Kinder Morgan Sinks as Profits Fall

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Both Kinder Morgan Energy Partners L.P. (NYSE: KMP) and Kinder Morgan Inc. (NYSE: KMI) reported second-quarter results after markets closed. KMP will pay a distribution of $1.39 per common unit, a 5% increase over the $1.32 earnings per common unit paid in the second quarter a year ago. Revenues totaled $3.58 billion, compared with revenues in the same period a year ago of $3.02 billion. The consensus estimate called for revenues of $3.35 billion.

KMI will pay a cash dividend of $0.43 per share, up from $0.40 in the same period a year ago and well above the consensus estimate of $0.29 per share. Revenues totaled $3.94 billion, up from $3.38 billion in the same period a year ago and higher than the consensus estimate of $3.78 billion.

KMP’s year-over-year profit suffers by comparison to last year when the company posted a gain of $558 million on remeasurement of net assets to fair value. Excluding that gain net income would have been nearly $452 million in 2Q13 compared with $669 million this year.

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

Our backlog of expansion and joint venture investments at the Kinder Morgan companies that have a high certainty of completion has grown to $17 billion, up from $16.4 billion at the time of our April earnings release. It is important to note that this increase takes into account approximately $700 million in projects that we placed into service in the second quarter, which means we have added about $1.3 billion to the backlog. More than $4.6 billion of the projects in our backlog are natural gas projects, and there continues to be tremendous demand for gas transportation capacity.

KMI expects cash to pay dividends of at least $1.78 billion for the 2014 fiscal year of $1.57 per share. KMP expects to distribute $5.58 per common unit in 2014.

Shares of KMI were down about 2.4% in after-hours trading at $36.02 in a 52-week range of $30.81 to $40.29.

Shares of KMP were down about 1.4% in after-hours trading, at $81.21 in a 52-week range of $71.32 to $87.50.

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