Kinder Morgan Inc. (KMI) and Kinder Morgan Energy Partners LP. (KMP) reiterated Tuesday that the companies expect to “meet or beat” 2002 consensus recurring earnings estimates for both the fourth quarter and full-year 2002.

Consensus estimates have KMI posting $0.73 per share for the fourth quarter and $2.68 per share for the year and KMP reporting $0.45 per unit for the fourth quarter and $1.90 per unit for full-year 2002.

“We have very strong earnings growth from all of our business segments at both KMI and KMP, except power, which will be down as previously indicated…as we shrink that operation,” said KMI and KMP CEO Richard D. Kinder in a Tuesday conference call.

Management also said Tuesday that it expects KMI to post 2003 recurring earnings of $3.11 per share. KMP, a master limited partnership, projected 2003 cash distributions of $2.63 per unit. The expectations include contributions only from assets currently owned by KMI and KMP and do not include the benefit of future acquisitions. Management said KMI’s 2003 outlook represents 16% earnings per share growth over 2002 consensus recurring earnings estimates and will be the target for determining bonuses for KMI employees.

“KMI continues to generate strong earnings and cash flow and is on track to significantly exceed its 2002 budget of $2.58 recurring earnings per share, which was detailed at last January’s analyst conference,” said Kinder. “The 2003 budget will be the standard by which we measure our performance next year. We remain committed to transparency, and we will continue to review and explain any variances to the budget during our quarterly earnings calls. It is important to note that although we are optimistic about our chances for making accretive acquisitions in 2003, we have not included any expected benefits of acquisitions in our base budget.”

Management said KMI’s expected cash flow in 2003 is approximately $450 million.

In the afternoon conference call, KMI management also provided an update on its previously announced examination of several non-recurring, non-cash items, which will be reported in the fourth quarter of 2002. “We are nearly complete with our review of our effective tax rate, our deferred tax account and our carrying value of several power investments,” Kinder said. “Our current estimate of the net impact of these items is a net, non-recurring, non-cash charge of approximately $30 to $40 million after-tax in the fourth quarter. As always, we will clearly identify these non-recurring gains and losses for investors.”

KMP said its 2003 outlook represents 8% growth over expected 2002 distributions of $2.435 per unit and will be the target for determining bonuses for KMP employees.

“KMP continues to generate strong earnings and cash flow growth in each of its business units,” said Kinder. “It is important to note that although we are optimistic about KMP’s chances for making accretive acquisitions in 2003, we have not included any expected benefits of acquisitions in our base 2003 budget. Without any additional acquisitions, we expect KMP will be able to grow its quarterly cash distribution to $0.68 per unit ($2.72 annualized) by the fourth quarter of 2003. This would represent an 11% increase from our current distribution of $0.61 per unit ($2.44 annualized).”

KMP said it also expects to increase its quarterly cash distribution to at least $0.625 per unit ($2.50 annualized) for the fourth quarter of 2002. Kinder said detailed budgets for KMI and KMP will be published and discussed during the company’s annual analyst meeting Jan. 22.

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