Wednesday, pipeline transportation and energy storage company Kinder Morgan Energy Partners LP (KMP) reported a decrease in third-quarter profit, hurt primarily by a sharp decline in revenues. Kinder Morgan said all of its business segments outperformed their 2008 third quarter results with the exception of CO2 business, which fell about 2% short of its third quarter results from last year due to o significantly lower crude oil prices. The company declared a quarterly cash distribution of $1.05 per common unit.
The Houston, Texas-based company reported a net income attributable to Kinder Morgan Energy Partners or KMEP for the third quarter of $395.5 million, up from $329.8 million in the corresponding quarter last year.
Net income attributable to KMEP before certain items was $351.1 million versus $345.0 million for the same period last year. Certain items resulted in a net gain of almost $9 million for the quarter, primarily reflecting insurance reimbursements in the company's Terminals business.
Net income attributable to non-controlling interest for the quarter was $4.2 million compared to $3.1 million in the third quarter of 2008.
Limited Partners' interest in the net income attributable to KMEP for the quarter declined marginally to $123.3 million or $0.43 per unit from $124.2 million or $0.48 per unit in the similar period of fiscal 2008.
On average, fifteen analysts polled by Thomson Reuters expected the company to earn $0.37 per limited partner unit for the quarter. Analysts estimates typically exclude special items.
Revenues for the quarter fell sharply to $1.66 billion from $3.23 billion in the prior-year quarter. Seven analysts had a revenue consensus of $2.17 billion for the third quarter.
Chairman and CEO Richard Kinder said, "KMP had a very strong third quarter despite the ongoing impact from lingering economic headwinds that we have been experiencing all year. We generated distributable cash flow of $1.12 per unit, substantially higher than our budget for the quarter, which resulted in excess coverage over our quarterly distribution of approximately $19 million."
Segment wise, Products Pipelines business reported first-quarter earnings before DD&A and certain items of $166.7 million, up 19% from $140.6 million in the comparable period of 2008.
For the quarter, Natural Gas Pipelines business earnings before DD&A and certain items was $94.8 million compared to $177.2 million in the similar period last year.
CO2 business earnings for the quarter before DD&A and certain items decreased to $198.6 million from $203.3 million in the first-quarter of 2008.
The Terminals business produced third quarter segment earnings before DD&A and certain items of $144 million, up 9% from $132.4 million for the comparable period in 2008.
Kinder Morgan Canada produced third quarter segment earnings before DD&A and certain items of $47.7 million, up 20% from $39.6 million for the same period in 2008.
KMEP said all of its business segments bettered their 2008 third quarter performance with the exception of CO2 business, which fell about 2% short of its third quarter results from last year due to significantly lower crude oil prices.
KMEP reported third quarter distributable cash flow before certain items of $320 million or $1.12 per unit, up 14% from $281.9 million or $1.09 per unit for the comparable period last year.
The company declared a cash distribution of $1.05 or $4.20 per common unit annualized payable on November 13, 2009, to unitholders of record as of October 30, 2009. The distribution represents a 3% increase over the third quarter 2008 cash distribution of $1.02 or $4.08 per unit annualized.
Among others in the industry, Houston, Texas-based TEPPCO Partners LP (TPP) is scheduled to report its third quarter financial results on October 26. The Street currently expect the company to post earnings of $0.42 per limited partner unit on revenues of $2.05 billion for the third quarter.
For the nine-month period, the company's net income attributable to KMP before certain items was $1.0 billion compared to $1.1 billion in the same period last year. Including certain items, net income attributable to KMP for the first nine months was $0.9 billion compared to $1.0 billion for the same period last year.
Limited Partners' interest in net income for the period declined to $254.5 million or $0.92 per LP unit from $448.5 million or $1.76 LP per unit in the prior year.
Revenues for the period declined to $5.09 billion from $9.45 billion in the same period of 2008.
Looking ahead, as previously announced, KMP expects to declare cash distributions of $4.20 per unit for 2009, which would represent a 4.5% increase over 2008.
KMEP said that it expects to generate or be very close to generating sufficient distributable cash flow to cover its published annual distribution target. Most of the $2.1 billion in distributable cash that was forecast in KMP's 2009 budget is secure and not subject to volatile market conditions
Kinder Morgan Management, LLC (KMR) also expects to declare distributions of $4.20 per share for 2009.
KMP closed Wednesday's regular trading at $56.81, up $0.74 or 1.32%, on a volume of 738,418 shares on the NYSE. In the past 52 weeks, the stock traded at a range of $40.19 - $56.99, with a 3-month average volume of 647,002 shares.
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