before Certain
Items is a significant performance metric because it provides us and
external users of our financial statements additional insight into the
ability of our segments to generate segment 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 Segment EBDA before Certain Items is segment
earnings before DD&A and amortization of excess cost of equity
investments (Segment EBDA). Segment EBDA before Certain Items is
calculated by adjusting Segment EBDA for the Certain Items attributable
to a segment, which are specifically identified in the footnotes to the
accompanying tables.
Adjusted EBITDA
is calculated by
adjusting net income before interest expense, taxes, and DD&A (EBITDA)
for Certain Items, noncontrolling interests before Certain Items, and
KMI’s share of certain equity investees’ DD&A (net of consolidating
joint venture partners’ share of DD&A) and book taxes, which are
specifically identified in the footnotes to the accompanying tables..
Adjusted EBITDA is used by management and external users, in
conjunction with our net debt, 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.
Adjusted Earnings
is net income
available to common stockholders before Certain Items. Adjusted
Earnings is used by certain external users of our financial statements
to assess the earnings of our business excluding Certain Items as
another reflection of our business’s ability to generate earnings. We
believe the GAAP measure most directly comparable to Adjusted Earnings
is net income available to common stockholders. Adjusted Earnings per
share uses Adjusted Earnings and applies the same two-class method used
in arriving at Adjusted Earnings per common share.
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
DCF, Segment EBDA before Certain Items and Adjusted EBITDA 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. DCF should not be
used as an alternative to net cash provided by operating activities
computed 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.
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 and Exchange Act of 1934. Generally the
words “expects,” “believes,” anticipates,” “plans,” “will,” “shall,”
“estimates,” and similar expressions identify forward-looking
statements, which are generally not historical in nature. 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 that any such forward-looking statements will
materialize. Important factors that could cause actual results to
differ materially from those expressed in or implied from these
forward-looking statements include the 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, 2016 (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.
|
Kinder Morgan, Inc. and Subsidiaries
|
Preliminary Consolidated Statements of Income
|
(Unaudited)
|
(In millions, except per share amounts)
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,632
|
|
|
$
|
3,389
|
|
|
|
|
$
|
13,705
|
|
|
$
|
13,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs, expenses and other
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales
|
|
|
1,207
|
|
|
|
1,024
|
|
|
|
|
|
4,345
|
|
|
|
3,429
|
|
|
|
Operations and maintenance
|
|
|
774
|
|
|
|
579
|
|
|
|
|
|
2,472
|
|
|
|
2,372
|
|
|
|
Depreciation, depletion and amortization
|
|
|
564
|
|
|
|
557
|
|
|
|
|
|
2,261
|
|
|
|
2,209
|
|
|
|
General and administrative
|
|
|
175
|
|
|
|
119
|
|
|
|
|
|
673
|
|
|
|
669
|
|
|
|
Taxes, other than income taxes
|
|
|
101
|
|
|
|
97
|
|
|
|
|
|
398
|
|
|
|
421
|
|
|
|
Loss on impairments and divestitures, net
|
|
|
—
|
|
|
|
80
|
|
|
|
|
|
13
|
|
|
|
387
|
|
|
|
Other income, net
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
2,820
|
|
|
|
2,455
|
|
|
|
|
|
10,161
|
|
|
|
9,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
812
|
|
|
|
934
|
|
|
|
|
|
3,544
|
|
|
|
3,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from equity investments
|
|
|
101
|
|
|
|
154
|
|
|
|
|
|
578
|
|
|
|
497
|
|
|
|
Loss on impairments and divestitures of equity investments, net
|
|
|
(150
|
)
|
|
|
(266
|
)
|
|
|
|
|
(150
|
)
|
|
|
(610
|
)
|
|
|
Amortization of excess cost of equity investments
|
|
|
(16
|
)
|
|
|
(14
|
)
|
|
|
|
|
(61
|
)
|
|
|
(59
|
)
|
|
|
Interest, net
|
|
|
(445
|
)
|
|
|
(422
|
)
|
|
|
|
|
(1,832
|
)
|
|
|
(1,806
|
)
|
|
|
Other, net
|
|
|
22
|
|
|
|
2
|
|
|
|
|
|
82
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
324
|
|
|
|
388
|
|
|
|
|
|
2,161
|
|
|
|
1,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(1,316
|
)
|
|
|
(173
|
)
|
|
|
|
|
(1,938
|
)
|
|
|
(917
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(992
|
)
|
|
|
215
|
|
|
|
|
|
223
|
|
|
|
721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
(14
|
)
|
|
|
(6
|
)
|
|
|
|
|
(40
|
)
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Kinder Morgan, Inc.
