Kinder Morgan Quarterly Profit Rises on Gas Pipelines

Kinder Morgan Energy Partners LP, the second-biggest U.S. pipeline company by market value, said third-quarter earnings rose on increased natural gas shipments at its expanded network.

Net income increased to $689 million from $405 million a year earlier, Houston-based Kinder Morgan said today in a statement. After payments made to Kinder Morgan Inc., its parent company, Kinder Morgan earned 59 cents a unit, compared with a 6-cent loss a year ago.

“The entire Kinder Morgan franchise has decided to go the natural gas route because they think that will be the future hydrocarbon of America,” Tanjila Shafi, an equity analyst at Standard & Poor’s Equity Services in New York, who rates the units a buy and owns none, said in a phone interview.

Natural gas demand in the U.S., including through exports, is forecast to climb to 90 billion cubic feet a day over the next decade from today’s total of 70 billion cubic feet, Chairman and Chief Executive Officer Richard Kinder told analysts and investors today on a conference call. Earnings from the gas pipelines business unit, before certain items, jumped 59 percent to $608 million from a year ago, according to the statement.

The natural gas segment is expected to make up 45.5 percent of this year’s earnings, up from 34 percent last year, Shafi said.

Revenue Rises

Revenue climbed 31 percent to $3.3 billion from $2.5 billion. Distributable cash flow, a measure of the company’s ability to pay distributions to its unitholders, rose 22 percent to $554 million, excluding certain items.

Kinder Morgan completed its $3.2 billion acquisition of Copano Energy LLC in May, giving it control of 6,900 miles (11,100 kilometers) of gas pipelines in Texas, Oklahoma and Wyoming. In September, Kinder Morgan and Valero Energy Corp. put into service their 141-mile Parkway Pipeline, which can carry as much as 110,000 barrels a day of refined oil products to Collins, Mississippi, from Norco, Louisiana.

“Our El Paso and Copano transactions have significantly increased our natural gas footprint in the United States, and KMP is well positioned to play a leading role in building and expanding infrastructure required to connect developing natural gas supplies to markets,”Kinder said in the statement.

Enterprise Products Partners LP is the largest U.S. pipeline company.

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