Kinder Morgan Inc. (KMI), which operates more than 35,000 miles of U.S. pipe and 80 storage terminals, expects 2004 earnings to be 12% higher than this year, while its master limited partnership, Kinder Morgan Energy Partners LP (KMP), should see growth of at least 8%, the company said Tuesday.

KMI management pegs 2004 earnings at $3.67/share, up from 2003 consensus earnings estimates of $3.29. The forecast includes contributions from assets now owned by KMI and don’t include any acquisitions. KMI’s expected cash flow in 2004, defined as pretax income, was estimated at approximately $570 million.

Meanwhile, KMP management expects to declare cash distributions of $2.84/unit in 2004, which would be 8% higher than this year’s distributions of $2.63. However, CEO Rich Kinder noted that KMP’s earnings may be even higher in the new year.

“While we expect KMP’s distributable cash flow to grow by almost 11% in 2004, we have budgeted only 8% growth in declared distributions,” he said. “This will significantly increase KMP’s excess coverage in 2004.”

Kinder explained that the 2004 budgets will be the standard by which KMI and KMP measure their performance next year and will be the target for determining employee bonuses. “It is important to note that although we are optimistic about our chances for making accretive acquisitions in 2004, we have not included any benefits from unidentified acquisitions in our base budgets.”

The CEO said the company remained “committed to transparency, and we will continue to review and explain any variances to the budgets during our quarterly earnings calls.”

Detailed budgets for both KMI and KMP will be published and discussed during the company’s annual analyst meeting Jan. 24 in Houston.

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