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Date
Jan. 21, 2026 at 4:30 p.m. ET
Call participants
- President — Thomas A. Martin
- Chief Financial Officer — David Patrick Michels
- Senior Vice President, Corporate Development — Theresa Chen
- President, Natural Gas Pipelines — Sital K. Mody
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Takeaways
- Net income and EPS -- Net income attributable to Kinder Morgan (KMI +2.22%) was $996 million, and earnings per share (EPS) was $0.45, representing increases of 49% and 50%, respectively, over 2024; adjusted net income and adjusted EPS rose 22% each, excluding certain items.
- Dividend -- The declared quarterly dividend is $0.2925 per share ($1.17 annualized), 2% higher than in 2024.
- Adjusted EBITDA -- Adjusted EBITDA grew by 6%, surpassing the stated budgeted growth of 4% for the year.
- Adjusted EPS -- Adjusted EPS increased 13%, beating the 10% growth rate set in the annual budget.
- Record financials -- Both EBITDA and net income reached all-time highs for Kinder Morgan.
- Net debt and leverage -- The net debt to adjusted EBITDA ratio improved to 3.8 times (down from 3.9 times in the prior quarter and 4.1 times at the end of fiscal Q1 ended March 31, 2025); net debt declined by $9 million year over year despite nearly $3 billion in total growth investments and the Outrigger acquisition.
- Cash flow and capital allocation -- Cash flow from operations reached $5.92 billion; $2.6 billion was paid in dividends, $3.15 billion was spent on total capital expenditures (growth, sustaining, JVs), $650 million on Outrigger acquisition, $380 million was received from divestitures (primarily Eagle Hawk), and $100 million came from other items, resulting in the net debt change described above.
- Credit ratings -- S&P upgraded Kinder Morgan to BBB positive, Fitch upgraded the company to BBB+, and Moody’s maintained a positive outlook.
- Project backlog -- The backlog rose from $8.1 billion to $10 billion, adding $3.7 billion in new projects during the year even after placing $1.8 billion of projects into service.
- Segment backlog composition -- About 60% of the $10 billion project backlog is associated with power sector projects, not limited to but including data center-related infrastructure.
- Terminal business metrics -- Liquids lease capacity stood at 93% with tank utilization at 99% at Houston Ship Channel and Carteret, New Jersey; the Jones Act tanker fleet is fully leased through 2026 and 97% leased through 2027.
- CO2 segment volumes -- In the quarter, oil production volumes were down 1%, NGL volumes declined 2%, and CO2 volumes decreased 2% compared to 2024; full-year oil volumes were 2% below 2024 but slightly above internal plan.
- Asset sale -- The Eagle Hawk sale yielded $380 million in proceeds, occurring at an eight and a half times multiple on a nonoperated minority interest in the asset.
- Western Gateway project -- Less than 50% of the capital contribution for the Western Gateway joint venture with P66 will be in cash, as asset contributions are included in Kinder Morgan’s share; long-term contracts with creditworthy shippers are anticipated.
- CapEx guidance -- Growth capital expenditure guidance rose to at least $3 billion annually for the next several years, up from $2.5 billion, based primarily on the approved $10 billion project backlog, and funded entirely from cash flow.
- Natural gas business outperformance -- Earnings exceeded budget expectations, attributed to higher value on transport capacity, ancillary services, and strong demand in both interstate and intrastate natural gas markets; outperformance continued into the terminal segment.
- Bakken exposure -- EBITDA from Bakken assets represents approximately 3% of total company EBITDA; management does not expect a material impact from Continental Resources’ decision to cease drilling in the basin.
- LNG exposure -- Approximately 12% of the shadow project backlog relates to LNG; Kinder Morgan prefers to serve LNG demand via pipeline contracts, with 20%-25% year take-or-pay agreements, instead of direct equity investment in LNG terminals.
- Project acceleration -- Removal of FERC regulation 871 and shorter approval periods have allowed projects like MSX to move toward earlier in-service dates, although actual contract start dates depend on customer elections and procurement timing.
