Kinder Morgan: The Texas’ Freeze Winner

Kinder Morgan: The Texas’ Freeze Winner

The first big winner from Texas' Great February Freeze is now revealed: Kinder Morgan Inc (KMI).

While extreme conditions hobbled rivals, the company's intrastate gas pipelines and storage network kept running. The result was a $1 billion windfall, which nearly doubled Q1 distributable cash flow to $1.02 per share.



DCF covered the dividend (increased 3% this month) by almost a four-to-one margin. And the company used the resulting surplus and proceeds from a low-cost bond issue to pay off $1.9 billion in higher cost debt.

Management raised 2021 guidance for EBITDA to a range of $7.6 to $7.7 billion, and for DCF to $5.1 to 5.3 billion. It also reduced projected year-end debt-to-EBITDA to 3.9 to 4 times, well below the long-term target of 4.5 times.



An oil tanker is docked at the Kinder Morgan terminal. (AP Photo/Mark Lennihan)



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During the earnings call, management emphasized parts of the business still face pressure from the pandemic and energy price cycle. Those include the flagship Natural Gas Pipelines unit (72.8% of Q1 earnings before depreciation and amortization), which saw a 3% decline in transport throughput and 25% lower gathering volumes. The shortfalls