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Kinder Morgan Energy Partners Distributes $4.98 Per Unit For 2012 – Meets Annual Budget

Stocks in this article: EPB KMI KMP KMR

NGL production for the fourth quarter was a record 19.7 MBbl/d, up 14 percent from the same period in 2011. For 2012, NGL production also set a record, 13 percent higher than last year.

This segment is an area where KMP is exposed to commodity price risk, but that risk is partially mitigated by a long-term hedging strategy intended to generate more stable realized prices. The realized weighted average oil price per barrel for the year, with all hedges allocated to oil, was $87.72 versus $69.73 for 2011. The realized weighted average NGL price per barrel for the year, allocating none of the hedges to NGLs, was $50.95 compared to $65.61 for 2011.

The Terminals business produced fourth quarter segment earnings before DD&A and certain items of $198 million, up 7 percent from $184 million for the comparable period in 2011. For the year, Terminals produced $752 million, up 7 percent from $701 million in 2011, and just below its published annual budget of 8 percent growth. Existing assets accounted for about 85 percent of the growth in the fourth quarter and 80 percent of the growth for the full year, with acquisitions making up the rest.

“Internal growth in the fourth quarter was driven by our liquids terminals on the Houston Ship Channel and in New York Harbor (due to increased volumes and rates attributable to new and restructured contracts, as well as incremental tank capacity), higher demand for export coal, and increased steel tonnage at Fairless Hills,” Kinder said. “Export coal volumes increased by more than 18 percent in the fourth quarter versus the same period last year. On the acquisition side, our additional equity investment in December 2011 in Watco Companies, which owns the largest privately held short line railroad business in the United States, contributed about 15 percent of the growth in the fourth quarter. I also would like to commend all of our employees who worked 24-7 to resume operations at our Northeast Terminals within days following Hurricane Sandy, which helped restore gasoline service within the region.”

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