Kinder Morgan reports higher second-quarter earnings

Profit jumped for pipeline giant Kinder Morgan Energy Partners in the second quarter of the year, with recent acquisitions and growth in natural gas operations helping it multiply its net income.

The Houston-based midstream company reported a net income of $1 billion during the second quarter, up from $132 million in the same period a year ago. The large figure was mainly a result of a reported $558 million increase in the value of assets it recently acquired.

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Kinder Morgan executives, in a conference call discussing the results, focused on their earnings before depreciation, depletion and amortization, which were $1.34 billion, up 39 percent from the same period a year ago. Those results were fueled largely by its natural gas-related pipeline business, which contributed $566 million.

The company said it increased its quarterly cash distribution to $1.32 per unit for owners of record as of July 31, up 7 percent from the second quarter distribution a year ago.

Kinder Morgan CEO Richard Kinder said the inflated net income included the $558 million gain that he viewed as “meaningless from a cash flow basis.”

But Kinder Morgan did see substantial earnings growth, driven by gains from its natural gas pipeline operations, which have expanded because of recent acquisitions, Kinder said.

“Obviously, we’re very bullish on the future of natural gas in America,” Kinder said, adding: “With our enormous footprint, we think that will put us in a position to grow dramatically across the coming years.”

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Kinder Morgan expanded its operations after it acquired El Paso Corp. and Copano Energy, each of which had major pipeline operations moving natural gas and other products.

Kinder Morgan completed the $4 billion acquisition of Copano in May, a deal in which Kinder Morgan also took on $1 billion in Copano’s debt. Copano’s 6,900 miles of pipelines and nine processing plants are now a part of the Kinder Morgan network of more than 82,000 miles of pipelines and 180 terminals.

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