Summary
Kinder Morgan reported record adjusted EBITDA and net income, driven largely by improved contributions from the natural gas and terminals segments and efficient capital deployment. Management highlighted an expanded $10 billion project backlog, with 60% directed toward power-related projects and a rising focus on infrastructure to meet increasing demand trends. The company enhanced its balance sheet, achieving net debt reduction despite substantial growth investments and receiving positive credit rating actions from major agencies.
- Management stated that all new projects, including Western Gateway, are expected to yield returns significantly above cost of capital, with long-term shipper contracts structured to minimize credit risk.
- Kinder Morgan emphasized opportunistic asset sales, citing the Eagle Hawk divestiture at eight and a half times multiple as driven by reinvestment discipline and not part of an ongoing portfolio reduction strategy.
- Despite near-term basin challenges, management described Bakken EBITDA exposure as limited in the context of the overall business and pointed to diversified customer relationships.
- Annual growth capital spending of at least $3 billion is underpinned by a robust backlog, with financial flexibility enhanced by steady deleveraging and ample cash flow coverage.
- Kinder Morgan expressed preference for take-or-pay pipeline agreements with long-duration, investment-grade counterparties—both for LNG and electric generation projects—to mitigate earnings volatility and ensure risk-adjusted returns.
Industry glossary
- Backlog: The estimated capital cost of committed or approved projects not yet in service, directly influencing future growth visibility for Kinder Morgan.
- Jones Act tanker: A U.S.-flagged vessel compliant with laws restricting domestic waterborne transport to American-owned, -built, and -crewed ships, relevant for lease and terminal utilization metrics.
- FERC regulation 871: Former Federal Energy Regulatory Commission rule that delayed pipeline construction after certificate issuance; its removal expedites project timelines.
- Take-or-pay contract: Agreement obligating a customer to pay for reserved transportation or processing capacity regardless of actual usage, reducing revenue variability.
- Shadow backlog: Project opportunities identified by management that have not yet been formally sanctioned or entered into the company's approved backlog.
Full Conference Call Transcript
Thomas A. Martin: Believe this project provides an attractive supply alternative for markets in Arizona and California. In our terminals business segment, our liquids lease capacity remained high at 93%. Market conditions continue to remain supportive of strong rates, and the utilization of tanks available for use is 99% at our key hubs on the Houston Ship Channel and at Carteret, New Jersey. Our Jones Act tanker fleet remains exceptionally well contracted, assuming likely options are exercised. Our fleet is 100% leased through 2026, 97% leased through 2027, and 80% leased through 2028. We have opportunistically chartered a significant percentage of our fleet at higher market rates and have an average length of firm contract commitments of more than three years.
The CO2 segment experienced 1% lower oil production volumes, 2% lower NGL volumes, and 2% lower CO2 volumes in the quarter versus 2024. For the full year 2025, oil volumes are about 2% below '24 but finished strong in the quarter to be slightly above our plan for the year. With that, I'll turn it over to David. Thank you, Tom.
David Patrick Michels: This quarter, we are declaring a quarterly dividend of $0.2925 per share, which is $1.17 per share annualized, up 2% from 2024. For the fourth quarter, we generated net income attributable to Kinder Morgan, Inc. of $996 million and EPS of $0.45, 49%, and 50% above 2024. This quarter included a gain on an asset sale, which we treat as a certain item. Excluding certain items, our adjusted net income and adjusted EPS still grew very nicely, both 22% above 2024. Our growth was driven by newly placed in service.
Theresa Chen: Natural gas expansion projects, contributions from our Outrigger acquisition, and continued strong demand for natural gas transport, storage, and related services. For the full year 2025, we beat our budget by more than the contributions from our Outrigger acquisition. Outperformance came from our natural gas business, driven by greater value on transport capacity and ancillary services. Our terminals segment also generated better than budgeted contributions. We budgeted to grow adjusted EBITDA by 4% and adjusted EPS by 10% from 2024. We actually grew adjusted EBITDA by 6% and adjusted EPS by 13%. Our 2025 EBITDA and net income were all-time record levels for Kinder Morgan. Moving on to the balance sheet.
