Kinder Morgan, Inc. (NYSE: KMI) today announced that its board of directors approved a cash dividend of $0.20 per share for the second quarter ($0.80 annualized) payable on August 15, 2018, to common stockholders of record as of the close of business on July 31, 2018. This is a 60 percent increase from last year’s fourth quarter dividend, and is consistent with the plan KMI announced during the summer of 2017. Due to $749 million in non-cash impairments taken during the quarter, KMI is reporting a net loss available to common stockholders of $180 million, despite generating second quarter distributable cash flow (DCF) of $1.1 billion, an increase of 9 percent over the second quarter of 2017. KMI continued to fund all growth capital through operating cash flows with no need to access capital markets for that purpose.
“The board is very pleased with the company’s progress during the quarter. We continue to aggressively de-lever even while maintaining our planned substantial dividend increase. We ended the quarter with a Net Debt-to-Adjusted EBITDA ratio of 4.9 times and expect to end the year below our 2018 budgeted leverage metric of approximately 5.1 times, excluding any impact from the use of Trans Mountain sale net proceeds,” said Richard D. Kinder, Executive Chairman. “We also continue to develop very attractive growth projects that build on our extensive North American energy infrastructure network. During the second quarter, we announced the joint development of the Permian Highway Project, which will provide a greatly needed associated-gas takeaway solution for producers,” Kinder added.
Chief Executive Officer Steve Kean said, “Two great attributes of this company are strategically positioned fee-based assets that generate predictable cash flows, and an inter-connected network that provides our customers with unrivaled flexibility. This quarter once again demonstrated both of those attributes. Several business units achieved strong financial performance in the second quarter and are poised to continue that success through the remainder of the year. In addition, during the second quarter we began work on the Gulf Coast Express Project and announced the joint development of our proposed Permian Highway Pipeline Project. Both of those projects take advantage of the unparalleled market access afforded by our existing network.”
Kean continued, “Overall, we had very good commercial and operating performance, though due to non-cash impairments taken during the quarter we are showing a second quarter loss per common share of $0.08. We achieved distributable cash flow (DCF) of $0.50 per common share in the quarter, representing 9 percent growth over the second quarter of 2017. This resulted in nearly $700 million of excess DCF above our dividend.”
KMI reported a second quarter net loss available to common stockholders of $180 million, compared to net income of $337 million for the second quarter of 2017, and DCF of $1,117 million, up 9 percent from $1,022 million for the comparable period in 2017. The increase in DCF was due to greater contributions from the Natural Gas, Products Pipelines and Terminals segments. The net loss available to common stockholders was driven by a $681 million unfavorable change in total Certain Items (defined under “Non-GAAP Financial Measures” below) compared to the second quarter of 2017. Second quarter 2018 Certain Items were predominantly net losses on impairments, the largest of which was a $600 million impairment of certain gathering and processing assets in Oklahoma, driven by reduced cash flow estimates as a result of KMI directing capital to other areas of its portfolio.
For the first six months of 2018, KMI reported net income available to common stockholders of $305 million, compared to $738 million for the first six months of 2017, and DCF of $2,364 million, up 6 percent from $2,237 million for the comparable period in 2017. The increase in DCF was driven by greater contributions from all KMI business units, partially offset by greater sustaining capital. Net income available to common stockholders was degraded by a $715 million unfavorable change in total Certain Items compared to the first six months of 2017. The first six months 2018 Certain Items were primarily driven by the impairments discussed above.
2018 Outlook
For 2018, KMI’s budget contemplates declared dividends of $0.80 per common share, DCF of approximately $4.57 billion ($2.05 per common share) and Adjusted EBITDA of approximately $7.5 billion, and we currently expect to meet or exceed those DCF and Adjusted EBITDA targets. KMI forecasts to invest $2.4 billion in growth projects during 2018 (excluding growth capital expected to be funded by Kinder Morgan Canada Limited (KML)), up $200 million from the budget, to be funded with internally generated cash flow without the need to access capital markets. KMI also expects to beat its budgeted leverage metric of a year-end Net Debt-to-Adjusted EBITDA ratio of approximately 5.1 times.
