Midstream energy company Kinder Morgan Inc. (KMI) on Tuesday said its $300 million stock repurchase program announced last August has been “substantially completed,” and it now will repurchase another $100 million. The entire $400 million repurchase is expected to be completed by the end of 2002.

CEO Richard D. Kinder said, “The additional $100 million that will be used to repurchase outstanding common stock represents less than a quarter of the over $400 million in free cash flow that KMI is expected to generate in 2002.” He said subsidiary Kinder Morgan Energy Partners LP (KMP) “continues to be the primary driver of KMI’s cash flow.”

Kinder noted that the share repurchase expansion, “possible because of KMI’s strong cash flow and solid balance sheet,” is also a tax-efficient way to return some of KMI’s cash to its shareholders. “As we generate cash throughout 2002 and beyond, we will consider additional increases to our repurchase program.” He said the Houston-based company also is committed to maintaining its strong balance sheet, which at the end of 2001 had a total debt-to-capital ratio of 47%.

In mid-January, KMI and KMP announced record earnings for both 2001 and the fourth quarter (see Daily GPI, Jan. 18). KMI recently announced an increase in its 2002 earnings per share guidance to between $2.55 and $2.65, up from its previously announced guidance of $2.40 and $2.50. “We are comfortable with the low end of that range, which represents about a 30% increase over 2001 earnings, without any additional acquisitions,” Kinder said. KMI, he said, is comfortable with consensus first quarter 2002 estimates for earnings per share of $0.66.

KMP recently announced its intention to increase the annual distribution per unit by at least 10 cents to $2.30 in the first full quarter after the Tejas Gas acquisition closes (see Daily GPI, Dec. 18, 2001). “By the end of 2002, we expect KMP will increase its per unit cash distribution to an annualized rate of over $2.50, substantially higher than the current annualized rate of $2.20,” Kinder said. KMP is comfortable with consensus first quarter 2002 estimates for earnings per unit of $0.43, as well as the consensus 2002 estimate for earnings per unit of $1.80.

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