Kinder Morgan (KMI) Releases Initial Financial Projections
Zacks Investment Research | Dec 04, 2018 07:09AM ET
Kinder Morgan, Inc. (NYSE:KMI) released preliminary financial projections for 2019.
The company expects strong performance in 2019 with distributable cash flow expected to grow 10% to $5 billion. The upside will be supported by a backlog of $6.5 billion comprising energy infrastructure expansion opportunities. Some projects that are expected to be commissioned in 2019 include the Elba Liquefaction Project and Gulf Coast Express.
Despite the sale of the Trans Mountain asset in 2018, the company expects to generate DCF of $2.20 per share and $7.8 billion of adjusted EBITDA, up 7% and 4% from 2018 budget, respectively.
The company is also believed to return additional value to shareholders through 2019 as announced earlier in 2017. For 2019, Kinder Morgan projects to enhance the declared dividend per common share to $1.00 per share (annualized), beginning with $0.25 per share for the first quarter of 2019, up 25% from the 2018 dividend and 100% from the 2017 dividend. The dividend hike is likely to continue through 2020, which is expected to reach $1.25 per share (annualized).
For 2019, Kinder Morgan intends to invest $3.1 billion in expansion projects and contributions to joint ventures. The dividends are expected to be fully funded by internally generated cash flow. A significant chunk of the company’s 2019 discretionary spending will also be funded by internal cash flow, which will negate the need to access equity markets. The company expects to exit 2019 with a 4.5x net debt-to-adjusted EBITDA ratio. Kinder Morgan’s effort places it well for an upgrade of credit ratings and already is on positive outlook at all three rating agencies.
Kinder Morgan’s projections have assumed average annual prices for West Texas Intermediate (WTI) crude oil and Henry Hub natural gas of $60.00 per barrel and $3.15 per MMBtu, respectively. The figures are in line with forward pricing during the budget process. Since bulk of cash generated by the company is fee-based, it is not directly exposed to commodity prices. Kinder Morgan has commodity price sensitivity primarily in the CO2 segment, where it hedges the majority of next 12 months’ worth oil production to reduce the sensitivity. For 2019, the company projects that every $1 per barrel change in the average WTI crude oil price will impact DCF by about $9 million. Also, each 10 cents per MMBtu change in the price of natural gas is expected to impact DCF by about $1 million.
Zacks Rank & Other Key Picks
Currently, Kinder Morgan carries a Zacks Rank #3 (Hold).
A few better-ranked players in the same sector are Eni SpA (NYSE:E) , Enterprise Products Partners L.P. (NYSE:EPD) and SunCoke Energy, Inc (NYSE:SXC) , each sporting a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.