Kinder Morgan is on steady footing despite the oil price slump (Part 7 of 16)
Revenues and profits increased
We have discussed Kinder Morgan’s (KMI) CO2 segment’s operating performance in the previous section of this series. In this article, we’ll discuss KMI’s Terminals and Products Pipelines segments’ operating performance. Read part four of this series to find out about the segment’s assets.
In 2014, Kinder Morgan’s (KMI) Terminals segment recorded higher revenues and profits. Revenues increased 22% to $1.72 billion in 2014 over the previous year. Earnings before depreciation and amortization (or EBDA), a measure of profit, increased 23% to $0.98 billion in 2014 over $0.79 billion in 2013.
EBDA margin (segment EBDA as a percentage of segment revenues) also remained steady at ~57% in 2014 compared to 2013. The primary revenue and profit drivers in 2014 were:
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$66 million profit rise following the Jones Act tankers acquisitions
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Edmonton expansion projects completion, which increased EBDA by $32 million
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Higher earnings from its Gulf Central terminals in the Houston ship channel
Segment volumes stay muted
Despite rise in revenues and profits, KMI’s Terminals segment volumes decreased 2% in 2014 over 2013.
Products Pipelines segment revenues and profits
In 2014, Kinder Morgan’s (KMI) Products Pipelines segment recorded increased revenues and profits. Revenues increased 12% to $2.06 billion in 2014 over the previous year. Earnings before depreciation and amortization (or EBDA), a measure of profit, increased 10% to $0.86 billion in 2014 over $0.78 billion in 2013.
EBDA margin (segment EBDA as a percentage of segment revenues) also decreased to 41.6% in 2014 compared to 42.3% in 2013. The primary revenue and profit driver in 2014 was the $67 million higher EBDA from Kinder Morgan Crude & Condensate Pipeline, where throughput volumes increased to 81 thousand barrels per day (MBbl/d) as compared to 24.1 MBbl/d in 2013.
Overall volumes increase
Volumes increased primarily in gasoline and condensate transportation. Kinder Morgan Crude & Condensate Pipeline led a 236% increase in pipeline throughput. Gasoline demand is on the rise in the US due to falling gasoline price led by the crude oil price fall.
Other midstream operators that have benefited from higher volumes include Williams Companies (WMB), Spectra Energy (SE), and Energy Transfer Equity (ETE). WMB, SE, and KMI account for 9.2% of the Energy Select Sector SPDR ETF (XLE).
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