As we continue to grow our cash flows and take a disciplined approach to capital allocation, our balance sheet continues to strengthen. Our net debt to adjusted EBITDA ratio improved to 3.8 times, down from 3.9 times last quarter and down from 4.1 times at the end of the first quarter, which was immediately following the acquisition of Outrigger. Since 2024, our net debt has decreased $9 million despite nearly $3 billion of total investments in growth projects and the acquisition. So we'll go through a high-level reconciliation. We generated cash flow from operations of $5.92 billion. We spent $2.6 billion in dividends. We invested $3.15 billion in total CapEx, including growth, sustaining, and contributions to joint ventures.
We spent approximately $650 million on the Outrigger acquisition. We've received $380 million on divestitures, primarily the Eagle Hawk sale. And then we had all other items as a source of cash of about $100 million. That gets close to the $9 million decrease in net debt for the year. The rating agencies have recognized our strengthened financial profile. Last week, S&P upgraded us to triple B positive. Fitch upgraded us to triple B plus during 2025, and we're on positive outlook by Moody's. So as has already been mentioned, but I'll mention it again, 2025 was an exceptionally strong year, a record-setting year, in fact. We beat our budget and delivered double-digit earnings growth.
We grew our backlog from $8.1 billion to $10 billion despite placing $1.8 billion of projects into service, meaning we added $3.7 billion of projects to the backlog during the year. We improved our balance sheet. We achieved credit rating upgrades and expect meaningful cash flow benefits from tax reform, which will generate additional investment capacity. We have very positive momentum heading into 2026.
David Patrick Michels: And with that, I'll turn it back to Kim. Okay, Michelle. If you'll come back on, and we'll take questions.
Operator: Thank you. At this time, if you would like to ask a question, you may press star followed by the number one. To withdraw your question, you may press 2. Please unmute your phones and state your name when prompted. Our first caller is Julien Dumoulin-Smith with Jefferies. Your line is open.
Julien Dumoulin-Smith: Hey, good afternoon, team. Thank you guys very much for the time. Appreciate it. Look, if I can kick it off more on the data center front, you guys talk about the 70% number with respect to where you have exposure and aligned with data center. Can you talk a little bit about what you're seeing actively on the front? Obviously, we saw the FGC announcement here, perhaps that speaks out a little bit. But how do you think about that regionally in terms of further points we should be seeing through the course of the year? And I've got a quick follow-up.
David Patrick Michels: Okay. I'm not exactly sure about the 70%, but if you look at our $10 billion backlog, about 60% of our backlog is associated with power projects. That's not just data center. That's, you know, anything associated with power. And if you think about the opportunities on the power side, you know, I think a great example is if you look in the state of Georgia, where, you know, Georgia Power, recently, I think the end of November, filed a revised IRP. And they're projecting 53 gigawatts of power demand between now and the early 2030s.
And so from a gas perspective, if that was 100% gas, you know, that would be, like, 10 BCF a day roughly, depending on the conversion metrics you use. And, you know, we expect that a significant portion of that will be gas. And that's just one utility in one state. And so, you know, what we're seeing across our network, whether that's in Georgia or South Carolina or Louisiana or Arkansas, or Texas or New Mexico, Colorado, I mean, we are seeing similar stories just across our network. And, you know, the other thing is you look at power demand. We've got a higher power demand growth between 2025 and 2030.
Wood Mac has re you know, in their most recent estimates, theirs. And if you look at Wood Mac between 2030 and 2035, they think the power growth, at least in their projections, is greater between 2030 and 2035 than it is in their projections between '25 and '30. So, you know, this is something that, you know, is driving a significant amount of projects. It's also, you know, a significant driver of the potential opportunities that we have. And we think will last, you know, for a decade.
