Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 6% and adjusted EPS increased by 12% compared to the previous year [7] - Net income attributable to Kinder Morgan was $715 million, a 24% increase from the second quarter of 2024 [19] - Adjusted net income was $619 million, with adjusted EPS of $0.28, reflecting a 13% increase from the previous year [20] - The company ended the quarter with $32.3 billion in net debt and a net debt to adjusted EBITDA ratio of 4.0x, down from 4.1x in the previous quarter [21] Business Line Data and Key Metrics Changes - Natural gas transport volumes were up 3% due to LNG deliveries, while natural gas gathering volumes were down 6% [14] - Refined products and crude volumes were both up 2% compared to the previous year [15] - The CO2 segment saw a 3% decrease in oil production volumes but a 13% increase in NGL volumes [18] Market Data and Key Metrics Changes - U.S. natural gas demand is expected to grow by 20% by 2030 according to Wood Mackenzie estimates [9] - LNG feed gas demand in the U.S. is projected to increase by 3.5 BCF per day this summer compared to 2024, and more than double by 2030 [5] Company Strategy and Development Direction - The company aims to own and operate stable fee-based assets core to energy infrastructure, using cash flow to invest in attractive return projects while maintaining a solid balance sheet [13] - The strategy remains focused on expanding natural gas pipeline networks to support growing demand, particularly in LNG and power sectors [15][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth of natural gas, driven by increasing global demand and U.S. LNG exports [3][5] - The federal permitting environment has improved, allowing for quicker project approvals, which is expected to benefit future growth [10][90] Other Important Information - The project backlog increased from $8.8 billion to $9.3 billion during the quarter, with $1.3 billion in new projects added [11] - The company expects significant cash tax benefits in 2026 and 2027 due to recent tax reforms [10][52] Q&A Session Summary Question: Changes in the commercial landscape and competitive advantages - Management highlighted the existing asset footprint and a strong track record in project delivery as key competitive advantages [28][29] Question: Progress on natural gas infrastructure expansion in Arizona - Management acknowledged the need for more natural gas in Arizona and mentioned ongoing discussions regarding potential projects [31] Question: Capital allocation between gas pipelines and gathering investments - Management reiterated that investment decisions are based on risk-reward assessments, with no changes in their approach [36] Question: Update on behind-the-meter opportunities - Management noted that most activity is seen from regulated utilities, with potential for independent power producers to announce projects [40] Question: Trends in gas demand and project mix - Management indicated that while LNG is a significant driver of demand growth, power demand is also expected to grow substantially [49] Question: Impact of tax reform on cash flow and project financing - Management confirmed that tax reform will provide benefits starting in 2025, but it will not change their investment strategy or return thresholds [54] Question: Concerns about potential oversupply in the LNG market - Management stated that they have not seen a slowdown in discussions with LNG customers and continue to see new projects being announced [105][106]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 6% and adjusted EPS increased by 12% compared to the previous year [9] - Net income attributable to Kinder Morgan was $715 million, a 24% increase from the second quarter of 2024 [20] - Adjusted net income was $619 million, with adjusted EPS of $0.28, reflecting a 13% increase from the previous year [21] - Net debt at the end of the quarter was $32.3 billion, with a net debt to adjusted EBITDA ratio of 4.0x, down from 4.1x in the previous quarter [22] Business Line Data and Key Metrics Changes - Natural gas transportation volumes were up 3% due to LNG deliveries, while natural gas gathering volumes decreased by 6% [16] - Refined products and crude volumes both increased by 2% compared