Kinder Morgan Declares Dividend of $0.125 for Fourth Quarter 2016
Net Debt Reduction of Over $3.0 Billion During 2016 Significantly
Enhanced Credit Profile
Kinder Morgan, Inc. (NYSE: KMI) today announced that its board of
directors approved a cash dividend of $0.125 per share for the quarter
($0.50 annualized) payable on Feb. 15, 2017, to common shareholders of
record as of the close of business on Feb. 1, 2017. KMI declared
dividends of $0.50 per share for 2016 and used cash in excess of
dividend payments to fully fund growth investments and strengthen its
balance sheet.
Richard D. Kinder, executive chairman, said, “We are pleased to have
reached significant milestones on two of our largest growth projects. We
received approval from the Canadian federal government and the province
of British Columbia to proceed with our Trans Mountain expansion
project, and we also began construction on our Elba Island Liquefaction
project. These are signature energy infrastructure assets for North
America, and we expect they will contribute greatly to Kinder Morgan’s
growth in the future.”
“For the year, we substantially reduced our debt, further positioning
Kinder Morgan for long-term value creation. We finished ahead of our
plan for 2016 year-end leverage, and we are pleased with the progress
toward reaching our targeted leverage level of around 5.0 times net
debt-to-Adjusted EBITDA,” said Kinder. “This will position us to return
substantial value to shareholders through some combination of dividend
increases, share repurchases, additional attractive growth projects or
further debt reduction. We are also seeing green shoots in our sector,
based on the expected balancing of global crude oil supply and demand
combined with expectations for a more positive federal legislative and
regulatory environment. Overall, we are very confident about Kinder
Morgan’s future.”
President and CEO Steve Kean said, “We are pleased with our operational
performance for the quarter, which contributed to full year 2016 results
that were in line with our guidance provided since April. We generated
full year 2016 distributable cash flow in excess of our dividends and
growth capital expenditures, and did not access the capital markets to
fund growth projects. We continue to demonstrate the resiliency of our
cash flows, generated by our large, diversified portfolio of
predominately fee-based assets. We generated earnings per common share
for the quarter of $0.08 and distributable cash flow of $0.51 per common
share, resulting in $867 million of excess distributable cash flow above
our dividend.”
Kean added, “We continue to drive future growth by completing
significant infrastructure development projects in our project backlog.
Our current project backlog is $12.0 billion, down from $13.0 billion at
the end of the third quarter of 2016. This reduction was primarily
driven by the completion of our Southern Natural Gas pipeline (SNG) and
Elba Express Company (EEC) expansions, our South System Flexibility
project and our Cortez Pipeline expansion, as well as the delivery of
the American Endurance tanker. Excluding the CO2
segment projects, we expect the projects in our backlog to generate an
average capital-to-EBITDA multiple of approximately 6.7 times.”
KMI reported fourth quarter net income available to common stockholders
of $170 million, compared to a net loss available to common stockholders
of $721 million for the fourth quarter of 2015, and distributable cash
flow of $1,147 million versus $1,233 million for the comparable period
in 2015. The decrease in distributable cash flow for the quarter was
attributable to lower contributions from SNG as a result of a 50 percent
sale of the pipeline during the third quarter of 2016 (which helped
improve KMI’s leverage metrics) and from the CO2 segment
primarily due to lower realized crude oil prices and lower volumes,
partially offset by higher contributions from the Terminals and Products
Pipelines segments. Net income available to common stockholders was also
impacted by a $988 million favorable change in total certain items
compared to the fourth quarter of 2015. Although the majority of Ruby
Pipeline’s capacity is contracted until 2021, this quarter included a
$250 million write down of the company’s equity investment in the
pipeline, driven by a delay in expected west coast natural gas demand
growth to beyond 2021. Fourth quarter 2015 certain items included a
goodwill impairment of $1,150 million.
For the full year, KMI reported net income available to common
stockholders of $552 million, compared to $227 million for 2015, and
distributable cash flow of $4,511 million versus $4,699 million for
2015. The decrease in distributable cash flow was primarily attributable
to lower contributions from the CO2 segment, lower
contributions from SNG as a result of a 50 percent sale of the pipeline
and a full year impact of preferred stock dividends, partially offset by
increased contributions from the Terminals and Products Pipelines
segments and lower interest expense. Net income available to common
stockholders was further impacted by a $508 million favorable change in
total certain items compared to 2015. In addition to the fourth quarter
certain items described above, 2016 included a partial write down of the
company’s equity investment in Midcontinent Express Pipeline (MEP).
2017 Outlook
On Dec. 5, 2016, KMI issued its preliminary 2017 financial projections
and said it expects to declare dividends of $0.50 per share and to
achieve distributable cash flow of approximately $4.46 billion and
Adjusted EBITDA of approximately $7.2 billion for the year. KMI also
expects to invest $3.2 billion in growth projects during 2017, to be
funded with internally generated cash flow without needing to access
equity markets, and to end the year with a net debt-to-Adjusted EBITDA
ratio of approximately 5.4 times. KMI’s 2017 budget assumes a joint
venture partner on the company’s Trans Mountain expansion project and
contributions from that partner to fund its share of growth capital, but
does not include any potential proceeds in excess of the partner’s share
of expansion capital to recognize the value created in developing the
project to this stage. KMI does not provide budgeted net income
attributable to common stockholders (the GAAP financial measure most
directly comparable to distributable cash flow 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 $53 per barrel and Henry Hub natural gas
of $3 per MMBtu, which were consistent with forward pricing during the
company’s budget process. The vast majority of cash generated by KMI is
fee-based and therefore is not directly exposed to commodity prices. The
primary area where KMI has commodity price sensitivity is in its CO2 segment,
where KMI hedges the majority of its next 12 months of oil production to
minimize this sensitivity. For 2017, the company estimates that every $1
per barrel change in the average WTI crude oil price impacts
distributable cash flow by approximately $6 million and each $0.10 per
MMBtu change in the price of natural gas impacts distributable cash flow
by approximately $1 million.
Overview of Business Segments
“The Natural Gas Pipelines segment’s performance for the fourth
quarter of 2016 was impacted by the sale of a 50 percent interest in SNG
and declines attributable to reduced volumes affecting certain of our
midstream gathering and processing assets. The segment benefited from
increased contribution from Tennessee Gas Pipeline (TGP), driven by
expansion projects placed into service,” Kean said.
Natural gas transport volumes were down 2 percent compared to the fourth
quarter of 2015, driven by lower throughput on Ruby Pipeline due to
increased Canadian imports to the Pacific Northwest, lower throughput on
the Texas Intrastate Natural Gas Pipelines due to lower Eagle Ford Shale
volumes, and lower throughput on Wyoming Interstate Company and
TransColorado pipelines due to lower Rockies production. These declines
were partially offset by higher throughput on TGP due to projects placed
in service, and higher throughput on NGPL due to deliveries to the
Sabine Pass LNG facility and to South Texas to meet continuing demand
from Mexico. Natural gas gathered volumes were down 21 percent from the
fourth quarter of 2015 due primarily to lower natural gas volumes on
multiple systems gathering from the Eagle Ford Shale and on the
KinderHawk system compared to the fourth quarter of 2015.
