uploads///EBDA Breakdown

Which Segments Drove Kinder Morgan’s 2Q15 Performance?

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Total EBDA

Kinder Morgan’s (KMI) total EBDA (earnings before depreciation and amortization) decreased to $1.721 billion in 2Q15 from $1.762 billion in 2Q14, a marginal YoY (year-over-year) decline of 2.3%. The decline was mainly due to poor performance in KMI’s Natural Gas Pipelines, CO2, and Other Segments operations. This was offset by strong operating performances from KMI’s Products Pipelines and Terminals segments.

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Products Pipelines

KMI’s Products Pipelines segment’s EBDA grew by ~37.1% YoY in 2Q15. The segment’s EBDA was mainly driven by higher volumes in the KMCC (Kinder Morgan Crude and Condensate Pipeline), the phase 1 startup of “petroleum condensate processing facility along the Houston Ship Channel, and contributions from the Double H Pipeline, which was part of the Hiland acquisition” that was completed in 1Q15.

Terminals

The Terminals segment’s 2Q15 EBDA grew by ~19.7% over 2Q14. The increase in this segment’s EBDA was driven by the recent addition of storage capacity, terminal acquisitions, and the service launch of the “Edmonton Rail Terminal, a 50-50 joint venture with Imperial Oil.” Meanwhile, the Terminals segment’s earnings were negatively impacted by weakness in the domestic steel market and the global coal market.

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Other segments: Natural Gas Pipelines

The Natural Gas Pipelines segment, which is KMI’s largest in terms of EBDA, experienced a decline in EBDA mainly due to lower natural gas prices that affected the segment’s midstream gathering and processing assets.

Energy Transfer Partners (ETP), Targa Resource Partners (NGLS), DCP Midstream Partners (DPM), MarkWest Energy Partners (MWE), and Crestwood Midstream Partners (CMLP) are among the midstream companies that have exposure to natural gas prices through their natural gas midstream assets.

Together, ETP, NGLS, DPM, MWE, and CMLP account for ~24.96% of the Alerian MLP ETF (AMLP). KMI alone constitutes ~4.36% of the Energy Select Sector SPDR Fund (XLE).

Other segments: CO2

KMI’s CO2 segment’s 2Q15 EBDA declined by ~27.7% YoY mainly due to lower commodity prices. “The commodity price impact on the CO2 segment in 2Q was higher than the sensitivities announced at the beginning of the year.”

Other segments: Kinder Morgan Canada

The Kinder Morgan Canada segment’s EBDA fell by 7.5%. The segment’s earnings were negatively impacted by an “unfavorable foreign exchange rate, as the Canadian dollar declined in value by approximately 11 percent since 2Q14.”

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