to the previous year [17] - The CO2 segment saw a 3% decrease in oil production volumes but a 13% increase in NGL volumes [19] Market Data and Key Metrics Changes - U.S. natural gas demand is expected to grow by 20% by 2030, with significant contributions from LNG exports [10] - LNG feed gas demand in the U.S. is projected to increase by 3.5 BCF per day this summer compared to 2024, and more than double by 2030 [7] Company Strategy and Development Direction - The company aims to own and operate stable fee-based assets, using cash flow to invest in attractive return projects while maintaining a solid balance sheet [14] - The project backlog increased from $8.8 billion to $9.3 billion, with new projects added and existing projects placed in service [12] - The company is focused on expanding its natural gas pipeline network to support growing demand [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth of natural gas demand, driven by population growth and the transition to cleaner energy sources [4] - The federal permitting environment has improved, allowing for quicker project approvals [10] - Management expects significant cash tax benefits from recent tax reforms, with no material cash tax liability anticipated until 2028 [11] Other Important Information - The company declared a quarterly dividend of $0.29 per share, an increase of 2% from the previous year [20] - Moody's and S&P have placed the company's credit rating on a positive outlook [25] Q&A Session Summary Question: Has the commercial landscape changed with demand tailwinds? - Management noted that their existing asset footprint and track record in project delivery have allowed them to remain competitive in securing projects [28] Question: What is the progress on building additional natural gas infrastructure in Arizona? - Management acknowledged the need for more natural gas in Arizona and mentioned ongoing discussions regarding potential projects [31] Question: How does the company view capital allocation between gas pipelines and gathering investments? - Management emphasized that investment decisions are based on risk-reward assessments, with no change in their approach to capital allocation [36] Question: What is the outlook for behind-the-meter opportunities? - Management indicated that most activity is seen from regulated utilities, with potential for future projects as IPPs secure contracts [40] Question: How does the company view the risk of Permian overbuild? - Management expressed confidence in their existing contracts and the ability to extract value from their pipelines, viewing the risk as low [80][82] Question: What is the expected timeline for the Haynesville gathering project? - Management plans to have facilities in service by the end of the fourth quarter next year, with volume ramp-up expected [87]

Financial Performance - Kinder Morgan reported quarterly earnings of 28 cents per share, exceeding the analyst consensus estimate of 27 cents [1] - Quarterly revenue reached $4.04 billion, surpassing the analyst consensus estimate of $3.74 billion and showing an increase from $3.572 billion in the same period last year [1] Future Outlook - The company affirmed its fiscal 2025 adjusted EPS guidance of $1.27 per share, aligning with the $1.27 estimate [3] - Executive Chairman Richard D. Kinder expressed optimism about the company's future, citing growing natural gas demand forecasts and a supportive regulatory environment [2] Stock Performance - Kinder Morgan's stock was up 0.14% at $27.95 in extended trading on the day of the earnings release [3]

[Second Quarter 2025 Financial Results](index=1&type=section&id=KINDER%20MORGAN%20REPORTS%20SECOND%20QUARTER%202025%20FINANCIAL%20RESULTS) [Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) Kinder Morgan reported strong second quarter 2025 results with a 24% increase in net income and a 6% rise in Adjusted EBITDA compared to Q2 2024, driven by the Natural Gas Pipelines and Terminals segments, while increasing its project backlog by $1.3 billion, declaring a 2% higher dividend, maintaining a healthy balance sheet with a 4.0x Net Debt-to-Adjusted EBITDA ratio, and expressing a highly positive outlook citing growing natural gas demand, particularly for LNG exports Q2 2025 