Kinder Morgan Expects Flat Distributable Cash Flow for 2017
Kinder Morgan expects to generate $4.46 billion in distributable cash flow for 2017. It’s flat compared to its expected distributable cash flow for 2016.
Kinder Morgan announced its financial outlook for 2017 on December 5, 2016. It expects to declare dividends of $0.5 per share in 2017.
Kinder Morgan’s (KMI) net debt-to-adjusted EBITDA ratio in 3Q16 fell to 5.3x, after remaining stable at 5.6x for three fiscal quarters.
The analyst average target price for KMI for the next year is $24.8, which implies a 15% price return, as compared to KMI’s current price of $21.5.
According to Kinder Morgan (KMI), 91% of its 2016 budgeted segment EBDA is fee-based. Of this, 67% is secured by take-or-pay contracts.
On September 1, 2016, KMI closed its agreement to partner with Southern Company through the sale of a 50% interest in the SNG pipeline system.
Kinder Morgan (KMI) has put ~$54 billion in asset investments and acquisitions since its inception. Of this, ~$25 billion went toward expansions.
According to the EIA, motor gasoline, distillate fuel oil, and jet fuel demand in 2016 is expected to be 9.3 MMbpd, 3.9 MMbpd, and 1.6 MMbpd, respectively.
Nearly 76% of Kinder Morgan’s Terminals segment’s 2016 budgeted EBDA is liquids-based, while ~99% of its liquid revenues are secured by fee-based contracts.
Kinder Morgan (KMI) carries out its operations through five reportable segments, and the Natural Gas Pipelines segment is the largest in terms of EBDA.
Kinder Morgan’s (KMI) natural gas transport volumes fell 1% YoY in 3Q16, partially driven by lower throughput on its Texas Intrastate Natural Gas Pipelines.
Headquartered in Houston, Texas, Kinder Morgan (KMI) is one of the largest energy infrastructure companies in the US.
Kinder Morgan has risen 49% in 2016. ONEOK, Enbridge Energy Partners, and Energy Transfer Partners have risen 123%, 7%, and 4%, respectively, YTD.
A Fed rate hike, which could likely happen at the Fed’s next meeting in mid-December, could impact MLPs negatively in two ways.
The MLP sector saw just one IPO in 2016 to date. Noble Midstream Partners (NBLX) completed its IPO in September 2016, raising $323.0 million.
Debt issuance fell significantly in 2016 compared to the previous two years. The fall was due to high debt levels of midstream MLPs.
The Permian region remained the best choice for strategic acquisitions among midstream MLPs in 2016.
MLP valuations fell significantly at the end of 2015 and the beginning of 2016. Investors dumped anything related to oil and natural gas with the fall in US energy prices.
MLPs have also started focusing more on bolt-on acquisitions over organic projects due to project delays.
MLPs were at their peak in 2014 until the crash in energy prices in late 2014. The majority of investors believed that MLPs would continue to grow their distributions.