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Which Segments Drove Kinder Morgan’s 3Q15 Performance?

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Oct. 27 2015, Updated 8:08 a.m. ET

Kinder Morgan’s total EBDA

Kinder Morgan’s (KMI) total EBDA (earnings before depreciation and amortization) before certain non-controllable items by its business segments fell to $1.84 billion in 3Q15 from $1.86 billion in 3Q14, a YoY (year-over-year) fall of 0.9%.

The fall was mainly due to poor performance from Kinder Morgan’s CO2, Natural Gas Pipelines, and Kinder Morgan Canada segments. This was offset by slightly better performances from Kinder Morgan’s Products Pipelines and Terminals segments.

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Products Pipelines

Kinder Morgan’s Products Pipelines segment’s EBDA grew by ~29.3% YoY in 3Q15 over 3Q14, driven by higher throughput volumes on the KMCC (Kinder Morgan Crude and Condensate) Pipeline, the startup of a second splitter along the Houston Ship Channel, and contributions from the addition of the Double H Pipeline, which was part of the Hiland acquisition completed in 1Q15.

The segment’s refined products throughput volumes were up 2.5% YoY compared to the industry average of 1.5%.

Terminals

Kinder Morgan’s Terminals segment’s 3Q15 EBDA grew by ~6.4% versus 3Q14, driven by strong liquid throughput volumes. However, the dry bulk business was hit by Alpha Natural Resources’ filing for bankruptcy, which negatively impacted Kinder Morgan’s coal business.

The liquids business benefited from higher renewal rates, expansion projects placed into service, and addition to its Jones Act tanker fleet.

Other segments

  • Natural Gas Pipelines: The Natural Gas Pipelines segment, which is Kinder Morgan’s largest in terms of EBDA, experienced a slight fall in EBDA, mainly due to lower natural gas prices affecting the segment’s midstream gathering and processing business. Plus, the KinderHawk contract roll-off led to a fall in natural gas throughput volumes.
  • CO2: Kinder Morgan’s CO2 segment’s 3Q15 EBDA fell by ~22.3% YoY over 3Q14, mainly due to lower crude oil prices. The segment’s performance was also impacted by lower CO2 volumes.
  • Kinder Morgan Canada: The Kinder Morgan Canada segment’s EBDA fell by 16.0%. Its 3Q15 earnings were negatively impacted by “unfavorable foreign exchange rate, as the Canadian dollar declined in value relative to the U.S. dollar by approximately 17 percent since the third quarter of 2014.”

Targa Resources Partners (NGLS), DCP Midstream Partners (DPM), MarkWest Energy Partners (MWE), and Enable Midstream Partners (ENBL) are among the midstream companies that have exposure to natural gas prices through their natural gas midstream assets.

Kinder Morgan constitutes ~4.6% of the iShares Global Infrastructure ETF (IGF).

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