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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kinder Morgan Inc | NYSE:KMI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.08 | -0.44% | 18.20 | 18.41 | 18.13 | 18.33 | 18,252,545 | 01:00:00 |
Credit Profile Significantly Enhanced with Net Debt Reduction of Over $2 Billion since Last Quarter
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 Nov. 15, 2016, to common shareholders of record as of the close of business on Nov. 1, 2016. KMI expects to declare dividends of $0.50 per share for 2016 and use cash in excess of dividend payments to fund growth investments and strengthen its balance sheet.
KMI continues to make significant progress toward enhancing its credit profile. On Sept. 1, 2016, KMI closed the previously announced agreement to partner with Southern Company through the sale of a 50 percent interest in the Southern Natural Gas (SNG) pipeline system for cash consideration of over $1.4 billion plus Southern Company’s share of SNG’s debt. KMI used the entire amount of cash proceeds to reduce its net debt. As of the end of the third quarter, $749 million was held in escrow to redeem debt and was not included in net debt reduction during the quarter. The debt was redeemed on Oct. 1, 2016, and will result in further net debt reduction in the fourth quarter of 2016.
“During the quarter, we substantially reduced our debt, further positioning Kinder Morgan for long-term value creation. We are ahead of our plan for 2016 year-end leverage and we’re pleased with the progress toward reaching our targeted leverage level of around 5.0 times net debt-to-Adjusted EBITDA,” said Richard D. Kinder, executive chairman. “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.
“Additionally, we are pleased with our operational performance for the quarter despite continued weak market conditions in our industry. Our performance, adjusted for the SNG transaction, remains consistent with our guidance provided since April. We remain on track to generate full year 2016 distributable cash flow in excess of our expected dividends and our expected growth capital expenditures, eliminating our need to access the capital markets to fund growth projects in 2016. Moreover, given our continued efforts to high-grade our backlog, we do not expect to need to access the capital markets to fund our growth projects for the foreseeable future beyond 2016.”
President and CEO Steve Kean said, “We had a good third quarter and once again, we demonstrated the resiliency of our cash flows, generated by a large, diversified portfolio of predominately fee-based assets. We generated a loss per common share for the quarter of $0.10, primarily as a result of non-cash charges discussed below. That said, we produced distributable cash flow of $0.48 per share relative to our $0.125 per share dividend, resulting in $801 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 sizable project backlog. Our current project backlog is $13.0 billion, down from $13.5 billion at the end of the second quarter of 2016. This reduction was driven by the delivery of the Garden State and Bay State tankers as well as placing other projects in service. Excluding the CO2 segment projects, we expect the projects in our backlog to generate an average capital-to-EBITDA multiple of approximately 6.5 times.”
KMI reported a third quarter net loss available to common stockholders of $227 million, compared to net income available to common stockholders of $186 million for the third quarter of 2015, and distributable cash flow of $1,081 million versus $1,129 million for the comparable period in 2015. The decrease in distributable cash flow for the quarter was attributable to lower contributions from the CO2 segment primarily due to lower commodity prices. In total, KMI’s other business segments generated higher contributions than the third quarter of 2015. Net income available to common stockholders was also impacted by a $405 million unfavorable change in total certain items compared to the third quarter of 2015, including a partial write down of our equity investment in Midcontinent Express Pipeline (MEP) driven by expectations for lower future transportation contract rates as well as a non-cash book tax expense associated with the SNG transaction.
For the first nine months of 2016, KMI reported net income available to common stockholders of $382 million, compared to $948 million for the first nine months of 2015, and distributable cash flow of $3,364 million versus $3,466 million for the comparable period in 2015. The decrease in distributable cash flow was primarily attributable to lower contributions from the CO2 segment, higher preferred stock dividends and higher cash taxes, partially offset by increased contributions from all of KMI’s other segments and lower interest expense. Net income available to common stockholders was further impacted by a $480 million unfavorable change in total certain items compared to the first nine months of 2015, including the write down of our equity investment in MEP, the non-cash book tax expense associated with the SNG transaction, and a $170 million write-off of costs associated with the Northeast Energy Direct Market and Palmetto Pipeline projects during the first quarter of 2016.