Julien Dumoulin-Smith: Excellent. If I can just firm up a little bit more on the SSC five setup and timing, what are you looking to move forward on that? How are you thinking about timing? And then even more specifically, you could speak to are you thinking about this as being a compression first or looping? Kind of project initially? And what level of signed utility load would unlock a more formal filing?
David Patrick Michels: Yeah. Julian, this is Sital. So, look, in terms of timing, we see strong interest in the Southeast, and we continue to work with the customer base. In terms of what the final scope looks like, that all depends on final subscription. I do see it more than just compression. I think there could be some more brownfield looping. But once again, it's early. We're working through the demand dynamics with our customer base. We do see opportunity there, and, you know, it is competitive. So we will continue to report as we go along, but ultimately, the fine deal is what drives the announcement.
Julien Dumoulin-Smith: Excellent. Thank you, guys. Stay warm this weekend.
Operator: Thank you. Our next caller is Jackie Colitis with Goldman Sachs. Your line is open.
Jackie Colitis: Hi. Thank you so much for the time this evening. First, I just wanted to start on the next steps on the Western Gateway following the second open season launch last week. How do you think about allocating capital towards this project versus natural gas opportunity set? And how do those returns compare?
David Patrick Michels: Yeah. I mean, on every project, we look at based on risk and return. And so, you know, I think we have a middle-of-the-road return that we expect, and then we vary off that based on the stability, the duration, and the creditworthiness of the cash flows. And so, you know, if you've got stronger creditworthy parties and longer cash flows and take or pay, then you come, you know, off that return down from that return a little bit. And if you have, you know, those things are less, then you go above that return. All these returns are significantly above our cost of capital.
And so I think, you know, if we proceed on Western Gateway, we will have long-term shipper contracts there, and I expect those shipper contracts will be largely from creditworthy counterparties. And if not, you know, we would have some credit support. So we don't, at this point, have limited capital. I think, you know, we can easily fund this project and do all the natural gas projects that we're talking about. Another point I'd point out on Western Gateway, which is we are contributing assets to that. And so our cash contribution, you know, will be less than, we're setting up a 50/50 joint venture with P66.
It would be less than half of the cost of the overall project because we're contributing value for contributing assets for part of our contribution.
Jackie Colitis: Got it. That's helpful. And then just as a follow-up, leverage ended around 3.8 times in the quarter. How do you think about maintaining leverage levels towards the midpoint of your long-term guide of 3.5 to 4.5 range versus, you know, leveraging up towards that high end if there are multiple CapEx opportunities?
David Patrick Michels: Well, I'd say this. You know, right now, what we said is we're gonna spend about $3 billion per year in CapEx. Now that won't be a perfect round $3 billion, you know, because you just have timing of spend. But roughly $3 billion a year. And we have the ability to fund that, you know, 100% out of cash flow. The other thing I'd point out is that, as our $10 billion backlog of projects come online, that our debt to EBITDA actually declines over time. And so that creates more balance sheet capacity. So for every 0.1 times of leverage, that's $850 million capacity.
So I think we've got a ton of capacity even without leveraging up closer to the 4.5 times. And I don't think, you know, I don't think we have intention of getting close to that level. So I think we've got plenty of capacity to accommodate the opportunities that we see out there.
Jackie Colitis: Great. Thank you so much for the time.
Operator: Thank you. Our next caller is Theresa Chen with Barclays. Your line is open.
Theresa Chen: Good afternoon. Kim, hear you loud and clear on the less than 50% of capital contribution on Western Gateway because you're contributing SFPP. When we think about the net EBITDA impact to Kinder, assuming this project moves forward, how should we quantify the displacement of existing SFTP EBITDA? How much is that contributing currently?
David Patrick Michels: Well, I think the two things. One, Theresa, I think we're really early. And so, you know, we've got to get through the open season. We've got negotiations to do with our partner on the specifics. So I think, and so I think it, you know, we've gotta finalize cost, etcetera. So I think it's too early to get through that at this point.
