U.S. pipeline operator Kinder Morgan Inc. reported a 26% rise in quarterly profit on Jan. 22, benefiting from higher gas takeaway from the Permian Basin through its Gulf Coast Express pipeline.
The pipeline, which can transport 2 billion cubic feet per day (Bcf/d), came into service in September when drillers were burning off natural gas at record rates due to lack of transportation capacity from the shale-rich Permian Basin.
Earnings from natural gas transport volumes rose 14% and from NGL transport volumes jumped 23% from a year earlier.
The pipeline operator generated $1.35 billion, or 59 cents per share, in distributable cash flow in the fourth quarter, higher than $1.14 billion, or 50 cents per share, in the prior quarter. On a year-over-year basis, distributable cash flow rose 6%.
Investors have been pushing U.S. oil and gas pipeline operators to deliver positive free cash flow as low energy prices and idle shale rigs pressure earnings.
The Houston-based company, whose business includes storage terminals as well as pipelines, said net income attributable to shareholders rose to $610 million, or 27 cents per share, in the quarter ended Dec. 31, from $483 million, or 21 cents per share, a year earlier. Net income got a boost from a $1.3 billion non-cash gain related to the sale of Kinder Morgan Canada and the U.S. portion of its Cochin pipeline.
However, the company's weighted average NGL price for the quarter fell 19% to $5.34 a barrel, and the realized weighted average crude oil price fell 10% to $49.90 a barrel.
It said profit was partly hurt by weakness in its CO₂ segment, which ships CO₂ to oil fields where it is used to extract crude, due to lower production and volatile oil prices.
Kinder Morgan continues to speak with potential partners to develop a third natural gas pipeline, Permian Pass, but market demand has cooled after U.S. oil producers began to tighten spending last year, CEO Steven Kean told investors.
The company could have made a final investment decision on the third pipeline of 2 billion cubic feet per day last year had the oil industry not eased spending and output projections, he said.
Still, with crude oil flowing now freely on new lines from West Texas to the U.S. Gulf Coast, demand for natural gas transport capacity could rise eventually, Kean added. "People do recognize additional gas takeaway is going to be needed," he said.
Excluding one-time items, Kinder Morgan earned 26 cents, missing the Street's view by a cent, according to Refinitiv IBES data.
Recommended Reading
Biden Administration Criticized for Limits to Arctic Oil, Gas Drilling
2024-04-19 - The Bureau of Land Management is limiting new oil and gas leasing in the Arctic and also shut down a road proposal for industrial mining purposes.
NAPE: In Basins Familiar to E&Ps, Lithium Rush Offers Little Gold
2024-02-07 - A quest for sources of lithium comes as the lucrative element is expected to play a part in global efforts to lower emissions, but in many areas the economics are challenging.
BWX Technologies Awarded $45B Contract to Manage Radioactive Cleanup
2024-03-05 - The U.S. Department of Energy’s Office of Environmental Management awarded nuclear technologies company BWX Technologies Inc. a contract worth up to $45 billion for environmental management at the Hanford Site.
FERC Says 32 Bcf/d in US LNG Capacity Approved, Not Yet Built
2024-01-29 - The FERC—which has jurisdiction over the siting, construction and operation of LNG export facilities in the U.S.—reported that 18 projects worth 32 Bcf/d of export capacity have obtained approval but are yet to be built.
US Customs Rules New Fortress’ FLNG Facility Does Not Violate Jones Act
2024-01-30 - New Fortress Energy’s FLNG facility offshore Mexico can now sell and deliver LNG to U.S. locations.