Kinder Morgan - $KMI.US

What’s Kinder Morgan Business Model?

Kinder Morgan, Inc. of Delaware operates as a pipeline transportation and energy storage company. The Company owns and operates pipelines that transport natural gas, gasoline, crude oil, carbon dioxide, and other products, as well as terminals that store petroleum products and chemicals and handle bulk materials like coal and petroleum coke.

What Kinder Morgan is doing in more details?

Kinder Morgan, Inc. (KMI) is one of the largest energy infrastructure companies in North America.

It operates approximately 83,000 miles of pipelines and some 145 terminals that transport natural gas, refined petroleum products, crude oil, condensate, CO2 and other products to its customers across America.

Its terminals store and handle various commodities including gasoline, diesel fuel chemicals, ethanol, metals and petroleum coke. KMI owns and operates 50% of Natural Gas Pipeline Company of America (NGPL). It generates most of its sales in the US.

Where Kinder Morgan is Operating?

KMI reports via four segments: Natural Gas Pipelines, Terminals, Products Pipelines, and CO2.

Natural Gas Pipelines is KMI’s most significant business segment, accounting for more than 60% of total revenue. This line of business operates approximately 71,000 miles of pipelines and storage facilities, which supply roughly 40% of all consumed natural gas in the US.

Terminals is the transportation arm of KMI and brings in roughly 15% of annual sales. With approximately 50 liquid terminals, more than 30 bulk terminals, and over 15 Jones Act approved tankers, KMI is the largest independent terminal operator in North America.

(Jones Act restricts US point-to-point maritime shipping to vessels that are 75% US-owned.) The terminals transload, store, or blend refined petroleum products, crude oil, chemicals, ethanol, and bulk products to US and parts of Canada.

The Products Pipelines segment includes approximately 9,000 miles of pipelines roughly 60 terminals, making this sector the largest independent transporter of petroleum products (more than 2 million barrels per day). Moving gasoline, jet fuel, diesel, crude, and NGL products, and this sector brings about 15% of annual sales.

Although KMI is the largest CO2 transporter in North America. Transporting approximately 2 billion cubic feet/day, this segment only accounts for about 10% of the company’s total sales. Overall, services generate around 65% of the company’s revenue.

Over 30% comes from commodities, while the rest is generated from others.

Where is the geographical reach of Kinder Morgan?

Delaware-based, KMI has operations in the US, Canada, and Mexico. KMI buys and sells significant volumes of natural gas in Texas. US customers account for almost 100% of the company’s revenue and the remaining are generated from customers in Mexico and other foreign countries.

What is Kinder Morgan’s Sales and Marketing Strategy?

KMI customers include major oil companies, energy producers and shippers, as well as local distributors. The company does business under extended transport and sales contracts.

KMI conducts its Midstream assets on a fee-based arrangement and its CO2 business has third-party contracts with minimum volume requirements.

What is Kinder Morgan Financial Performance?

Revenue at KMI fluctuated in the last five years. During that period, the revenue has an overall decline of about 10%. Net income has also been fluctuating over the same period.

In 2020, annual sales decreased about 11% to $11.7 billion. The decrease in results was impacted by lower earnings from all of its business segments primarily attributable to COVID-19-related reduced energy demand and commodity price impacts and the impact of the KML and US.

Net income experienced a dip of 92% to $180 in 2020 from $2.2 billion in 2019.

The decrease was due primarily to $1,950 million of non-cash impairments of goodwill associated with its Natural Gas Pipelines Non-Regulated and CO2 reporting units and non-cash impairments of certain oil and gas producing assets in its CO2 business segment.

Cash holdings increased to $1.2 billion at the end of 2019. Operations provided $4.6 billion, offset by $911 million used in investments, and a further $2.6 billion used by financing activities.

What is Kinder Morgan Future Strategy?

Kinder Morgan’s strategy is to: focus on stable, fee-based energy transportation and storage assets that are central to the energy infrastructure of growing markets within North America; increase utilization of existing assets while controlling costs, operating safely, and employing environmentally sound operating practices; exercise discipline in capital allocation and in evaluating expansion projects and acquisition opportunities; leverage economies of scale from expansions of assets and acquisitions that fit within its strategy; and maintain a strong financial profile and enhance and return value to stockholders.

The company regularly considers and enters into discussions regarding potential acquisitions and divestitures, and it is currently contemplating potential transactions.

What is Kinder Morgan’s Background?

Kinder Morgan Energy Partners (KMP) was founded in February 1997 when a group of investors led by Executive Chairman Richard D. Kinder and Vice Chairman William V. Morgan decided to build an energy company by utilizing the master limited partnership (MLP) financial structure as a growth vehicle—something that had never been done before.

Their innovative approach proved so successful that in two decades, KMP has becomes the largest publicly traded pipeline limited partnership in America based on enterprise value.

Initially, the company grew mostly through acquisitions of existing operations but eventually took on the construction of projects.

Separately, in 1999, Mr. Kinder took over the reins of KN Energy from Lakewood, Colorado, a natural gas pipeline company serving small communities and rural areas in Kansas and Nebraska, and turned it to Kinder Morgan, Inc., Kinder Morgan’s second publicly traded company.

What is Kinder Morgan’s History?

Kinder Morgan Energy Partners (KMP) was founded in February 1997 when a group of investors led by Executive Chairman Richard D. Kinder and Vice Chairman William V. Morgan decided to build an energy company by utilizing the master limited partnership (MLP) financial structure as a growth vehicle—something that had never been done before.

Their innovative approach proved so successful that in two decades, KMP has becomes the largest publicly traded pipeline limited partnership in America based on enterprise value. Initially, the company grew mostly through acquisitions, but eventually transitioned into expansions and new build projects.

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