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Kinder Morgan Results Miss Consensus, 1% above EDA in 4Q

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Kinder Morgan (KMI) reported 4Q23 Adj. EBITDA below Street estimates last week, confirming a forecast by East Daley Analytics for a disappointing quarter. The company’s Adj. EBITDA of $1,925MM was 3% below consensus but 1% above East Daley’s 4Q call in the KMI Financial Blueprint.

Kinder Morgan is the first midstream company to report earnings each quarter and often can serve as a bellwether for sector performance. The company gave mixed 4Q23 results last Wednesday (January 17) for midstream investors to chew.Picture1-Jan-24-2024-11-40-57-3551-PM

KMI’s Natural Gas Pipelines segment delivered excellent results, reporting Adj. EBDA of $1,330MM, or $88MM (+7%) above East Daley’s forecast in the KMI Financial Blueprint. Natural gas transport volumes rose 5% Y-o-Y, primarily due to the restart of Line 2000 of the El Paso Natural Gas system.

A stellar performance by the Kinderhawk gathering system drove the beat. Management said Haynesville volumes increased over 30% from 3Q23. Based on pipeline samples, EDA had projected a 25% Q-o-Q gain for the Kinderhawk asset in the Blueprint.

KMI also placed several pipeline projects in service in 4Q23, supporting the increase in earnings. These projects include a 550 MMcf/d expansion of the Permian Highway Pipeline and the 2 Bcf/d Eagle Ford Transportation expansion in South Texas. KMI also closed on the $1.815B acquisition of NextEra’s South Texas assets at the end of the quarter.

However, the beat by Gas Pipelines was offset by a disappointing quarter for KMI’s Products Pipelines and CO2 businesses. The Products Pipelines segment reported Adj. EBDA of $278MM, falling $11MM (4%) short of our forecast. The miss by the CO2 business was significant. The segment reported Adj. EBDA of $170MM, missing our forecast by $42MM (-20%) due to lower NGL and CO2 prices.

KMI guided to $8,160MM in Adj. EBITDA for 2024, while East Daley currently estimates 2024 Adj. EBITDA of $8,131MM in the company's Financial Blueprint. – Zach Krause Tickers: KMI.

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