Houston Chronicle Sunday

Picture brightens for pipeline giant

- By David Hunn david.hunn@chron.com twitter.com/@davidhunn

The crash in crude prices has been tough on oil and gas companies. And Houston pipeline giant Kinder Morgan didn’t sail through unscathed.

It cut about 100 jobs last year. Revenues dropped by billions of dollars. Share prices plummeted, from $42 in 2015 to under $20 by the end of 2016, and haven’t rebounded.

But Kinder acted quickly to protect profits, cutting its dividend by 75 percent, trimming projects and managing debt. Even as other energy companies were posting hundreds of millions of dollars in losses over the past two years, Kinder’s annual earnings never dipped below $200 million.

And profits are now rising again.

Kinder Morgan is one of the largest energy companies in North America, with interests in 84,000 miles of pipelines and 155 oil, gas and chemical terminals. It came in 10th among public companies on this year’s Chronicle 100, with 2016 revenue of more than $13 billion and growth in earnings per share of 150 percent.

“Overall, the longterm prospects for North American energy are bright,” Kinder Morgan’s CEO, Steve Kean, told analysts in January. “And our assets are wellpositi­oned to participat­e in the recovery and growth.”

Kinder Morgan’s recent rise tracked the U.S. shale revolution.

As drillers began pulling surprising volumes of oil and gas out of the ground, they needed a way to get it to market. Kinder Morgan revenues doubled, from $8 billion in 2010 to $16 billion in 2014.

But as oil prices began to tank almost three years ago, Kinder Morgan revenues fell, too, back to $14 billion in 2015 and $13 billion last year.

Net income tracked Kinder Morgan’s earnings, from $315 million in 2012 to $1 billion in 2014.

Even at the depth of the crash, the company still made $250 million. Last year, it nearly tripled that sum, to more than $700 million.

Kinder Morgan reduced long-term debt by $3 billion to $39 billion. It dropped low-return projects, focused on those with high earning potential and continued to fund all of them with savings rather than debt or equity.

And earnings per share more than doubled, from 10 cents in 2015 to 25 cents last year.

“All in all, 2016 was a very good year for us, even in the face of a challengin­g environmen­t for the industry as a whole,” said David Conover, vice president of corporate communicat­ions.

 ?? Kinder Morgan ?? The Elba Island LNG Terminal near Savannah, Ga., adds to Kinder Morgan’s long-term prospects.
Kinder Morgan The Elba Island LNG Terminal near Savannah, Ga., adds to Kinder Morgan’s long-term prospects.

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