Kinder Morgan Energy Partners L.P.
) third quarter 2012 earnings of 57 cents per limited partner
unit (excluding certain items) were in line with the Zacks
Consensus Estimate. However, the quarterly results were 29.5%
higher than the year-ago quarter's earnings of 44 cents per
KINDER MORGAN (KMI): Free Stock Analysis
KINDER MORG ENG (KMP): Free Stock Analysis
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Revenue increased 10.7% to $2,336.0 million in the quarter from
$2,111 million in the year-ago quarter and beat the Zacks
Consensus Estimate of $2,273 million.
The partnership's cash distribution per common unit was raised to
$1.26 ($5.04 annualized), representing a 9% year-over-year
growth. The distribution is payable on November 14, 2012.
The partnership has now increased the quarterly distribution 45
times since the current management team took over in February
Kinder Morgan's payout hike was fueled by incremental
contribution from the dropdown of 100% of Tennessee Gas Pipeline
(TGP) and 50% of El Paso Natural Gas (EPNG), growth opportunities
in the coal export business as well as robust oil yield.
The partnership's distributable cash flow - a measure of its
ability to make unitholders' payments - before considering
certain items, was $455 million versus $394 million in the
comparable quarter last year. Additionally, distributable cash
flow per unit, excluding certain items, was $1.28, up 7.6% year
: The business segment's earnings before DD&A and certain
items climbed 4.0% year over year to $185 million. The higher
revenues from the West Coast Terminal; mainly due to
earlier-than-expected completion of the Carson project in
California and the Southeast Terminals, resulting from two
purchases and improved throughput volumes of refined products and
biofuels, led to increased earnings. Total refined products
volume was 162.7 million barrels, down 2.6% from the prior-year
Natural Gas Pipelines
: Earnings before DD&A and certain items from the business
shot up 54% year over year to $383 million. The performance was
aided by the dropdown of TGP and EPNG as well as higher
contributions from the Fayetteville Express Pipeline. Further,
Kinder Morgan Treating benefited from the SouthTex acquisition in
December 2011 and subsequent strong plant sales.
Overall, transport volumes moved up 11% from the year-ago
quarter, mainly attributable to robust volumes on the
Fayetteville Express Pipeline system and strong transport volumes
on the Texas intrastate pipeline system, partly due to Eagle Ford
: The segment's earnings before DD&A and certain items were
$332 million, up 16% year over year, on the back of higher oil
prices, increased yield at the Katz Field and SACROC as well as
record natural gas liquids (NGL) output at the Snyder Gasoline
: The business segment earned $184 million before DD&A and
certain items in the third quarter, up 2% year over year.
Kinder Morgan Canada: The segment reported earnings of $56
million before DD&A and certain items, up 15% year over year.
The highlights for the segment during the quarter were a new toll
agreement on the Trans Mountain pipeline, enhanced domestic
throughput on the Trans Mountain and the Westridge Terminal as
well as superior performance of the Express-Platte Pipeline.
As of September 30, 2012, Kinder Morgan had cash and cash
equivalents of $532 million and long-term debt of $15,217
million. Debt-to-capitalization ratio stood at 57.9% (versus
61.6% in the last quarter).
Kinder Morgan is one of the largest publicly-traded master
limited partnerships (MLP) and generally serves as a benchmark
for the pipeline MLP group. A focus on fee-based and diversified
businesses has enabled the partnership to dilute its business
Kinder Morgan acquired stakes of TGP as well as EPNG from its
Kinder Morgan Inc.
). This was a part of Kinder Morgan Inc.'s acquisition of El Paso
Corp. that entails the divestiture of three U.S. natural gas
Kinder Morgan funded the above deal with the funds raised from
the divestiture of Kinder Morgan Interstate Gas Transmission,
Trailblazer Pipeline Company, the Casper-Douglas natural gas
processing and West Frenchie Draw treating facilities in Wyoming
and the partnership's 50% interest in the Rockies Express
Pipeline to Tallgrass Energy Partners, LP.
Recently, Kinder Morgan inked a deal with oil refiner
) for the transportation of Eagle Ford crude and condensate to
the latter's Sweeny refinery in Brazoria County, Texas.
These deals positioned Kinder Morgan advantageously and ensure
stable cash flow to Kinder Morgan and its unit holders going
Kinder Morgan currently retains a Zacks #3 Rank (short-term Hold
rating). Longer term, we maintain a Neutral recommendation on the