Theresa Chen: Understood. Maybe turning to a different portion of your liquids business, could you provide an update on the progress of the Double H conversion and in light of recent upstream developments in the Bakken? And the increasingly challenged near-term outlook for the basin, how are you thinking about the expected NGL throughput and EBITDA contribution from this project?
David Patrick Michels: Sure. I mean, the project's gonna come on probably late first quarter, early second quarter. And that's phase one. And then, you know, with respect to the future phases, you know, that's something we continue to work on.
Theresa Chen: Yeah. I mean, Theresa, broadly, though, I mean, we still, you know, given the recent pullback, you know, it's just a matter of time. I think our initial phase is well contracted. We see the volumes behind it. You know, these are coming from power plants. So we have visibility there. So I don't think, you know, as far as phase one's concerned, and that is probably on the earlier side of the time frame that Kim gave you in terms of where we come in. I think as we look to the next phase, you know, we continue to have discussions, positive discussions with our customers. We'll monitor the overall macro situation. And we'll make the investment decision accordingly.
That being said, we still have, you know, that in front of us.
David Patrick Michels: Right. And I think the other thing is, you know, GORs are growing in the Bakken.
Theresa Chen: Fair enough. Thank you.
Operator: Thank you. Our next caller is Michael Blum with Wells Fargo. Your line is open.
Michael Blum: Thanks. Good afternoon, everyone. Yeah. Maybe if I could just ask maybe a different way at the same question to some degree. With Continental Resources, effectively saying they're gonna stop drilling in the Bakken, I'm wondering if you can talk about at least for now, can you talk about how meaningful a customer they are, either your current business or where they were contemplated to be for Double H and if that has any impact on the further expansion? Thanks.
David Patrick Michels: So yeah. On, you know, if you look at the EBITDA that we get from Bakken, or EBITDA, it's about 3% of Kinder Morgan's overall. Obviously, Continental makes up a piece of that. We don't think that there's gonna be any material impact from the Continental News. We think that the impact is very manageable. You know, that's one because it's 3% of our EBITDA, but also because volumes, you know, came into the year a little stronger than we were expecting. And it's also because, you know, they're going to continue to complete wells, you know, through August and because they are just one of a number of customers we have up there.
Michael Blum: Okay. Great. That makes sense. Thanks for that. And then just wanted to ask, in light of the asset sale that you did here in late 2025, are there more noncore assets that you're actively looking to sell? And strategically, are there segments or areas of the business that you're more inclined to reduce your exposure to? Thanks.
David Patrick Michels: Okay. Yeah. Let me talk about the Eaglehawk sale first. You know, first of all, on that, you know, that's not an asset that we were looking or planning to sell. You know, our partner approached us because they were selling at least a portion of their interest. And, you know, based on the price that we could achieve, it made sense to sell. You know, it's an eight and a half times multiple on a nonoperated minority interest and the GMP asset.
And when we looked at the reinvestment opportunity, meaning if we, you know, were buying at the price that we propose to sell and we look at the cash flows, you know, those were gonna be below our cost of capital. So, you know, and that included taking into account any tax impact from the sale. So we thought it made sense. It was a good economic decision to sell that asset and recycle that capital. And so, you know, that's generally, you know, the way that we have been approaching sales of assets, has been more opportunistic. As we say, you know, our assets are for sale every day at the right price.
And so, we want to make good economic decisions about that. We like the portfolio of assets that we have today. You know, 60% is two-thirds natural gas. And 26% is product pipelines and terminals, very similar. You know, pipeline and storage business. So similar and then, you know, 7% is CO2, which is a little bit different, but we get great returns in that business. And we have an expertise that a lot of people don't have. So I think we're very comfortable with the suite of assets that we have and this was just an opportunistic sale that made sense.
Michael Blum: Thank you, Kim.
Operator: Thank you. Our next caller is Jeremy Tonet with JPMorgan. Your line is open.