Key Financial Metrics vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income Attributable to KMI | $715 million | $575 million | +24% | | Earnings Per Share (EPS) | $0.32 | $0.26 | +23% | | Adjusted EPS | $0.28 | $0.25 | +12% | | Adjusted EBITDA | $1,972 million | $1,858 million | +6% | | Dividend per share | $0.2925 | $0.2875 | +2% | - The company added **$1.3 billion** to its project backlog during the quarter, bringing the total to **$9.3 billion**, with approximately **93%** consisting of natural gas projects[1](index=1&type=chunk)[9](index=9&type=chunk) - Management highlights the strong outlook for natural gas, driven by a **20%** projected demand growth through 2030, led by LNG exports, with contracts to move almost **8 Bcf/d** to LNG facilities, expected to grow to nearly **12 Bcf/d** by 2028[7](index=7&type=chunk)[8](index=8&type=chunk) - The company generated **$1.6 billion** in cash flow from operations and **$1.0 billion** in free cash flow (FCF), ending the quarter with a Net Debt-to-Adjusted EBITDA ratio of **4.0 times**[5](index=5&type=chunk) [2025 Full-Year Outlook](index=2&type=section&id=2025%20Outlook) Kinder Morgan anticipates exceeding its original 2025 budget, primarily due to contributions from the Outrigger Energy II acquisition, with the initial budget projecting an 8% increase in net income and a 10% increase in Adjusted EPS compared to 2024, and a target year-end Net Debt-to-Adjusted EBITDA ratio of 3.8 times - The company expects to exceed its 2025 budget, factoring in contributions from the Outrigger Energy II acquisition which closed in Q1 2025[12](index=12&type=chunk) 2025 Budgeted Financial Targets (vs. 2024) | Metric | 2025 Budget | % Change vs. 2024 | | :--- | :--- | :--- | | Net Income Attributable to KMI | $2.8 billion | +8% | | Adjusted EPS | $1.27 | +10% | | Dividends per share | $1.17 | +2% | | Adjusted EBITDA | $8.3 billion | +4% | | Year-End Net Debt-to-Adjusted EBITDA | 3.8 times | N/A | - The budget is based on assumed average annual prices of **$68/barrel** for WTI crude oil and **$3.00/MMBtu** for Henry Hub natural gas[13](index=13&type=chunk) [Business Segment Overview](index=3&type=section&id=Overview%20of%20Business%20Segments) In Q2 2025, financial performance improved in the Natural Gas Pipelines and Terminals segments compared to the prior year, benefiting from higher contributions from key pipeline systems and gains from the Jones Act tanker fleet, while Products Pipelines and CO2 segments experienced earnings declines due to weak commodity prices and other factors [Natural Gas Pipelines](index=3&type=section&id=Natural%20Gas%20Pipelines) The segment's financial performance improved due to higher contributions from the Texas Intrastate system and Tennessee Gas Pipeline (TGP), with overall transport volumes rising 3% year-over-year, driven by LNG deliveries, which offset a 6% decline in natural gas gathering volumes - Improved financial performance was primarily driven by the Texas Intrastate system and Tennessee Gas Pipeline (TGP)[15](index=15&type=chunk) Natural Gas Pipelines Volume Changes (Q2 2025 vs Q2 2024) | Volume Type | % Change | | :--- | :--- | | Transport Volumes | +3% | | Gathering Volumes | -6% | [Products Pipelines](index=3&type=section&id=Products%20Pipelines) Segment contributions declined compared to Q2 2024, despite a 2% increase in both refined products and crude/condensate volumes, attributed to weak commodity prices and the expiration of legacy contracts ahead of a pipeline conversion - Segment contributions were down due to weak commodity prices and the expiration of legacy contracts[17](index=17&type=chunk) - Total refined products volumes and crude and condensate volumes both increased by **2%** compared to Q2 2024[17](index=17&type=chunk) [Terminals](index=3&type=section&id=Terminals) Earnings in the Terminals segment increased year-over-year, led by higher rates in its fully contracted Jones Act tanker fleet, with liquids terminals also benefiting from expansion projects and higher rates, particularly at the Houston Ship Channel facilities - The Jones Act tanker fleet led the increase with higher rates and remains fully contracted[18](index=18&type=chunk) - Liquids terminals benefited from expansion projects