Kinder Morgan Companies Post Earnings, Offer Different Outlooks (KMI, KMP)

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Both Kinder Morgan Energy Partners L.P. (NYSE: KMP) and Kinder Morgan Inc. (NYSE: KMI) reported third quarter results today. KMP will pay a distribution of $1.26 per common unit, more than double the consensus estimate of $0.58 and double last year’s distribution of $1.16 per common unit. Revenues totaled $2.34 billion compared with revenues in the same period a year ago of $2.11 billion.

KMI will pay a cash dividend of $0.36 per share, up from $0.21 in the same period a year ago and more than the consensus estimate of $0.33 per share. Revenues totaled $2.87 billion, up from $2.12 billion in the same period a year ago and higher thant the consensus estimate of $2.8 billion.

Chairman and CEO Richard Kinder had this to say about KMI:

KMI had an outstanding quarter and our cash available to pay dividends nearly doubled compared to the third quarter of 2011. Growth was attributable to the strong performance of Kinder Morgan Energy Partners, and a full quarter of contributions from El Paso Pipeline Partners and the natural gas assets that we acquired in the El Paso Corporation transaction.

He also commented on KMP’s performance:

Looking ahead, we see significant growth opportunities across all of our business segments, and we remain very excited about the additional prospects that we expect KMP to realize from Kinder Morgan, Inc.’s acquisition of El Paso Corporation, which closed in the second quarter.

The $23 billion merger with El Paso Corp. made all the difference for both Kinder Morgan companies. Here’s the company’s outlook for the KMI for the 2012 fiscal year:

As previously announced, KMI expects to declare dividends of at least $1.40 per share for 2012, well above its 2012 budget of $1.35 per share, and an increase of approximately 17 percent over its 2011 declared dividend of $1.20 per share. The 2011 per share amounts are presented as if KMI were publicly traded for all of 2011

As a result of the acquisition of El Paso and KMI’s normal expected annual growth, KMI continues to expect its dividend per share to grow at an average annual rate of around 12.5 percent through 2015 from its budgeted 2011 dividend of $1.16 per share.

For KMP, the outlook is not quite so rosy:

KMP expects to declare cash distributions of $4.98 per unit for 2012, an 8 percent increase over the $4.61 it distributed for 2011. Due to deteriorating NGL prices, KMP now expects to generate 2012 distributable cash flow slightly above its distributions, but below budget.

Shares of KMI are up about 0.1% in after hours trading at $35.81 in a 52-week range of $26.91 to $40.25.

Shares of KMP are inactive in late trading, having closed at $85.99 in a 52-week range of $73.71 to $90.60.

Paul Ausick

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