|
|
|
(1,006
|
)
|
|
|
209
|
|
|
|
|
|
183
|
|
|
|
708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends
|
|
|
(39
|
)
|
|
|
(39
|
)
|
|
|
|
|
(156
|
)
|
|
|
(156
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income available to common stockholders
|
|
$
|
(1,045
|
)
|
|
$
|
170
|
|
|
|
|
$
|
27
|
|
|
$
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class P Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per common share
|
|
$
|
(0.47
|
)
|
|
$
|
0.08
|
|
|
|
|
$
|
0.01
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding
|
|
|
2,229
|
|
|
|
2,230
|
|
|
|
|
|
2,230
|
|
|
|
2,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared dividend per common share
|
|
$
|
0.125
|
|
|
$
|
0.125
|
|
|
|
|
$
|
0.500
|
|
|
$
|
0.500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per common share (1)
|
|
$
|
0.21
|
|
|
$
|
0.18
|
|
|
|
|
$
|
0.66
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBDA
|
|
|
|
|
|
%
change
|
|
|
|
|
|
%
change
|
Natural Gas Pipelines
|
|
$
|
641
|
|
|
$
|
708
|
|
|
(9
|
)%
|
|
$
|
3,487
|
|
|
$
|
3,211
|
|
|
9
|
%
|
CO2
|
|
|
211
|
|
|
|
219
|
|
|
(4
|
)%
|
|
|
847
|
|
|
|
827
|
|
|
2
|
%
|
Terminals
|
|
|
299
|
|
|
|
222
|
|
|
35
|
%
|
|
|
1,224
|
|
|
|
1,078
|
|
|
14
|
%
|
Products Pipelines
|
|
|
318
|
|
|
|
306
|
|
|
4
|
%
|
|
|
1,231
|
|
|
|
1,067
|
|
|
15
|
%
|
Kinder Morgan Canada
|
|
|
50
|
|
|
|
41
|
|
|
22
|
%
|
|
|
186
|
|
|
|
181
|
|
|
3
|
%
|
Total Segment EBDA
|
|
$
|
1,519
|
|
|
$
|
1,496
|
|
|
2
|
%
|
|
$
|
6,975
|
|
|
$
|
6,364
|
|
|
10
|
%
|
Note
|
(1)
|
Adjusted earnings per common share uses adjusted earnings and
applies the same two-class method used in arriving at diluted
earnings per common share. See the following page, Preliminary
Earnings Contribution by Business Segment, for a reconciliation of
net income available to common stockholders to adjusted earnings.