and higher rates, especially at Houston Ship Channel facilities[18](index=18&type=chunk) [CO2 Segment](index=3&type=section&id=CO2%20Segment) The CO2 segment, which includes Energy Transition Ventures (ETV), reported lower earnings compared to Q2 2024, caused by lower prices for CO2 and D3 RINs, which was partially offset by higher D3 RIN volumes from increased renewable natural gas (RNG) sales - Earnings were down due to lower CO2 and D3 RIN prices[19](index=19&type=chunk) - The negative impact was partially offset by higher D3 RIN volumes generated through increased renewable natural gas sales[19](index=19&type=chunk) [Other News and Project Updates](index=4&type=section&id=Other%20News%20and%20Project%20Updates) Kinder Morgan announced positive corporate developments, including a ratings outlook change to positive from Moody's and a new debt issuance at favorable rates, detailing a multi-billion dollar slate of new and progressing capital projects, overwhelmingly focused on expanding its natural gas infrastructure to meet demand from LNG and power generation sectors [Corporate Updates](index=4&type=section&id=Corporate%20Updates) Moody's revised Kinder Morgan's rating outlook to positive, aligning with S&P's existing positive outlook, and the company successfully issued $1.85 billion in senior notes in May 2025 at interest rates more favorable than budgeted - On June 16, 2025, Moody's changed KMI's rating outlook to **positive**, citing continued earnings growth, a conservative approach to funding, and favorable leverage levels, aligning with S&P's existing positive outlook[22](index=22&type=chunk) - On May 1, 2025, KMI issued **$1.1 billion** of **5.15%** senior notes due 2030 and **$750 million** of **5.85%** senior notes due 2035 at favorable rates[22](index=22&type=chunk) [Natural Gas Pipelines Projects](index=4&type=section&id=Natural%20Gas%20Pipelines%20Projects) The company is advancing numerous significant natural gas projects, including expanding the Trident Intrastate Pipeline to 2.0 Bcf/d, launching the $112 million Texas Access Project (TAP), and investing over $500 million in the KinderHawk gathering system, with other major projects like Mississippi Crossing (MSX) and South System Expansion 4 (SSE4) moving through regulatory processes, representing billions in future investment to serve growing demand - The Trident Intrastate Pipeline project was expanded to **2.0 Bcf/d** capacity at a cost of approximately **$1.8 billion**, expected in service in Q1 2027[22](index=22&type=chunk) - The Mississippi Crossing (MSX) project, a **~$1.7 billion** pipeline to transport up to **2.1 Bcf/d**, has filed its certificate application with FERC and is expected to be in service in Q4 2028[24](index=24&type=chunk) - The South System Expansion 4 (SSE4) project, a **~$3.5 billion** project to increase SNG's capacity by **~1.3 Bcf/d**, has also filed its FERC application, with a phased in-service schedule for Q4 2028 and Q4 2029[24](index=24&type=chunk) [Products Pipelines Projects](index=5&type=section&id=Products%20Pipelines%20Projects) On July 1, 2025, the company placed its SFPP East Line Expansion project into service, adding 2,500 barrels per day of capacity to Tucson, Arizona, fully supported by a five-year take-or-pay agreement - The SFPP East Line Expansion project to Tucson, Arizona was placed in service on July 1, 2025, adding **2,500 barrels per day** of capacity[23](index=23&type=chunk)[25](index=25&type=chunk) [Financial Statements and Reconciliations](index=11&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents the unaudited consolidated financial statements for the second quarter and first six months of 2025, including the income statement, balance sheet, and supplemental data, along with detailed reconciliations of GAAP metrics to the non-GAAP measures used for management analysis, such as Adjusted EBITDA and Free Cash Flow [Consolidated Statements of Income (Table 1)](index=11&type=section&id=Table%201%20Consolidated%20Statements%20of%20Income) For the second quarter of 2025, Kinder Morgan reported revenues of $4.04 billion, a 24% increase in Net Income Attributable to KMI to $715 million, and a 23% increase in basic and diluted EPS to $0.32 compared to the same period