Natural gas continues to be the fuel of choice for America’s evolving
energy needs, and industry experts are projecting U.S. natural gas
demand, including net exports of liquefied natural gas (LNG) and net
exports to Mexico, to increase by approximately 35 percent to almost 107
billion cubic feet per day (Bcf/d) over the next 10 years. Of the
natural gas consumed in the U.S., about 40 percent moves on KMI
pipelines. KMI expects future natural gas infrastructure opportunities
will 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. In fact,
natural gas deliveries on KMI pipelines to Mexico and LNG facilities
were up 17 percent to 407,000 dekatherms per day (Dth/d) and
approximately 458,000 Dth/d, respectively, compared to the fourth
quarter of 2015.
“The CO2 segment was impacted by lower
commodity prices, as our realized weighted average oil price for the
quarter was $62.30 per barrel compared to $72.86 per barrel for the
fourth quarter of 2015,” Kean said. “Combined oil production across all
of our fields was down 8 percent compared to 2015 on a net to Kinder
Morgan basis, partially driven by project deferrals at SACROC and Yates
as well as reallocating capital to higher return projects with longer
lead times. Fourth quarter 2016 net NGL sales volumes of 10.5 thousand
barrels per day (MBbl/d) were consistent with volumes in 2015. Net CO2
volumes increased 3 percent versus the fourth quarter of 2015. We
continued to offset some of the impact of lower realized commodity
prices by generating cost savings across our CO2 business.”
Combined gross oil production volumes averaged 53.5 MBbl/d for the
fourth quarter, down 6 percent from 57.0 MBbl/d for 2015. SACROC’s
fourth quarter gross production was 11 percent below fourth quarter 2015
results, and Yates gross production was 7 percent below fourth quarter
2015 results. Both decreases were partially driven by project deferrals
during 2016 as well as reallocating capital to higher return projects
with longer lead times. Fourth quarter gross production from Katz,
Goldsmith and Tall Cotton was 24 percent above the same period in 2015,
but below plan. Gross NGL sales volumes were 21.3 MBbl/d during the
quarter, which completed a record year for gross NGL production.
“The Terminals segment experienced strong performance at our
liquids terminals, which saw record volumes for the year with over 900
million barrels of throughput handled, a 14 percent increase from
full-year 2015, and now comprise close to 80 percent of the segment’s
business. Growth in the liquids business during the quarter versus the
fourth quarter of 2015 was driven by increased contributions from our
Jones Act tankers, our refined products terminals joint venture with BP
and various expansions across our network,” Kean said. The Magnolia
State, Garden State, Bay State and American Endurance tankers
were delivered in May 2016, July 2016, September 2016 and December 2016,
respectively. These tankers are each contracted with major energy
customers under long-term charters.
The bulk terminals contribution was also higher in the fourth quarter of
2016 compared to the same period in 2015, largely due to an expense
taken in 2015 associated with the bankruptcy of Arch Coal.
“The Products Pipelines segment was favorably impacted by greater
volumes on KMCC and Double H pipelines, and favorable performance in our
Transmix business compared to 2015, largely due to unfavorable market
price impacts during the fourth quarter of 2015,” Kean said.
Total refined products volumes were down 1 percent for the fourth
quarter versus the same period in 2015. NGL volumes were up 18 percent
from the same period last year due to greater volumes on Cochin. Crude
and condensate pipeline volumes were up 6 percent from the fourth
quarter of 2015 primarily due to higher volumes on Double H and KMCC
pipelines.
Kinder Morgan Canada contributions were down slightly in the
fourth quarter of 2016 compared to the fourth quarter of 2015 partly due
to operating expense timing changes.
Other News
Kimberly A. Dang Elected to the KMI Board of Directors
-
The KMI board of directors unanimously elected to the board Kimberly
Dang, vice president and chief financial officer. Dang joined KMI in
2001 and has served as chief financial officer of the company since
2005. In 2014, Dang joined the Office of the Chairman of KMI, which
also includes Richard D. Kinder, executive chairman, and Steven J.
Kean, president and CEO. “Kim has been an essential contributor to the
company’s success over the years, and we are delighted to have her
join the KMI board,” said Kinder.
Natural Gas Pipelines
-
On Dec. 9, 2016, the FERC denied rehearing of its June 1 Certificate
Orders being sought by parties opposing the Elba Liquefaction Project.
Construction of the project is underway. The approximately $2 billion
project will be located and operated at the existing Elba Island LNG
Terminal near Savannah, Georgia. Initial liquefaction units are
expected to be placed in service in mid-2018, with final units coming
on line by early 2019. The project is supported by a 20-year contract
with Shell. In 2012, the Elba Liquefaction Project received
authorization from the Department of Energy (DOE) to export to Free
Trade Agreement (FTA) countries and on Dec. 16, 2016, the DOE issued
non-FTA export authority. The project is expected to have a total
capacity of approximately 2.5 million tonnes per year of LNG for
export, equivalent to approximately 350 million cubic feet per day of
natural gas.
-
On Dec. 1, 2016, the approximately $285 million EEC Modification and
SNG Zone 3 Expansion Projects, supported by long-term customer
contracts, began initial service.
-
On Nov. 1, 2016, NGPL placed its approximately $69 million Chicago
Market Expansion project in service on time and below budget. This
project increased NGPL’s capacity by 238,000 Dth/d and is supported by
long-term contracts with four customers for transportation from the
Rockies Express Pipeline interconnection in Moultrie County, Illinois,
to markets in Chicago and surrounding areas.
-
KMI and Southern Company continue to assess mutual natural gas
infrastructure growth opportunities under a previously announced joint
venture transaction that closed in September 2016, whereby Southern
Company acquired a 50 percent equity interest in SNG’s pipeline
system. KMI is the operator of the SNG pipeline system as part of the
joint venture.
-
FERC review and approval progress occurred for several projects during
the quarter:
-
On Jan. 4, 2017, TGP received a Notice to Proceed with
construction for the entire $156 million Susquehanna West Project,
which will provide 145,000 Dth/d of additional capacity for
Statoil Natural Gas LLC to an interconnection with National Fuel
Supply in Potter County, Pennsylvania and expects to begin service
on or before Nov. 1, 2017.
-
On Dec. 30, 2016, the FERC approved TGP’s $69 million Triad
Expansion Project in Susquehanna County, Pennsylvania, providing
180,000 Dth/d of capacity to serve a new power plant at
Invenergy’s Lackawanna Energy Center and TGP expects service
beginning as early as Nov. 1, 2017.
-
On Dec. 15, 2016, the FERC approved TGP’s proposed $178 million,
900,000 Dth/d Southwest Louisiana Supply Project, which will serve
the Cameron LNG export complex and is expected to be placed in
service by Feb. 1, 2018.
-
On Dec. 13, 2016, Kinder Morgan Louisiana Pipeline (KMLP) filed a
FERC certificate application for the $151 million Sabine Pass
Expansion Project, which would provide 600,000 Dth/d of firm
capacity under a 20-year contract to serve Train 5 which is under
construction at Cheniere Energy’s Sabine Pass Liquefaction Project
in Cameron Parish, Louisiana.