|
|
Kinder Morgan, Inc. and Subsidiaries
|
Preliminary Earnings Contribution by Business Segment
|
(Unaudited)
|
(In millions, except per share amounts)
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
%
change
|
|
|
2017
|
|
|
|
2016
|
|
|
%
change
|
Segment EBDA before certain items (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Pipelines
|
|
$
|
1,027
|
|
|
$
|
986
|
|
|
4
|
%
|
|
$
|
3,879
|
|
|
$
|
4,036
|
|
|
(4
|
)%
|
CO2
|
|
|
228
|
|
|
|
238
|
|
|
(4
|
)%
|
|
|
887
|
|
|
|
919
|
|
|
(3
|
)%
|
Terminals
|
|
|
317
|
|
|
|
305
|
|
|
4
|
%
|
|
|
1,214
|
|
|
|
1,169
|
|
|
4
|
%
|
Product Pipelines
|
|
|
314
|
|
|
|
307
|
|
|
2
|
%
|
|
|
1,193
|
|
|
|
1,180
|
|
|
1
|
%
|
Kinder Morgan Canada
|
|
|
50
|
|
|
|
41
|
|
|
22
|
%
|
|
|
186
|
|
|
|
181
|
|
|
3
|
%
|
Subtotal
|
|
|
1,936
|
|
|
|
1,877
|
|
|
3
|
%
|
|
|
7,359
|
|
|
|
7,485
|
|
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DD&A and amortization of excess investments
|
|
|
(580
|
)
|
|
|
(571
|
)
|
|
|
|
|
(2,322
|
)
|
|
|
(2,268
|
)
|
|
|
General and administrative and corporate charges (1) (2)
|
|
|
(163
|
)
|
|
|
(152
|
)
|
|
|
|
|
(645
|
)
|
|
|
(665
|
)
|
|
|
Interest, net (1)
|
|
|
(463
|
)
|
|
|
(475
|
)
|
|
|
|
|
(1,871
|
)
|
|
|
(1,999
|
)
|
|
|
Subtotal
|
|
|
730
|
|
|
|
679
|
|
|
|
|
|
2,521
|
|
|
|
2,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book taxes (1)
|
|
|
(207
|
)
|
|
|
(225
|
)
|
|
|
|
|
(853
|
)
|
|
|
(899
|
)
|
|
|
Certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and divestiture related costs
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
(8
|
)
|
|
|
(13
|
)
|
|
|
Fair value amortization
|
|
|
11
|
|
|
|
37
|
|
|
|
|
|
53
|
|
|
|
143
|
|
|
|
Contract and debt early termination (3)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
19
|
|
|
|
53
|
|
|
|
Legal and environmental reserves (4)
|
|
|
(6
|
)
|
|
|
71
|
|
|
|
|
|
37
|
|
|
|
16
|
|
|
|
Change in fair market value of derivative contracts (5)
|
|
|
(13
|
)
|
|
|
(52
|
)
|
|
|
|
|
(40
|
)
|
|
|
(75
|
)
|
|
|
Losses on impairments and divestitures, net
|
|
|
(157
|
)
|
|
|
(343
|
)
|
|
|
|
|
(170
|
)
|
|
|
(848
|
)
|
|
|
Project write-offs (6)
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
|
|
—
|
|
|
|
(171
|
)
|
|
|
Hurricane damage
|
|
|
(18
|
)
|
|
|
—
|
|
|
|
|
|
(27
|
)
|
|
|
—
|
|
|
|
Other
|
|
|
(3
|
)
|
|
|
(2
|
)
|
|
|
|
|
(5
|
)
|
|
|
(20
|
)
|
|
|
Subtotal certain items before tax
|
|
|
(187
|
)
|
|
|
(291
|
)
|
|
|
|
|
(141
|
)
|
|
|
(915
|
)
|
|
|
Book tax certain items (7)
|
|
|
53
|
|
|
|
52
|
|
|
|
|
|
77
|
|
|
|
(18
|
)
|
|
|
Impact of 2017 Tax Cuts and Jobs Act
|
|
|
(1,381
|
)
|
|
|
—
|
|
|
|
|
|
(1,381
|
)
|
|
|
—
|
|
|
|
Total certain items
|
|
|
(1,515
|
)
|
|
|
(239
|
)
|
|
|
|
|
(1,445
|
)
|
|
|
(933
|
)
|
|
|
Net (loss) income
|
|
|
(992
|
)
|
|
|
215
|
|
|
|
|
|
223
|
|
|
|
721
|
|
|
|
Net income attributable to noncontrolling interests
|
|
|
(14
|
)
|
|
|
(6
|
)
|
|
|
|
|
(40
|
)
|
|
|
(13
|
)
|
|
|
Preferred stock dividends
