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Researched by Industrial Info Resources (Sugar Land, Texas)--Energy pipeline transportation and storage company Kinder Morgan Energy Partners LP (NYSE:KMP) (KMP) (Houston, Texas), whose general partner is owned by Kinder Morgan Incorporated (NYSE:KMI) (KMI) (Houston), reported strong operational results in first-quarter 2014, as major acquisitions from last year continued to pay off and especially in the Natural Gas Pipelines segment. Net income was reported to be $746 million, a 4.73% decrease from first-quarter 2013.
KMP executives said that results were more representative of the company's performance when excluding "certain items," including legal and environmental reserve adjustments; acquisition costs; gains on the sale of assets; mark-to-market and amortization of hedges; severance costs; and a few other exceptional expenses. Using this measurement, income stood at $788 million, a 20.31% increase from the same period last year.
Total revenues were reported to be $3.65 billion, a 37.24% increase from first-quarter 2013. The Natural Gas Pipelines segment led the company's growth with an almost 50% increase in earnings, which was attributed to last year's acquisition of Copano Energy (Houston), which boosted KMP's presence in the Eagle Ford, Barnett, Mississippi Lime and Woodford shales. The increase also was attributed to KMP's purchase last year of the remaining 50% of El Paso Natural Gas (EPNG) and 50% of El Paso Midstream from KMI. The Natural Gas Pipelines segment also benefited from a strong performance by Tennessee Gas Pipeline, which continues to see strong demand and growth in the Marcellus and Utica shales.
The CO2 segment also saw stronger earnings, led by increased production at the SACROC refinery in Snyder, Texas, and improved sales and transport volumes of CO2. KMP's businesses in southwest Colorado reported record quarterly production, following a major source field expansion in November. KMP's ethanol business continued to grow, with the Products Pipelines and Terminals segments seeing significant increases in related capacity; executives say the company now handles about 30% of ethanol in the U.S.
KMP reported sustaining capital expenditures of $72 million for the quarter, compared with $48 million in the same period last year.
Industrial Info is tracking more than $22.6 billion in active projects involving Kinder Morgan and its entities, including the $400 million construction of a grassroot petroleum condensate splitter in Galena Park, Texas. The project involves constructing a 50,000-barrel-per-day (BBL/d) petroleum condensate splitter to split out various components, such as light & heavy naphtha, kerosene and gas oil as part of a series of tank additions. BP plc (NYSE:BP) (London, England) will claim more than 40,000 BBL/d of the product. Performance Contractors Incorporated (Rosharon, Texas) is serving as the general contractor.
"The project backlog increased by $1.6 billion during the quarter, notwithstanding the fact that we put $800 million out of the backlog and into service during the quarter," said Richard Kinder, the chairman and chief executive officer of KMP, in a conference call. "So we really generated $2.4 billion of new backlog projects, and most of the increase came in the Natural Gas [Pipelines] segment."
KMP executives say the company has about $14.9 billion in expansion and joint venture investments in its total standing backlog. Natural gas growth projects account for about $2.6 billion, double the amount at the end of 2013; activity in the Marcellus and Utica shales was a major driver of 2.3 billion cubic feet per day of new capacity commitments since early December, most of which is expected to be operational before 2017.
"McKinsey [Global Institute] recently put out its 'Spring 2014 Preliminary Outlook,'" Kinder said. "In that outlook for natural gas supply and demand, they estimate that demand for natural gas this year in the United States will be 71.5 billion cubic feet per day, and they project that by 2024 that demand will escalate to 94.5 billion cubic feet per day. We would view that as a real understatement."
He continued: "LNG exports; additional electric generation fuelled by natural gas; an increase in industrial use; and an increase in exports to Mexico. All of these, we think, bode well for a national pipeline network like us."
KMP executives expect WTI crude oil prices to average about $96.15 per barrel in 2014, with every $1 change in the price to impact the CO2 segment by roughly $7 million.
For more information, visit Industrial Info's North American Oil & Gas Transmission Project Database and North American Oil & Gas Terminal Project Database.
View Plant Profile - 3047881 1089918
View Project Report - 300059341
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
KMP executives said that results were more representative of the company's performance when excluding "certain items," including legal and environmental reserve adjustments; acquisition costs; gains on the sale of assets; mark-to-market and amortization of hedges; severance costs; and a few other exceptional expenses. Using this measurement, income stood at $788 million, a 20.31% increase from the same period last year.
Total revenues were reported to be $3.65 billion, a 37.24% increase from first-quarter 2013. The Natural Gas Pipelines segment led the company's growth with an almost 50% increase in earnings, which was attributed to last year's acquisition of Copano Energy (Houston), which boosted KMP's presence in the Eagle Ford, Barnett, Mississippi Lime and Woodford shales. The increase also was attributed to KMP's purchase last year of the remaining 50% of El Paso Natural Gas (EPNG) and 50% of El Paso Midstream from KMI. The Natural Gas Pipelines segment also benefited from a strong performance by Tennessee Gas Pipeline, which continues to see strong demand and growth in the Marcellus and Utica shales.
The CO2 segment also saw stronger earnings, led by increased production at the SACROC refinery in Snyder, Texas, and improved sales and transport volumes of CO2. KMP's businesses in southwest Colorado reported record quarterly production, following a major source field expansion in November. KMP's ethanol business continued to grow, with the Products Pipelines and Terminals segments seeing significant increases in related capacity; executives say the company now handles about 30% of ethanol in the U.S.
KMP reported sustaining capital expenditures of $72 million for the quarter, compared with $48 million in the same period last year.
Industrial Info is tracking more than $22.6 billion in active projects involving Kinder Morgan and its entities, including the $400 million construction of a grassroot petroleum condensate splitter in Galena Park, Texas. The project involves constructing a 50,000-barrel-per-day (BBL/d) petroleum condensate splitter to split out various components, such as light & heavy naphtha, kerosene and gas oil as part of a series of tank additions. BP plc (NYSE:BP) (London, England) will claim more than 40,000 BBL/d of the product. Performance Contractors Incorporated (Rosharon, Texas) is serving as the general contractor.
"The project backlog increased by $1.6 billion during the quarter, notwithstanding the fact that we put $800 million out of the backlog and into service during the quarter," said Richard Kinder, the chairman and chief executive officer of KMP, in a conference call. "So we really generated $2.4 billion of new backlog projects, and most of the increase came in the Natural Gas [Pipelines] segment."
KMP executives say the company has about $14.9 billion in expansion and joint venture investments in its total standing backlog. Natural gas growth projects account for about $2.6 billion, double the amount at the end of 2013; activity in the Marcellus and Utica shales was a major driver of 2.3 billion cubic feet per day of new capacity commitments since early December, most of which is expected to be operational before 2017.
"McKinsey [Global Institute] recently put out its 'Spring 2014 Preliminary Outlook,'" Kinder said. "In that outlook for natural gas supply and demand, they estimate that demand for natural gas this year in the United States will be 71.5 billion cubic feet per day, and they project that by 2024 that demand will escalate to 94.5 billion cubic feet per day. We would view that as a real understatement."
He continued: "LNG exports; additional electric generation fuelled by natural gas; an increase in industrial use; and an increase in exports to Mexico. All of these, we think, bode well for a national pipeline network like us."
KMP executives expect WTI crude oil prices to average about $96.15 per barrel in 2014, with every $1 change in the price to impact the CO2 segment by roughly $7 million.
For more information, visit Industrial Info's North American Oil & Gas Transmission Project Database and North American Oil & Gas Terminal Project Database.
View Plant Profile - 3047881 1089918
View Project Report - 300059341
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
