Kinder Morgan (KMI) Announces Preliminary 2019 Financial Projections

Kinder Morgan, Inc. (NYSE: KMI) today announced its preliminary 2019 financial projections. “This year has been a very good one for Kinder Morgan and we expect to nicely exceed our budget. In 2019, with our market fundamentals remaining very strong, the Elba Liquefaction Project coming online and Gulf Coast Express entering service, we project continued growth,” said Steve Kean, KMI chief executive officer. “We expect to generate $5.0 billion of distributable cash flow (DCF) which is approximately a 10 percent increase over our 2018 budgeted DCF. Our growth will continue to be supported by an approximately $6.5 billion backlog of high probability energy infrastructure expansion opportunities,” continued Kean.

Below is a summary of KMI’s expectations for 2019:

• Generate $2.20 DCF per share and $7.8 billion of Adjusted EBITDA, up 7 percent and 4 percent, respectively, compared to our 2018 budget, despite the sale of our Trans Mountain asset.
• Return additional value to shareholders in 2019 through the previously announced dividend increase. As first stated in KMI’s second quarter 2017 earnings release, KMI expects to increase the declared dividend per common share for 2019 to $1.00 per share (annualized), beginning with $0.25 per share for the Q1 2019 dividend (which is paid in Q2 2019), a 25 percent increase from the 2018 dividend and a 100 percent increase from the 2017 dividend. KMI also continues to expect to increase the dividend to $1.25 per share (annualized) for 2020.
• Invest $3.1 billion in expansion projects and contributions to joint ventures in 2019. KMI expects to use internally generated cash flow to fully fund its 2019 dividend payment as well as the vast majority of its 2019 discretionary spending, with no need to access equity markets.
• End 2019 with a Net Debt-to-Adjusted EBITDA ratio of 4.5 times. We continue to be well positioned for an upgrade to our credit ratings and are on positive outlook at all three rating agencies.

KMI does not provide budgeted net income attributable to common stockholders and net income, the GAAP financial measures most directly comparable to the non-GAAP financial measures DCF and Adjusted EBITDA, respectively, due to the impracticality of quantifying certain components required by GAAP such as: ineffectiveness of commodity, interest rate and foreign currency hedges; unrealized gains and losses on derivatives marked to market; and, potential changes in estimates for certain contingent liabilities.

KMI’s expectations assume average annual prices for West Texas Intermediate (WTI) crude oil and Henry Hub natural gas of $60.00 per barrel and $3.15 per MMBtu, respectively, consistent with forward pricing during the budget process. The vast majority of cash generated by KMI is fee-based and therefore is not directly exposed to commodity prices. The primary area where KMI has commodity price sensitivity is in its CO2 segment, where KMI hedges the majority of its next 12 months of oil production to minimize this sensitivity. For 2019, the company estimates that every $1 per barrel change in the average WTI crude oil price impacts DCF by approximately $9 million and each $0.10 per MMBtu change in the price of natural gas impacts DCF by approximately $1 million.

The KMI board of directors will review the 2019 budget for approval at the January board meeting and management will discuss the budget in detail during the company’s annual analyst conference on Jan. 23, 2019, in Houston, Texas. Kinder Morgan remains committed to transparency and will continue to publish its budget on the company’s website as presented at the analyst conference. The 2019 budget will be the standard by which KMI measures its performance next year and will be a factor in determining employee compensation.

Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. We own an interest in or operate approximately 84,000 miles of pipelines and 152 terminals. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products, and our terminals transload and store liquid commodities including petroleum products, ethanol and chemicals, and bulk products, including petroleum coke, metals and ores. For more information please visit www.kindermorgan.com.

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