2016 Outlook
For 2016, KMI expects to declare dividends of $0.50 per share. KMI's budgeted 2016 distributable cash flow was approximately $4.7 billion and budgeted 2016 Adjusted EBITDA was approximately $7.5 billion. Consistent with guidance provided the last two quarters, the company continues to expect Adjusted EBITDA to be about 3 percent below budget and distributable cash flow to be about 4 percent below budget. To be consistent with previous quarters, this guidance does not take the SNG transaction into account. Including the impact of the SNG transaction, the company expects Adjusted EBITDA and distributable cash flow to each be about 4 percent below budget. 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 quantifying 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 expects to generate excess cash sufficient to fund its growth capital requirements without needing to access capital markets and expects to end the year with a net debt-to-Adjusted EBITDA ratio of approximately 5.3 times, consistent with where KMI ended the third quarter and below the budgeted year-end ratio of 5.5 times. KMI’s growth capital forecast for 2016 is approximately $2.7 billion.
The overwhelming majority of cash generated by KMI is fee-based and therefore is not directly exposed to commodity prices. The primary area where KMI has direct commodity price sensitivity is in its CO2 segment, and KMI hedges the majority of its next 12 months of oil production to minimize this sensitivity. Additionally, KMI continues to closely monitor counterparty exposure and obtain collateral when appropriate. Moreover, the company has operations across a broad range of businesses and a diverse customer base, with its average customer representing less than one-tenth of 1 percent of annual revenues. Additionally, approximately two-thirds of KMI’s business is conducted with customers who are end-users of the products KMI transports and stores, such as utilities, local distribution companies, refineries and large integrated firms.
Overview of Business Segments
“The Natural Gas Pipelines segment’s performance for the third quarter of 2016 was impacted by the sale of a 50 percent interest in SNG. Excluding this sale, the Natural Gas Pipeline segment’s performance was in-line with the same period during 2015. The segment benefited from an increased contribution from Tennessee Gas Pipeline (TGP), driven by expansion projects placed into service during 2015, and increased contributions from both the Hiland midstream assets and the Texas Intrastate Natural Gas Pipelines. These contributions were offset by declines attributable to reduced volumes affecting certain of our midstream gathering and processing assets, unfavorable contract renewals on Colorado Interstate Gas pipeline, and a customer contract buyout at Kinder Morgan Louisiana pipeline during 2015,” Kean said.
Natural gas transport volumes were down 1 percent compared to the third quarter last year, driven by lower throughput on the Texas Intrastate Natural Gas Pipelines due to lower Eagle Ford Shale volumes, lower throughput on Ruby Pipeline due to increased Canadian imports to the Pacific Northwest, and lower throughput on Fayetteville Express Pipeline due to lower production from the Fayetteville Shale. These declines were partially offset by higher throughput on TGP due to projects placed in service, higher throughput on NGPL due to deliveries to Sabine Pass LNG facility and to South Texas to meet demand from Mexico, and higher throughput on Citrus pipeline due to strong weather-driven demand in Florida. Natural gas gathered volumes were down 17 percent from the third quarter last year due primarily to lower natural gas volumes on multiple systems gathering from the Eagle Ford Shale and lower volumes on the KinderHawk system compared to the third quarter of 2015.
Natural gas continues to be the fuel of choice for America’s evolving energy needs, and industry experts are projecting natural gas demand increases of approximately 35 percent to over 105 billion cubic feet per day (Bcf/d) over the next 10 years. Over the last 2.8 years, KMI has entered into new and pending firm transport capacity commitments totaling 8.2 Bcf/d (1.9 Bcf/d of which is existing, previously unsold capacity). Of the natural gas consumed in the United States, about 38 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, liquefied natural gas (LNG) exports, exports to Mexico and continued industrial development, particularly in the petrochemical industry. In fact, natural gas deliveries on KMI pipelines to gas-fired power plants, to Mexico and to LNG facilities were up 9 percent, 6 percent, and approximately 346,000 dekatherms per day (Dth/d), respectively, compared to the third quarter of 2015.
