Kinder Morgan Inc. on Wednesday reported $586 million in net income and $3.501 billion in revenue for the second quarter, both down from last year on lower oil and gas prices.
Earnings before deductions from April to June represented a $49 million decline from the corresponding quarter in 2022, while revenue fell $1.65 billion.
Although earnings per share fell to $0.24, the midstream-focused company on Wednesday declared a higher cash dividend of $0.2825 per unit for the second quarter of 2023. Kinder Morgan has increased the dividend by two percent from April to June 2022, although it expected to end 2023 below its financial targets due to its financial targets.
“By 2023, KMI [Kinder Morgan] budgeted net income attributable to KMI of $2.5 billion ($1.12 per share) and expects to declare dividends of $1.13 per share, a 2 percent increase from dividends declared for 2022,” the Texas state-owned company said in a press release.
“While we are on budget through the year, we now expect to finish 2023 slightly below our full-year plan, all of which can be explained by lower commodity prices,” Kinder Morgan said. “To date, crude oil and natural gas prices have been below our 2023 budget assumptions of $85 per barrel and $5.50 per MMBtu. [million British thermal unit]respectively, and our NGL [natural gas liquids] the crude ratio has been below our budgeted ratio of 45 percent.”
But he added: “We expect a strong performance in our global business to partially offset the weaker prices.”
In the second quarter, the company transported 39.173 trillion Btu per day of natural gas by pipeline, compared with about 37.465 trillion Btu per day from April to June 2022. Meanwhile, sales volumes decreased to 2.22 trillion Btu per day from 2.579 Btu per day year-over-year, with a cumulative volume of 3.2 trillion Btu per day in the year 944 trillion Btu per day.
Meanwhile, Kinder Morgan’s oil production segment averaged 30,820 barrels per day, with most of the oil coming from the SACROC field in the Permian Basin. Oil production increased both sequentially and year-over-year.
However, the company’s average realized oil price fell quarterly and year-over-year to $67.73 per barrel, while the average realized price for NGLs was $31.32, also for year-ago and sequential comparisons.
“Contributions from the Products Pipelines business segment decreased compared to the second quarter of 2022, largely due to the impact of the prior year period from the sharp rise in commodity prices, which primarily impacted our transmix business,” said Kim Dang, president of Kinder Morgan. Fuel prices soared last year after Russia’s invasion of Ukraine, as trade sanctions sought to deprive the major energy producer of war chests.
At $100.93 a barrel, global benchmark Brent crude reached its highest since 2014 in 2022 in terms of annual average, according to data from the US Energy Information Administration (EIA). West Texas Intermediate also hit an eight-year high at $94.9 a barrel. The Henry Hub natural gas price benchmark hit its highest since 2009 at $6.45 per million Btu, according to the EIA database.
Looking ahead, Kinder Morgan stated its intention to increase investment in low-carbon activities. “We are focused on maintaining a strong balance sheet while internally financing capital projects that produce returns well in excess of our cost of capital, including projects that are part of the ongoing energy evolution toward a lower carbon future,” said Executive Chairman Richard D. Kinder.
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