in 2024 Q2 2025 Income Statement Highlights (vs. Q2 2024) | Line Item | Q2 2025 (millions) | Q2 2024 (millions) | % Change | | :--- | :--- | :--- | :--- | | Revenues | $4,042 | $3,572 | +13.2% | | Operating Income | $1,152 | $1,038 | +11.0% | | Net Income Attributable to KMI | $715 | $575 | +24.3% | | Basic and Diluted EPS | $0.32 | $0.26 | +23.1% | [Non-GAAP Reconciliations (Tables 2 & 3)](index=12&type=section&id=Tables%202%20%26%203%20Non-GAAP%20Reconciliations) These tables reconcile GAAP Net Income to key non-GAAP metrics, showing that for Q2 2025, Net Income of $715 million was adjusted to $619 million of Adjusted Net Income and $1.972 billion of Adjusted EBITDA, with the Natural Gas Pipelines segment being the largest contributor to Adjusted Segment EBDA at $1.347 billion for the quarter Q2 2025 Reconciliation of Net Income to Adjusted EBITDA | Item | Amount (millions) | | :--- | :--- | | Net income attributable to KMI | $715 | | Total Certain Items | $(96) | | DD&A | $616 | | Income tax expense | $179 | | Interest, net | $453 | | Amounts associated with joint ventures | $105 | | **Adjusted EBITDA** | **$1,972** | Q2 2025 Adjusted Segment EBDA (millions) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Natural Gas Pipelines | $1,347 | $1,223 | | Products Pipelines | $289 | $298 | | Terminals | $300 | $281 | | CO2 | $145 | $162 | [Segment Volumes and Hedges (Table 4)](index=14&type=section&id=Table%204%20Segment%20Volume%20and%20CO2%20Segment%20Hedges%20Highlights) This table details operational volumes by segment for Q2 2025, showing Natural Gas transport volumes rose 3% YoY to 44,585 BBtu/d, while gathering volumes fell 6%, and total refined product delivery volumes increased by 2%, also disclosing the company's crude oil and NGL hedge positions through 2028 Q2 2025 vs Q2 2024 Key Volume Changes | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Natural Gas Transport (BBtu/d) | 44,585 | 43,123 | +3.4% | | Natural Gas Gathering (BBtu/d) | 3,931 | 4,203 | -6.5% | | Total Products Delivery (MBbl/d) | 2,213 | 2,169 | +2.0% | | Total Oil Production - net (MBbl/d) | 25.52 | 26.20 | -2.6% | - The company has hedged crude oil volumes at weighted average prices ranging from **$64.51** to **$66.98 per barrel** for the remainder of 2025 through 2028[57](index=57&type=chunk) [Consolidated Balance Sheets (Table 5)](index=15&type=section&id=Table%205%20Preliminary%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Kinder Morgan reported total assets of $72.4 billion and total liabilities of $40.3 billion, with Net Debt standing at $32.3 billion and the Net Debt-to-Adjusted EBITDA ratio at 4.0x, unchanged from the end of 2024 Balance Sheet Highlights (as of June 30, 2025) | Item | Amount (millions) | | :--- | :--- | | Total Assets | $72,371 | | Total Liabilities | $40,290 | | Total KMI Stockholders' Equity | $30,770 | | Net Debt | $32,348 | - The Net Debt-to-Adjusted EBITDA ratio was **4.0x** as of June 30, 2025, consistent with the ratio at year-end 2024[61](index=61&type=chunk) [Supplemental Information (Table 6)](index=16&type=section&id=Table%206%20Preliminary%20Supplemental%20Information) This table provides a reconciliation to Free Cash Flow (FCF), showing that for the second quarter of 2025, the company generated $1.65 billion in cash flow from operations, resulting in $1.0 billion of FCF, and after paying $654 million in dividends, FCF after dividends was $348 million Q2 2025 Free Cash Flow Calculation (millions) | Item | Amount | | :--- | :--- | | Cash flow from operations | $1,649 | | Capital expenditures (GAAP) | $(647) | | **FCF** | **$1,002** | | Dividends paid | $(654) | | **FCF after dividends** | **$348** | [Non-GAAP Financial Measures and Forward-Looking Statements](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Forward-Looking%20Statements) This section provides detailed definitions for the non-GAAP financial measures used in the report, such as Adjusted EBITDA, Adjusted EPS, Net Debt, and Free Cash Flow (FCF), explaining their calculation and management's rationale for their use, and contains a standard safe harbor statement, cautioning that forward-looking statements are subject to various risks and uncertainties and are not guarantees of future performance - Management