“The CO2 segment was impacted by lower commodity prices, as our realized weighted average oil price for the quarter was $62.12 per barrel compared to $74.18 per barrel for the third quarter of 2015,” Kean said. “Combined oil production across all of our fields was down 5 percent compared to 2015 on a net to Kinder Morgan basis, primarily driven by lower SACROC production. Third quarter 2016 net NGL sales volumes of 10.6 thousand barrels per day (MBbl/d) was consistent with volumes in the same period in 2015. Net CO2 volumes increased 3 percent versus the third quarter of 2015. We continued to offset some of the impact of lower commodity prices by generating cost savings across our CO2 business.”
Combined gross oil production volumes averaged 53.7 MBbl/d for the third quarter, down 6 percent from 57.3 MBbl/d for the same period in 2015. SACROC’s third quarter gross production was 11 percent below third quarter 2015 results, and Yates gross production was 6 percent below third quarter 2015 results. Both decreases were partially driven by project deferrals during 2016. Third quarter gross production from Katz, Goldsmith and Tall Cotton was 16 percent above the same period in 2015, but below plan. KMI had record high gross NGL production of 21.7 MBbl/d for the quarter and is on track for record annual NGL production. The average West Texas Intermediate unhedged crude oil price for the third quarter was $44.94 per barrel versus $46.43 for the third quarter of 2015.
“The Terminals segment experienced strong performance at our liquids terminals, which comprise more than 75 percent of the segment’s business. Growth in the liquids business during the quarter versus the third 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 Lone Star State, Magnolia State, Garden State and Bay State tankers were delivered in December 2015, May 2016, July 2016 and September 2016, respectively. These tankers are each contracted with major energy customers under long-term, firm time charters.
Growth from the liquids terminals was partially offset by a decline in the bulk terminals as compared to the same period in 2015, largely driven by the bankruptcies of Arch Coal and Peabody Energy.
“The Products Pipelines segment was favorably impacted by the startup of the second petroleum condensate processing facility along the Houston Ship Channel during 2015, and favorable performance in our Transmix business compared to 2015 due to unfavorable market price impacts during the third quarter of 2015,” Kean said.
Total refined products volumes were up 3 percent for the third quarter versus the same period in 2015. NGL volumes were down 1 percent from the same period last year. Crude and condensate pipeline volumes were up 6 percent from the third quarter of 2015 primarily due to higher volumes on Double H and KMCC.
Kinder Morgan Canada contributions were up slightly in the third quarter of 2016 compared to the third quarter of 2015.