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 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 budgeted expectations assumed average annual prices for West Texas Intermediate (WTI) crude oil of $56.50 per barrel and Henry Hub natural gas of $3.00 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 36,362 barrels per day (Bbl/d) at $58.12/Bbl in 2018; 24,929 Bbl/d at $55.14/Bbl in 2019; 11,400 Bbl/d at $53.41/Bbl in 2020; 6,700 Bbl/d at $52.81/Bbl in 2021; and 1,200 Bbl/d at $53.85/Bbl in 2022.
Overview of Business Segments
“The Natural Gas Pipelines segment had an outstanding quarter. The segment’s performance for the second quarter of 2018 was 11 percent higher relative to the second quarter of 2017. The segment benefited from increased activity across nearly all of our large transmission intrastate and interstate systems, as well as on our Midstream gathering and processing assets, primarily Hiland and KinderHawk, due to increased drilling and production in the Bakken and the Haynesville. The transmission assets saw higher revenue on El Paso Natural Gas (EPNG), on the Texas Intrastates (KMTP/Tejas), on Tennessee Gas Pipeline (TGP), on Natural Gas Pipeline Company of America (NGPL), and on Colorado Interstate Gas (CIG), due to increased Permian activity, increased power demand, exports to Mexico, projects placed in service, and increased production in the DJ Basin,” said KMI President Kim Dang.
Natural gas transport volumes were up 12 percent compared to the second quarter of 2017, driven by higher throughput on TGP due to power demand and projects placed in service; on NGPL due to power demand and deliveries to Mexico; on EPNG due to additional Permian capacity sales; and on CIG due to growing DJ production and coal-to-gas switching in the Mid-Continent Region. Natural gas gathering volumes were up 7 percent from the second quarter of 2017 due primarily to higher volumes on the KinderHawk and Hiland systems, partially offset by lower volumes on Copano South Texas. Unseasonably cold weather early in the quarter was also a factor on several systems.
Natural gas is critical to the American economy and to meeting the world’s evolving energy 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 39 percent to nearly 112 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 over the next decade will also be driven by greater demand for gas-fired power generation across the country (expected to increase by 27 percent), LNG exports (up almost seven-fold), exports to Mexico (forecast to rise by 51 percent), and continued industrial development, particularly in the petrochemical industry.
“In the CO2 segment, second quarter 2018 combined oil production across all of our fields was up 4 percent compared to the same period in 2017 on a net to KMI basis, primarily due to increased volumes at our SACROC (up 6 percent) and Tall Cotton assets (up 35 percent), though Tall Cotton production was below plan. Second quarter 2018 net NGL sales volumes of 10.1 thousand barrels per day (MBbl/d) were up 2 percent compared to the same period in 2017. In total for the first half of 2018, oil production on both a gross and net-to-KMI basis was just slightly ahead of plan,” Dang said. “The segment was also helped during the quarter by higher commodity prices, as NGL prices were up 46 percent and CO2 prices up 11 percent compared to the same period last year. Our realized weighted average oil price for the quarter was essentially flat at $58.08 per barrel compared to $57.80 per barrel for the second quarter of 2017, as higher WTI prices were largely offset by the Midland-Cushing differential.
“Terminals segment earnings were up 3 percent compared to the second quarter of 2017. Contributions from our liquids business, which accounts for approximately 80 percent of the segment total, were up 3 percent driven by storage capacity increases in key hubs along the Houston Ship Channel and Edmonton, Alberta, as well as the full-period impact of new-build Jones Act tankers delivered in 2017,” said Dang. “These contributions were partially offset by the impact of certain divestitures, lower charter rates on existing Jones Act tankers, and lower tank utilization at our Staten Island, New York location. Contributions from our bulk business were up 7 percent compared to the second quarter of 2017 driven by strong demand at our steel and export coal handling operations.”