evaluates performance using non-GAAP measures including Adjusted Net Income, Adjusted EPS, Adjusted Segment EBDA, Adjusted EBITDA, Net Debt, and FCF[14](index=14&type=chunk)[27](index=27&type=chunk) - The report defines "Certain Items" as adjustments used to calculate non-GAAP measures, which typically do not have a cash impact or are not part of normal business operations[29](index=29&type=chunk) - The forward-looking statements section cautions investors about risks and uncertainties related to supply/demand, commodity prices, counterparty risk, and tariffs that could cause actual results to differ from expectations[40](index=40&type=chunk)[41](index=41&type=chunk)

Group 1: Legislative Impact - The One Big Beautiful Bill Act (BBB) is expected to release approximately $3 trillion in stimulus, benefiting the oil and gas sector, particularly pipeline operators like Kinder Morgan (KMI) [3][9] - The BBB allows oil and gas producers to write off capital expenses immediately and delays fees on methane emissions until 2035, which is likely to increase production [5][10] Group 2: Company Overview - Kinder Morgan operates as a corporation, avoiding the complexities associated with master limited partnerships (MLPs), and offers a 4.2% dividend that grows annually [4][8] - KMI manages 79,000 miles of pipelines in North America, with 40% of U.S. natural gas production flowing through its systems, positioning it favorably in the energy market [11][12] Group 3: Financial Stability - KMI's revenue is largely secured through "take-or-pay" contracts (64%) and fee-based agreements (26%), providing stability against fluctuations in oil and gas prices [14] - The company anticipates $5.2 billion in distributable cash flow for 2025, significantly exceeding its $2.6 billion dividend obligations, allowing for growth investments and debt repayment [16] Group 4: Market Position and Growth Potential - KMI has outperformed major MLPs like Enterprise Products Partners (EPD) in total return over the past three years, despite EPD offering a higher yield [15] - The company's focus on natural gas aligns with growing trends such as reshoring industrial production and increasing energy demands from AI [12][13]

Samuel Smith has a diverse background that includes being lead analyst and Vice President at several highly regarded dividend stock research firms and running his own dividend investing YouTube channel. He is a Professional Engineer and Project Management Professional and holds a B.S. in Civil Engineering & Mathematics from the United States Military Academy at West Point and has a Masters in Engineering from Texas A&M with a focus on applied mathematics and machine learning. Samuel leads the High Yield Inv ...

Core Viewpoint - Kinder Morgan (KMI) is expected to report quarterly earnings of $0.28 per share, reflecting a year-over-year increase of 12%, with anticipated revenues of $3.88 billion, an 8.7% increase compared to the previous year [1]. Earnings Estimates - Over the last 30 days, there has been no revision in the consensus EPS estimate for the quarter, indicating stability in analysts' forecasts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Key Metrics Projections - Analysts project the 'Realized weighted average oil price' to be $66 per barrel, down from $69 per barrel in the same quarter last year [5]. - The 'Terminals - Bulk transload tonnage' is expected to be 13 million tons, compared to 14 million tons reported in the same quarter last year [5]. - The 'Realized weighted average NGL price' is estimated at $30 per barrel, up from $27 per barrel a year ago [6]. Segment Performance Estimates - The 'Segment EBDA- Products Pipelines' is projected at $292.43 million, compared to $301 million in the same quarter last year [7]. - 'Segment EBDA- Terminals' is expected to be $276.23 million, down from $281 million a year ago [7]. - The 'Segment EBDA- Natural gas Pipelines' is anticipated to reach $1.32 billion, compared to $1.23 billion in the same quarter last year [8]. - The estimated 'Segment EBDA- CO2' is $178.58 million, down from $206 million a year ago [8]. Stock Performance - Kinder Morgan shares have returned +0.7% over the past month, while the Zacks S&P 500 composite has changed by +4% [8].

