What to Watch When Kinder Morgan Releases Second Quarter Results


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Kinder Morgan and Kinder Morgan Energy Partners are expected to report second quarter results on Jul. 16.

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  • What to Watch When Kinder Morgan Releases Second Quarter Results

    1. 1. What to Watch When Kinder Morgan Releases Second Quarter Results Source: Kinder Morgan
    2. 2. Kinder Morgan’s second quarter • Kinder Morgan Inc (NYSE: KMI) is expected to report earnings of $0.29 per share. • Kinder Morgan Energy Partners (NYSE: KMP), meanwhile, expects to deliver earnings per common unit of $0.55. Kinder Morgan Inc. and Kinder Morgan Energy Partners are scheduled to report second quarter results on July 16th. Photo credit: Kinder Morgan
    3. 3. Kinder Morgan and Kinder Morgan Energy Partners started 2014 off by delivering strong first-quarter results and raising their respective payouts to investors. Photo credit: Kinder Morgan
    4. 4. The biggest driver for both companies was the growth in segment earnings from Kinder Morgan Energy Partners’ natural gas pipelines. Source: Kinder Morgan Energy Partners press release. Note: Segment earnings in millions.
    5. 5. Investors should expect that segment to drive results again this quarter.
    6. 6. However, its not the only segment to watch, so, here’s what to keep an eye on this quarter.
    7. 7. 1. Natural gas pipelines will again be a key fuel for the company as it’s the biggest profit contributor.  Drop down transaction from Kinder Morgan to Kinder Morgan Energy Partners really helped to fuel gains last quarter.  However, organic growth investments continue to enter service and will contribute revenue this quarter.  Looking further ahead, the company has added $1.5 billion of new investment to its backlog since December. Look for demand to continue to fuel new investments in capacity.
    8. 8. 2. Commodity prices in the carbon dioxide segment could have an impact on earnings.  Kinder Morgan Energy Partners hedges much of its oil volumes produced from enhanced oil recovery. However, it does have some unhedged exposure, particularly to natural gas liquids.  For every $1 the price of WTI oil moves, it will impact the CO2 segment by $7 million or 0.125% of the combined segment’s earnings.
    9. 9. 3. New Jones Act tankers should fuel growth in the terminals segment.  $960 million in acquisitions that closed in January will contribute a full quarter’s worth of earnings.  Deals included five tankers currently in operation and four to be delivered starting next year.  In addition to tankers, the terminals segment should see contribution from additional storage capacity that Kinder Morgan has brought online this year.
    10. 10. 4. The $310 million Cochin Reversal project should be complete and contribute earnings to the products pipelines segment.  Project was due to be in service right before the end of the quarter.  Overall, Kinder Morgan Energy Partners expects to spend about $700 million to grow its products pipelines segment this year.  However, the company has several prospective projects that could have been given the green light this past quarter.
    11. 11. Kinder Morgan Energy Partners expects to have a strong year in 2014, which is a key to fueling gains for Kinder Morgan Inc as well. As long as the company keeps the momentum going at its four main segments, that won’t be a problem. Photo credit: Kinder Morgan
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