“The Products Pipelines segment contributions were up 10 percent compared with second quarter 2017 performance with increased contributions from nearly all of the segment’s assets,” Dang said.
Total refined products volumes were up 3 percent for the second quarter versus the same period in 2017. Ethanol volumes for the quarter were up 10 percent while crude and condensate pipeline volumes were up 5 percent compared to the second quarter of 2017.
Kinder Morgan Canada contributions were up 7 percent in the second quarter of 2018 compared to the second quarter of 2017. The increase was largely due to higher capitalized equity financing costs associated with spending on the Trans Mountain Expansion Project (TMEP).
Other News
Natural Gas Pipelines
CO2
Terminals
Kinder Morgan Canada
Financing
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. We own an interest in or operate approximately 85,000 miles of pipelines and 152 terminals. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products, and our terminals transload and store liquid commodities including petroleum products, ethanol and chemicals, and bulk products, including petroleum coke, metals and ores. For more information please visit www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. Eastern Time on Wednesday, July 18, at www.kindermorgan.com for a LIVE webcast conference call on the company’s second quarter earnings.
Non-GAAP Financial Measures
The non-generally accepted accounting principles (non-GAAP) financial measures of 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 the company’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 Basic 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 by 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, 2017 (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 |
Six Months Ended |
|||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Revenues | $ | 3,428 | $ | 3,368 | $ | 6,846 | $ | 6,792 | ||||||||||||||||||
Costs, expenses and other | ||||||||||||||||||||||||||
Costs of sales | 1,068 | 1,070 | 2,087 | 2,131 | ||||||||||||||||||||||
Operations and maintenance | 617 | 556 | 1,236 | 1,089 | ||||||||||||||||||||||
Depreciation, depletion and amortization | 571 | 577 | 1,141 | 1,135 | ||||||||||||||||||||||
General and administrative | 164 | 157 | 337 | 341 | ||||||||||||||||||||||
Taxes, other than income taxes | 85 | 91 | 173 | 195 | ||||||||||||||||||||||
Loss on impairments and divestitures, net | 653 | — | 653 | 6 | ||||||||||||||||||||||
Other income, net | (2 | ) | (1 | ) | (2 | ) | — | |||||||||||||||||||
3,156 | 2,450 | 5,625 | 4,897 | |||||||||||||||||||||||
Operating income | 272 | 918 | 1,221 | 1,895 | ||||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||
Earnings from equity investments | 58 | 135 | 278 | 310 | ||||||||||||||||||||||
Amortization of excess cost of equity investments | (24 | ) | (15 | ) | (56 | ) | (30 | ) | ||||||||||||||||||
Interest, net | (516 | ) | (463 | ) | (983 | ) | (928 | ) | ||||||||||||||||||
Other, net | 34 | 24 | 70 | 43 | ||||||||||||||||||||||
(Loss) income before income taxes | (176 | ) | 599 | 530 | 1,290 | |||||||||||||||||||||