|
|
|
(39
|
)
|
|
|
(39
|
)
|
|
|
|
|
(156
|
)
|
|
|
(156
|
)
|
|
|
Net (loss) income available to common stockholders
|
|
$
|
(1,045
|
)
|
|
$
|
170
|
|
|
|
|
$
|
27
|
|
|
$
|
552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income available to common stockholders
|
|
$
|
(1,045
|
)
|
|
$
|
170
|
|
|
|
|
$
|
27
|
|
|
$
|
552
|
|
|
|
Total certain items
|
|
|
1,515
|
|
|
|
239
|
|
|
|
|
|
1,445
|
|
|
|
933
|
|
|
|
Noncontrolling interests certain item (8)
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
|
—
|
|
|
|
(8
|
)
|
|
|
Adjusted earnings
|
|
|
469
|
|
|
|
410
|
|
|
|
|
|
1,472
|
|
|
|
1,477
|
|
|
|
DD&A and amortization of excess investments (9)
|
|
|
666
|
|
|
|
656
|
|
|
|
|
|
2,684
|
|
|
|
2,617
|
|
|
|
Total book taxes (10)
|
|
|
232
|
|
|
|
248
|
|
|
|
|
|
957
|
|
|
|
993
|
|
|
|
Cash taxes (11)
|
|
|
(18
|
)
|
|
|
(18
|
)
|
|
|
|
|
(72
|
)
|
|
|
(79
|
)
|
|
|
Other items (12)
|
|
|
13
|
|
|
|
12
|
|
|
|
|
|
29
|
|
|
|
43
|
|
|
|
Sustaining capital expenditures (13)
|
|
|
(172
|
)
|
|
|
(161
|
)
|
|
|
|
|
(588
|
)
|
|
|
(540
|
)
|
|
|
DCF
|
|
$
|
1,190
|
|
|
$
|
1,147
|
|
|
|
|
$
|
4,482
|
|
|
$
|
4,511
|
|
|
|
Weighted average common shares outstanding for dividends (14)
|
|
|
2,239
|
|
|
|
2,239
|
|
|
|
|
|
2,240
|
|
|
|
2,238
|
|
|
|
DCF per common share
|
|
$
|
0.53
|
|
|
$
|
0.51
|
|
|
|
|
$
|
2.00
|
|
|
$
|
2.02
|
|
|
|
Declared dividend per common share
|
|
$
|
0.125
|
|
|
$
|
0.125
|
|
|
|
|
$
|
0.500
|
|
|
$
|
0.500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (15)
|
|
$
|
1,896
|
|
|
$
|
1,829
|
|
|
|
|
$
|
7,198
|
|
|
$
|
7,242
|
|
|
|
Notes ($ million)
|
(1)
|
Excludes certain items:
|
|
4Q 2017 - Natural Gas Pipelines $(386), CO2 $(17), Terminals $(18),
Products Pipelines $4, general and administrative and corporate
charges $(7), interest expense $18, book tax $(1,109).
|
|
4Q 2016 - Natural Gas Pipelines $(278), CO2 $(19), Terminals $(83),
Products Pipelines $(1), general and administrative and corporate
charges $37, interest expense $53, book tax $52.
|
|
YTD 2017 - Natural Gas Pipelines $(392), CO2 $(40), Terminals $10,
Products Pipelines $38, general and administrative and corporate
charges $(15), interest expense $39, book tax $(1,085).
|
|
YTD 2016 - Natural Gas Pipelines $(825), CO2 $(92), Terminals $(91),
Products Pipelines $(113), general and administrative and corporate
charges $13, interest expense $193, book tax $(18).
|
(2)
|
Includes corporate charges:
|
|
4Q 2017 - $4
|
|
4Q 2016 - $5
|
|
YTD 2017 - $22
|
|
YTD 2016 - $17
|
|
General and administrative expense is also net of management fee
revenues from an equity investee:
|
|
4Q 2017 - $(9)
|
|
4Q 2016 - $(9)
|
|
YTD 2017 - $(35)
|
|
YTD 2016 - $(34)
|
(3)
|
Comprised of earnings recognized related to the early termination of
customer contracts, including earnings from the sale of a contract
termination claim related to a customer bankruptcy, partially offset
by an equity investee loss on early termination of debt.