Core Viewpoint - Kinder Morgan, Inc. (KMI) is expected to report second-quarter 2025 earnings on July 16, with factors influencing its performance being analyzed [1] Group 1: Q1 Performance and Surprise History - In the last reported quarter, KMI's adjusted earnings per share were 34 cents, missing the Zacks Consensus Estimate of 35 cents due to a planned turnaround at its condensate processing facility and increased operating costs [2] - KMI has missed the Zacks Consensus Estimate in three of the last four quarters, with an average negative surprise of 3.33% [2] Group 2: Estimate Trends - The Zacks Consensus Estimate for second-quarter earnings per share is 28 cents, reflecting a 12% improvement from the prior year [3] - The top-line estimate of $3.88 billion indicates an 8.69% increase from the year-ago figure [3] Group 3: Factors Influencing Performance - KMI is expected to maintain stable performance due to long-term contracts that ensure consistent cash flows and protect against short-term market fluctuations [4] - The Natural Gas Henry Hub Spot price increased almost 53% year over year in the second quarter, which may have positively impacted KMI's revenues [4] - Higher gathering and transport volumes year over year likely aided overall throughput and fee-based earnings [5] - KMI's project backlog, approximately $8 billion, is expected to expand, supported by acquisition contributions from the Outrigger Energy II deal [5] - Proactive tariff mitigation and disciplined cost controls may have helped preserve margins amid inflationary pressures [5] Group 4: Earnings Whisper - KMI's Earnings ESP is +20.71%, indicating a strong potential for an earnings beat [7] - The company currently holds a Zacks Rank of 3, suggesting a stable outlook [7] - The upcoming Q2 earnings report is anticipated to show EPS of $0.28, up 12% year over year, supported by higher gas prices and increased transport volumes [8]

Core Insights - Kinder Morgan (KMI) is recognized as one of the largest and most renowned companies in the energy sector, headquartered in Houston, Texas [1] Investment Strategy - The focus is on long-term growth and dividend growth investing, with an emphasis on identifying undervalued stocks and high-quality dividend-growing companies [1] - Profitability is prioritized as a safer driver of gains compared to low valuation, highlighting the importance of margins, free cash flow stability and growth, and returns on invested capital [1] - Continuous research is conducted on high-quality companies to uncover potential investment opportunities [1]

Core Viewpoint - Midstream operators are positioned to benefit from increasing demand for natural gas driven by artificial intelligence, data centers, and LNG exports, while providing reliable cash flow and high distribution yields. Group 1: Energy Transfer - Energy Transfer offers a yield of 7.4%, supported by strong distributable cash flow, with approximately 90% of EBITDA derived from fee-based contracts, many of which are take-or-pay [2][4] - The company is increasing its capital expenditures from $3 billion in 2024 to $5 billion this year to capitalize on growing power demand and LNG exports [3] - Energy Transfer has signed a supply agreement with Cloudburst for a data center project in Texas and is seeing progress on the Lake Charles LNG project, enhancing its growth prospects [4] Group 2: Enterprise Products Partners - Enterprise Products Partners has a yield of 6.8% and has increased its payout for 26 consecutive years, with about 85% of cash flow coming from fee-based contracts [5][6] - The company is pursuing $7.6 billion in growth projects, with $6 billion expected to go live this year, and has increased its spending on these projects from $3.9 billion last year to $4.5 billion this year [6] Group 3: Western Midstream - Western Midstream offers a yield of 9.4% and maintains a strong balance sheet with a leverage ratio below 3, supported by cost-of-service contracts and minimum volume commitments [7][8] - The company aims for mid-single-digit annual distribution increases while investing in expansion opportunities, notably the Pathfinder produced-water system, which is projected to cost over $450 million [8] Group 4: MPLX - MPLX has a yield of 7.5% and has achieved double-digit distribution growth for three consecutive years, with its distribution covered 1.5 times by cash flow [9][10] - The company is increasing its expansion capex to $1.7 billion in 2025, driven by demand for natural gas and NGLs, and is enhancing its infrastructure through full ownership of the BANGL pipeline and a joint venture with Oneok [10][11] Group 5: Kinder Morgan - Kinder Morgan has the lowest yield at 4.1% but controls about 40% of U.S. natural gas flow, with 80% of cash flow from volumetric fee-based contracts [13][15] - The company's project backlog has surged to $8.8 billion, primarily focused on power demand related to AI and LNG facilities, with expected EBITDA yields of 16.7% on new spending [14][15] - Kinder Morgan has improved its balance sheet, reducing leverage from 5.1 in 2017 to 4 in 2024, positioning itself well for future growth amid rising natural gas export demand [15]