Income tax benefit (expense) | 46 | (216 | ) | (118 | ) | (462 | ) | |||||||||||||||||||
Net (loss) income | (130 | ) | 383 | 412 | 828 | |||||||||||||||||||||
Net income attributable to noncontrolling interests | (11 | ) | (7 | ) | (29 | ) | (12 | ) | ||||||||||||||||||
Net (loss) income attributable to Kinder Morgan, Inc. | (141 | ) | 376 | 383 | 816 | |||||||||||||||||||||
Preferred stock dividends | (39 | ) | (39 | ) | (78 | ) | (78 | ) | ||||||||||||||||||
Net (loss) income available to common stockholders | $ | (180 | ) | $ | 337 | $ | 305 | $ | 738 | |||||||||||||||||
Class P Shares | ||||||||||||||||||||||||||
Basic and diluted (loss) earnings per common share | $ | (0.08 | ) | $ | 0.15 | $ | 0.14 | $ | 0.33 | |||||||||||||||||
Basic and diluted weighted average common shares outstanding | 2,204 | 2,230 | 2,206 | 2,230 | ||||||||||||||||||||||
Declared dividend per common share | $ | 0.20 | $ | 0.125 | $ | 0.40 | $ | 0.25 | ||||||||||||||||||
Adjusted earnings per common share (1) | $ | 0.21 | $ | 0.14 | $ | 0.43 | $ | 0.30 | ||||||||||||||||||
Segment EBDA |
% |
% |
||||||||||||||||||||||||
Natural Gas Pipelines | $ | 313 | $ | 907 | (65 | )% | $ | 1,449 | $ | 1,962 | (26 | )% | ||||||||||||||
CO2 | 157 | 221 | (29 | )% | 356 | 439 | (19 | )% | ||||||||||||||||||
Terminals | 274 | 304 | (10 | )% | 569 | 611 | (7 | )% | ||||||||||||||||||
Products Pipelines | 319 | 324 | (2 | )% | 578 | 611 | (5 | )% | ||||||||||||||||||
Kinder Morgan Canada | 46 | 43 | 7 | % | 92 | 86 | 7 | % | ||||||||||||||||||
Total Segment EBDA | $ | 1,109 | $ | 1,799 | (38 | )% | $ | 3,044 | $ | 3,709 | (18 | )% |
Note |
||
(1) | Adjusted earnings per common share uses adjusted earnings and applies the same two-class method used in arriving at diluted (loss) earnings per common share. See the following page, Preliminary Earnings Contribution by Business Segment, for a reconciliation of net (loss) 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 |
Six Months Ended |
|||||||||||||||||||||||||||
2018 | 2017 |
% |
2018 | 2017 |
% |
|||||||||||||||||||||||
Segment EBDA before certain items (1) | ||||||||||||||||||||||||||||
Natural Gas Pipelines | $ | 1,001 | $ | 905 | 11 | % | $ | 2,083 | $ | 1,924 | 8 | % | ||||||||||||||||
CO2 | 221 | 220 | — | % | 458 | 442 | 4 | % | ||||||||||||||||||||
Terminals | 308 | 299 | 3 | % | 604 | 601 | — | % | ||||||||||||||||||||
Products Pipelines | 318 | 290 | 10 | % | 608 | 577 | 5 | % | ||||||||||||||||||||
Kinder Morgan Canada | 46 | 43 | 7 | % | 92 | 86 | 7 | % | ||||||||||||||||||||
Subtotal | 1,894 | 1,757 | 8 | % | 3,845 | 3,630 | 6 | % | ||||||||||||||||||||
DD&A and amortization of excess investments | (595 | ) | (592 | ) | (1,197 | ) | (1,165 | ) | ||||||||||||||||||||
General and administrative and corporate charges (1) (2) | (160 | ) | (149 | ) | (324 | ) | (323 | ) | ||||||||||||||||||||
Interest, net (1) | (477 | ) | (468 | ) | (949 | ) | (945 | ) | ||||||||||||||||||||
Subtotal | 662 | 548 | 1,375 | 1,197 | ||||||||||||||||||||||||
Book taxes (1) | (145 | ) | (199 | ) | (312 | ) | (433 | ) | ||||||||||||||||||||
Certain items | ||||||||||||||||||||||||||||
Acquisition and divestiture related costs (3) | (48 | ) | (1 | ) | (48 | ) | (7 | ) | ||||||||||||||||||||
