July 17, 2014 [OPIS] - Kinder Morgan Energy Partners reported on Wednesday stronger second quarter earnings for almost all business segments, with its terminals business showing the highest year-on-year increase.
The terminals business produced second-quarter segment earnings before depreciation, depletion and amortization (DD&A) and certain items of $227 million, up 19% from $191 million for the same period in 2013.
The terminals segment is on track to exceed its published annual budget of 21% annual growth due to the acquisition of American Petroleum Tankers (APT) in January, which is engaged in the marine transportation of crude oil, condensate and refined products in the United States.
“The increase in earnings was driven by strong performance at our liquids facilities, predominantly driven by expansions at the Edmonton Terminal and our Houston Ship Channel facilities (BOSTCO and Galena Park), and the APT acquisition,” said Richard Kinder, KMP’s CEO.
Strong petcoke volumes, including the impact of the BP Whiting expansion, and improved steel volumes also contributed to this segment’s earnings increase.
For the second quarter, terminals handled 18.6 million bbl of ethanol, up significantly from 15.6 million bbl for the same period last year.
Combined, the terminals and products pipelines business segments handled 29 million bbl of ethanol, up 15% from 25.3 million bbl for the second quarter of 2013.
KMP currently handles approximately 33% of the ethanol used in the United States.
Besides terminals, KMP’s natural gas Pppelines business raised earnings by 13%, carbon dioxide business up 3%, products pipelines business up 17%, and Kinder Morgan Canada down 20% mainly due to an unfavorable foreign exchange rate.
KMP’s net income was $669 million compared to $1.01 billion for the second quarter last year, reflecting a large gain from certain items in the second quarter last year primarily related to re-measurement of KMP’s original 50% interest in the Eagle Ford Gathering joint venture to fair market value as a result of the Copano acquisition. Certain items for the second quarter totaled a net loss of $29 million versus a net gain of $383 million for the same period last year.
KMP’s expectations assume an average WTI crude oil price of approximately $96.15/bbl in 2014, which approximated the forward curve at the time the budget was prepared.
The cash generated by KMP’s assets is predominantly fee-based and is not sensitive to commodity prices.
