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Kinder Morgan Announces 2013 Financial Expectations

Stocks in this article: EPB KMI KMP KMR

“We see exceptional growth opportunities across all of KMP’s business segments, including the need to build more midstream infrastructure to move or store oil, gas and liquids from the prolific shale plays in the U.S. and the oilsands in Alberta, along with increasing demand for export coal and CO 2,” Kinder said.

In 2013, KMP expects to:

  • Generate over $5.4 billion in business segment earnings before DD&A (adding back KMP’s share of joint venture DD&A), an increase of almost $900 million over the 2012 forecast.
  • Distribute over $2 billion to its limited partners.
  • Produce excess cash flow of more than $30 million above the distribution target of $5.28 per unit.
  • Invest approximately $2.8 billion in expansions (including contributions to joint ventures) and small acquisitions (excluding the dropdowns from KMI). Over $625 million of the equity required for this investment program is expected to be funded by KMR dividends.

KMP’s expectations assume an average West Texas Intermediate (WTI) crude oil price of approximately $91.68 per barrel in 2013, which approximated the forward curve at the time this budget was prepared. The overwhelming majority of cash generated by KMP’s assets is fee based and is not sensitive to commodity prices. In its CO 2 segment, the company hedges the majority of its oil production, but does have exposure to unhedged volumes, a significant portion of which are natural gas liquids. For 2013, the company expects that every $1 change in the average WTI crude oil price per barrel will impact the CO 2 segment by approximately $8 million, or approximately 0.15 percent of KMP’s combined business segments’ anticipated segment earnings before DD&A.

EPB expects to declare cash distributions of $2.55 per unit for 2013, a 13 percent increase over its 2012 expected distribution of $2.25 per unit. EPB’s 2013 budget includes the expected purchase (dropdown) of 50 percent of Gulf LNG from KMI. EPB’s growth is expected to be driven by its stable, regulated natural gas pipeline and storage assets, its LNG businesses and incremental cost and growth synergies related to KMI’s purchase of El Paso. In 2013, EPB expects to generate earnings before DD&A of $1.22 billion (adding back EPB’s share of joint venture DD&A), an increase of over $50 million compared to 2012. EPB expects to produce excess cash flow of more than $25 million above the 2013 distribution target of $2.55.

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