The economy, rising costs, and hurricanes, oh my!
Houston-based Kinder Morgan Energy Partners
The lone exception was the product pipeline unit, which, when adjusted for asset sales and DD&A (depletion, depreciation, and amortization), saw its earnings dip by 3%. The primary culprit there was lower gasoline demand, along with a couple of chaps named Gustav and Ike, who forced the closure of several Gulf Coast refineries. At the same time, the natural gas pipelines group recorded a 25% improvement in segment earnings before DD&A, as the likes of Devon
The CO2 business also grew by 47% before DD&A, even in the face of hurricane-related lost business. The company continues to note the commodity price risk for this unit, but also emphasizes the mitigating effects of hedging activities. The terminals area maintains both wet- and dry-handling facilities and serves a host of energy companies, along with the likes of steel mini-mill majordomo Nucor
With all this in mind, and despite its perhaps excessively general nature, I'm intrigued by CEO Richard Kinder's comment that his company is "well positioned for future growth." My inclination is to wrap that statement around an impressive quarter and then ladle on the fact that the quarterly cash distribution per common unit is being increased to $1.02, from $0.99.
When I pop that combination into the cooker and let it percolate for 30 seconds or so, I can't help but come away with a company that, just about a year ago, my Foolish colleague Toby Shute (obviously at his alliterative best) called a "potpourri of perennially profitable pursuit." His assessment still seems pointedly and persuasively perfect.
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