KMI - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. At the end of today's presentation we will conduct the question-and-answer session. [Operator Instructions] Today's conference is being recorded, if you have any objections you may disconnect at this time.

I would now like to turn the call over to Mr. of Chairman Executive Kinder, Kinder Morgan. Rich may you begin. Sir,

Rich Kinder

Thank you, Brendon.

includes financial as I'd we Canadian as securities and non-GAAP remind Securities outlook Litigation call the the you applicable of and meaning Before within KML and to as the laws, certain statements this Reform KMI that usual, and Private by territorial Exchange like well Act begin, provincial of measures. XXXX, financial and releases today's and XXXX, Act forward-looking Securities earnings of

SEC for making on outlook encourage described financial full use Canadian Before forward-looking releases, the securities cause decisions, to assumptions, you and earnings outlook to important strongly non-GAAP material KML's at actual territorial and and from any statements. we a forward-looking investment and review end read in materially our and and latest differ of measure of of those the statements risk that disclosures commissions, set expectations, provincial forth anticipated results such financial filings KMI's and and factors may financial list our with and to

way Before quarterly turning a flow clear calls to generate the I Morgan. words management maximizes cash they and now at we to made that hope responsible that few managing returns in strategy our Kinder earnings about financial our with and are shareholders. substantial begin the usually by call team, I very a assets the we've over these Steve it financially our

to returns and continue opportunity expand generate flow, whether will and to the to asset That cash base. said, growing that and it's appreciate what our understand that underpins important strong business with

the miles our and XX,XXX comes earnings through before know, all pipelines, about gas you our plus majority gas gas consumed in segment, country. As natural handle this of from we natural XX% our DD&A of of segment

expansion are gas the addition, bulk segment. to capital also our projected natural and devoted of dollars In current the

supply needs the and our emissions both demand of our on importantly, to energy reducing is very are in critical to and natural economy perspective. the American cost-effective around bullish gas gas world, future gas a growing very manner. Natural a greenhouse from to We the satisfy

Our estimate by firms agencies by closely. energy those out field over and years consensus which the borne optimism the actual and of follow few governmental last is the results most

Sometimes lose looking in involved, the demand rearview shaping through another XXXX U.S. from decade of is XXXX we be was XXXX a XX% up sight above actual XX% so facts up mirror and demand to year. first of earlier. strong the the

previously XXXX grow said between is industrial by growth power by now to and and driven is by XX% Looking demand forward, U.S. projected Mexico. L&G, we demand to over and as that exports demand being

by of Turning in global XX% supply and by natural supply projected that world, to year. to all be side, in is -- the the XXXX of gas quarter growth the the the one over for accounting supply producing U.S. in

to come. Now any Twain that vast higher that they winner drive vast gas and utilization will U.S. for growing future. scenario these supplies Connecting look when is markets -- particularly believe assets. infrastructure these I’m of natural existing is predictions years aware Mark I But very difficult, the under saying making demand concern new a almost supplies to of

of LNG situated why this network That's reason big facilities. rapidly of KMI to well and long-term of to future growing these extensive where is Louisiana the advantage feel export good positioned our is very about serve petrochemical pipelines company. and especially Texas take opportunities, well the in we very a

I'll that, to turn over With it Steve.

Steve Kean

Rich. thanks, right All

the start Michels president with Sanders it KMI our we’ll our numbers, performance, on the We afternoon David questions. give you update will over will going on to updating be after our Dang, then turn on KMI and through to both take update KML your CFO I am and you you segment KML number, Dax Kim this and you will to take

this adhering KMI to summary you. we’ve to adhere been for is and on we've the continue The laid principles out that

met target from balance all times We and approximately debt sheet upgrades have agencies. to now EBITDA rating our having with three X.X a strong ratings

We're maintaining track to attractive a investments. by XX% increase we through and our shareholders returning self-funding of record our execution discipline criteria, year-over-year our dividend capital opportunities. growth and return find to the We're value good continue with

opportunities strong those operate We returning value principles shareholders we additional finding to capital sheet, discipline have by. are balance a our and the growth

this year we segment the of commodity project a in solid COX on Elba been LNG we budget settlements We’ve the for as in from rate are XXX-G our and did year, it we at headwinds our we’ve be performances had service able so pleased and Our prices had facility. the delay far to not beginning has solid. process, resulting settlements of but we said to with case we Also obtain. the the were in

gas and midstream be performance good offset plan helping DCS a we standpoint. Now north on negatives. under plan as our we quarter, to last it in together, rates, expect terms and an from we interest these on but west, in of basis, had all groups said Putting slightly to tailwinds lower EBITDA

