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Kinder Morgan cuts dividends, trims capex to $3.3 billion

Distributable cash flow per common share was $0.55 for Q4 2015 compared to $0.60 for Q4 2014 – Kinder Morgan update

Kinder Morgan

Richard D. Kinder, Chairman and Chief Executive Officer of Kinder Morgan Energy Partners

Kinder Morgan, Inc. said Thursday that its board of directors approved a quarterly cash dividend of $0.125 ($0.50 annualized) payable on Feb. 15, 2016, to shareholders of record as of the close of business on Feb. 1, 2016.

This is down from $0.51 per share ($2.04 annualized) for the third quarter of 2015. Consistent with KMI’s 2016 guidance provided on Dec. 8, 2015, KMI expects to declare dividends of $0.50 per share for 2016 and use cash in excess of dividend payments to fully fund growth investments.

“We are pleased with KMI’s business performance for the year especially in light of a tremendously challenging commodity environment, and we are glad to have generated the greatest amount of annual distributable cash flow in the company’s history along with a 7 per cent increase in our DCF per share year-over-year,” said Richard D. Kinder, executive chairman.

“However, we were disappointed by KMI’s stock performance, which declined 65 per cent during 2015.

Kinder says the decision to reduce the dividend was “very difficult” and a direct result of the rapid and significant disconnect between the performance of our business and the performance of the company’s stock.

“We expect the reduced dividend has completely eliminated our need to access the capital markets to fund growth projects in 2016,” he said.

“This insulates us from challenging capital markets and significantly enhances our credit profile. Moreover, by reducing the dividend and high-grading our backlog, we do not expect to need to access the capital markets to fund our growth projects for the foreseeable future beyond 2016.

As future cash flow exceeds investment needs, Kinder Morgan will be in an improved position to return value to shareholders, Kinder added.

 

 

 

2016 Outlook

KMI expects to declare dividends of $0.50 per share, generate approximately $4.9 billion of distributable cash flow available to equity holders and approximately $4.7 billion of distributable cash flow available to common shareholders (i.e., after payment of preferred dividends) and generate approximately $3.6 billion of cash flow in excess of its dividend.

KMI’s revised growth capital budget for 2016 is approximately $3.3 billion which is a reduction of approximately $900 million from the preliminary 2016 guidance.

These expectations assume an average 2016 West Texas Intermediate (WTI) crude oil price of $38 per barrel, an average 2016 Henry Hub natural gas price of $2.50 per MMBtu and interest rates consistent with the current forward curve.

Posted in: Energy Financial

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