{"id":479826,"date":"2021-04-21T16:08:43","date_gmt":"2021-04-21T20:08:43","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/kinder-morgan-increases-dividend-3-percent-and-raises-2021-guidance\/"},"modified":"2021-04-21T16:08:43","modified_gmt":"2021-04-21T20:08:43","slug":"kinder-morgan-increases-dividend-3-percent-and-raises-2021-guidance","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/kinder-morgan-increases-dividend-3-percent-and-raises-2021-guidance\/","title":{"rendered":"Kinder Morgan Increases Dividend 3 Percent and Raises 2021 Guidance"},"content":{"rendered":"

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Kinder Morgan Increases Dividend 3 Percent and Raises 2021 Guidance<\/b><\/p>\n

HOUSTON–(BUSINESS WIRE<\/a>)–
\nKinder Morgan, Inc.\u2019s (NYSE: KMI) board of directors today approved a cash dividend of $0.27 per share for the first quarter ($1.08 annualized), payable on May 17, 2021, to stockholders of record as of the close of business on April 30, 2021. This dividend represents a 3% increase over the fourth quarter of 2020.\n<\/p>\n

\nKMI is reporting first quarter net income attributable to KMI of $1,409 million, compared to a net loss attributable to KMI of $306 million in the first quarter of 2020; and distributable cash flow (DCF) of $2,329 million, compared to $1,261 million in the first quarter of 2020. The increases are primarily related to the February winter storm and therefore largely nonrecurring. We realized greater margins on KMI\u2019s Texas intrastate pipeline systems resulting from the temporary supply and demand imbalances and substantial spot market price volatility caused by the storm; as well as favorable contributions from the CO2 <\/sub>segment, which curtailed oil production during the storm, allowing power it would have used to be delivered to the grid. Net income for the first quarter of 2021 is also higher relative to the prior year period due to $971 million of impairment charges taken in the first quarter of 2020.\n<\/p>\n

\n\u201cApart from the storm and throughout the quarter, our assets continued to provide strong cash flow as we remain guided by a sound corporate philosophy: fund our capital needs internally, maintain a healthy balance sheet, and return excess cash to our shareholders through dividend increases and\/or share repurchases,\u201d said KMI Executive Chairman Richard D. Kinder.\n<\/p>\n

\n\u201cThe bulk of our improvement in net income and DCF is due to the strong performance of our Natural Gas Pipelines segment in the face of challenging circumstances presented by the February winter storm. That performance was a result of actions we took following previous weather events, as well as actions we took immediately prior to and during this storm to ensure that our systems could remain operational,\u201d said KMI Chief Executive Officer Steve Kean. \u201cThose actions included enhanced weatherization at storage and other facilities, ensuring critical facilities had backup generation so they wouldn\u2019t lose power, and deploying additional personnel and equipment at normally automated facilities to maintain operations and be positioned to make any necessary repairs if roads became impassable.\n<\/p>\n

\n\u201cOur storage assets performed exceptionally well, allowing us to deliver gas into the market throughout the storm. These storage withdrawals, along with gas we purchased before and during the event, enabled us to deliver significant volumes of gas at contractual or prevailing prices. These volumes were directed primarily to serve gas utilities and power plants, including some customers who traditionally find their gas supplies elsewhere,\u201d continued Kean. \u201cI am extremely proud of our co-workers throughout the organization in commercial, control rooms, scheduling and contract administration, field operations, and others, who ensured that natural gas reached our wholesale customers even as their own homes were without power and heat.\u201d\n<\/p>\n

\n\u201cWe generated first quarter earnings per share of $0.62, well up compared to a loss per share of $0.14 in the first quarter of 2020,\u201d said KMI President Kim Dang. \u201cAt $1.02 per share, DCF per share was up $0.47 from the first quarter of 2020. We achieved $1,714 million of excess DCF above our declared dividend.\n<\/p>\n

\n\u201cAs noted above, that excess cash resulted largely from the outstanding performance of the people in our Texas intrastate pipeline systems and the facilities they kept operational throughout the storm. In addition to the steps Steve outlined, system deliverability and resiliency was also enhanced by our investments in expansion projects and asset maintenance in Texas. These investments, by Kinder Morgan and our joint venture partners, totaled more than $5 billion in the last three years alone.\n<\/p>\n

\n\u201cWe are particularly proud of the fact that the Permian Highway Pipeline, which went into commercial service six weeks prior to the storm, played a key role in keeping more lights and heat on in Austin than would otherwise have been the case,\u201d Dang continued.\n<\/p>\n

