Kinder Morgan Energy Partners' cash, debt up in Q2, payouts rise

By Lisa Kerner

Charlotte, N.C., July 17 - Kinder Morgan Energy Partners, LP ended the second quarter with $18.6 billion of total debt and debt-to-EBITDA of about 3.9 times, said vice president and chief financial officer Kimberly Allen Dang during the company's quarterly earnings conference call on Wednesday.

Debt increased $1.4 billion for the quarter and $3.2 billion year to date, Dang said, highlighting the assumption of $558 million of debt related to the acquisition of El Paso Corp.

Kinder Morgan Energy plans to end the year with debt-to-EBITDA of 3.8 times to 3.9 times.

During the quarter, Dang said Kinder Morgan Energy issued $4.5 billion of equity, primarily related to the purchase of Copano Energy.

Cash and cash equivalents at the end of the quarter were $656 million, compared to $529 million at Dec. 31.

According to chief executive officer Richard Kinder, Kinder Morgan Energy's five business segments produced about $1.34 billion in segment earnings, a 39% increase from the year before.

Kinder Morgan Energy has "an enormous backlog of future products already nailed" across its companies, said Kinder.

The project backlog of about $14 billion includes expansion and joint venture projects.

Distributions, dividends increase

Kinder said the second quarter was "strong," with all three companies in the group - Kinder Morgan Energy, Kinder Morgan Inc. and Kinder Morgan Management - increasing dividends or distributions.

During the quarter, Kinder Morgan Energy declared a quarterly cash distribution per common unit of $1.32 payable on Aug. 14 to unitholders of record as of July 31, a 7% increase over the second-quarter 2012 cash distribution per unit of $1.23, a company news release said.

Kinder Morgan Energy's second-quarter distributable cash flow before certain items was $505 million, up 38% from the comparable period in 2012. The distributable cash flow per unit before certain items was $1.22 compared to $1.07.

For the first six months of 2013, Kinder Morgan Energy's distributable cash flow before certain items was up 27% at $1.1 billion versus the prior-year period. Distributable cash flow per unit before certain items was $2.67 compared to $2.44 for the same period last year.

Kinder Morgan, Inc. increased its quarterly cash dividend 14% from a year ago to $0.40 per share payable on Aug. 15 to shareholders of record as of July 31. Kinder Morgan, Inc. had $294 million available for dividend payments, down from $307 million. Cash available for dividends was up 32% for the first six months of the year at $807 million.

Shareholders of Kinder Morgan Management, LLC will also receive a $1.32 dividend payable on Aug. 14 to shareholders of record as of July 31. The dividend to Kinder Morgan Management shareholders will be paid in the form of additional shares, according to a company news release.

Financial highlights

Kinder Morgan Energy had net income for the second quarter before certain items was $627 million, compared with $467 million for the second quarter of 2012.

For the six-month period, net income before certain items was about $1.3 billion, compared with $1 billion for the first six months of 2012.

Combined, Kinder Morgan Energy and Kinder Morgan Management sold common units and shares valued at about $585 million under their at-the-market programs during the second quarter.

Kinder Morgan Energy, a Houston-based petroleum pipeline company, expects to declare cash distributions of $5.33 per unit for 2013, a 7% increase over its 2012 distribution of $4.98 per unit.

The board of directors of Kinder Morgan, Inc. approved a $350 million share and warrant repurchase with no time limit of minimum number of shares or warrants the company intends to purchase, according to Kinder.

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