Fair value amortization | 9 | 17 | 20 | 34 | ||||||||||||||||||||||||
Contract early termination (4) | (1 | ) | 4 | (1 | ) | 26 | ||||||||||||||||||||||
Legal and environmental reserves (5) | — | 34 | (37 | ) | 32 | |||||||||||||||||||||||
Change in fair market value of derivative contracts (6) | (103 | ) | (1 | ) | (143 | ) | 5 | |||||||||||||||||||||
Losses on impairments and divestitures, net (7) | (742 | ) | (1 | ) | (742 | ) | (6 | ) | ||||||||||||||||||||
Hurricane damage recoveries, net | 27 | — | 24 | — | ||||||||||||||||||||||||
Refund and reserve adjustment of taxes, other than income taxes | 21 | — | 39 | — | ||||||||||||||||||||||||
Other | (1 | ) | (1 | ) | (1 | ) | 9 | |||||||||||||||||||||
Subtotal certain items before tax | (838 | ) | 51 | (889 | ) | 93 | ||||||||||||||||||||||
Book tax certain items | 191 | (17 | ) | 194 | (29 | ) | ||||||||||||||||||||||
Impact of 2017 Tax Cuts and Jobs Act | — | — | 44 | — | ||||||||||||||||||||||||
Total certain items | (647 | ) | 34 | (651 | ) | 64 | ||||||||||||||||||||||
Net (loss) income | (130 | ) | 383 | 412 | 828 | |||||||||||||||||||||||
Net income attributable to noncontrolling interests | (11 | ) | (7 | ) | (29 | ) | (12 | ) | ||||||||||||||||||||
Preferred stock dividends | (39 | ) | (39 | ) | (78 | ) | (78 | ) | ||||||||||||||||||||
Net (loss) income available to common stockholders | $ | (180 | ) | $ | 337 | $ | 305 | $ | 738 | |||||||||||||||||||
Net (loss) income available to common stockholders | $ | (180 | ) | $ | 337 | $ | 305 | $ | 738 | |||||||||||||||||||
Total certain items | 647 | (34 | ) | 651 | (64 | ) | ||||||||||||||||||||||
Noncontrolling interests certain item (8) | (8 | ) | 1 | (8 | ) | 1 | ||||||||||||||||||||||
Adjusted earnings | 459 | 304 | 948 | 675 | ||||||||||||||||||||||||
DD&A and amortization of excess investments (9) | 684 | 686 | 1,374 | 1,357 | ||||||||||||||||||||||||
Total book taxes (10) | 159 | 223 | 343 | 484 | ||||||||||||||||||||||||
Cash taxes (11) | (33 | ) | (48 | ) | (46 | ) | (45 | ) | ||||||||||||||||||||
Other items (12) | 11 | 13 | 22 | 26 | ||||||||||||||||||||||||
Sustaining capital expenditures (13) | (163 | ) | (156 | ) | (277 | ) | (260 | ) | ||||||||||||||||||||
DCF | $ | 1,117 | $ | 1,022 | $ | 2,364 | $ | 2,237 | ||||||||||||||||||||
Weighted average common shares outstanding for dividends (14) | 2,214 | 2,239 | 2,216 | 2,239 | ||||||||||||||||||||||||
DCF per common share | $ | 0.50 | $ | 0.46 | $ | 1.07 | $ | 1.00 | ||||||||||||||||||||
Declared dividend per common share | $ | 0.20 | $ | 0.125 | $ | 0.40 | $ | 0.25 | ||||||||||||||||||||
Adjusted EBITDA (15) | $ | 1,848 | $ | 1,728 | $ | 3,749 | $ | 3,547 |
Notes ($ million) |
||
(1) | Excludes certain items: | |
2Q 2018 - Natural Gas Pipelines $(688), CO2 $(64), Terminals $(34), Products Pipelines $1, general and administrative and corporate charges $(14), interest expense $(39), book tax $191. | ||
2Q 2017 - Natural Gas Pipelines $2, CO2 $1, Terminals $5, Products Pipelines $34, general and administrative and corporate charges $4, interest expense $5, book tax $(17). | ||