2021 Outlook<\/span><\/b><\/p>\n

\nFor 2021, KMI now expects to generate net income attributable to KMI in a range of $2.7 billion to $2.9 billion, declared dividends of $1.08 per share, a 3% increase from the 2020 declared dividends, DCF in a range of $5.1 billion to $5.3 billion, and Adjusted EBITDA in a range of $7.6 billion to $7.7 billion. KMI also now expects to end 2021 with a Net Debt-to-Adjusted EBITDA ratio in a range of 3.9 to 4.0.\n<\/p>\n

\nAs of March 31, 2021, we had over $3.9 billion of borrowing capacity under our $4 billion credit facility and over $1.3 billion in cash and cash equivalents. We believe this borrowing capacity, current cash on hand, and our cash from operations are more than adequate to allow us to manage our cash requirements, including maturing debt, through 2021.\n<\/p>\n

Overview of Business Segments<\/span><\/b><\/p>\n

\n\u201cThe Natural Gas Pipelines<\/b> segment\u2019s financial performance was well up for the first quarter of 2021 relative to the first quarter of 2020,\u201d said Dang. \u201cThe segment provided higher contributions from the Texas intrastate systems and Tennessee Gas Pipeline (TGP), due to their performance during the February winter storm, partially offset by lower contributions from our Oklahoma gathering systems, also due to the storm.\u201d\n<\/p>\n

\nNatural gas transport volumes were down 3% compared to the first quarter of 2020, with notable volume declines on Colorado Interstate Gas Pipeline (CIG) due to production declines in the Rockies basin; on El Paso Natural Gas due to lower Permian supplies and power generation shifting to coal due to higher natural gas prices (particularly during the winter storm), and milder weather in the southwest later in the quarter; and on Fayetteville Express Pipeline due to contract expirations. These declines were partially offset by: increased volumes on TGP due primarily to weather-related increased usage across the system and increased deliveries to LNG and Mexico customers; on the Permian Highway Pipeline going into service; and, on Elba Express due to increased deliveries to Elba Island. Natural gas gathering volumes were down 25% from the first quarter of 2020 across nearly all our systems, most notably on the KinderHawk and Eagle Ford systems.\n<\/p>\n

\n\u201cContributions from the Products Pipelines<\/b> segment were down compared to the first quarter of 2020 on lower refined products demand as well as lower crude and condensate volumes that were exacerbated by temporary supply and demand interruptions from the February winter storm,\u201d Dang said. \u201cCrude and condensate pipeline volumes were down 28% and total refined products volumes were down 10% compared to the first quarter of 2020. Gasoline volumes were below the comparable period last year by 7% and jet volumes were still very weak (down 40%) but diesel volumes were up by 6% compared to the first quarter of 2020. We did see favorable pricing impacts compared to the first quarter of 2020, when severe declines in commodity prices necessitated inventory value write-downs during that quarter in our transmix and crude and condensate assets.\n<\/p>\n

\n\u201cTerminals<\/b> segment earnings were down compared to the first quarter of 2020. Extended refinery outages resulting from the winter storm impacted refined product and petroleum coke volumes at our Houston Ship Channel and Port Arthur, Texas-area facilities, reducing associated ancillary and product handling fees for the quarter. Lingering demand reduction attributable to the pandemic continued to affect refined product volumes that move through our terminals as well as demand for our Jones Act tankers, which experienced lower fleet utilization in the quarter compared to the prior year period,\u201d said Dang. \u201cConversely, effective utilization across our network of nearly 80 million barrels of storage capacity remains near historic highs due to term contracts entered into during the second quarter of 2020. Due to the structure of our contracts, a much more significant portion of our revenue comes from fixed monthly payments on tank leases versus the revenue we receive for moving product through our terminals.\u201d\n<\/p>\n

\n\u201cCO2<\/sub><\/b> segment earnings were up compared to the first quarter of 2020 due to its returning power to the grid by curtailing oil production during the winter storm under its existing contract with its power provider, partially offset by lower CO2<\/sub> sales and crude volumes and lower realized crude prices. Our realized weighted average crude oil price for the quarter was down 7% at $51.05 per barrel compared to $54.61 per barrel for the first quarter of 2020,\u201d said Dang. \u201cFirst quarter 2021 combined oil production across all of our fields was down 19% compared to the same period in 2020 on a net to KMI basis, but only down 15% net of curtailed volumes. CO2<\/sub> sales volumes were down 26%.\u201d\n<\/p>\n

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