|
(4)
|
Legal reserve adjustments related to certain litigation and
environmental matters.
|
(5)
|
Gains or losses are reflected in our DCF when realized.
|
(6)
|
YTD 2016 includes $106 million of project write-offs associated with
our Northeast Energy Direct Market project and $65 million of
write-offs associated with our Palmetto project.
|
(7)
|
YTD 2017 includes a $36 million federal return-to-provision tax
benefit as a result of the recognition of an enhanced oil recovery
credit instead of deduction. YTD 2016 includes a $276 million book
tax expense certain item due to the non-deductibility, for tax
purposes, of approximately $800 million of goodwill included in the
loss calculation related to the sale of a 50% interest in SNG,
resulting in a gain for tax purposes.
|
(8)
|
Represents noncontrolling interest share of certain items.
|
(9)
|
Includes KMI's share of certain equity investees' DD&A, net of the
noncontrolling interests' portion of KML DD&A and consolidating
joint venture partners' share of DD&A:
|
|
4Q 2017 - $86
|
|
4Q 2016 - $85
|
|
YTD 2017 - $362
|
|
YTD 2016 - $349
|
(10)
|
Excludes book tax certain items. Also, includes KMI's share of
taxable equity investees' book taxes, net of the noncontrolling
interests' portion of KML book taxes:
|
|
4Q 2017 - $25
|
|
4Q 2016 - $23
|
|
YTD 2017 - $104
|
|
YTD 2016 - $94
|
(11)
|
Includes KMI's share of taxable equity investees' cash taxes:
|
|
4Q 2017 - $(15)
|
|
4Q 2016 - $(17)
|
|
YTD 2017 - $(69)
|
|
YTD 2016 - $(76)
|
(12)
|
All periods include non-cash compensation associated with our
restricted stock program. 2017 also includes a pension contribution.
|
(13)
|
Includes KMI's share of certain equity investees' sustaining capital
expenditures (the same equity investees for which DD&A is added
back):
|
|
4Q 2017 - $(33)
|
|
4Q 2016 - $(24)
|
|
YTD 2017 - $(107)
|
|
YTD 2016 - $(90)
|
(14)
|
Includes restricted stock awards that participate in common share
dividends.
|
(15)
|
Net (loss) income is reconciled to Adjusted EBITDA as follows, with
any difference due to rounding:
|
|
|
|
Three Months Ended
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
Net (loss) income
|
|
$
|
(992
|
)
|
|
$
|
215
|
|
|
|
|
$
|
223
|
|
|
$
|
721
|
|
|
Total certain items
|
|
1,515
|
|
|
239
|
|
|
|
|
1,445
|
|
|
933
|
|
|
Net income attributable to noncontrolling interests before certain
items (16)
|
|
(1
|
)
|
|
(5
|
)
|
|
|
|
(12
|
)
|
|
(21
|
)
|
|
DD&A and amortization of excess investments (9) (17)
|
|
674
|
|
|
657
|
|
|
|
|
2,704
|
|
|
2,617
|
|
|
