Which Segment Will Drive Kinder Morgan’s 1Q16 Performance?
What Can We Expect from Kinder Morgan's 1Q16 Earnings Release?
Kinder Morgan’s Natural Gas Pipelines segment
Natural Gas Pipelines is Kinder Morgan’s (KMI) largest business segment in terms of EBDA (earnings before depreciation and amortization). In 4Q15, the segment accounted for 57% of company’s total EBDA. KMI constitutes 4.8% of First Trust North American Energy Infrastructure ETF (EMLP).
The Natural Gas Pipelines segment experienced a slight increase in its 4Q15 EBDA, driven by higher throughput volumes due to the expansion projects placed into service. This was offset by lower natural gas prices affecting the segment’s midstream gathering and processing business. The segment’s performance is expected to be impacted by lower natural gas prices in 1Q16.
Enable Midstream Partners (ENBL), Summit Midstream Partners (SMLP), and DCP Midstream Partners (DPM) are midstream companies that have direct exposure to natural gas prices through their natural gas midstream assets. Lower gas prices in 1Q16 might impact the performance of these companies for the quarter.
Kinder Morgan’s CO2 segment
KMI’s CO2 (carbon dioxide) segment, which provides CO2-enhanced crude oil recovery and CO2 sales and transportation, saw its 4Q15 EBDA fall by ~21% YoY from 4Q14, mainly due to lower crude oil prices. The trend is expected to continue in 1Q16.
Kinder Morgan’s Product Pipelines segment
KMI’s Products Pipelines segment’s YoY EBDA growth in 1Q16 is expected to be driven by higher volumes along the Kinder Morgan Crude and Condensate Pipeline, recent acquisitions, and projects placed into services.
Kinder Morgan’s Terminals segment
The Terminals segment’s performance was hit by declining dry bulk volumes due to the bankruptcy of KMI’s coal customers, Arch Coal and Alpha Natural Resources. However, strong liquid throughput volumes, acquisitions, and recent expansion projects continue to support the segment’s EBDA growth.
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