Jeremy Tonet: Hi. Good afternoon. I was just curious for your thoughts, I guess. Industry at large and what opportunities it could present to you down the road? Just if you think about Waha egress, one, we have some pretty cold weather coming up during Yuri that presented opportunities for Kinder last, you know, last go around. So just wondering if you could share any thoughts there.
David Patrick Michels: Well, look. We, you know, as always here, when we look at the footprint, you know, given our footprint, we're able to leverage, you know, basis dislocations that occurred. You know, first and foremost, we want to serve our customers. And then to the extent that these opportunities present themselves, we've been taking a little more of a, you know, proprietary view on certain things in certain areas strategically, small amounts. And so to the extent that presents itself, we'll be able to leverage that.
Jeremy Tonet: Yeah. But I don't think this storm is not a Yuri. It's not a Yuri. I mean, it's much shorter in duration and, you know, it's not going to be as significant.
Jeremy Tonet: Understood. Seems like there might be another one on a teal, so we'll see what happens this winter, I guess.
David Patrick Michels: Yeah. Yeah. But I, you know, generally, what I would say is that the gas transportation market is very tight. And so whenever you see dislocations in, you know, supply or demand in and around our assets, you know, that is going to present opportunities for us. And that's part of what you saw in the fourth quarter of this year.
Jeremy Tonet: Yeah. And then a key component of that is storage for us, and we have a significant storage portfolio. That will allow us to leverage some of that to the extent that it presents itself.
Jeremy Tonet: Got it. Thank you for that. And then just want to dial in on NGPL a little bit. Bit here, hearing, you know, more data center driven opportunities in the Midwest, you know, coal to gas switching as well, you know, some of the other net gas pipeline operators is seeing a lot of activity there. I'm just wondering if you could talk about what that could mean for Kinder, for NGPL.
David Patrick Michels: Yeah. So, look, we've, you know, there's quite a bit of, you know, there's significant discussions you've been seeing some of the EBV postings we've been making out there. We've got interest all along the pipeline, in terms of, you know, not only just from power customers, but also from, you know, organic markets that are trying to grow. Still early on some of these projects. We've got some binding commitments that we're looking to convert into full-fledged, you know, FID projects. As these develop, we'll bring it. But, I mean, when you think about the corridor itself, you know, we see a concentration up in the market area.
We have some in the producing regions where, you know, folks are looking to site themselves. And so I think the opportunity sets there. It's just, you know, once again, you know, we're in this mode where folks are looking, you know, there's it's a competitive landscape so we want to make sure we secure the returns that we need to progress the projects to FID.
Jeremy Tonet: Got it. Understood. Thank you.
Operator: Thank you. Our next caller is Jean Ann Salisbury with Bank of America. Your line is open.
Jean Ann Salisbury: Hi. You said in the prepared comments that NSX could be in service a couple of quarters early, I think. Is there any read across to a faster permitting process across the board? Or was that project specific?
David Patrick Michels: No. I mean, I think that a couple of things on these projects. One is 871 is gone. And that happened, I don't know, six or nine months ago. And that, you know, basically required us to wait five months between when we got our FERC certificate to when we could start construction. So that's gone. And then, you know, the FERC has acted within is going to act within roughly one year. On our filing. And so previously, we've been seeing that take a little bit longer than that. On big projects.
And so the fact that, you know, the FERC process only took twelve months and we don't have 871, is speeding up our in service on MSX from, you know, called the '28 to the '28.
Jean Ann Salisbury: Great. That's very clear. Thank you. And then, one of your peers took an equity stake in a US LNG terminal a few months ago. Is that something that KMI is actively looking at or would have interest in, especially, I guess, if you could back to back it with another counterparty to make it take or pay equivalent?
David Patrick Michels: To make it well, I'll say a couple of things on Generally, what we've seen, on the LNG front is the returns haven't been where we needed them to be to make those investments. And, you know, it's not something that we are accustomed to building. We do small one, obviously, at Elba, but that was a relatively small facility. And so, you know, I think, in general, what you should expect from us is that we are kind of sticking to our knitting. We're staying in our lane. You know, we are serving those LNG that LNG demand, through our pipelines. And, you know, right now, we serve 40% of that demand.