-
On Dec. 29, 2016, TGP reached an agreement with the Commonwealth of
Massachusetts on a proposed consent decree to resolve the compensation
issue on the award of easements in Massachusetts for the FERC-approved
$93 million Connecticut Expansion project and expects a hearing on the
proposed consent decree in February 2017. TGP continues to seek the
remaining permits required for the start of construction. The
expansion project will upgrade portions of TGP’s existing system in
New York, Massachusetts and Connecticut, and provide approximately
72,100 Dth/d of additional firm transportation capacity for three
local distribution company customers. Construction is now anticipated
to begin June 1, 2017, with a Nov. 1, 2017 in service date.
-
Progress continues on NGPL’s approximately $212 million Gulf Coast
Southbound Expansion Project. The project, which is fully subscribed
under long-term customer 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. Pending regulatory approvals, the project is expected
to be placed in service by the fourth quarter of 2018.
-
On Nov. 9, 2016, KMI and EnLink Midstream LLC (EnLink) entered a
strategic venture upon EnLink’s contribution of $39 million and other
consideration for a 30 percent interest in Cedar Cove Midstream LLC
(Cedar Cove). The joint venture will provide gas gathering and
processing services within an area of mutual interest in Blaine
County, Oklahoma, located in the heart of the STACK play. Cedar Cove
currently has gathering and processing dedications of over 50,000
gross acres, and the system will be expanded over the next several
years as this acreage is developed. KMI will serve as the operator of
the system and both parties will jointly conduct business development
activities in the designated area.
CO2
-
The northern portion of the Cortez Pipeline expansion project was
completed and the final two facilities were placed into service in
November 2016. The approximately $227 million project increases CO2
transportation capacity on the Cortez Pipeline from 1.35 Bcf/d to 1.5
Bcf/d. The pipeline transports CO2 from southwestern
Colorado to eastern New Mexico and West Texas for use in enhanced oil
recovery projects.
-
Drilling has been initiated on the approximately $66 million second
phase of KMI’s Tall Cotton field project in Gaines County, Texas. Tall
Cotton is the industry’s first greenfield Residual Oil Zone CO2
project and marks the first time a field without a main pay zone has
been specifically developed for CO2 technology. First oil
production from the second phase of the project is expected to occur
in the second quarter of 2017.
-
The company has benefited from cost savings in its operations and in
its expansion capital program, and continues to find high-return
enhanced oil recovery projects in the current price environment across
the portfolio.
Terminals
-
In October 2016, the second of two new deep-water liquids berths being
developed along the Houston Ship Channel was placed in service. The
additional docks, at a total project cost of approximately $72
million, are responsive to customers’ growing demand for waterborne
outlets for refined products along the ship channel, and are supported
by firm vessel commitments from existing customers at the Galena Park
and Pasadena terminals.
-
Construction continues at the Base Line Terminal, a new crude oil
storage facility being developed in Edmonton, Alberta, Canada. In
March 2015, KMI and Keyera Corp. announced the new 50-50 joint venture
terminal and entered into long-term, firm take-or-pay agreements with
strong, creditworthy customers to build 12 tanks with total crude oil
storage capacity of 4.8 million barrels. KMI’s investment in the joint
venture terminal is approximately CAD$372 million. Commissioning is
expected to begin in the first quarter of 2018 with tanks phased-into
service throughout that year.
-
Work is nearing completion on the Kinder Morgan Export Terminal (KMET)
along the Houston Ship Channel. The approximately $246 million
project, supported by long-term customer contracts, includes 12
storage tanks with 1.5 million barrels of storage capacity, one ship
dock, one barge dock and cross-channel pipelines to connect with KMI’s
Galena Park terminal. Storage tanks at KMET were placed into service
in January 2017 with the terminal’s full marine capabilities to follow
by the end of the first quarter of 2017.
-
Work continues on the previously announced Pit 11 expansion project at
KMI’s Pasadena terminal. The approximately $185 million project,
back-stopped by long-term commitments from existing customers, adds
2.0 million barrels of refined products storage to KMI’s best-in-class
liquids storage hub along the Houston Ship Channel. Commissioning is
expected to begin in the third quarter of 2017, with the tanks being
phased into service through the first quarter of 2018.
-
In December 2016, KMI’s American Petroleum Tankers (APT) took delivery
of the American Endurance, the first of four
50,000-deadweight-ton product tankers from Philly Shipyard, Inc. in
Philadelphia, Pennsylvania. The ECO class vessel, with a cargo
capacity of 330,000-barrels and LNG conversion ready engine
capabilities, is fixed under long-term, firm time charters with major
energy companies. The construction programs at NASSCO and Philly
Shipyard, Inc. remain on budget and substantially on time. Four
additional vessels are scheduled to be delivered through the end of
2017, bringing APT’s best-in-class fleet to 16 vessels.
-
In October 2016, KMI entered into a definitive agreement to sell 20
bulk terminals to an affiliate of Watco Companies, LLC for cash
consideration of approximately $100 million. The sale of seven of the
locations closed in the fourth quarter of 2016 with the balance
expected to close by April 2017 as certain conditions are satisfied.
The terminals, which are predominantly located along the inland river
system and handle mostly coal and steel products, contributed less
than 2 percent of the Terminals segment earnings before depreciation
and amortization in 2016.
Products Pipelines
-
KMI has made significant progress securing right-of-way for the
approximately $540 million Utopia Pipeline Project. The new pipeline
will have an initial design capacity of 50,000 barrels per day (bpd),
and will move ethane and ethane-propane mixtures across Ohio to
Windsor, Ontario, Canada. The project is fully supported by a
long-term, fee-based transportation agreement with a petrochemical
customer. The project has a planned in-service date of January 2018,
subject to permitting and land acquisition.
Kinder Morgan Canada
-
On Nov. 29, 2016, the Government of Canada granted approval for the
Trans Mountain Expansion Project, subject to 157 conditions. This is a
landmark decision affirming both the strength of the project and the
rigor of the review process it has undergone. The subsequent Federal
Government Order in Council was received on Dec. 1, 2016.
Additionally, on Jan. 11, 2017, the project achieved another critical
milestone as the Province of British Columbia announced that the
project received its environmental certificate from the Environmental
Assessment Office, subject to 37 conditions, and has met its
Requirements to Consider Support for Heavy Oil Pipelines (British
Columbia’s five conditions). The Trans Mountain Expansion Project is
an opportunity for Canada to access world markets for its resources by
building on an existing pipeline system. Trans Mountain will continue
to obtain all necessary permits, and is planning to begin construction
in September 2017, with an in-service date for the twinned pipeline
expected in late 2019. Other next steps will include a final cost
estimate review with shippers committed to the project and a final
investment decision by KMI’s board of directors. Aboriginal support
for the project is strong and growing, with 51 Aboriginal communities
now in support of the project. The Mutual Benefit Agreements (MBAs)
that have been signed will see Trans Mountain share over $400 million
with those communities. The 51 agreements include all of the First
Nations whose Reserve lands the project crosses and approximately 80
percent of communities in proximity to the pipeline right-of-way.