Book taxes (10) (17)
|
|
237
|
|
|
248
|
|
|
|
|
967
|
|
|
993
|
|
|
Interest, net (1)
|
|
463
|
|
|
475
|
|
|
|
|
1,871
|
|
|
1,999
|
|
|
Adjusted EBITDA
|
|
$
|
1,896
|
|
|
$
|
1,829
|
|
|
|
|
$
|
7,198
|
|
|
$
|
7,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16)
|
Excludes KML noncontrolling interests:
|
|
4Q 2017 - $13
|
|
YTD 2017 - $27
|
(17)
|
Includes the noncontrolling interests' portion of KML:
|
|
4Q 2017 - DD&A $8; Book taxes $5
|
|
YTD 2017 - DD&A $20; Book taxes $10
|
|
Volume Highlights
|
(historical pro forma for acquired and divested assets)
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Pipelines
|
|
|
|
|
|
|
|
|
Transport Volumes (BBtu/d) (1)
|
|
|
30,033
|
|
|
|
27,897
|
|
|
|
29,108
|
|
|
|
28,095
|
|
Sales Volumes (BBtu/d) (2)
|
|
|
2,375
|
|
|
|
2,288
|
|
|
|
2,341
|
|
|
|
2,335
|
|
Gas Gathering Volumes (BBtu/d) (3)
|
|
|
2,704
|
|
|
|
2,749
|
|
|
|
2,653
|
|
|
|
2,970
|
|
Crude/Condensate Gathering Volumes (MBbl/d) (4)
|
|
|
286
|
|
|
|
265
|
|
|
|
273
|
|
|
|
292
|
|
|
|
|
|
|
|
|
|
|
CO2
|
|
|
|
|
|
|
|
|
Southwest Colorado Production - Gross (Bcf/d) (5)
|
|
|
1.28
|
|
|
|
1.27
|
|
|
|
1.29
|
|
|
|
1.20
|
|
Southwest Colorado Production - Net (Bcf/d) (5)
|
|
|
0.59
|
|
|
|
0.65
|
|
|
|
0.61
|
|
|
|
0.61
|
|
Sacroc Oil Production - Gross (MBbl/d) (6)
|
|
|
28.35
|
|
|
|
28.13
|
|
|
|
27.88
|
|
|
|
29.32
|
|
Sacroc Oil Production - Net (MBbl/d) (7)
|
|
|
23.61
|
|
|
|
23.43
|
|
|
|
23.22
|
|
|
|
24.43
|
|
Yates Oil Production - Gross (MBbl/d) (6)
|
|
|
17.00
|
|
|
|
17.91
|
|
|
|
17.34
|
|
|
|
18.37
|
|
Yates Oil Production - Net (MBbl/d) (7)
|
|
|
7.44
|
|
|
|
7.96
|
|
|
|
7.67
|
|
|
|
8.17
|
|
Katz, Goldsmith, and Tall Cotton Oil Production - Gross (MBbl/d) (6)
|
|
|
8.76
|
|
|
|
7.45
|
|
|
|
8.10
|
|
|
|
7.01
|
|
Katz, Goldsmith, and Tall Cotton Oil Production - Net (MBbl/d) (7)
|
|
|
7.43
|
|
|
|
6.27
|
|
|
|
6.86
|
|
|
|
5.90
|
|
NGL Sales Volumes (MBbl/d) (8)
|
|
|
10.12
|
|
|
|
10.46
|
|
|
|
9.94
|
|
|
|
10.31
|
|
Realized Weighted Average Oil Price per Bbl (9)
|
|
$
|
59.32
|
|
|
$
|
62.30
|
|
|
$
|
58.40
|
|
|
$
|
61.52
|
|
Realized Weighted Average NGL Price per Bbl
|
|
$
|
28.81
|
|
|
$
|
22.25
|
|
|
$
|
25.15
|
|
|
$
|
17.91
|
|
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
|
|
|
|
|
|
Liquids Leasable Capacity (MMBbl)
|
|
|
87.9
|
|
|
|
84.7
|
|
|
|
87.9
|
|
|
|
84.7
|
|
Liquids Utilization %
|
|
|
93.6
|
%
|
|
|
94.7
|
%
|
|
|
93.6
|
%
|
|
|
94.7
|
%
|
Bulk Transload Tonnage (MMtons) (10)
|
|
|
15.0
|
|
|
|
13.7
|
|
|
|
59.5
|
|
|
|
54.8
|
|