Other News
Natural Gas Pipelines
CO2
Terminals
Products Pipelines
Kinder Morgan Canada
Financings
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 approximately 180 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 at 4:30 p.m. Eastern Time on Wednesday, Oct. 19, at www.kindermorgan.com for a LIVE webcast conference call on the company’s third 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 Kinder Morgan 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 Kinder Morgan’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, Kinder Morgan 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 SubsidiariesPreliminary Consolidated Statements of Income
(Unaudited)
(In millions, except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016 2015 Revenues $ 3,330 $ 3,707 $ 9,669 $ 10,767 Costs, expenses and other Costs of sales 971 1,106 2,454 3,281 Operations and maintenance 576 612 1,744 1,707 Depreciation, depletion and amortization 549 617 1,652 1,725 General and administrative 171 160 550 540 Taxes, other than income taxes 106 108 324 339 Loss on impairments and divestitures, net 76 385 307 489 Other income, net (1 ) (2 ) — (5 ) 2,448 2,986 7,031 8,076 Operating income 882 721 2,638 2,691 Other income (expense) Earnings from equity investments 137 114 343 330 Loss on impairments and divestitures of equity investments, net (350 ) — (344 ) (26 ) Amortization of excess cost of equity investments (15 ) (13 ) (45 ) (39 ) Interest, net (472 ) (540 ) (1,384 ) (1,524 ) Other, net 12 9 42 33 Income before income taxes 194 291 1,250 1,465 Income tax expense (377 ) (108 ) (744 ) (521 ) Net (loss) income (183 ) 183 506 944 Net (income) loss attributable to noncontrolling interests (5 ) 3 (7 ) 4 Net (loss) income attributable to Kinder Morgan, Inc. (188 ) 186 499 948 Preferred stock dividends (39 ) — (117 ) — Net (loss) income available to common stockholders $ (227 ) $ 186 $ 382 $ 948 Class P Shares Basic and diluted (loss) earnings per common share $ (0.10 ) $ 0.08 $ 0.17 $ 0.43 Basic weighted average common shares outstanding (1) 2,230 2,203 2,229 2,173 Diluted weighted average common shares outstanding (1) 2,230 2,203 2,229 2,181 Declared dividend per common share $ 0.125 $ 0.510 $ 0.375 $ 1.480 Segment EBDA%
change
%
change
Natural Gas Pipelines $ 540 $ 993 (46 )% $ 2,498 $ 2,936 (15 )% CO2 217 29 648 % 606 605 — % Terminals 286 249 15 % 831 798 4 % Products Pipelines 293 288 2 % 765 811 (6 )% Kinder Morgan Canada 43 42 2 % 123 120 3 % Other 2 (9 ) 122 % (11 ) (55 ) 80 % Total Segment EBDA $ 1,381 $ 1,592 (13 )% $ 4,812 $ 5,215 (8 )%Note
(1)For all periods presented, all potential common share equivalents were antidilutive, except for the nine months ended September 30,
2015 during which the KMI warrants were dilutive.
Kinder Morgan, Inc. and SubsidiariesPreliminary Earnings Contribution by Business Segment
(Unaudited)
(In millions, except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015%
change
2016 2015%
change
Segment EBDA before certain items (1) Natural Gas Pipelines $ 957 $ 975 (2 )% $ 3,045 $ 3,027 1 % CO2 229 282 (19 )% 679 849 (20 )% Terminals 285 263 8 % 837 798 5 % Product Pipelines 294 287 2 % 877 807 9 % Kinder Morgan Canada 43 42 2 % 123 120 3 % Other (2 ) (10 ) 80 % (19 ) (23 ) 17 % Subtotal 1,806 1,839 (2 )% 5,542 5,578 (1 )% DD&A and amortization of excess investments (564 ) (630 ) (1,697 ) (1,764 ) General and administrative (1) (2) (159 ) (152 ) (493 ) (485 ) Interest, net (1) (3) (505 ) (524 ) (1,526 ) (1,565 ) Subtotal 578 533 