Thirteen companies have signed firm long-term contracts supporting the
project for approximately 708,000 bpd. Kinder Morgan Canada is
currently in negotiations with construction contractors and continues
to engage extensively with landowners, Aboriginal groups, communities
and stakeholders along the proposed expansion route and adjacent
marine areas.
Kinder Morgan, Inc. (NYSE: KMI) is the largest energy infrastructure
company in America. It owns an interest in or operates approximately
84,000 miles of pipelines and 155 terminals. KMI’s pipelines transport
natural gas, gasoline, crude oil, CO2 and other products, and
its terminals store petroleum products and chemicals, and handle bulk
materials like coal and petroleum coke. For more information please
visit www.kindermorgan.com.
Please join Kinder Morgan, Inc. at 4:30 p.m. Eastern Time on
Wednesday, Jan. 18, 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), and net income before
interest expense, taxes, DD&A and Certain Items (Adjusted EBITDA) are
presented herein.
Certain Items 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, hurricane impacts and casualty
losses).
DCF is a significant performance
measure used by us and by external users of our financial statements to
evaluate 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. Management uses this measure and believes it
provides users of our financial statements a useful measure reflective
of our business’s ability to generate cash earnings to supplement the
comparable GAAP measure. We believe the GAAP measure most
directly comparable to DCF is net income available to common
stockholders. A reconciliation of DCF to net income available to
common stockholders 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 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
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
and book taxes, which are specifically identified in the footnotes to
the accompanying tables.
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,
2015 (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
December 31,
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
$
|
3,389
|
|
|
|
|
$
|
3,636
|
|
|
|
|
|
|
|
|
$
|
13,058
|
|
|
|
|
$
|
14,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs, expenses and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of sales
|
|
|
|
|
1,044
|
|
|
|
|
834
|
|
|
|
|
|
|
|
|
3,498
|
|
|
|
|
4,115
|
|
|
|
|
|
Operations and maintenance
|
|
|
|
|
559
|
|
|
|
|
630
|
|
|
|
|
|
|
|
|
2,303
|
|
|
|
|
2,337
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
|
|
557
|
|
|
|
|
584
|
|
|
|
|
|
|
|
|
2,209
|
|
|
|
|
2,309
|
|
|
|
|
|
General and administrative
|
|
|
|
|
119
|
|
|
|
|
150
|
|
|
|
|
|
|
|
|
669
|
|
|
|
|
690
|
|
|
|
|
|
Taxes, other than income taxes
|
|
|
|
|
97
|
|
|
|
|
100
|
|
|
|
|
|
|
|
|
421
|
|
|
|
|
439
|
|
|
|
|
|
Loss on impairment of goodwill
|
|
|
|
|
—
|
|
|
|
|
1,150
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
1,150
|
|
|
|
|
|
Loss on impairments and divestitures, net
|
|
|
|
|
80
|
|
|
|
|
430
|
|
|
|
|
|
|
|
|
387
|
|
|
|
|
919
|
|
|
|
|
|
Other (income) expense, net
|
|
|
|
|
(1
|
)
|
|
|
|
2
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
2,455
|
|
|
|
|
3,880
|
|
|
|
|
|
|
|
|
9,486
|
|
|
|
|
11,956
|
|
|
|
|
|
Operating income
|
|
|
|
|
934
|
|
|
|
|
(244
|
)
|
|
|
|
|
|
|
|
3,572
|
|
|
|
|
2,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from equity investments
|
|
|
|
|
154
|
|
|
|
|
84
|
|
|
|
|
|
|
|
|
497
|
|
|
|
|
414
|
|
|
|
|
|
Loss on impairments and divestitures of equity investments, net
|
|
|
|
|
(266
|
)
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
(610
|
)
|
|
|
|
(30
|
)
|
|
|
|
|
Amortization of excess cost of equity investments
|
|
|
|
|
(14
|
)
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
(59
|
)
|
|
|
|
(51
|
)
|
|
|
|
|
Interest, net
|
|
|
|
|
(422
|
)
|
|
|
|
(527
|
)
|
|
|
|
|
|
|
|
(1,806
|
)
|
|
|
|
(2,051
|
)
|
|
|
|
|
Other, net
|
|
|
|
|
2
|
|
|
|
|
10
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
43
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
|
388
|
|
|
|
|
(693
|
)
|
|
|
|
|
|
|
|
1,638
|
|
|
|
|
772
|
|
|
|
|
|
Income tax expense
|
|
|
|
|
(173
|
)
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
(917
|
)
|
|
|
|
(564
|
)
|
|
|
|
|
Net income (loss)
|
|
|
|
|
215
|
|
|
|
|
(736
|
)
|
|
|
|
|
|
|
|
721
|
|
|
|
|
208
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
|
|
(6
|
)
|
|
|
|
41
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
45
|
|
|
|
|
|
Net income (loss) attributable to Kinder Morgan, Inc.
|
|
|
|
|
209
|
|
|
|
|
(695
|
)
|
|
|
|
|
|
|
|
708
|
|
|
|
|
253
|
|
|
|
|
|
Preferred stock dividends
|
|
|
|
|
(39
|
)
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
(156
|
)
|
|
|
|
(26
|
)
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
|
|
|
$
|
170
|
|
|
|
|
$
|
(721
|
)
|
|
|
|
|
|
|
|
$
|
552
|
|
|
|
|
$
|
227
|
|
|
|
|
|
Class P Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per common share
|
|
|
|
|
$
|
0.08
|
|
|
|
|
$
|
(0.32
|
)
|
|
|
|
|
|
|
|
$
|
0.25
|
|
|
|
|
$
|
0.10
|
|
|
|
|
|
Basic weighted average common shares outstanding (1)
|
|
|
|
|
2,230
|
|
|
|
|
2,229
|
|
|
|
|
|
|
|
|
2,230
|
|
|
|
|
2,187
|
|
|
|
|
|
Diluted weighted average common shares outstanding (1)
|
|
|
|
|
2,230
|
|
|
|
|
2,229
|
|
|
|
|
|
|
|
|
2,230
|
|
|
|
|
2,193
|
|
|
|
|
|
Declared dividend per common share
|
|
|
|
|
$
|
0.125
|
|
|
|
|
$
|
0.125
|
|
|
|
|
|
|
|
|
$
|
0.500
|
|
|
|
|
$
|
1.605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBDA
|
|
|
|
|
|
|
|
|
|
|
|
|
%
change
|
|
|
|
|
|
|
|
|
|
|
|
%
change
|
Natural Gas Pipelines
|
|
|
|
|
$
|
706
|
|
|
|
|
$
|
127
|
|
|
|
|
456
|
%
|
|
|
|
$
|
3,204
|
|
|
|
|
$
|
3,063
|
|
|
|
|
5
|
%
|
CO2
|
|
|
|
|
219
|
|
|
|
|
52
|
|
|
|
|
321
|
%
|
|
|
|
825
|
|
|
|
|
657
|
|
|
|
|
26
|
%
|
Terminals
|
|
|
|
|
205
|
|
|
|
|
51
|
|
|
|
|
302
|
%
|
|
|
|
1,036
|
|
|
|
|
849
|
|
|
|
|
22
|
%
|
Products Pipelines
|
|
|
|
|
307
|
|
|
|
|
289
|
|
|
|
|
6
|
%
|
|
|
|
1,072
|
|
|
|
|
1,100
|
|
|
|
|
(3
|
)%
|
Kinder Morgan Canada
|
|
|
|
|
38
|
|
|
|
|
43
|
|
|
|
|
(12
|
)%
|
|
|
|
161
|
|
|
|
|
163
|
|
|
|
|
(1
|
)%
|
Other
|
|
|
|
|
(3
|
)
|
|
|
|
2
|
|
|
|
|
(250
|
)%
|
|
|
|
(14
|
)
|
|
|
|
(53
|
)
|
|
|
|
74
|
%
|
Total Segment EBDA
|
|
|
|
|
$
|
1,472
|
|
|
|
|
$
|
564
|
|
|
|
|
161
|
%
|
|
|
|
$
|
6,284
|
|
|
|
|
$
|
5,779
|
|
|
|
|
9
|
%
|
|
Note
|
(1)
|
|
For all periods presented, all potential common share equivalents
were antidilutive, except for the year ended December 31, 2015
during which the KMI warrants were dilutive.
