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KMI, EPD, WPZ, and MPLX: A Leverage Comparison

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KMI’s leverage

Kinder Morgan’s (KMI) net debt stood at $37.0 billion at the end of 1Q18, $331 million higher quarter-over-quarter. Of the $331 million increase, nearly $100 million was associated with increased debt at Kinder Morgan Canada (KML.TO). Notably, Kinder Morgan’s net debt has fallen ~$5.8 billion since the end of 1Q15.

Kinder Morgan’s net debt-to-adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) ratio was 5.1x at the end of 1Q18. KMI has budgeted for a net debt-to-adjusted EBITDA ratio of ~5.1x in 2018. It currently expects to meet or beat the budgeted number. The above graph shows Kinder Morgan’s debt-to-EBITDA ratio over the last six years.

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EPD’s debt-to-EBITDA

Enterprise Products Partners’ debt-to-adjusted EBITDA ratio was 4.1x at the end of 1Q18, unchanged from 2017. Enterprise Products’ debt-to-EBITDA ratio rose to 4.4x in 2016 due to acquisitions. Its ratio has remained below 4.5x—a number MLPs usually target—for the last several quarters.

WPZ’s leverage

Williams Partners’ adjusted net debt-to-EBITDA ratio was 3.5x at the end of 2017. The company is targeting an adjusted debt-to-EBITDA ratio of below 4.5x in 2018. Its ratio has come down significantly from more than 5x in June 2015 to 3.5x at the end of 2017. Williams Partners’ analyst-adjusted net debt-to-EBITDA ratio was 4.4x at the end of 1Q18.

MPLX’s ratio

MPLX reported a total debt-to-adjusted EBITDA ratio of 3.6x at the end of 2017. The company, whose total debt stood at $7.3 billion at the end of 2017, looks the least leveraged of the four companies. Next, let’s see what institutional investors are doing with their holdings of the abovementioned midstream companies.

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