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.
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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