|
|
|
Kinder Morgan, Inc. and Subsidiaries
|
Preliminary Earnings Contribution by Business Segment
|
(Unaudited)
|
(In millions, except per share amounts)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
%
change
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
%
change
|
Segment EBDA before certain items (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Pipelines
|
|
|
|
|
$
|
984
|
|
|
|
|
$
|
1,098
|
|
|
|
|
(10
|
)%
|
|
|
|
$
|
4,029
|
|
|
|
|
$
|
4,125
|
|
|
|
|
(2
|
)%
|
CO2
|
|
|
|
|
238
|
|
|
|
|
292
|
|
|
|
|
(18
|
)%
|
|
|
|
917
|
|
|
|
|
1,141
|
|
|
|
|
(20
|
)%
|
Terminals
|
|
|
|
|
296
|
|
|
|
|
257
|
|
|
|
|
15
|
%
|
|
|
|
1,133
|
|
|
|
|
1,055
|
|
|
|
|
7
|
%
|
Product Pipelines
|
|
|
|
|
308
|
|
|
|
|
289
|
|
|
|
|
7
|
%
|
|
|
|
1,185
|
|
|
|
|
1,096
|
|
|
|
|
8
|
%
|
Kinder Morgan Canada
|
|
|
|
|
38
|
|
|
|
|
43
|
|
|
|
|
(12
|
)%
|
|
|
|
161
|
|
|
|
|
163
|
|
|
|
|
(1
|
)%
|
Other
|
|
|
|
|
(3
|
)
|
|
|
|
5
|
|
|
|
|
(160
|
)%
|
|
|
|
(22
|
)
|
|
|
|
(18
|
)
|
|
|
|
(22
|
)%
|
Subtotal
|
|
|
|
|
1,861
|
|
|
|
|
1,984
|
|
|
|
|
(6
|
)%
|
|
|
|
7,403
|
|
|
|
|
7,562
|
|
|
|
|
(2
|
)%
|
DD&A and amortization of excess investments
|
|
|
|
|
(571
|
)
|
|
|
|
(596
|
)
|
|
|
|
|
|
|
|
(2,268
|
)
|
|
|
|
(2,360
|
)
|
|
|
|
|
General and administrative (1) (2)
|
|
|
|
|
(147
|
)
|
|
|
|
(143
|
)
|
|
|
|
|
|
|
|
(640
|
)
|
|
|
|
(628
|
)
|
|
|
|
|
Interest, net (1) (3)
|
|
|
|
|
(476
|
)
|
|
|
|
(517
|
)
|
|
|
|
|
|
|
|
(2,002
|
)
|
|
|
|
(2,082
|
)
|
|
|
|
|
Subtotal
|
|
|
|
|
667
|
|
|
|
|
728
|
|
|
|
|
|
|
|
|
2,493
|
|
|
|
|
2,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate book taxes (4)
|
|
|
|
|
(213
|
)
|
|
|
|
(237
|
)
|
|
|
|
|
|
|
|
(839
|
)
|
|
|
|
(843
|
)
|
|
|
|
|
Certain items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related costs (5)
|
|
|
|
|
(1
|
)
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
(19
|
)
|
|
|
|
|
Pension plan net benefit
|
|
|
|
|
—
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
35
|
|
|
|
|
|
Fair value amortization
|
|
|
|
|
37
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
143
|
|
|
|
|
94
|
|
|
|
|
|
Contract early termination revenue
|
|
|
|
|
—
|
|
|
|
|
200
|
|
|
|
|
|
|
|
|
57
|
|
|
|
|
200
|
|
|
|
|
|
Legal and environmental reserves (6)
|
|
|
|
|
71
|
|
|
|
|
(16
|
)
|
|
|
|
|
|
|
|
16
|
|
|
|
|
(94
|
)
|
|
|
|
|
Mark to market and ineffectiveness (7)
|
|
|
|
|
(52
|
)
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
(75
|
)
|
|
|
|
139
|
|
|
|
|
|
Loss on impairment of goodwill
|
|
|
|
|
—
|
|
|
|
|
(1,150
|
)
|
|
|
|
|
|
|
|
—
|
|
|
|
|
(1,150
|
)
|
|
|
|
|
Losses on impairments and divestitures, net (8)
|
|
|
|
|
(343
|
)
|
|
|
|
(427
|
)
|
|
|
|
|
|
|
|
(848
|
)
|
|
|
|
(943
|
)
|
|
|
|
|
Project write-offs
|
|
|
|
|
(1
|
)
|
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
(171
|
)
|
|
|
|
(32
|
)
|
|
|
|
|
Other
|
|
|
|
|
(2
|
)
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
(24
|
)
|
|
|
|
(11
|
)
|
|
|
|
|
Subtotal certain items before tax
|
|
|
|
|
(291
|
)
|
|
|
|
(1,431
|
)
|
|
|
|
|
|
|
|
(915
|
)
|
|
|
|
(1,781
|
)
|
|
|
|
|
Book tax certain items (9)
|
|
|
|
|
52
|
|
|
|
|
204
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
340
|
|
|
|
|
|
Total certain items
|
|
|
|
|
(239
|
)
|
|
|
|
(1,227
|
)
|
|
|
|
|
|
|
|
(933
|
)
|
|
|
|
(1,441
|
)
|
|
|
|
|
Net income (loss)
|
|
|
|
|
215
|
|
|
|
|
(736
|
)
|
|
|
|
|
|
|
|
721
|
|
|
|
|
208
|
|
|
|
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
|
|
(6
|
)
|
|
|
|
41
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
45
|
|
|
|
|
|
Preferred stock dividends
|
|
|
|
|
(39
|
)
|
|
|
|
(26
|
)
|
|
|
|
|
|
|
|
(156
|
)
|
|
|
|
(26
|
)
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
|
|
|
$
|
170
|
|
|
|
|
$
|
(721
|
)
|
|
|
|
|
|
|
|
$
|
552
|
|
|
|
|
$
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common stockholders
|
|
|
|
|
$
|
170
|
|
|
|
|
$
|
(721
|
)
|
|
|
|
|
|
|
|
$
|
552
|
|
|
|
|
$
|
227
|
|
|
|
|
|
Total certain items
|
|
|
|
|
239
|
|
|
|
|
1,227
|
|
|
|
|
|
|
|
|
933
|
|
|
|
|
1,441
|
|
|
|
|
|
Noncontrolling interests certain item (10)
|
|
|
|
|
1
|
|
|
|
|
(43
|
)
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
(63
|
)
|
|
|
|
|
Net income available to common stockholders before certain items
|
|
|
|
|
410
|
|
|
|
|
463
|
|
|
|
|
|
|
|
|
1,477
|
|
|
|
|
1,605
|
|
|
|
|
|
DD&A and amortization of excess investments (11)
|
|
|
|
|
656
|
|
|
|
|
679
|
|
|
|
|
|
|
|
|
2,617
|
|
|
|
|
2,683
|
|
|
|
|
|
Total book taxes (12)
|
|
|
|
|
248
