Kinder Morgan profit, cash flow rise on Gulf Coast Express pipeline strength

(Reuters) – U.S. pipeline operator Kinder Morgan Inc (KMI.N) reported a 26% rise in quarterly profit on Wednesday, benefiting from higher gas takeaway from Permian Basin through its Gulf Coast Express pipeline.

The pipeline, which can transport 2 billion cubic feet per day (bcfd), came into service in September last year when drillers were burning off natural gas at record rates due to lack of transportation capacity from the shale-rich Permian Basin.

Earnings from natural gas transport volumes rose 14% and from NGL transport volumes jumped 23% from a year earlier.

The pipeline operator generated $1.35 billion, or 59 cents per share, in distributable cash flow (DCF) in the fourth quarter, higher than $1.14 billion, or 50 cents per share, in the prior quarter. On a year-over-year basis, DCF rose 6%.

Investors have been pushing U.S. oil and gas pipeline operators to deliver positive free cash flow as low energy prices and idle shale rigs pressure earnings.

The Houston-based company, which has pipelines as well as storage terminals, said net income attributable to shareholders rose to $610 million, or 27 cents per share, in the quarter ended Dec. 31, from $483 million, or 21 cents per share, a year earlier.

However, the company’s weighted average natural gas liquids (NGL) price for the quarter fell to $5.34 a barrel, or 19%, and realized weighted average crude oil price fell 10% t $49.90 a barrel. It also said profit was partly hurt by weakness in its CO2 segment.

Excluding one-time items, Kinder Morgan earned 26 cents, missing the Street’s view by a cent, according to Refinitiv IBES data.

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The segment, which ships carbon dioxide to oilfields where it is used to extract crude, came under pressure from lower production due to volatile oil prices.

Reporting by Arunima Kumar in Bengaluru; Editing by Amy Caren Daniel and Arun Koyyur


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