Kinder Morgan Forecasts Growth in Natural Gas Market and Financial Performance
2024-01-24
Kinder Morgan, one of the largest energy infrastructure companies in North America, recently held a conference call to discuss its financial results and provide updates on its business strategy. During the call, Rich Kinder, the co-founder of Kinder Morgan, announced that he would be serving as the executive chairman of the company, demonstrating his continued involvement in guiding its strategic direction.
The call focused on Kinder Morgan's strategy for expanding its assets, with a particular emphasis on expansion, capital expenditures, and acquisitions in the natural gas segment. The company currently delivers approximately 40% of the nation's natural gas throughput and sees significant growth opportunities along the Gulf Coast.
In terms of financial outlook, Kinder Morgan projected growth in earnings before interest, taxes, depreciation, and amortization (EBITDA), earnings per share (EPS), and distributable cash flow (DCF) per share for 2024. The company expects EPS and DCF per share to grow by 15% and 8% respectively in 2024.
The call also provided details on the commodity assumptions for the final 2024 budget, including West Texas Intermediate (WTI) crude oil price and Henry Hub Natural Gas price. Kinder Morgan assumed $82 per barrel for WTI crude oil and $3.50 for Henry Hub Natural Gas.
Management expressed confidence in the company's ability to spend on capital expenditures, stating that they expect to spend at the high end of the $1 billion to $2 billion per year discretionary capex range for the next few years.
Kinder Morgan discussed the expected growth in the natural gas market, driven by LNG exports, exports to Mexico, and industrial demand. The company sees significant opportunities for growth in this market.
Updates were provided on various aspects of Kinder Morgan's operations, including the backlog of projects, gathering volumes, refined product volumes, renewable diesel volumes, and crude and condensate volumes. These updates highlighted the company's strong performance in these areas.
The call also covered the financial results for the fourth quarter of 2022. Revenues generated in the quarter were $4 billion, with a decrease of $541 million compared to the fourth quarter of 2021. The decrease in revenues was primarily due to lower commodity prices, particularly in the natural gas market. Despite this, the cost of sales also decreased by $614 million, and the margin was generally not impacted.
Management addressed the company's balance sheet and its flexibility, highlighting the stability of its assets and cash flow. Despite executing share repurchases of 522 million and making a $1.8 billion acquisition in the previous year, the company's debt to EBITDA multiple was not significantly impacted.
Overall, the conference call provided valuable insights into Kinder Morgan's business strategy, growth prospects, and financial performance. The company's focus on expanding its assets, its strong position in the natural gas market, and its commitment to financial discipline were key themes discussed during the call.