|
|
|
|
|
263
|
|
|
|
|
|
|
|
|
993
|
|
|
|
|
976
|
|
|
|
|
|
Cash taxes (13)
|
|
|
|
|
(18
|
)
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
(79
|
)
|
|
|
|
(32
|
)
|
|
|
|
|
Other items (14)
|
|
|
|
|
12
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
43
|
|
|
|
|
32
|
|
|
|
|
|
Sustaining capital expenditures (15)
|
|
|
|
|
(161
|
)
|
|
|
|
(168
|
)
|
|
|
|
|
|
|
|
(540
|
)
|
|
|
|
(565
|
)
|
|
|
|
|
DCF
|
|
|
|
|
$
|
1,147
|
|
|
|
|
$
|
1,233
|
|
|
|
|
|
|
|
|
$
|
4,511
|
|
|
|
|
$
|
4,699
|
|
|
|
|
|
Weighted average common shares outstanding for dividends (16)
|
|
|
|
|
2,239
|
|
|
|
|
2,236
|
|
|
|
|
|
|
|
|
2,238
|
|
|
|
|
2,200
|
|
|
|
|
|
DCF per common share
|
|
|
|
|
$
|
0.51
|
|
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
$
|
2.02
|
|
|
|
|
$
|
2.14
|
|
|
|
|
|
Declared dividend per common share
|
|
|
|
|
$
|
0.125
|
|
|
|
|
$
|
0.125
|
|
|
|
|
|
|
|
|
$
|
0.500
|
|
|
|
|
$
|
1.605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (17)
|
|
|
|
|
$
|
1,830
|
|
|
|
|
$
|
1,947
|
|
|
|
|
|
|
|
|
$
|
7,245
|
|
|
|
|
$
|
7,372
|
|
|
|
|
|
|
|
Notes ($ million)
|
(1)
|
|
|
Excludes certain items:
4Q 2016 - Natural Gas Pipelines $(278), CO2 $(19), Terminals
$(91), Products Pipelines $(1), general and administrative $37,
interest expense $53.
4Q 2015 - Natural Gas Pipelines $(971), CO2 $(240), Terminals
$(206), Other $(3), general and administrative $2, interest
expense $(13).
YTD 2016 - Natural Gas Pipelines $(825), CO2 $(92), Terminals
$(97), Products Pipelines $(113), Other $8, general and
administrative $5, interest
expense $193.
YTD 2015 - Natural Gas Pipelines $(1,062), CO2 $(484), Terminals
$(206), Products Pipelines $4, Other $(35), general and
administrative $(25),
interest expense $27.
|
|
|
|
|
(2)
|
|
|
General and administrative expense is net of management fee
revenues from an equity investee:
4Q 2016 - $(9)
4Q 2015 - $(9)
YTD 2016 - $(34)
YTD 2015 - $(37)
|
|
|
|
|
(3)
|
|
|
Interest expense excludes interest income that is allocable to the
segments:
4Q 2016 - Products Pipelines $(1), Other $2.
4Q 2015 - Other $3.
YTD 2016 - Other $3.
YTD 2015 - Products Pipelines $2, Other $2.
|
|
|
|
|
(4)
|
|
|
Corporate book taxes exclude book tax certain items not allocated
to the segments of $60 in 4Q 2016, $204 in 4Q 2015, $(12) YTD
2016, and $340
YTD 2015. Also excludes income tax that is allocated to the
segments:
4Q 2016 - Natural Gas Pipelines $(2), Terminals $(17), Products
Pipelines $2, Kinder Morgan Canada $(3).
4Q 2015 - Natural Gas Pipelines $1, CO2 $2, Terminals $(8),
Products Pipelines $(1), Kinder Morgan Canada $(4).
YTD 2016 - Natural Gas Pipelines $(7), CO2 $(2), Terminals $(42),
Products Pipelines $5, Kinder Morgan Canada $(20).
YTD 2015 - Natural Gas Pipelines $(4), CO2 $(1), Terminals $(29),
Products Pipelines $(8), Kinder Morgan Canada $(19).
|
|
|
|
|
(5)
|
|
|
Acquisition related costs for closed or pending acquisitions.
|
|
|
|
|
(6)
|
|
|
Legal reserve adjustments related to certain litigation and
environmental matters.
|
|
|
|
|
(7)
|
|
|
Gains or losses in our DCF are reflected when realized.
|
|
|
|
|
(8)
|
|
|
Includes the following non-cash impairments:
4Q 2016 and YTD 2016 include a $250 million impairment of our
equity investment in Ruby Pipeline, L.L.C. YTD 2016 also includes
a $350 million impairment of our equity investment in Midcontinent
Express Pipeline LLC. 4Q 2015 and YTD 2015 includes $235 million
and $632 million of CO2 long lived asset impairments primarily
related to our Goldsmith oil and gas field and CO2 source and
transportation projects. Also, 4Q 2016, 4Q 2015, YTD 2016 and YTD
2015 amounts include net (gains)/losses of $(2), $25, $22 and $26,
respectively, primarily related to impairments and disposals of
long-lived assets recorded by our equity investees that are
included within the Earnings from equity investments amounts on
the Preliminary Statements of Income.
|
|
|
|
|
(9)
|
|
|
YTD 2016 include 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.
|
|
|
|
|
(10)
|
|
|
Represents noncontrolling interest share of certain items.
|
|
|
|
|
(11)
|
|
|
Includes KMI's share of certain equity investees' DD&A:
4Q 2016 - $85
4Q 2015 - $83
YTD 2016 - $349
YTD 2015 - $323
|
|
|
|
|
(12)
|
|
|
Excludes book tax certain items and includes book tax allocated to
the segments. Also, includes KMI's share of taxable equity
investees' book tax expense:
4Q 2016 - $23
4Q 2015 - $16
YTD 2016 - $94
YTD 2015 - $72
|
|
|
|
|
(13)
|
|
|
YTD 2015 excludes a $195 million income tax refund received.
