10-QPeriod: Q2 FY2021

KINDER MORGAN, INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 23, 2021For Securities:KMIEP-PC

Summary

Kinder Morgan, Inc. (KMI) reported mixed financial results for the quarter ending June 29, 2021. While total revenues saw a significant increase to $3.15 billion compared to $2.56 billion in the prior year's quarter, driven by higher commodity sales and services, the company recorded a substantial net loss of $757 million attributable to Kinder Morgan, Inc. This loss was heavily impacted by a significant non-cash impairment charge of $1.6 billion related to South Texas gathering and processing assets within the Natural Gas Pipeline segment. Despite the quarterly loss, the six-month period showed a positive net income of $652 million, a substantial improvement from a loss of $943 million in the same period last year. This turnaround was largely due to a significant reduction in impairment charges compared to the prior year and improved performance in key segments like Natural Gas Pipelines and CO2, partly influenced by the February 2021 winter storm. Operationally, KMI completed the acquisition of Stagecoach Gas Services LLC for approximately $1.23 billion shortly after the quarter's end and announced an agreement to acquire Kinetrex Energy. The company also continued its focus on returning capital to shareholders, declaring a cash dividend of $0.27 per share for the quarter. While the impairment charge presents a near-term concern, the improved six-month performance, strategic acquisitions, and continued dividend payments offer a more positive outlook for the year.

Financial Statements
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Key Highlights

  • 1Total revenues increased to $3.15 billion in Q2 2021, up from $2.56 billion in Q2 2020, driven by higher commodity sales and services.
  • 2A significant non-cash impairment loss of $1.6 billion was recognized in the Natural Gas Pipeline segment for South Texas gathering and processing assets.
  • 3Net loss attributable to Kinder Morgan, Inc. was $757 million for Q2 2021, a worsening from a net loss of $637 million in Q2 2020, primarily due to the impairment charge.
  • 4For the six months ended June 30, 2021, KMI reported a net income of $652 million, a substantial improvement from a net loss of $943 million in the same period of 2020.
  • 5The company completed the acquisition of Stagecoach Gas Services LLC for approximately $1.23 billion shortly after the quarter ended.
  • 6Kinder Morgan declared a cash dividend of $0.27 per share for the quarter, indicating continued commitment to shareholder returns.
  • 7Operating expenses were largely offset by gains from equity investments and a reduction in the overall impairment charges for the six-month period.

Frequently Asked Questions

The substantial net loss of $757 million in the second quarter of 2021 was primarily due to a significant non-cash impairment charge of $1.6 billion related to South Texas gathering and processing assets within the Natural Gas Pipeline segment. This impairment was driven by lower-than-expected volumes and rates associated with contract re-contracting.

The first six months of 2021 showed a significant turnaround with a net income of $652 million, compared to a net loss of $943 million in the first six months of 2020. This improvement was driven by a substantial reduction in impairment charges and stronger performance in the Natural Gas Pipelines and CO2 segments, partly benefiting from the February 2021 winter storm impacts.

Kinder Morgan completed the acquisition of Stagecoach Gas Services LLC for approximately $1.23 billion on July 9, 2021. Additionally, they announced an agreement to acquire Kinetrex Energy for $310 million, which is expected to close in the third quarter of 2021. These acquisitions are aimed at expanding their energy infrastructure and renewable natural gas capabilities.

Kinder Morgan declared a cash dividend of $0.27 per share for the quarter ended June 30, 2021. The company expects to declare dividends totaling $1.08 per share for the full year 2021, representing a 3% increase from 2020. They anticipate fully funding these dividend payments and discretionary spending for 2021 without needing to access capital markets.