So starting here a are projects few some Pipeline on with our updates Natural projects. Permian Gas key

the discussions two Permian get We Permian out can Gulf in gas to have out possible NGLs pipeline, got of they are to Express their which and anxious projects on gas Highway calling are and the a were so get get Pass. customers third we us Permian their oil Coast well. as Our out and

to and in ground, October Highway X service our pipe a for still X to expectation service in this of days ahead be the on at original compressor the in X BCF of of now a schedule. the Permian expected September. and slightly in stage. meter but service to stations, work long-term week execution in going schedule is BCF full expect was we The XX are each is about year, date. is day and in level GCX the are slightly of is are The both day there a the capacity, last contracts by be commissioning the GCX on early secured both

that pipeline acquiring nevertheless in we used are and eminent significant we which affirms way, and process for in our for of domain hired has four completion last and thing use legal our the Permian good Felt receiving a in the the in essentially been Texas. court right a is had confident firms existing decades have Highway decision pipe We on schedule of month, to position, in construction but XXXX. October state case. prevailed is a

optimization downstream bring X day opportunities at both that So gas of both of today. to X BCF a Combined, Coast power, industrial as and about for moves day are that our attractive our we a BCF projects find and all gas bring in both downstream for homes pipelines. demand. projects connectivity incremental they with Texas through expansion petchem a bring our and incremental opportunities projects on schedule, projects are LNG returns, Gulf us current Those system additional facilities,

on advantage We BCF Texas, and but These have within more the and are Pass of stay where the positive in working Permian is very a growth Pipeline a customers bridge large the us day along. Permian taking to flexibility. we pipeline. of moving projects demand certainly, two in Texas, Network at work it premier connect is third pipeline X state Texas, show supply we this large progress. This entirely our a the not point, commercial with Intrastate backlog a can situation. in growth in Texas There's and It's

to to at expected between out natural in be pointed now is Texas, our from XX% benefit demand we and year gas demand As this and the systems and XXXX well growth that. conference positioned of -- are natural Louisiana

project we in On our are key another service. liquefaction Elba Elba, facility, on closing in

on unit temperatures cold now we cold is We on units. complete first at and mechanically XX are MMLS ramping the of are now the the cryogenic X up uniformly volume. The box

of temperatures producing and LNG last the our cold had are between plaguing the been top the startup unevenness over weeks. the box We several bottom in the

now and service. up are full past We that ramping to

soon it to be function is like we project expect the of additional suspend in revenue. to troubleshooting. whether for XX% a LNG about exact definitive service in-service of unit production represents that We unit one of and But date. the I'd be to more have on

contractor between to on our internal of is provides expected unwelcome, The mitigates impact delay still when announcement our we've risk the attractive and The delay tax be customer separate the We'll and significant experienced a impact service. return. unit protection the a return. of allocation to make the after in approximately first basis but points have unlevered is XXX rate certainly our and us we

remain at removed when economics million very of the $XXX The backlog. we new from makes is of billion. worth in reduced million Also in projects not do segment, capital and nearly - worth service partially what now quarter, now was the COX of that into backlog. the capital the up remains which placed the our disciplined spend removed stands XX% we And total from offsetting backlog are added $XXX investment find $X.X in justify most COX this gas, here natural expenditure. we our the of we backlog team to note of Most we of or backlog projects

I'll to that, turn with Kim. it And over

Kim Dang

another the increase and had up natural was gas and the by Between strong. Steve. is expected thanks Hey, X% quarter, over market remain it to XXXX very outstanding demand and gas underlying natural DD&A Almost Natural XXXX fundamentals move we U.S. BCF segment business about on earnings pipeline. day. X in before a of natural our XX% our KMI consumed the of come gas from XX% gas

underlying So strong. are largest our very business the fundamentals

BCF versus sixth quarter which XX% pipes the Transport the are our comparable by more. volumes increased period transmission exceeded on or XXXX quarter in a day of the This second approximately row second in about is XX%. volumes quarter a X.X

XXX showed Permian a volumes at million feet look and where increased volume increased volumes were California you up transmission these to pipe demand. our in PNG cubic up due day If

colder million were approximately And in volumes exports. approximately BCF were were million export increased day LNG Pacific deliveries Kinder up and a for And to XXX volumes Basin up to day a DJ feet day. to CIG plants due XXX and cubic were West due overall rig million volumes increased feet to XXX Northwest. increased LNG due a day KMLA production. DJ volumes XXX a X.X colder up due weather production Coast to outages the day Ruby Morgan's a cubic weather.

