Kinder Morgan Inc ((KMI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Kinder Morgan’s recent earnings call painted a generally positive picture for the company, buoyed by strong financial growth and an expanding project backlog. Despite some challenges in natural gas gathering volumes and the CO2 segment, the overall sentiment was optimistic, driven by favorable conditions in the LNG export market.
Strong Financial Growth
Kinder Morgan reported a robust financial performance with a 6% increase in adjusted EBITDA and a 12% rise in adjusted EPS over the second quarter of 2024. The net income attributable to KMI reached $715 million, marking a significant 24% increase compared to the previous year.
Expansion in Project Backlog
The company saw a notable expansion in its project backlog, which grew from $8.8 billion to $9.3 billion. This growth was fueled by the addition of $1.3 billion in new projects and the successful placement of approximately $750 million worth of projects into service.
LNG Export Growth
Kinder Morgan is poised to benefit from the growing demand in the LNG export market. S&P Global Commodity Insights projects a 3.5 Bcf/day increase in U.S. LNG feed gas demand this summer compared to last year, with expectations for this demand to more than double by 2030.
Dividend Increase
Reflecting its strong financial position, Kinder Morgan declared a dividend of $0.2925 per share, representing a 2% increase from the 2024 dividend.
Improved Federal Permitting Environment
The federal permitting environment has shown improvement, with faster permitting processes by the U.S. Army Corps of Engineers and favorable actions from FERC, which could positively impact future projects.
Decline in Natural Gas Gathering Volumes
The company faced a 6% decline in natural gas gathering volumes this quarter compared to the same period last year, primarily due to challenges in the Haynesville system.
Tariff Challenges
Tariffs pose a potential risk to project economics, although they are currently estimated to impact project costs by only about 1%.
CO2 Segment Challenges
The CO2 segment experienced some difficulties, with a 3% decrease in oil production volumes and an 8% decrease in CO2 volumes compared to the second quarter of 2024.
Forward-Looking Guidance
Looking ahead, Kinder Morgan remains optimistic about its future prospects. The company anticipates exceeding its original budget for the year, driven by contributions from the Outrigger acquisition. Significant growth in U.S. natural gas demand is projected, with a 20% increase expected by 2030. The project backlog continues to grow, with a focus on serving power demand. Additionally, Kinder Morgan expects substantial cash tax benefits in 2026 and 2027, with no material cash taxpayer status until 2028.
In conclusion, Kinder Morgan’s earnings call highlighted a positive outlook for the company, supported by strong financial growth and strategic project expansions. While challenges in natural gas gathering and the CO2 segment were noted, the overall sentiment remains optimistic, with promising developments in the LNG export market and improved federal permitting conditions.