YTD 2018 - Natural Gas Pipelines $(634), CO2 $(102), Terminals $(35), Products Pipelines $(30), general and administrative and corporate charges $(10), interest expense $(34), book tax $194. | ||
YTD 2017 - Natural Gas Pipelines $38, CO2 $(3), Terminals $10, Products Pipelines $34, general and administrative and corporate charges $(3), interest expense $17, book tax $(29). | ||
(2) | Includes corporate (benefit) charges: | |
2Q 2018 - $10 | ||
2Q 2017 - $(3) | ||
YTD 2018 - $(3) | ||
YTD 2017 - $3 | ||
General and administrative expense is also net of management fee revenues from an equity investee: | ||
2Q 2017 - $(9) | ||
YTD 2017 - $(18) | ||
(3) | 2018 amounts primarily represent the non-cash write-off of capitalized KML credit facility fees. | |
(4) | 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. | |
(5) | Legal reserve adjustments related to certain litigation and environmental matters. | |
(6) | Gains or losses are reflected in our DCF when realized. | |
(7) | 2018 amounts include (i) a $600 million non-cash impairment of certain gathering and processing assets in Oklahoma; (ii) a $60 million non-cash impairment of certain Terminal business segment assets; and (iii) a net loss of $89 million representing an impairment of our equity investment in Gulf LNG Holdings Group, LLC (Gulf LNG) due to a ruling by an arbitration panel affecting a customer contract. | |
(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: | |
2Q 2018 - $89 | ||
2Q 2017 - $94 | ||
YTD 2018 - $177 | ||
YTD 2017 - $192 | ||
(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: | |
2Q 2018 - $14 | ||
2Q 2017 - $24 | ||
YTD 2018 - $31 | ||
YTD 2017 - $51 | ||
(11) | Includes KMI's share of taxable equity investees' cash taxes: | |
2Q 2018 - $(28) | ||
2Q 2017 - $(45) | ||
YTD 2018 - $(38) | ||
YTD 2017 - $(45) | ||
(12) | Includes non-cash compensation associated with our restricted stock program. | |
(13) | Includes KMI's share of certain equity investees' sustaining capital expenditures (the same equity investees for which DD&A is added back): | |
2Q 2018 - $(24) | ||
2Q 2017 - $(27) | ||
YTD 2018 - $(40) | ||
YTD 2017 - $(45) | ||
(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 |
Six Months Ended |
||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
Net (loss) income | (130 | ) | 383 | 412 | 828 | ||||||||||||||||
Total certain items | 647 | (34 | ) | 651 | (64 | ) | |||||||||||||||
Net income attributable to noncontrolling interests before certain items (16) | (3 | ) | (3 | ) | (7 | ) | (8 | ) | |||||||||||||
DD&A and amortization of excess investments (9) (17) | 693 | 689 | 1,392 | 1,360 | |||||||||||||||||
Book taxes (10) (17) | 164 | 225 | 352 | 486 | |||||||||||||||||
Interest, net (1) | 477 | 468 | 949 | 945 | |||||||||||||||||
Adjusted EBITDA | $ | 1,848 | $ | 1,728 | $ | 3,749 | $ | 3,547 |
(16) |
Excludes KML noncontrolling interests: 2Q 2018 - $16 2Q 2017 - $3 YTD 2018 - $30 YTD 2017 - $3 |
|
(17) |
Includes the noncontrolling interests' portion of KML: 2Q 2018 - DD&A $9; Book taxes $5 2Q 2017 - DD&A $3; Book taxes $2 YTD 2018 - DD&A $18; Book taxes $9 YTD 2017 - DD&A $3; Book taxes $2 |
Volume Highlights
(historical pro forma for acquired and divested assets) |
