July 26, 2020 [Houston Chronicle] – Houston pipeline operator Kinder Morgan saw its second-quarter bottom line take a billion dollar swing from a profit to a loss as it wrote down $1 billion in assets.
The company lost $637 million in the three months ended in June compared with a profit of $518 million in the same period a year earlier. The company’s results translated into a loss per share of 28 cents, compared with an earnings per share of 23 cents one year earlier.
Facing a significant reduction in energy demand during the second quarter, Kinder Morgan’s second quarter revenue declined by 20 percent to nearly $2.6 billion from $3.2 billion in the same period a year earlier.
Kinder Morgan wrote down the value of $1 billion worth of intrastate and gathering pipelines that move natural gas in states such as North Dakota, Oklahoma and Texas. Without that non-cash impairment, the company would have made a $363 million profit in the second quarter.
The write down follows first quarter move where the company marked down the value of equipment from its carbon dioxide business and its oil production operations in the Permian Basin of West Texas by $950 million.
Despite the second quarter loss, the company is keeping its dividend for stockholders at 26.5 cents per share. As part of a plan to maintain that dividend, the company is cutting $660 million of a $2.4 billion budget that was marked for expansion projects this year.
“Our business model, which secures much of our cash flows on a take-or-pay basis independent of underlying commodity prices, positions us well even in the current environment,” Kinder Morgan CEO Steve Kean said.
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