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Kinder Morgan Energy Partners, Message Board

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  • rrb1981 rrb1981 Jun 30, 2010 3:08 PM Flag

    Distributions paid from issue of units

    Hmmm, Bilyjoerobideaux, you disappoint me. You ask questions that you already know the answer to. Since you seem to know a lot about Kinder Morgan's assets, you also almost certainly know about cash flow and how cash flow is different than earnings. Earnings is a GAAP number that is influenced by depreciation, amortization etc, which are non-cash charges. I won't fall into you trap of saying earnings aren't important. They are important, but they don't dictate how much cash can be paid out. Look at Real Estate Investment Trusts for a comparison of asset rich companies with huge depreciation charges.

    Ohhh and SACROC and Yates, yes, they are depleting. Right now production is actually increasing, but eventually it will flatten out and then begin declining. I don't like that. Of course, they can continue to try and buy depleted oil fields for a song, flood them with CO2 and make a killing....I'd prefer they not be in that business, but they got it at a cheap price and it is hedged, so it is what it is. It is a material part of the business, but much of that business is also 3rd party CO2. Care to tell us what the R/P life is for SACROC and see if you have done your homework....