Ethanol (MMBbl)
|
|
|
16.8
|
|
|
|
17.8
|
|
|
|
68.1
|
|
|
|
66.7
|
|
|
|
|
|
|
|
|
|
|
Products Pipelines
|
|
|
|
|
|
|
|
|
Pacific, Calnev, and CFPL (MBbl/d)
|
|
|
|
|
|
|
|
|
Gasoline (11)
|
|
|
807
|
|
|
|
781
|
|
|
|
811
|
|
|
|
795
|
|
Diesel
|
|
|
308
|
|
|
|
280
|
|
|
|
298
|
|
|
|
292
|
|
Jet Fuel
|
|
|
263
|
|
|
|
251
|
|
|
|
264
|
|
|
|
255
|
|
Sub-Total Refined Product Volumes - excl. Plantation
|
|
|
1,378
|
|
|
|
1,312
|
|
|
|
1,374
|
|
|
|
1,342
|
|
Plantation (MBbl/d) (12)
|
|
|
|
|
|
|
|
|
Gasoline
|
|
|
221
|
|
|
|
234
|
|
|
|
227
|
|
|
|
230
|
|
Diesel
|
|
|
56
|
|
|
|
48
|
|
|
|
53
|
|
|
|
50
|
|
Jet Fuel
|
|
|
33
|
|
|
|
34
|
|
|
|
33
|
|
|
|
34
|
|
Sub-Total Refined Product Volumes - Plantation
|
|
|
310
|
|
|
|
315
|
|
|
|
312
|
|
|
|
313
|
|
Total (MBbl/d)
|
|
|
|
|
|
|
|
|
Gasoline (11)
|
|
|
1,028
|
|
|
|
1,015
|
|
|
|
1,038
|
|
|
|
1,025
|
|
Diesel
|
|
|
364
|
|
|
|
328
|
|
|
|
351
|
|
|
|
342
|
|
Jet Fuel
|
|
|
296
|
|
|
|
284
|
|
|
|
297
|
|
|
|
288
|
|
Total Refined Product Volumes
|
|
|
1,689
|
|
|
|
1,627
|
|
|
|
1,686
|
|
|
|
1,655
|
|
NGLs (MBbl/d) (13)
|
|
|
113
|
|
|
|
117
|
|
|
|
112
|
|
|
|
109
|
|
Crude and Condensate (MBbl/d) (14)
|
|
|
339
|
|
|
|
333
|
|
|
|
327
|
|
|
|
324
|
|
Total Delivery Volumes (MBbl/d)
|
|
|
2,141
|
|
|
|
2,078
|
|
|
|
2,125
|
|
|
|
2,088
|
|
Ethanol (MBbl/d) (15)
|
|
|
119
|
|
|
|
113
|
|
|
|
117
|
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
Trans Mountain (MMBbl/d - mainline throughput)
|
|
|
303
|
|
|
|
295
|
|
|
|
308
|
|
|
|
316
|
|
|
Notes
|
(1)
|
Includes Texas Intrastates, Copano South Texas, KMNTP, Monterrey,
TransColorado, MEP, KMLA, FEP, TGP, EPNG, CIG, WIC, Cheyenne Plains,
SNG, Elba Express, Ruby, Sierrita, NGPL, and Citrus pipeline
volumes. Joint Venture throughput reported at KMI share.
|
(2)
|
Includes Texas Intrastates and KMNTP.
|
(3)
|
Includes Copano Oklahoma, Copano South Texas, Eagle Ford Gathering,
Copano, North Texas, Altamont, KinderHawk, Camino Real, Endeavor,
Bighorn, Webb/Duval Gatherers, Fort Union, EagleHawk, Red Cedar, and
Hiland Midstream throughput. Joint Venture throughput reported at
KMI share.
|
(4)
|
Includes Hiland Midstream, EagleHawk, and Camino Real. Joint Venture
throughput reported at KMI share.
|
(5)
|
Includes McElmo Dome and Doe Canyon sales volumes.
|
(6)
|
Represents 100% production from the field.
|
(7)
|
Represents KMI's net share of the production from the field.
|
(8)
|
Net to KMI.
|
(9)
|
Includes all KMI crude oil properties.
|
(10)
|
Includes KMI's share of Joint Venture tonnage.
