Kinder Morgan reports drop in first-quarter earnings

HOUSTON — Kinder Morgan Energy Partners first-quarter profits were down 5 percent, the company announced Wednesday, but officials were upbeat that growing demand for natural gas would be a boon for the company.

The company emphasized that it increased its quarterly cash distribution to unit-holders to $1.38 per unit in the first quarter, up 6 percent from its 2013 first quarter distribution.

The company reported net income of $746 million, or 67 cents per unit, for the period ending March 31. That was down from $783 million or 97 cents per unit a year ago.

The company’s revenue, however, rose 37 percent to $3.65 billion.

“We had a very good quarter,” Chairman and CEO Richard Kinder said in a call with investors. “We’re on track for a very good year.”

Company officials touted the large volumes of natural gas Kinder Morgan transported during the first quarter and said they’re counting on growing demand for natural gas to be a source of strength for its companies in the future.

In particular, officials highlighted the success of its natural gas pipelines segment, which saw its earnings grow more than 40 percent to $564 million. The company benefited from the unusually cold winter in the U.S., which resulted in natural gas throughput that was continuously near capacity on many of its pipelines.

Kinder pointed to analysts’ projections that U.S. demand for natural gas could rise by a third by 2024 as “a little understated.” He highlighted the demand for gas for LNG exports, electric generation, industrial use and shipment to Mexico as factors that will bode well for the company’s future. “All of these facts I think are relevant to saying we are at the very beginning of what we view as a tremendous upswing in the need for natural gas transportation in the United States,” Kinder said.

Kinder said while Mexico’s energy reforms will focus on exploration and production of gasoline, the company will need more natural gas to meet its rising power demands. He said it will be too expensive for the country to import large volumes of natural gas via LNG shipments, and Kinder Morgan is strategically positioned to deliver natural gas by pipeline the country.

“All in all we see all these events … as a very positive trend that will drive growth at Kinder Morgan in the years to come,” he said.

Two other Kinder Morgan companies reported their first quarter earnings Wednesday. El Paso Pipeline Partners’ profits for the quarter were essentially flat, falling $1 million to $173 million. Kinder Morgan Inc.’s earnings fell $5 million to $287 million.