1,826 1,764 Corporate book taxes (4) (191 ) (185 ) (626 ) (606 ) Certain items Acquisition related costs (5) (4 ) (2 ) (12 ) (14 ) Pension plan net benefit — 5 — 28 Fair value amortization 53 24 106 72 Contract early termination revenue 18 — 57 — Legal and environmental reserves (6) 1 (1 ) (55 ) (78 ) Mark to market and ineffectiveness (7) (30 ) 118 (23 ) 162 Losses on impairments and divestitures, net (8) (426 ) (387 ) (505 ) (516 ) Project write-offs — — (170 ) — Other (10 ) (17 ) (22 ) (4 ) Subtotal certain items before tax (398 ) (260 ) (624 ) (350 ) Book tax certain items (9) (172 ) 95 (70 ) 136 Total certain items (570 ) (165 ) (694 ) (214 ) Net (loss) income (183 ) 183 506 944 Net (income) loss attributable to noncontrolling interests (5 ) 3 (7 ) 4 Preferred stock dividends (39 ) — (117 ) — Net (loss) income available to common stockholders $ (227 ) $ 186 $ 382 $ 948 Net (loss) income available to common stockholders $ (227 ) $ 186 $ 382 $ 948 Total certain items 570 165 694 214 Noncontrolling interests certain item (10) — (6 ) (9 ) (20 ) Net income available to common stockholders before certain items 343 345 1,067 1,142 DD&A and amortization of excess investments (11) 653 708 1,961 2,004 Total book taxes (12) 230 224 745 713 Cash taxes (13) (22 ) (3 ) (61 ) (19 ) Other items (14) 11 7 31 23 Sustaining capital expenditures (15) (134 ) (152 ) (379 ) (397 ) DCF $ 1,081 $ 1,129 $ 3,364 $ 3,466 Weighted average common shares outstanding for dividends (16) 2,239 2,210 2,237 2,189 DCF per common share $ 0.48 $ 0.51 $ 1.50 $ 1.58 Declared dividend per common share $ 0.125 $ 0.510 $ 0.375 $ 1.480 Adjusted EBITDA (17) $ 1,770 $ 1,803 $ 5,414 $ 5,425Notes ($ million)
(1) Excludes certain items:3Q 2016 - Natural Gas Pipelines $(417), CO2 $(12), Terminals $1, Products Pipelines $(1), Other $4, general and administrative $(4), interest expense $31.3Q 2015 - Natural Gas Pipelines $18, CO2 $(253), Terminals $(14), Products Pipelines $1, Other $1, general and administrative $2, interest expense $(15).YTD 2016 - Natural Gas Pipelines $(547), CO2 $(73), Terminals $(6), Products Pipelines $(112), Other $8, general and administrative $(32), interest expense $140.YTD 2015 - Natural Gas Pipelines $(91), CO2 $(244), Products Pipelines $4, Other $(32), general and administrative $(27), interest expense $40. (2) General and administrative expense is net of management fee revenues from an equity investee:3Q 2016 - $(8)3Q 2015 - $(10)YTD 2016 - $(25)YTD 2015 - $(28) (3) Interest expense excludes interest income that is allocable to the segments:3Q 2016 - Other $2.3Q 2015 - Products Pipelines $1, Other $(2).YTD 2016 - Products Pipelines $1, Other $1.YTD 2015 - Products Pipelines $2, Other $(1). (4) Corporate book taxes exclude book tax certain items not allocated to the segments of $(172) in 3Q 2016, $95 in 3Q 2015, $(72) YTD 2016, and $136 YTD 2015. Also excludes income tax that is allocated to the segments:3Q 2016 - Natural Gas Pipelines $(2), Terminals $(8), Products Pipelines $1, Kinder Morgan Canada $(5).3Q 2015 - Natural Gas Pipelines $(1), CO2 $(1), Terminals $(8), Products Pipelines $(3), Kinder Morgan Canada $(5).YTD 2016 - Natural Gas Pipelines $(5), CO2 $(2), Terminals $(25), Products Pipelines $3, Kinder Morgan Canada $(17).YTD 2015 - Natural Gas Pipelines $(5), CO2 $(3), Terminals $(21), Products Pipelines $(7), Kinder Morgan Canada $(15). (5) Acquisition related costs for closed or pending acquisitions. (6) Legal reserve adjustments related to certain litigation and