||||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Natural Gas Pipelines | ||||||||||||||||||||
Transport Volumes (BBtu/d) (1) | 31,704 | 28,187 | 31,913 | 28,753 | ||||||||||||||||
Sales Volumes (BBtu/d) (2) | 2,445 | 2,247 | 2,468 | 2,404 | ||||||||||||||||
Gas Gathering Volumes (BBtu/d) (3) | 2,871 | 2,673 | 2,801 | 2,693 | ||||||||||||||||
Crude/Condensate Gathering Volumes (MBbl/d) (4) | 311 | 261 | 296 | 267 | ||||||||||||||||
CO2 | ||||||||||||||||||||
Southwest Colorado Production - Gross (Bcf/d) (5) | 1.15 | 1.31 | 1.20 | 1.33 | ||||||||||||||||
Southwest Colorado Production - Net (Bcf/d) (5) | 0.53 | 0.64 | 0.55 | 0.65 | ||||||||||||||||
Sacroc Oil Production - Gross (MBbl/d) (6) | 29.16 | 27.42 | 29.35 | 27.86 | ||||||||||||||||
Sacroc Oil Production - Net (MBbl/d) (7) | 24.29 | 22.84 | 24.45 | 23.21 | ||||||||||||||||
Yates Oil Production - Gross (MBbl/d) (6) | 17.06 | 17.40 | 17.03 | 17.64 | ||||||||||||||||
Yates Oil Production - Net (MBbl/d) (7) | 7.43 | 7.68 | 7.57 | 7.84 | ||||||||||||||||
Katz, Goldsmith, and Tall Cotton Oil Production - Gross (MBbl/d) (6) | 8.12 | 7.97 | 8.36 | 7.63 | ||||||||||||||||
Katz, Goldsmith, and Tall Cotton Oil Production - Net (MBbl/d) (7) | 6.91 | 6.74 | 7.10 | 6.46 | ||||||||||||||||
NGL Sales Volumes (MBbl/d) (8) | 10.06 | 9.86 | 10.11 | 10.01 | ||||||||||||||||
Realized Weighted Average Oil Price per Bbl (9) | $ | 58.08 | $ | 57.80 | $ | 58.90 | $ | 57.97 | ||||||||||||
Realized Weighted Average NGL Price per Bbl | $ | 32.88 | $ | 22.47 | $ | 31.64 | $ | 23.49 | ||||||||||||
Terminals | ||||||||||||||||||||
Liquids Leasable Capacity (MMBbl) | 88.9 | 85.8 | 88.9 | 85.8 | ||||||||||||||||
Liquids Utilization % | 90.7 | % | 94.5 | % | 90.7 | % | 94.5 | % | ||||||||||||
Bulk Transload Tonnage (MMtons) (10) | 16.9 | 14.6 | 31.3 | 29.0 | ||||||||||||||||
Ethanol (MMBbl) | 16.3 | 15.8 | 31.2 | 33.4 | ||||||||||||||||
Products Pipelines | ||||||||||||||||||||
Pacific, Calnev, and CFPL (MBbl/d) | ||||||||||||||||||||
Gasoline (11) | 860 | 826 | 813 | 797 | ||||||||||||||||
Diesel | 322 | 303 | 300 | 288 | ||||||||||||||||
Jet Fuel | 278 | 275 | 268 | 263 | ||||||||||||||||
Sub-Total Refined Product Volumes - excl. Plantation | 1,460 | 1,404 | 1,381 | 1,348 | ||||||||||||||||
Plantation (MBbl/d) (12) | ||||||||||||||||||||
Gasoline | 222 | 233 | 218 | 229 | ||||||||||||||||
Diesel | 61 | 51 | 62 | 50 | ||||||||||||||||
Jet Fuel | 27 | 33 | 29 | 34 | ||||||||||||||||
Sub-Total Refined Product Volumes - Plantation | 310 | 317 | 309 | 313 | ||||||||||||||||
Total (MBbl/d) | ||||||||||||||||||||
Gasoline (11) | 1,082 | 1,059 | 1,031 | 1,026 | ||||||||||||||||
Diesel | 383 | 354 | 362 | 338 | ||||||||||||||||
Jet Fuel | 305 | 308 | 297 | 297 | ||||||||||||||||
Total Refined Product Volumes | 1,770 | 1,721 | 1,690 | 1,661 | ||||||||||||||||
NGLs (MBbl/d) (13) | 121 | 121 | 119 | 114 | ||||||||||||||||
Crude and Condensate (MBbl/d) (14) | 349 | 331 | 339 | 340 | ||||||||||||||||
Total Delivery Volumes (MBbl/d) | 2,240 | 2,173 | 2,148 | 2,115 | ||||||||||||||||
Ethanol (MBbl/d) (15) | 129 | 118 | 124 | 114 | ||||||||||||||||
Trans Mountain (MMBbl/d - mainline throughput) | 293 | 303 | 291 | 305 |