As Rich said, that, you know, demand is expected to grow significantly. And we expect to get our fair share of that future and, of that future demand. And that's driving, you know, very nice project opportunities for us. And so I'm not saying we would never step out. It's just, you know, there hasn't been the opportunity where we thought the risk return profile was appropriate. And, you know, we haven't wanted to build these on our own.
Theresa Chen: I think another thing we like on a risk return basis is the fact that both on the LNG terminal side for feed gas and on the service to for electric generation purposes, we have in general, take or pay contracts with utility grade investment grade utilities. And that we think is a very good way to look at risk that we are taking, and we think that minimizes any risk that we have. As opposed to contracting directly with AI developers, for example.
Jean Ann Salisbury: That makes sense. Thank you.
Operator: Thank you. Our next caller is Keith Stanley with Wolfe Research. Your line is open, sir.
Keith Stanley: Hi. Good afternoon. You updated the messaging on CapEx to at least $3 billion a year of growth CapEx for the next few years, up from 2.5. Wanted to clarify, is that solely based on the sanctioned project backlog today? So if you keep FID ing new projects and the backlog grows, CapEx could be above $3 billion a year for the next few years? Or is that already reflecting your best estimate over the next few years?
David Patrick Michels: I'd say it's largely based on the $10 billion approved project backlog, but there is some view. There's a small portion or that is based on, you know, getting some of the $10 billion in the opportunity set. So and look, I think that, you know, we updated it from 2.5 to 3 billion. You know, given the $10 billion, given we continue to add to the backlog even after putting projects in service. So, you know, this year, when we were putting all those projects in service, you know, at the beginning of the year, we thought it might come down. It's continued to increase.
You know, natural gas demand, you know, we continue to see it grow between twenty five and thirty, but also, you know, beyond that. And so, you know, there may be the opportunity to extend that further, but you know, we're not ready to do that at or make it higher, but we're not ready to do that at this point in time.
Keith Stanley: Got it. Second question, just wanted to follow-up on the earlier one on Mississippi Crossing. So if you're six months early on that project and on, you know, potentially on some of the other bigger ones given the regulatory environment, would your contracts kick in and you'd have pretty close to a full financial contribution right away at that earlier date? Or is that not the case?
David Patrick Michels: It's a project by project analysis. In this case, the answer is no. The customers don't have to take it at that point in time. They can. I mean, they can elect to take it, but they don't have to. And I would say that, you know, being early on the regulatory front does not directly translate into day for day on the in service. You know, it's gonna depend on the project because, you know, once you move back that regulatory once you get sooner, approval from a regulatory perspective, you know, you have to think about when you're getting pipe and when you're getting compression.
And so, you know, for example, we haven't seen that translate into much of an earlier date on South 4 at this point in time. So it's project by project. But if our customers don't want that capacity, it will be available for, you know, us to use during that time.
Keith Stanley: And given the macro environment case, I mean, you just think about, you know, the demand profiles that are coming our way. You know, it's just, you know, you look at that as an opportunity to sell in the secondary markets.
Keith Stanley: Yeah. Right? Got it. Thank you.
Operator: Thank you. Our next caller is Manav Gupta with UBS. Your line is open, sir.
Manav Gupta: Okay. Firstly, congrats on all the upgrades from rating agencies. Reflects the strong quality of the management and execution. I wanted to ask you about the Florida gas transmission projects. Both the projects, how did these come about? Can you give us more details? In the last one year, what you have seen is you announced a project and then end up upsizing it if you could talk about the possibility of some upsizing here for these projects.
