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Kinder Morgan Energy Partners Increases Quarterly Distribution To $1.20 Per Unit

Stocks in this article: KMI KMP KMR

Acquisitions that contributed to growth quarter over quarter included purchasing 50 percent of a crude oil terminal in Cushing, Okla. (February 2011), acquiring the Port Arthur, Texas, terminal (June 2011) that handles petcoke for the Total refinery, and making an additional equity investment in Watco Companies, which owns the largest privately held short line railroad company in the United States.

In the first quarter, this segment handled 17.9 million barrels of ethanol, up 14 percent from 15.7 million barrels for the comparable period last year. Combined, the terminals and products pipelines business segments handled about 25.2 million barrels of ethanol compared to 23 million barrels in the first quarter of 2011. KMP continues to handle approximately 30 percent of the ethanol used in the United States.

Kinder Morgan Canada produced first quarter segment earnings before DD&A and certain items of $50 million, up 4 percent from $48 million for the same period in 2011, and currently is expected to finish the year slightly below its published annual budget of 1 percent growth. On a distributable cash flow basis, however, this segment is expected to meet its plan.

“Growth in the first quarter compared to the same period last year was driven by the new toll agreement on the Trans Mountain pipeline system, increased domestic throughput on the Platte Pipeline and favorable book taxes,” Kinder said. Trans Mountain volumes declined compared to first quarter of 2011 due to a regulator imposed pressure restriction that has now been lifted.

2012 Outlook

As previously announced, KMP expects to declare cash distributions of $4.98 per unit for 2012, an 8 percent increase over the $4.61 it distributed for 2011. KMP expects to generate cash flow in excess of distributions of approximately $70 million, consistent with its budget. Management expects KMP will invest approximately $1.9 billion in expansions (including contributions to joint ventures) and small acquisitions for 2012. Over $490 million of the equity required for this investment program is expected to be funded by Kinder Morgan Management, LLC (NYSE: KMR) dividends.

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