Kinder Morgan Profits Keep Rolling In

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Both Kinder Morgan Energy Partners L.P. (NYSE: KMP) and Kinder Morgan Inc. (NYSE: KMI) reported third-quarter results after markets closed Wednesday. KMP will pay a distribution of $1.39 per common unit, a 4% increase over the $1.35 earnings per common unit paid in the second quarter a year ago. Revenues totaled $3.93 billion compared with revenues in the same period a year ago of $3.38 billion. The consensus estimate called for revenues of $3.57 billion.

KMI will pay a cash dividend of $0.43 per share, up from $0.41 in the same period a year ago and well above the consensus estimate of $0.34 per share. Revenues totaled $4.29 billion, up from $3.76 billion in the same period a year ago and higher than the consensus estimate of $3.98 billion.

KMP’s year-over-year distributable cash flow increased by $0.04 per common unit excluding a net income benefit of $230 million primarily related to a gain from the early termination of a long-term natural gas transportation contract.

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

We currently move about one-third of the natural gas consumed in America, and certain industry experts are projecting gas demand will increase by about 35 percent to approximately 100 Bcf/d over the next 10 years. As the largest natural gas pipeline operator in North America, and with the substantial cash flow being produced by our other market leading businesses, we are confident that KMI is well positioned to grow for many years.

In early August KMI announced that it would aquire all the publicly held shares or common units of KMP, Kinder Morgan Management Co. (NYSE: KMR), and El Paso Pipeline Partners (NYSE: EPB) in a transaction valued at around $70 billion. The company still expects the deal to close before the end of 2014. Following the transaction, KMI will have a projected dividend of $2.00 a share for 2015, up 16% from the budgeted target of $1.72 per share in the current fiscal year. KMI expects to pay more than the budgeted dividend in the current year, but did not give a figure.

Shares of KMI were up about 1.3% in after hours trading, at $35.75 in a 52-week range of $30.81 to $42.49.

Common units of KMP closed at $86.29, in a 52-week range of $71.32 to $99.42. The common units were inactive in the after-hours session.

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