Kinder Morgan, Inc. may not be recession-proof, but its fee-based portfolio of midstream assets clearly felt no ill effects during the third quarter, according to CEO Richard Kinder. The company produced a 109% increase in third quarter net income to $58.2 million, or $0.48 per diluted common share, exceeding Wall Street consensus estimates by 2 cents/share. The results compared to $26.7 million, or $0.23 per diluted common share, in the third quarter of 2000.

“KMI had an excellent quarter, and we are on target to deliver almost 50% growth in earnings per share this year,” said Kinder. “As a result, we are increasing our expected 2001 earnings from $1.88 to $1.90 per share, and we project 2002 earnings will be in the range of $2.40 to $2.50 per share.”

The KMI board of directors declared a common stock dividend of $0.05 per share payable on Nov. 14 to shareholders of record as of Oct. 31. Third quarter earnings were driven by KMI’s ownership of the general partner of Kinder Morgan Energy Partners, L.P., which voted to increase its 2001 third quarter distribution per unit to $0.55 ($2.20 annualized). The distribution is 29% higher than the $0.425 distribution per unit paid for the third quarter of 2000. KMP’s net income was $115.8 million, 66% higher than the $69.9 million reported in the third quarter last year. Earnings met the analysts’ consensus estimate of $0.37 per unit, compared to $0.33 per unit during the same period a year ago. KMI will receive $73.3 million in total distributions from KMP for the third quarter of 2001, up 98% from $37 million during the same period last year.

“As KMP’s cash flow grows, KMI’s general partner share of that cash flow grows dramatically,” Kinder explained. “For the first nine months of 2001, KMI has received almost $200 million in total distributions from KMP, and is on track to receive more than $270 million for the year, up substantially from $150 million in 2000. KMP’s cash flow continued to increase significantly in the third quarter due to internal growth in pipeline and terminal segments and the strong performance of acquired assets.”

Natural Gas Pipeline Company of America (NGPL), a wholly owned subsidiary of KMI, had segment earnings of $83.6 million, slightly higher than the $82.3 million it reported in the third quarter of 2000. The increase in earnings was principally due to higher transport margins. NGPL’s capacity through the winter remains virtually sold out, as management continues to successfully re-contract capacity and enter into contracts with new electric generation load. NGPL expects to connect 3,000 to 4,000 MW of incremental natural gas-fired electric generation capacity annually through 2004.

KMI segment earnings in retail were $5.6 million, up 15%. Power and other operations recorded segment earnings of $20.6 million, 105% higher than the $10.0 million recorded in the third quarter of 2000.

KMP’s products pipelines segment delivered a 51% increase in earnings to $97.2 million. The KMP natural gas pipelines segment produced segment earnings of $55.3 million, a 59% increase over the $34.9 million reported in the third quarter of 2000. The increase reflected the contribution of natural gas assets that were transferred to KMP from Kinder Morgan Inc. at the end of 2000, principally Kinder Morgan Texas Pipeline.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.