Kinder Morgan Inc. saw a roughly $1 billion windfall from Winter Storm Uri and has experienced "substantial interest" in its services following the February weather event that left millions of Texas customers without power for days.
"While we view the event and our financial results as nominally non-recurring, we are already pursuing more long-term firm capacity sales and some associated capital investments that will help our customers to be even better positioned for future extreme weather and create incremental value for Kinder Morgan," CEO Steven Kean said during the natural gas pipeline giant's April 21 first-quarter earnings conference call.
Still, what President Kimberly Dang quantified as an approximately billion-dollar impact from the winter storm enabled the company to raise its first-quarter cash dividend by 3% and increase 2021 guidance. Kinder Morgan now expects to generate net income attributable to the company in a range between $2.7 billion and $2.9 billion, distributable cash flow in a range of $5.1 billion to $5.3 billion, and adjusted EBITDA in a range of $7.6 billion to $7.7 billion.
Both Dang and Kean, however, noted that there are some outstanding disputes with customers over February bills.
"Pretty much everybody paid in the normal course," Kean said. "We do have some disputes and I'd say [they are] mostly unfounded."
When it comes to future extreme weather events, meanwhile, Kean said Kinder Morgan is more than willing to invest in improving assets.
"We have had very specific conversations with specific customers about enhancements we could make to our systems to make them firm customers of ours and some of those enhancements would require some capital," Kean said. "There is a continued and determined focus on examining winterization."
Kinder Morgan executives also fielded several questions about its newly formed energy transitions group. Kean declined to "quantify that opportunity set" but noted that the company would evaluate potential joint venture partners and even "alternative sources of capital" such as special purpose acquisition companies.
Fuels such as hydrogen and renewable diesel are already on the firm's radar as it looks for opportunities to move more renewable natural gas on existing pipelines and build out its CO2 value chain to include carbon capture.
Kinder Morgan separately on April 21 posted first-quarter adjusted EBITDA of $2.81 billion, up from $1.85 billion a year earlier. The S&P Capital IQ consensus adjusted EBITDA estimate for the quarter was $1.76 billion.
The company's distributable cash flow in the first quarter was $2.33 billion, up from $1.26 billion in the prior-year period. Kinder Morgan reported net income attributable to the company of $1.41 billion, up from a net loss attributable to the company of $306 million a year earlier.