due to approximately system. and volumes On our volumes a gathering cubic assets, our higher Ford on was XX% Haynesville feet that gathering primarily Eagle or day were and XXX up million

serve XX%, wellhead Permian Natural gas approximately of increased X%. XXXX, key basins Eagle increase. and Ford XX%, out increased natural the Bakken quarter second volumes versus to approximately volumes XX% approximately wellhead the that approximately of Overall increased we increased Gas continue Haynesville

as opportunities which line and bottom growth resulted nice market Overall, need to for to spend our term capacity. a the segment will drive in longer on came expansion the [indiscernible] capital without the of systems the the our quarter utilization lot higher in continues in grow significant

Our quarter was down the product segment in slightly.

from contributions that increased by Terminal, XX%, than Eagle Products splitter Here our offset impacted KMCC more lower was were Central and the actually on rates. was but offset were our our higher Florida KMCC operating Southeast SFPP. than contribution by and from by our SFPP expenses. Pipeline, Volumes more lower Refined Condensate up Pipeline, Double

Overall the crude volume products were the that the and flat product down in refined were condensate volumes quarter up than X%, X.X% average. little refined bit they volumes estimate is a better is were approximately and national EIA

in in was the nice expansion of liquids thermal business projects business about quarter. from Edmonton. which Terminals XX% The of largest our was expansion increases for which baseline accounts the down projects, had segment the

ancillary and ship We facility. in throughput also saw our higher charges channel Houston

the in resulted Terminal Trans high Act these impact time third Edmonton which from that offset party historically than contributed water became on River obligation However, Jones were our to expense sale in tankers. the our Mississippi by our a lease Mountain reduced and on volumes and increases posts levels more South off-hire

of X.X approximately in the quarter versus added quarter barrels the million We tankage second of XXXX.

a results baseline volume. also lower around approximately due and total our brings down pet down due and Now lower volumes coke to it's capacity project The Bulk business leasable XX bulk with in to million barrels. quarter coal, steel. XX% were was to that primarily the

and quarter to the and in was lower primarily down due NGL prices. was that segment COX Our crude

were crude about barrel that's down down realized was largely barrel. driven net price per a oil our the $X prices by mid/cush approximately quarter Our for NGL basis and $X hedges.

to and production were at primarily production On the due crude X%, down oil side, Katz volumes Goldsmith. approximately lower

offset increased But production the plan. quarter substantially X% cotton While our XXXX. below versus of second

million address has benefited future for to from associated these processing to The XXXX business and this result $XX than cash approximately reservoir is this how with the we expenditures expected flow capital we COX this Largely all increased by until years. investments slower asset. associated determine as reduce production starting issue a as our decision, can XXXX with free of almost

that all risks to as our we return. our not as to a move make to think its COX the we investments downside, with return or they're with To monitor forward diligently steps here. there's take our either with achieve do that did sure projected going we our assets extent In material investments mitigate those we

At which to X% two-thirds almost the above for year. production be the expect current in budgeted SACROC accounts was we our and up of volumes production, quarter, for

performance. by So nice When at approximately XX% increase by proved reserves. primarily improved. mid-year also recovery increased current the increased increased factors performance you a in our which longer about term, barrels, result improved reserves as million has SACROC. X.X This the represents SACROC look of driven reserve In review, was story

quarter. it an a X% more price. was and our decrease the transport COX And the in increase On offset sales XX% that volumes, in in was which up by slightly driven than COX business,

I'll that, Michels. Dave over it With to turn

David Michels

Kim. share, fourth quarter in declaring $X.XX as Thanks, Difficulty] line dividends XX% for Today and over [Technical a share dividend increase are $X same of per the we the per XXXX. budget, last with

the DCF in Difficulty] year’s from times of two per second generated $XXX earnings declared DCF last million in grew or approximately [Technical $X.XX share adjusted dividends. quarter KMI’s excess

of gross Revenues XXXX. in compared the relative X% margin that period. our this But quarter than the our was in to sales a were to cost decline down second more prior lower offset quarter, up revenues

treat quarter items derivative Some exclude period as margin and over XXXX. gross non-cash metric. Including from on our second from of the that non-GAAP certain was of during We the certain items of came in benefit losses line contracts period.

