Cash Pipeline Still Flows at Kinder Morgan (KMP, SRE, COP)

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Kinder Morgan Energy Partners L.P. (NYSE:KMP) reported earnings yesterday, and handily missed analysts expectations of $3.4 billion in revenue and earnings per limited partner unit of $0.53. Revenue for the fourth quarter totaled nearly $2.3 billion and earnings per unit came in at $0.26. Still, the stock rose about $2/unit before closing the day at $48.49/unit. The quarterly distribution to limited partners will amount to $1.05/common unit.

The number that really matters to Kinder Morgan is its income fromcontinuing operations before taxes. For the fourth quarter, thisamounted to $262.6 million, up from $175.1 million a year ago. For theyear, income from continuing operations totaled $1.34 billion, upnearly 3x from last year’s $487.4.

The big hike in income is the result of the opening of the first phaseof the Rockies Express (REX) natural gas pipeline. REX is a jointventure with Sempra Energy Inc. (NYSE:SRE) and ConocoPhillipsCorporation (NYSE:COP) that will be completed in April 2009 and haul1.8 billion cubic feet of natural gas every day from Cheyenne, Wyoming,to the eastern border of Ohio. The final cost for REX will reach $6.2billion, but according to Kinder Morgan the line is fully subscribedunder long-term contracts.

The unit price is rising again this morning, up to $48.95. The 52-week high is $60.89.

Paul Ausick
January 23, 2009