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Kinder Morgan conference points.The conference call is at www.kindermorgan.com -> hit the News Room button -> find the Webcast link. Registration is not verified so just type in junk for that, use <garbage>@<garbage>.com for the email. I think it's worth listening to the first bit by Richard Kinder. The rest is rather dry until we get to the Q&A at +45 minutes into it. I'll highlight the points that stuck to me. The entire call was 1 hour 13 minutes. I am paraphrasing everything. 'IMHO's are my specific opinion. * Dividends/distributions increased (~7% from 2nd Q last year for KMP, ~17% for KMI). DCF up a lot. Negative coverage for the quarter, slightly positive ~6 months, expected to be near 1.0x for the full year. * NG volumes for generation very high, setting records. (NG volumes in general continue to ramp up, but it's a bit messy due to all the acquisitions). * Dry-gas volumes down from Haynesville. Under expectations. (IMHO nobody should be surprised by this). * NGL prices down, but Kinder has less ethane in the mix than others so it isn't horrible. NGL volumes up. * OIL volumes up, pricing good. * Kinder's four coal terminals are handling about 20% of U.S. coal exports, with modestly increasing demand. * Terminal volumes increased significantly across all segments, 80% internal growth. * Project backlog is approaching $10B across KMI/KMP/EPB, mostly already approved, ~3-4 years worth. All projects backed by long-term contracts w/shippers. * Budget savings due to acquisitions noticeable this quarter, expected to improve through the year. Richard Kinder talks a lot about all the projects being completed, under construction, and in the backlog. Balance sheet. KMP net debt $12.6B in Q2. 3.4x debt/ebitda, down from 3.5 and 3.6. However, expect to end the year with 3.9x debt/ebitda (inclusive of all acquisitions and drop-downs). (IMHO this is demonstrative of KMI's power as a GP over KMP, I think reinforcing my personal preference to be invested in KMI rather than KMP). $110M in warrants (aka KMI-WT) were repurchased by KMI during the quarter. (IMHO I think this is significant). -- The Q&A section starts at 45:00 (45 minutes) into the conference call. I think that's worth listening to. * Cash tax rate. ~36-37% once KMI gets back to normal GP operation. * Paying down debt vs increasing dividend. Proceeds from dropdown will be applied to the debt. KMI's debt (~$16B or so) from held assets will mostly be dropped down to KMP e.g. along w/ the assets, in order to get KMI back to being a normal GP. (IMHO generally speaking investors worry about GP's dropping down debt risk to MLP's but reaping the distributions). * Coal export opportunities. Kinder says they will do whatever exporting they can get good long-term contracts for, and not if they can't. Three of the coal export terminals are undergoing significant expansions. ~$460M in cap-ex for coal expansion (IMHO not sure of the time frame for that, think this year). Lots of terminal expansion opportunities in general. * KMR equity? We will issue KMP or KMR equity as appropriate, plus KMR generates $500M/year in equity from PIK 'distributions'. (IMHO people sometimes forget that KMR creates new units with their every distribution). * Transmountain, (Canadian) environmental review. They want a full environmental review but they also want it to be timely, ~18 months, not 3-4 years. (IMHO seems the Canadians want to get the stuff done). This is for converting a pipeline moving 300M barrels a day w/open-access to 500M barrels/day on 20-year contracts. Expect to permit the pipeline in late 2013, +18M review -> begin building in 2015, get it operational in 2016. (IMHO The Canadians need more firm export volume from oil sands and other areas). * Certain fixed costs on the Canadian side will not be passed through to KMP/KMI, costs related to things not under their control will. They've done similar deals in the past with good results. * NGL volumes, ethane mix: Kinder Morgan hedges NGL production but applies it all to the crude oil side. NGL mix in permium, 40-50% ethane at the well head, 18% by the time it gets to market (they burn some of it for internal power generation). Something like that. Dollar amount on lower NGL prices is about $60M less if current prices persist for the rest of the year. * KMI will drop-down stuff this year (3rd or 4th quarter), and expects to complete required pipeline sales this year mandated by the FTC. Drop-downs currently as sub C corps under KMI will be converted to LP's prior to the drop-down, then dropped down. * Richard Kinder wants to get KMI back to a pure GP as quickly as possible. Hopefully by mid-2014 (they don't really know, so +/-2 quarters IMHO). * Will move on new Opportunities as quickly as they can lock in the long-term contracts. Hope to have announcements by Q3. * All Kinder companies have combined ~680BCF of NG storage (IMHO about 17% of U.S. total I think). They believe they can leverage/optimize the capability to create additional opportunities. (IMHO he mentions power demand here, which I think might have been a bit of a slip but what it means is that they will be trying to leverage their now much larger pipeline system to form end-to-end contracts all the way to the power generators, similar to what OKS does). * Biggest opportunity for EP&G asset is east of California, focus on exports to Mexico. Intend to build laterals from the EP&G mainline down to the border (Mexico). Numerous duplication in the EP&G lines can be optimized/filled. Expect real opportunities there (IMHO timeline not specified). * EP&G dropdown to KMP: Intention to drop-down 50% of EP&G to KMP. (They rattled off some numbers here but it is clear the analyst was a bit worried about the debt being assumed by KMP for the related drop-downs). * KMI guided to 12.5% compound dividend growth, KMP 8% compound distribution growth in the past going forward. Pre-merger. Post-merger, they feel good about those numbers through 2015 and also now 9% compound dividend growth for EPB (EPB is now part of Kinder). No major surprises so far, original acquisition plan for the El Paso assets going well. IMHO I didn't hear any specific questions regarding the item highlighted by the Bloomberg report. Richard Kinder did say that the sales required by the FERC for the closing of the El Paso deal are larger than they originally anticipated so they are figuring out how best to structure it within the KMI/KMP space. -Matt |
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Msg # | Subject | Author | Recs | Date Posted |
25682 | Re: Kinder Morgan conference points. | AspenFlyer | 2 | 7/18/2012 11:58:42 PM |
25685 | Re: Kinder Morgan conference points. | Smashedthumb | 0 | 7/19/2012 8:09:36 AM |
25686 | Re: Kinder Morgan conference points. | passandshoot | 6 | 7/19/2012 8:22:09 AM |
25688 | Re: Kinder Morgan conference points. | passandshoot | 7 | 7/19/2012 8:28:13 AM |
25706 | Re: Kinder Morgan conference points (transcript on S.A.) | MattZN | 0 | 7/19/2012 4:04:32 PM |