environmental matters. (7) Gains or losses are reflected when realized. (8) Includes the following non-cash impairments:3Q 2016 and YTD 2016 include a $350 million impairment of our equity investment in Midcontinent Express Pipeline LLC. 3Q 2015 and YTD 2015 includes $388 million of CO2 long lived asset impairments primarily related to our Goldsmith oil and gas field. (9) 3Q and 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:3Q 2016 - $893Q 2015 - $78YTD 2016 - $264YTD 2015 - $240 (12) Excludes book tax certain items and includes income tax allocated to the segments. Also, includes KMI's share of taxable equity investees' book tax expense:3Q 2016 - $253Q 2015 - $21YTD 2016 - $71YTD 2015 - $56 (13) YTD 2015 excludes a $195 million income tax refund received. Includes KMI's share of taxable equity investees' cash taxes:3Q 2016 - $(25)3Q 2015 - $(2)YTD 2016 - $(59)YTD 2015 - $(8) (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):3Q 2016 - $(24)3Q 2015 - $(16)YTD 2016 - $(66)YTD 2015 - $(50) (16) Includes restricted stock awards that participate in common share dividends and dilutive effect of warrants, as applicable. (17) Adjusted EBITDA is net (loss) 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 income tax allocated to the segments and KMI’s share of certain 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 September 30,
Nine Months Ended September 30,
2016 2015 2016 2015 Net (loss) income $ (183 ) $ 183 $ 506 $ 944 Total certain items 570 166 694 214 Net income attributable to noncontrolling interests (5 ) (3 ) (16 ) (16 ) DD&A and amortization of excess investments (see (11) above) 653 708 1,960 2,005 Book taxes (see (12) above) 230 224 745 713 Interest, net (see (1) and (3) above) 505 525 1,525 1,565 Adjusted EBITDA $ 1,770 $ 1,803 $ 5,414 $ 5,425 Volume Highlights(historical pro forma for acquired assets)
Three Months Ended September 30,
Nine Months Ended September 30,
2016 2015 2016 2015 Natural Gas Pipelines Transport Volumes (BBtu/d) (1) (2) 28,144 28,438 28,162 28,076 Sales Volumes (BBtu/d) (3) 2,438 2,445 2,350 2,416 Gas Gathering Volumes (BBtu/d) (2) (4) 2,935 3,541 3,044 3,554 Crude/Condensate Gathering Volumes (MBbl/d) (2) (5) 283 343 310 340 CO2Southwest Colorado Production - Gross (Bcf/d) (6)
1.20 1.20 1.18 1.22 Southwest Colorado Production - Net (Bcf/d) (6) 0.62 0.60 0.60 0.58 Sacroc Oil Production - Gross (MBbl/d) (7) 28.92 32.49 29.72 34.44 Sacroc Oil Production - Net (MBbl/d) (8) 24.09 27.07 24.76 28.69 Yates Oil Production - Gross (MBbl/d) (7) 17.85 18.89 18.52 18.94 Yates Oil Production - Net (MBbl/d) (8) 7.94 7.60 8.24 8.20 Katz, Goldsmith, and Tall Cotton Oil Production - Gross (MBbl/d) (7) 6.89 5.95 6.86 5.60 Katz, Goldsmith, and Tall Cotton Oil Production - Net (MBbl/d) (8) 5.84 4.99 5.78 4.71 NGL Sales Volumes (MBbl/d) (9) 10.55 10.51 10.26 10.33 Realized Weighted Average Oil Price per Bbl (10) $ 62.12 $ 74.18 $ 61.27 $ 73.19 Realized Weighted Average NGL Price per Bbl $ 18.03 $ 16.29 $ 16.42 $ 18.96 Terminals Liquids Leasable Capacity (MMBbl) 88.9 81.5 88.9 81.5 Liquids Utilization % 95.6 % 93.1 % 95.6 % 93.1 % Bulk Transload Tonnage (MMtons) (11) 17.2 16.9 46.3 48.9 Ethanol (MMBbl) 17.3 15.0 48.9 47.3 Products Pipelines Pacific, Calnev, and CFPL (MMBbl) Gasoline (12) 76.3 74.1 218.4 216.0 Diesel 28.2 28.5 80.8 80.8 Jet Fuel 24.7 23.2 69.8 67.0 Sub-Total Refined Product Volumes - excl. Plantation and Parkway 129.2 125.8 369.0 363.8 Plantation (MMBbl) (13) Gasoline 21.1 19.1 62.5 59.5 Diesel 4.7 5.6 13.9 15.9 Jet