Sital K. Mody: So Manav, this is Sital. So just, you know, in terms of the project itself, you know, as you know, we're not the operator. You know, Energy Transfer is the operator, so, you know, we'll let them talk about how it came about on the call. We've been working with them closely. Thematically, it's the same themes we've been talking about in the Southeast. You know, we see that as a growth area, just broadly, and this is just another example of us getting incremental infrastructure to an area where there is significant growth. There's also a resiliency component there. With the two projects.
We think it makes sense in terms of whether or not the project gets upsized, we're in the process of having an open season right now. That open season closes here, I think, Feb fifth. If I'm not mistaken. And, you know, based on the interest there, is it possible to upsize? Yes. If there's a demand for it.
David Patrick Michels: Yeah. And I'd say those both those projects are backed by, you know, long-term contracts with creditworthy counterparties. And so, I mean, they are right down the...
Manav Gupta: Oh, perfect. My quick follow-up here is at the start of the call, mentioned that the 4Q turned out to be stronger than what you thought when you announced your 3Q results. Help us understand some of those tailwinds which help you drive the beat in 4Q. And are those still persistent out there? So should one also turn out pretty strong? If you could talk about that.
David Patrick Michels: Sure. So, I mean, it was across the gas network. So it was our...
Theresa Chen: It was across...
David Patrick Michels: It was our interstate pipes.
Manav Gupta: And...
Operator: This is the operator. Please stand by. This is the operator. Please stand by. And speakers, please go ahead. Parties, please continue to stand by. This is the operator. We're resuming the conference. The next question comes from Jason Gabelman. Your line is open.
Jason Daniel Gabelman: Yes. Hey, it's Jason Gabelman from TD Cowen. Hopefully, the storm isn't hitting you too hard down there. Maybe to start and to help that everyone out, maybe we could just replay Manav's question because I was interested in the answer to it. I didn't quite hear. So just wondering what drove the earnings upside on the natural gas segment in 4Q. Sounded like some of it was driven by pull from LNG plants. So did some of these plants start up earlier than you had expected in the plan, or were there other factors at play? Thanks.
David Patrick Michels: I mean, it was like, it was across the entire gas business. So it was a lot in our Texas and trust state market. It was in the Eagle Ford and the Haynesville on our gathering assets. And then it was also on the interstate markets. More so in the Northeast than other areas. And so, you know, it's a function of having a very tight pipeline and storage network and, you know, and that's going to create opportunities when you have supply or demand dislocations. That could be weather. That could be LNG coming on or off. You know, it could be a variety of factors. But that leads to volatility and upside for us.
And there is the potential for that to happen again in 2026.
Jason Daniel Gabelman: Great. And my follow-up maybe staying on the topic of LNG. It seems like the market is facing this upcoming global supply glut, and maybe you get a bit of a slowdown in the pace of new liquefaction project sanctions here in the US Gulf Coast. So just wondering how much of that project backlog, if any, is tied to servicing incremental projects. And I guess it's not the project backlog. It is the shadow project backlog and projects LNG projects that are associated with that shadow backlog. Thanks.
David Patrick Michels: Yeah. So a couple of things. You know, I'd reiterate the point Rich made a minute ago, which is, you know, we have long-term take or pay contracts with these LNG facilities. And so those typically are twenty to twenty-five year contracts. And they pay whether they use that capacity or not. You know, in our current backlog, about 12% of the $10 billion actual approved project backlog is... Oh, 12% of the shadow backlog is associated with LNG. It's not a huge percentage. You know, I think a lot of the shadow backlog, again, is gonna be more on the power front.
But the other thing I'd say is that, when you look at these LNG projects, it's not always about adding a new facility. You know, a lot of times, it's about an existing facility has, you know, some capacity, and they want to reach further back to get more competitive supply. So, you know, to have incremental project, you don't have to have a new facility come online. It could be a need from an existing facility to try to get more competitive supply.
Jason Daniel Gabelman: Great. Thanks for those answers.
Operator: Michelle, is that it? Time we are showing and at this time, we are showing no further questions.
David Patrick Michels: Okay. Thank you, everybody. Thank you. Have a good day.
Operator: Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.