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, Utopia (KMI share), 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) |
||||||||||
June 30, | December 31, | |||||||||
2018 | 2017 | |||||||||
ASSETS | ||||||||||
Cash and cash equivalents | $ | 271 | $ | 264 | ||||||
Other current assets | 2,363 | 2,451 | ||||||||
Property, plant and equipment, net | 39,905 | 40,155 | ||||||||
Investments | 7,293 | 7,298 | ||||||||
Goodwill | 22,153 | 22,162 | ||||||||
Deferred charges and other assets | 6,330 | 6,725 | ||||||||
TOTAL ASSETS | $ | 78,315 | $ | 79,055 | ||||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | ||||||||||
Liabilities | ||||||||||
Short-term debt | $ | 2,132 | $ | 2,828 | ||||||
Other current liabilities | 3,247 | 3,353 | ||||||||
Long-term debt | 34,640 | 33,988 | ||||||||
Preferred interest in general partner of KMP | 100 | 100 | ||||||||
Debt fair value adjustments | 626 | 927 | ||||||||
Other | 2,495 | 2,735 | ||||||||
Total liabilities | 43,240 | 43,931 | ||||||||
Redeemable Noncontrolling Interest | 581 | — | ||||||||
Shareholders' Equity | ||||||||||
Other shareholders' equity | 33,725 | 34,177 | ||||||||
Accumulated other comprehensive loss | (690 | ) | (541 | ) | ||||||
KMI equity | 33,035 | 33,636 | ||||||||
Noncontrolling interests | 1,459 | 1,488 | ||||||||
Total shareholders' equity | 34,494 | 35,124 | ||||||||
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY | $ | 78,315 | $ | 79,055 | ||||||
Net Debt (1) | $ | 36,398 | $ | 36,409 | ||||||
Net Debt including 50% of KML preferred shares (2) | 36,613 | 36,624 | ||||||||
Adjusted EBITDA |
||||||||||
June 30, | December 31, | |||||||||
Reconciliation of Net (Loss) Income to Adjusted EBITDA | 2018 | 2017 | ||||||||
Net (loss) income | $ | (193 | ) | $ | 223 | |||||
Total certain items | 2,159 | 1,445 | ||||||||
Net income attributable to noncontrolling interests before certain items (3) | (12 | ) | (12 | ) | ||||||
DD&A and amortization of excess investments (4) | 2,736 | 2,704 | ||||||||
Income tax expense before certain items (5) | 834 | 967 | ||||||||
Interest, net before certain items | 1,876 | 1,871 | ||||||||
Adjusted EBITDA | $ | 7,400 | $ | 7,198 | ||||||
Net Debt including 50% of KML preferred shares to Adjusted EBITDA | 4.9 | 5.1 |
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 $103 million and $143 million as of June 30, 2018 and December 31, 2017, respectively, as we have entered into swaps to convert that debt to U.S.$. | |
(2) | June 30, 2018 and December 31, 2017 amounts include $215 million, representing 50% of KML preferred shares which is included in noncontrolling interests. | |
(3) | 2018 and 2017 amounts exclude KML noncontrolling interests of $55 million and $27 million, respectively. | |
(4) | 2018 and 2017 amounts include KMI's share of certain equity investees' DD&A of $383 million and $382 million, respectively. | |
(5) | 2018 and 2017 amounts include KMI's share of taxable equity investees' book taxes of $101 million and $114 million, respectively. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20180718005726/en/
Kinder Morgan, Inc.
Media Relations
Dave Conover, (713)
420-6397
[email protected]
or
Investor
Relations
(800) 348-7320
[email protected]
www.kindermorgan.com