|
(11)
|
Gasoline volumes include ethanol pipeline volumes.
|
(12)
|
Plantation reported at KMI share.
|
(13)
|
Includes Cochin and Cypress (KMI share).
|
(14)
|
Includes KMCC, Double Eagle (KMI share), and Double H.
|
(15)
|
Total ethanol handled including pipeline volumes included in
gasoline volumes above.
|
|
Kinder Morgan, Inc. and Subsidiaries
|
Preliminary Consolidated Balance Sheets
|
(Unaudited)
|
(In millions)
|
|
|
|
December 31,
|
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
264
|
|
|
$
|
684
|
|
Other current assets
|
|
2,451
|
|
|
2,545
|
|
Property, plant and equipment, net
|
|
40,155
|
|
|
38,705
|
|
Investments
|
|
7,298
|
|
|
7,027
|
|
Goodwill
|
|
22,162
|
|
|
22,152
|
|
Deferred charges and other assets
|
|
6,725
|
|
|
9,192
|
|
TOTAL ASSETS
|
|
$
|
79,055
|
|
|
$
|
80,305
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Short-term debt
|
|
$
|
2,828
|
|
|
$
|
2,696
|
|
Other current liabilities
|
|
3,353
|
|
|
3,228
|
|
Long-term debt
|
|
33,988
|
|
|
36,105
|
|
Preferred interest in general partner of KMP
|
|
100
|
|
|
100
|
|
Debt fair value adjustments
|
|
927
|
|
|
1,149
|
|
Other
|
|
2,735
|
|
|
2,225
|
|
Total liabilities
|
|
43,931
|
|
|
45,503
|
|
|
|
|
|
|
Shareholders’ Equity
|
|
|
|
|
KMI equity
|
|
33,636
|
|
|
34,431
|
|
Noncontrolling interests
|
|
1,488
|
|
|
371
|
|
Total shareholders' equity
|
|
35,124
|
|
|
34,802
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
79,055
|
|
|
$
|
80,305
|
|
|
|
|
|
|
Net Debt (1)
|
|
$
|
36,409
|
|
|
$
|
38,160
|
|
Net Debt including 50% of KML preferred shares (2)
|
|
36,624
|
|
|
38,160
|
|
|
|
|
Adjusted EBITDA
|
|
|
Twelve Months Ended
|
|
|
December 31,
|
Reconciliation of Net Income to Adjusted EBITDA
|
|
2017
|
|
2016
|
Net income
|
|
$
|
223
|
|
|
$
|
721
|
|
Total certain items
|
|
1,445
|
|
|
933
|
|
Net income attributable to noncontrolling interests before certain
items (3)
|
|
(12
|
)
|
|
(21
|
)
|
DD&A and amortization of excess investments (4)
|
|
2,704
|
|
|
2,617
|
|
Income tax expense before certain items (5)
|
|
967
|
|
|
993
|
|
Interest, net before certain items
|
|
1,871
|
|
|
1,999
|
|
Adjusted EBITDA
|
|
$
|
7,198
|
|
|
$
|
7,242
|
|
|
|
|
|
|
Net Debt including 50% of KML preferred shares to Adjusted EBITDA
|
|
5.1
|
|
|
5.3
|
|
|
Notes
|
(1)
|
Amounts exclude: (i) the preferred interest in general partner of
KMP, (ii) debt fair value adjustments and (iii) the foreign exchange
impact on our Euro denominated debt of $143 million and $(43)
million as of December 31, 2017 and 2016, respectively, as we have
entered into swaps to convert that debt to U.S.$.
|
(2)
|
December 31, 2017 amount includes $215 million representing 50% of
KML preferred shares which is included in noncontrolling interests.
|
(3)
|
2017 excludes KML noncontrolling interests of $27 million.
|
(4)
|
2017 and 2016 include KMI's share of certain equity investees' DD&A
of $382 million and $349 million, respectively.
|
(5)
|
2017 and 2016 include KMI's share of taxable equity investees' book
taxes of $114 million and $94 million, respectively.
|