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Kinder Morgan Delivers Excellent Second-Quarter Results

Kinder Morgan (NYSE: KMI  ) is out with second-quarter results. The company reported revenue of $3.93 billion and earnings of $284 million, or $0.27 per share. That missed analysts' estimates by a penny, though revenue beat by $150 million. However, a more meaningful number for Kinder Morgan is its cash available to pay dividends, which was up 13% from last year to $332 million. Moreover, the company remains on track to meet or exceed its annual budget of $1.78 billion in cash available to pay dividends.

What fueled Kinder Morgan's results this quarter was its MLP Kinder Morgan Energy Partners (NYSE: KMP  ) . The partnership delivered strong results this quarter as distributable cash flow was up 11% from last year to $561 million. Growth was led by outstanding results from the company's Tennessee Gas Pipeline, contributions from the Copano Energy acquisition and increased oil production from SACROC. Looking ahead, Kinder Morgan Energy Partners also expects to meet or exceed its targets for distributions to investors.

The other big contributor to Kinder Morgan's results were the solid results from its other MLP El Paso Pipeline Partners (NYSE: EPB  ) . The partnership reported distributable cash flow of $141 million, which was up 9% from last year's second quarter. Fueling El Paso Pipeline Partners results were the $2 billion in dropdown transactions from Kinder Morgan that it completed in the quarter. In addition to that El Paso Pipeline Partners saw good performance at Colorado Interstate Gas. Together these solid contributions helped to partially offset lower income from elsewhere within El Paso Pipeline Partners portfolio.

Overall, the Kinder Morgan family of companies delivered solid second quarter results. All three companies remain on track to meet or exceed full-year distributions to investors. Meanwhile, organic growth projects across all platforms should continue to fuel growth in the quarters ahead. 

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  • Report this Comment On July 16, 2014, at 5:42 PM, terrapin wrote:

    First reactions to results were intriguing and contradictory; maybe you set the market straight, Matt.

  • Report this Comment On July 16, 2014, at 7:17 PM, AdamGalas wrote:

    I hate hearing how a company missed or beat by a couple of pennies. As far as I'm concerned an analysts job is to get as close to the real earnings number as possible. Companies are not supposed to try to hit a consensus target.

    As far as this quarter goes? Dang Kinder, you did it again. 11% DCF growth? 9% for EPB? 13% for KMI? What say you now Barron's? Double digit growth and $30 billion in backlog and potential backlog doesn't seem like much "trouble in the pipelines" to me.

  • Report this Comment On July 16, 2014, at 7:27 PM, TMFmd19 wrote:

    I think EPS numbers can basically be ignored when looking at MLPs and E&P stocks. Distributable cash flow is much more important at MLPs. Meanwhile, oil & gas earnings can fluctuate due to gains/losses on hedges.

    But, yeah KMI/KMP/EPB looked fine at first glance. The long-term story only gets better.


  • Report this Comment On July 17, 2014, at 11:05 AM, MNDLBRT wrote:

    If natural gas usage improves, EPB, especially backed by KMI's muscle, pretty much has to continue cash flow growth. This is a safe place to park money as the story plays out into 2017 and beyond.

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Matt DiLallo

Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:

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