Net we million, certain of to during stockholders second was were than as XXXX, to quarter impairments which income treat second XXXX, common available $XXX XXX% taken better quarter largely the the items. of

to includes the preferred available $XX items, in was That as or income year. result approximately of payments the last net million million of our of a securities benefit certain preferred equity stockholders down $XX Before up X%. zero dividend common from of October conversion

quarter, Adjusted $X.XX the up from or earnings per share was X% for prior period. $X.XX the

supply multiple We to growth, were which South saw assets. projects distributable impacts X%. million, business, Texas $XX multiple placed offsetting versus up had our performance, by flow our by you've year driven performance heard on that received XXX-G Moving was was in-service, settlement. that or EPNG Permian gas greater nicely cash We already last natural up, across more driven increased contribution asset from and assets than up the related volume. expansion to KinderHawk increased GMP

Kim pipeline our Louisiana And to Pass the due up for Kinder Morgan and was our Sabine terminal drivers [indiscernible]. segments. products main provided COX

Mountain our segment Morgan the down result was of of that sale on Moving to as XXX% our Canada Trans pipeline. Kinder a

back Those pension add them Mountain G&A and greater lower to offsetting year. our or to can well our was with contribution expense million those cash actual we pension to last Tran projects, fund. that was pension expenses G&A overhead capitalized due non-cash, lower as by growth G&A our as from the replace sale. $X Partially hit relative higher to DCF those expenses

$XX was are expense and debt projects driven Interest was as last would rate partially higher LIBOR our that by greater well. lower rate a lower by interest and capitalized versus balance offset million year Those impact interest swaps. to

our and million of stock taxes $XX income Cash down a dividends were year higher payments will at our by result taxable to favorable the are last that’s million of conversion full greater Those budget and the preferred were $XX year. citrus, versus slightly securities. Preferred as related tax KML, cash which is there at actually our and expected forecast for Dax through. impacts walk taxes higher to

due Difficulty] for million segments. [Technical have integrity our fact slightly to in Sustaining forecast pipeline is was year full quarter of we [Technical $XX Again, the expenditure budget second XXXX, gas budgeted work greater natural higher Difficulty]. mainly versus capital our favorable in

Total stock interest was Trans was higher our expense, last $X.XX segments, that same result DCF our issued incremental drivers DCF, tax cash prices million line lower includes DCF but impacting contributions summarize billion gas of a the lower the the sustaining it impact preferred offset $X.XXX payments. preferred our up of X%, to Mountain, security conversion. were shares of from drivers by share natural CapEx segments, quarter, and per from or mostly in share per sale commodity higher as main our COX greater dividend, as $X

At at the than Moving year leverage which ended on approximately is times. to times end balance where at with X.X end the long-term consistent target the is year unfavorable we of sheet, at debt slightly our with to which the just X.X forecasted to slightly our times. and is X.X of were to times, higher EBITDA, X.X quarter consistent and budget our budget X.X is of leverage we be

said there lower to for As a than below strong XXX-G lowered last partially year little or include impacting less expenses, Permian offset prices slightly delay, impacts, budget first be commodity by very than supply EBITDA COX, full we quarter X% forecast higher Elba the that pension the Drivers growth. budget. the

well, All year DCF expected benefit as for also and it of those impact of expenses DCF non-cash expense. interest pension favorable includes adds the backs but the the

with year be our As we expect result, to a in full line DCF budget.

bonds sheet the Canadian balance $X.X taxes has to by a changes to of of billion year-end use, the $XXX distribution to cash pay first on to and quarter, Trans the sale larger from AML shareholders regard million driven note which Items billion $X.X Mountain. cash $XXX happen with down of the of public in related the some million

$XXX or mainly and debt off of quarter billion increase million, DCF, ended down have for of Reconcile is billion [Technical Other public from in distribution accrual to million we the flat Adjusted booked for debt to a taxes. $XXX at the due quarter about contributions to paying paid $X.XXX current net $XX.X of quarter million, last interest dividends Difficulty] billion where was with about capital the debt movements bond. us includes liabilities gets of shareholders for source $XXX growth also payable $X.X that of accrued quarter an expense the mainly the we [Technical and $XXX this the interest change net million capital us Long-term had Difficulty] flat year-end. JVs working and quarter.

million $X.XX capital year-end, dividends interest tax billion billion million, from growth in $X.X contributions $XXX bonus were Difficulty] and year-to-date. [the use we paid paid billion, taxes had Difficulty] $XXX approximately reconcile out $X.XX Mountain [Technical [Technical and to sale][ph] of working about of of CapEx which and To to DCF, payroll payments, paid of very close mainly

we’re for posting your format Finally earnings for some or commodity also include have that to modeling. we our our it information information posted supplemental financial [Technical presentation, alternative an Difficulty] website includes hedging

Beginning third release, new represent to we that an our of it use quarter, in earnings our format in presentation financial. plan the enhanced

format standard just an it now our can [indiscernible] Difficulty]. our addition For been you of so provided implementation to [Technical

to With turn I back it will that, Steve.