Fuel 3.2 3.5 9.2 10.8 Sub-Total Refined Product Volumes - Plantation 29.0 28.2 85.6 86.2 Total (MMBbl) Gasoline (12) 97.4 93.2 280.9 275.5 Diesel 32.9 34.1 94.7 96.7 Jet Fuel 27.9 26.7 79.0 77.8 Total Refined Product Volumes 158.2 154.0 454.6 450.0 NGLs (MMBbl) (14) 9.9 10.0 28.9 29.4 Crude and Condensate (MMBbl) (15) 28.8 27.3 87.6 70.9 Total Delivery Volumes (MMBbl) 196.9 191.3 571.1 550.3 Ethanol (MMBbl) (16) 10.1 10.7 30.9 31.1 Trans Mountain (MMBbls - mainline throughput) 30.7 29.5 88.1 86.9 (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 SubsidiariesPreliminary Consolidated Balance Sheets
(Unaudited)
(In millions)
September 30, December 31, 2016 2015 ASSETS Cash and cash equivalents $ 357 $ 229 Other current assets 3,006 2,595 Property, plant and equipment, net 38,780 40,547 Investments 7,358 6,040 Goodwill 22,163 23,790 Deferred charges and other assets 9,940 10,903 TOTAL ASSETS $ 81,604 $ 84,104 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Short-term debt $ 2,944 $ 821 Other current liabilities 3,100 3,244 Long-term debt 36,708 40,632 Preferred interest in general partner of KMP 100 100 Debt fair value adjustments 1,710 1,674 Other 2,074 2,230 Total liabilities 46,636 48,701 Shareholders’ Equity Accumulated other comprehensive loss (557 ) (461 ) Other shareholders’ equity 35,163 35,580 Total KMI equity 34,606 35,119 Noncontrolling interests 362 284 Total shareholders’ equity 34,968 35,403 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 81,604 $ 84,104 Net Debt (1) (3) $ 39,248 $ 41,224Adjusted EBITDA Twelve Months Ended
September 30, December 31, Reconciliation of Net (Loss) Income to Adjusted EBITDA (2) 2016 2015 Net (loss) income $ (228 ) $ 208 Total certain items 1,920 1,441 Net income attributable to noncontrolling interests (18 ) (18 ) DD&A and amortization of excess investments 2,638 2,683 Book taxes 1,007 976 Interest, net 2,042 2,082 Adjusted EBITDA $ 7,361 $ 7,372 Net Debt to Adjusted EBITDA (3) 5.3 5.6 Year ended December 31, 2016 Reconciliation of Forecasted GAAP Capital Expenditures to Growth Capital Forecast for 2016 Forecasted capital expenditures(4) $ 2,728 Growth capital expenditures of unconsolidated joint ventures and acquisitions, net of divestitures 450 Less: Sustaining capital expenditures (455 ) Growth Capital Forecast for 2016 $ 2,723Notes
(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 $47 million and less than $1 million as of September 30, 2016 and December 31, 2015, respectively, as we have entered into swaps to convert that debt to US$. (2) Adjusted EBITDA is net (loss) 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 income 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. (3) As of September 30, 2016, $749 million of cash was held in escrow to redeem debt, which occurred on October 1, 2016, and therefore, not included in cash and cash equivalents or the calculation of Net Debt. Had this cash been included in cash and cash equivalents as of September 30, 2016, Net Debt would have been $38,499 million and the Net Debt to Adjusted EBITDA ratio would have been 5.2 times for the twelve months ended September 30, 2016. (4) Excludes accrued capital expenditures and contractor retainage.
View source version on businesswire.com: http://www.businesswire.com/news/home/20161019006214/en/
Kinder Morgan, Inc.Media RelationsDave Conover, 713-369-9407dave_conover@kindermorgan.comorInvestor Relations713-369-9490km_ir@kindermorgan.comwww.kindermorgan.com
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