Includes KMI's share of taxable equity investees' cash taxes:
4Q 2016 - $(17)
4Q 2015 - $(11)
YTD 2016 - $(76)
YTD 2015 - $(19)
|
|
|
|
|
(14)
|
|
|
Consists primarily of non-cash compensation associated with our
restricted stock program.
|
|
|
|
|
(15)
|
|
|
Includes KMI's share of certain equity investees' sustaining
capital expenditures (the same equity investees for which DD&A is
added back):
4Q 2016 - $(24)
4Q 2015 - $(20)
YTD 2016 - $(90)
YTD 2015 - $(70)
|
|
|
|
|
(16)
|
|
|
Includes restricted stock awards that participate in common share
dividends and dilutive effect of warrants, as applicable.
|
|
|
|
|
(17)
|
|
|
Adjusted EBITDA is net income (loss) before certain items, less
net income attributable to noncontrolling interests before certain
items, plus DD&A (including KMI's share of certain equity
investees' DD&A), book taxes (including book tax allocated to the
segments and KMI’s share of equity investees’ book tax), and
interest expense (before certain items). Adjusted EBITDA is
reconciled as follows, with any difference due to rounding:
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
2016
|
|
|
2015
|
Net income (loss)
|
|
|
|
|
$
|
215
|
|
|
|
$
|
(736
|
)
|
|
|
|
|
$
|
721
|
|
|
|
$
|
208
|
|
Total certain items
|
|
|
|
|
239
|
|
|
|
1,227
|
|
|
|
|
|
933
|
|
|
|
1,441
|
|
Net income attributable to noncontrolling interests before certain
items
|
|
|
|
|
(5
|
)
|
|
|
(2
|
)
|
|
|
|
|
(21
|
)
|
|
|
(18
|
)
|
DD&A and amortization of excess investments (see (11) above)
|
|
|
|
|
656
|
|
|
|
678
|
|
|
|
|
|
2,617
|
|
|
|
2,683
|
|
Book taxes (see (12) above)
|
|
|
|
|
249
|
|
|
|
263
|
|
|
|
|
|
993
|
|
|
|
976
|
|
Interest, net (see (1) and (3) above)
|
|
|
|
|
476
|
|
|
|
517
|
|
|
|
|
|
2,002
|
|
|
|
2,082
|
|
Adjusted EBITDA
|
|
|
|
|
$
|
1,830
|
|
|
|
$
|
1,947
|
|
|
|
|
|
$
|
7,245
|
|
|
|
$
|
7,372
|
|
|
|
Volume Highlights
(historical pro forma for acquired assets)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Pipelines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transport Volumes (BBtu/d) (1) (2)
|
|
|
|
|
27,897
|
|
|
|
|
28,552
|
|
|
|
|
28,095
|
|
|
|
|
28,196
|
|
Sales Volumes (BBtu/d) (3)
|
|
|
|
|
2,288
|
|
|
|
|
2,428
|
|
|
|
|
2,335
|
|
|
|
|
2,419
|
|
Gas Gathering Volumes (BBtu/d) (2) (4)
|
|
|
|
|
2,749
|
|
|
|
|
3,498
|
|
|
|
|
2,970
|
|
|
|
|
3,540
|
|
Crude/Condensate Gathering Volumes (MBbl/d) (2) (5)
|
|
|
|
|
285
|
|
|
|
|
339
|
|
|
|
|
308
|
|
|
|
|
340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CO2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southwest Colorado Production - Gross (Bcf/d) (6)
|
|
|
|
|
1.27
|
|
|
|
|
1.26
|
|
|
|
|
1.20
|
|
|
|
|
1.23
|
|
Southwest Colorado Production - Net (Bcf/d) (6)
|
|
|
|
|
0.65
|
|
|
|
|
0.63
|
|
|
|
|
0.61
|
|
|
|
|
0.60
|
|
Sacroc Oil Production - Gross (MBbl/d) (7)
|
|
|
|
|
28.13
|
|
|
|
|
31.75
|
|
|
|
|
29.32
|
|
|
|
|
33.76
|
|
Sacroc Oil Production - Net (MBbl/d) (8)
|
|
|
|
|
23.43
|
|
|
|
|
26.45
|
|
|
|
|
24.43
|
|
|
|
|
28.12
|
|
Yates Oil Production - Gross (MBbl/d) (7)
|
|
|
|
|
17.91
|
|
|
|
|
19.17
|
|
|
|
|
18.37
|
|
|
|
|
19.00
|
|
Yates Oil Production - Net (MBbl/d) (8)
|
|
|
|
|
7.96
|
|
|
|
|
9.25
|
|
|
|
|
8.17
|
|
|
|
|
8.47
|
|
Katz, Goldsmith, and Tall Cotton Oil Production - Gross (MBbl/d) (7)
|
|
|
|
|
7.45
|
|
|
|
|
6.03
|
|
|
|
|
7.01
|
|
|
|
|
5.71
|
|
Katz, Goldsmith, and Tall Cotton Oil Production - Net (MBbl/d) (8)
|
|
|
|
|
6.27
|
|
|
|
|
5.08
|
|
|
|
|
5.90
|
|
|
|
|
4.80
|
|
NGL Sales Volumes (MBbl/d) (9)
|
|
|
|
|
10.46
|
|
|
|
|
10.41
|
|
|
|
|
10.31
|
|
|
|
|
10.35
|
|
Realized Weighted Average Oil Price per Bbl (10)
|
|
|
|
|
$
|
62.30
|
|
|
|
|
$
|
72.86
|
|
|
|
|
$
|
61.52
|
|
|
|
|
$
|
73.11
|
|
Realized Weighted Average NGL Price per Bbl
|
|
|
|
|
$
|
22.25
|
|
|
|
|
$
|
16.56
|
|
|
|
|
$
|
17.91
|
|
|
|
|
$
|
18.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terminals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquids Leasable Capacity (MMBbl)
|
|
|
|
|
87.8
|
|
|
|
|
81.5
|
|
|
|
|
87.8
|
|
|
|
|
81.5
|
|
Liquids Utilization %
|
|
|
|
|
94.8
|
%
|
|
|
|
93.6
|
%
|
|
|
|
94.8
|
%
|
|
|
|
93.6
|
%
|
Bulk Transload Tonnage (MMtons) (11)
|
|
|
|
|
15.4
|
|
|
|
|
14.3
|
|
|
|
|
61.8
|
|
|
|
|
63.2
|
|
Ethanol (MMBbl)
|
|
|
|
|
17.8
|
|
|
|
|
15.8
|
|
|
|
|
66.7
|
|
|
|
|
63.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Products Pipelines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific, Calnev, and CFPL (MMBbl)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline (12)
|
|
|
|
|
71.9
|
|
|
|
|
71.9
|
|
|
|
|
290.3
|
|
|
|
|
287.8
|
|
Diesel
|
|
|
|
|
25.8
|
|
|
|
|
27.4
|
|
|
|
|
106.6
|
|
|
|
|
108.3
|
|
Jet Fuel
|
|
|
|
|
23.1
|
|
|
|
|
22.1
|
|
|
|
|
92.9
|
|
|
|
|
89.0
|
|
Sub-Total Refined Product Volumes - excl. Plantation
|
|
|
|
|
120.8
|
|
|
|
|
121.4
|
|
|
|
|
489.8
|
|
|
|
|
485.1
|
|
Plantation (MMBbl) (13)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline
|
|
|
|
|
21.5
|
|
|
|
|
21.6
|
|
|
|
|
84.0
|
|
|
|
|
81.1
|
|
Diesel
|
|
|
|
|
4.4
|
|
|
|
|
4.8
|
|
|