Steve Kean

right thank you. All

turning we Works expansion our KML to So now continue had the Vancouver in strong our we projects advance quarter, performance to KML, during facility. at

good good We grow for all assets of here, for we the of it and will shareholders. a look our manage good team midstream it have and to business a opportunities and to continue benefit

the give performance quarter. financial will an and update our you for Dax on commercial

Dax Sanders

Thanks, Steve.

I update you I want Before items. the into couple on a get general of business to results,

into up use will X shares will issuer voting Board shares course allow and rules allowed million normal us number plan account Canadian over months, First repurchase stock selectively of we Difficulty]. as This [Technical repurchase bid to the restricted is opportunistically. the the XX the to that we taking XX% purpose next announced under maximum KML

the we activity. XXX,XXX that permits diesel storage an we export of XX tanks construction distillate million statements a to take-or-pay underpinned put commenced two previous in project combined capacity received had half contemplates is Consistent of On with that by approximately with barrels $XX our during material announced service project XXXX. expect year this and contract first

discussed, reactivation to expect Difficulty]. expansion million an which as continue that On in-service reminder a the Works, is we $X in we to shed that have project six Vancouver at have projects [Technical

of KML Board and $X.XXXX to Difficulty]. Now Today $X.XX the per voting dividend results. annual declared the for forward restricted the a second moving share quarter [Technical

same $XX as voting in approximately from per quarter operations, of is million $X income Earnings derived for operations continuing from same share restricted from and continuing the from quarter net XXXX. that’s continuing second are income. XXXX million versus approximately operation down Income $X.XX was which the

offset online, that across and most Looking revenue at non-recurrence on in led Difficulty] Edmonton than of gain largest increase from expense assets the XXXX the on by [Technical coming small the of tank was was variance, in of a pipeline item asset a revenues by and drivers the than and baseline sale the other but area of line the income KML’s DCF. the as more certain treated increased the contribution terminal assets

is for million, reflects the quarter of million down ratio [Technical comparable DCF approximately of million the $X.X XXXX from approximately Difficulty]. in reflects period DCF continuing operations $XX.X and coverage that $X.X payout

until Cash XXXX taxes we differ cash quarter operations, in previously of unfavorable payments of $X were million, as rather tax make we them to Difficulty]. we’re to first able required but [Technical for not the discussed XXXX

required now that which for installments make driving we're year [Technical However this year-to-year is Difficulty]. to

relevant expected refile [upside] [Technical a tax form cash for and to XXXX [ph] our in we we was obligation expect such lower year As this Difficulty]. as later than ultimate

certain segment EBITDA adjusted of to to [Technical was X.X was and timing pipeline significant volumes. segment primarily segment on $X.X of higher Difficulty]. component baseline rate a accounted about $X.X other [indiscernible] at Difficulty]. higher is and result the million the primarily the due pipeline segment before [Technical coming Terminal $X DCF million. The revenue online, as million Terminal up index segment variants which higher for up items Looking on due the up

tank several to quarter Difficulty]. capital did that $X.X we inspections sustaining in plant negative second due [Technical Finally was the that was million

budget to of approximately the $XXX of Difficulty]. expect [Technical as forward in approximately meet of said we EBITDA million $XXX Looking million release, and we our

million situation. the as million out liquidity $XX $XXX a available with cash million just that of we comments With of only and the liquidity have sheet couple revolving. We quick drawn quarter balance $XX significant ended approximately the around on

ratio Our X.X of EBITDA months last adjusted XX debt approximately times. the

adjustments leases and However items raising not as said necessarily current of we potential operating indicative agency our other given the rating ratings. is ratio in capacity past on at this our debt

that, With to back it I turn Steve. will

Steve Kean

on take Okay Brandon, back will we if questions. you come

Operator

you. Thank

now [Operator with J.P. Tonet session. will Morgan. We first is question-and-answer instructions] question begin Jeremy Our the from

open. is line Your

Steve Kean

afternoon. Good

Jeremy Tonet

with Good like Hi, sounds good early. it news coming online GCX there afternoon.

