Kinder Morgan has reported a net loss for the second quarter of 2021 of US$757 million (€643.4 million), greater than Q2 2020, which saw a net loss of US$637 million.
The company says that the loss was mainly due to a US$1.6 billion non-cash impairment related to anticipated lower volumes and rates on contract renewals on its South Texas natural gas processing and gathering assets in the US. Kinder Morgan’s adjusted earnings, which do not include the impairment, amounted to US$516 million. It has approved a cash dividend of US$0.27/share, which is a 3% increase on Q2 2020.
Its terminals segment reported increase earning compared to Q2 2020, with tank volumes now approaching pre-pandemic levels.
‘Corresponding increases in variable throughput and ancillary service fees more than offset a normalization in tank utilisation to historical levels and an elevated number of tanks temporarily off-lease for routine inspection and maintenance. Our Jones Act tankers experienced a decline in fleet utilization and average charter rates during the quarter compared to the prior year period, despite the ongoing economic recovery, as charter activity tends to lag underlying supply and demand fundamentals,’ says KMI president Kim Dang, adding that the bulk segment is also doing well wit increase steel and coal exports.
Crude and condensate product volumes have increased by 6% compared to Q2 2020 and total refined products volumes have increased by 37%. Gasoline volumes specifically are up by 37% and diesel by 13%. Jet volumes are up by 129%. Compared to Q2 2019, the reference point for pre-pandemic levels, jet fuel is still down by 26%, but other products are now largely back to those levels. Jet, gasoline and diesel volumes have all increased since Q1 2021, up 28%, 17% and 10% respectively.
CO2 segment earnings were down as a result of lower CO2 sales and crude volumes along with increased well work costs, partially offset by higher realised crude and NGL prices, but this is expected to recover. The company also said that it is continuing work on gas pipelines in Massachusetts and Louisiana, and recently acquired Stagecoach Gas Services, a natural gas pipeline and storage joint venture between Consolidated Edison and Crestwood Equity Partners. It is also creating biodiesel and renewable diesel hubs in California. In July 2021, it bought Kinetrex, the leading supplier of LNG in the US Midwest which also produces and supplies renewable natural gas (RNG).
The company overall is recovering from the difficult conditions caused by the COVID-19 pandemic, and reported a net income attributable to KMI of US$652 million for the first six months of 2021, compared to a net loss attributable to KMI of US$943 million for the first six months of 2020.
‘As the global economy continues to recover from the pandemic, our company generated substantial adjusted earnings and robust coverage of this quarter’s dividend. Our shareholders continue to benefit from the philosophy that guides our decision-making: fund our expansion capital needs internally, maintain a healthy balance sheet, and return excess cash to our shareholders through dividend increases and/or share repurchases,’ says KMI executive chairman Richard D. Kinder, adding that the company has reduced its net debt by more than US$12 billion in the past six years.
Kinder Morgan expects o generate net income attributable to KMI of US$1.7 billion and declare dividends of US$1.08 per share for 2021.