|
|
18.3
|
|
|
|
|
20.8
|
|
Jet Fuel
|
|
|
|
|
3.1
|
|
|
|
|
3.3
|
|
|
|
|
12.3
|
|
|
|
|
14.1
|
|
Sub-Total Refined Product Volumes - Plantation
|
|
|
|
|
29.0
|
|
|
|
|
29.7
|
|
|
|
|
114.6
|
|
|
|
|
116.0
|
|
Total (MMBbl)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gasoline (12)
|
|
|
|
|
93.4
|
|
|
|
|
93.5
|
|
|
|
|
374.3
|
|
|
|
|
368.9
|
|
Diesel
|
|
|
|
|
30.2
|
|
|
|
|
32.2
|
|
|
|
|
124.9
|
|
|
|
|
129.1
|
|
Jet Fuel
|
|
|
|
|
26.2
|
|
|
|
|
25.4
|
|
|
|
|
105.2
|
|
|
|
|
103.1
|
|
Total Refined Product Volumes
|
|
|
|
|
149.8
|
|
|
|
|
151.1
|
|
|
|
|
604.4
|
|
|
|
|
601.1
|
|
NGLs (MMBbl) (14)
|
|
|
|
|
10.8
|
|
|
|
|
9.2
|
|
|
|
|
39.7
|
|
|
|
|
38.6
|
|
Crude and Condensate (MMBbl) (15)
|
|
|
|
|
30.7
|
|
|
|
|
28.8
|
|
|
|
|
118.3
|
|
|
|
|
99.7
|
|
Total Delivery Volumes (MMBbl)
|
|
|
|
|
191.3
|
|
|
|
|
189.1
|
|
|
|
|
762.4
|
|
|
|
|
739.4
|
|
Ethanol (MMBbl) (16)
|
|
|
|
|
10.3
|
|
|
|
|
10.3
|
|
|
|
|
41.3
|
|
|
|
|
41.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trans Mountain (MMBbls - mainline throughput)
|
|
|
|
|
27.1
|
|
|
|
|
28.6
|
|
|
|
|
115.2
|
|
|
|
|
115.4
|
|
|
|
(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)
|
|
Volumes for acquired pipelines are included for all periods.
|
(3)
|
|
Includes Texas Intrastates and KMNTP.
|
(4)
|
|
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.
|
(5)
|
|
Includes Hiland Midstream, EagleHawk, and Camino Real. Joint Venture
throughput reported at KMI share.
|
(6)
|
|
Includes McElmo Dome and Doe Canyon sales volumes.
|
(7)
|
|
Represents 100% production from the field.
|
(8)
|
|
Represents KMI's net share of the production from the field.
|
(9)
|
|
Net to KMI.
|
(10)
|
|
Includes all KMI crude oil properties.
|
(11)
|
|
Includes KMI's share of Joint Venture tonnage.
|
(12)
|
|
Gasoline volumes include ethanol pipeline volumes.
|
(13)
|
|
Plantation reported at KMI share.
|
(14)
|
|
Includes Cochin and Cypress (KMI share).
|
(15)
|
|
Includes KMCC, Double Eagle (KMI share), and Double H.
|
(16)
|
|
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,
|
|
|
|
|
|
2016
|
|
|
|
2015
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
$
|
684
|
|
|
|
|
$
|
229
|
|
Other current assets
|
|
|
|
|
2,545
|
|
|
|
|
2,595
|
|
Property, plant and equipment, net
|
|
|
|
|
38,705
|
|
|
|
|
40,547
|
|
Investments
|
|
|
|
|
7,027
|
|
|
|
|
6,040
|
|
Goodwill
|
|
|
|
|
22,152
|
|
|
|
|
23,790
|
|
Deferred charges and other assets
|
|
|
|
|
9,192
|
|
|
|
|
10,903
|
|
TOTAL ASSETS
|
|
|
|
|
$
|
80,305
|
|
|
|
|
$
|
84,104
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
|
|
$
|
2,696
|
|
|
|
|
$
|
821
|
|
Other current liabilities
|
|
|
|
|
3,236
|
|
|
|
|
3,244
|
|
Long-term debt
|
|
|
|
|
36,105
|
|
|
|
|
40,632
|
|
Preferred interest in general partner of KMP
|
|
|
|
|
100
|
|
|
|
|
100
|
|
Debt fair value adjustments
|
|
|
|
|
1,149
|
|
|
|
|
1,674
|
|
Other
|
|
|
|
|
2,217
|
|
|
|
|
2,230
|
|
Total liabilities
|
|
|
|
|
45,503
|
|
|
|
|
48,701
|
|
Shareholders’ Equity
|
|
|
|
|
|
|
|
|
|
Other shareholders’ equity
|
|
|
|
|
35,092
|
|
|
|
|
35,580
|
|
Accumulated other comprehensive loss
|
|
|
|
|
(661
|
)
|
|
|
|
(461
|
)
|
Total KMI equity
|
|
|
|
|
34,431
|
|
|
|
|
35,119
|
|
Noncontrolling interests
|
|
|
|
|
371
|
|
|
|
|
284
|
|
Total shareholders’ equity
|
|
|
|
|
34,802
|
|
|
|
|
35,403
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
$
|
80,305
|
|
|
|
|
$
|
84,104
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt (1)
|
|
|
|
|
$
|
38,160
|
|
|
|
|
$
|
41,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Twelve Months Ended
|
|
|
|
|
|
December 31,
|
Reconciliation of Net Income to Adjusted EBITDA (2)
|
|
|
|
|
2016
|
|
|
|
2015
|
Net income
|
|
|
|
|
$
|
721
|
|
|
|
|
$
|
208
|
|
Total certain items
|
|
|
|
|
933
|
|
|
|
|
1,441
|
|
Net income attributable to noncontrolling interests before certain
items
|
|
|
|
|
(21
|
)
|
|
|
|
(18
|
)
|
DD&A and amortization of excess investments
|
|
|
|
|
2,617
|
|
|
|
|
2,683
|
|
Book taxes
|
|
|
|
|
993
|
|
|
|
|
976
|
|
Interest, net
|
|
|
|
|
2,002
|
|
|
|
|
2,082
|
|
Adjusted EBITDA
|
|
|
|
|
$
|
7,245
|
|
|
|
|
$
|
7,372
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted EBITDA
|
|
|
|
|
5.3
|
|
|
|
|
5.6
|
|
|
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 $(43) million and less than
$1 million as of December 31, 2016 and 2015, respectively, as we
have entered into swaps to convert that debt to US$.
|
|
|
|
(2)
|
|
Adjusted EBITDA is net income before certain items, less net
income attributable to noncontrolling interests before certain
items, plus DD&A (including KMI's share of certain equity
investees' DD&A), book taxes (including book tax allocated to the
segments and KMI’s share of certain equity investees’ book tax),
and interest expense (before certain items), with any difference
due to rounding.
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170118006082/en/ Copyright Business Wire 2017
Source: Business Wire
(January 18, 2017 - 4:05 PM EST)
News by QuoteMedia
www.quotemedia.com
|