Just want to pushes certain where on process? could and the kind you gas on fill pipe bit touch guys force I be about just a little that level from flow before to even compressors paid online, more plant of the a able see there the startup of are think gas line through get line how and that or that should fill could that is

Steve Kean

that’s ramping going and days going we're to kind early time. X done get to be think but to the us them of get of XXX is these think process And ramp And this -- will compressor looking as what them takes So all packing I the to able the at. the with that it’s are be now the over a units as up period and the part we’re really stations stations look pipe that compressor to comfortable dicey, ramp causes And be occur. is the are process BCF. pipeline look ground can over mile we to compression XX pack take pretty we it and up. The it, up We the the out get line, it's in said. will an starting week commissioning a

some delivering all gas meantime, we this buying we it moving are service. in full be with gas, deliver. our speed be will to There customers to for in we that. to what value we In on and up get will can get deliberate But we're hurry is a the

Jeremy Tonet

that of And see being want at if there to target CapEx Pass comment million to see product too Got stages would this but of can your this part here want talk be on it, markets I would what and here footprint early type end you point? Permian and $XXX kind this is there you. thanks. that don't you helpful, of That’s lifted what I in probably spend that gather could think you spend developmental realize incurring about if leverage expenses this much the just

Steve Kean

last start the I'll with first.

We’re making we developmental lot got not incurring doing very expenses; a do good sure route. on good research that lot think have we’ve a we routing and the a route we’re of of a and

the I'm LNG is, which middle the and up around about think you hits the LNG and part Texas serve demand and talking facility Dulce, as go East GCX well the talking Corpus the around there market pipe PHP will Agua and and serves into about markets, not third that serve the okay, And way our industrial well, we’ll of of end gas here I about Sabine. will some easiest the in kind state. demand of Freeport fourth at demand it Mexican pipe I’m the industrial down in as the to system this that's serves of Whistler, area. to if kind that pipe count think fourth in comes shippers

Operator

from question Shneur Gershuni is next Our UBS. with

open. Your line is

Shneur Gershuni

hits your a did Do you're just gas about for pipe? that part this little you wondering three talk the and demand And mean, the how I the Maybe there's on Pass or whether pipes I expect sort partners you benefit you project, analysis it need Eastern it with operating can doing have last have as here. was to system? the fourth everyone. afternoon, part up Good question bit a of to on it Permian from to the GCX similar leverage follow on note enough other of about also of you once

Steve Kean

Okay.

the in to it's good to pattern, which participate own is your of with a in So want to to I that we think. expect while the like it's think like welcome similar shippers extent that projects, there I very we will projects, certain And the shippers pipeline. to a reasonable would you, previous ownership these large more of have

expect opportunities So we proof associated ups. and to of of -- Pass. up in in for the produce their our that hold so I out looking another be is the demand to shipper of that And would the people here, proof push and oil will the standpoint, from supply expect the will And get same again the the growing is producer NGLs Permian can pipeline that sort kind the be of too. pattern their the on proof same yes, gas would in Permian expect are sign they going sign --

supply Now there's needed fourth very will all this LNG it every demand and another And day year, function a term primarily be out then through into for that. commitment. early, pipeline are growth, pipeline. demand some very That's projections robust. of a beyond expected long for but itself growth one really is translate the still X a a very, And Permian the there the need all expectation the should a BCF essentially way the of that

Shneur Gershuni

just Okay the up, backlog here. CapEx in for a And your wanted to as great. a second follow of sort chat about

perceived as in of $XX likely prepared your [indiscernible] press noodling are reduction You're it taking down to remarks that project it's little a that kind of that million CapEx? Can that Or language little with you on Kim this The understand if in then the release indications. evaluate was forward? a interesting Trying her you're evaluating of said saying $XX kind CapEx, sort was assume Tallgrass. further? I is you And you're moving -- an will the COX wondering positive think flow. comment cash free we in created on I million that can

Steve Kean

with the is Okay, the additional of source let's cash with Yes, associated free the capital dialing the start of flow back expenditures. primarily COX.

So that that. is result $XX of primarily a million

that and pipeline is but to pipeline, Tallgrass’s existing system, it project, primarily Pony the serves flows we there One think into too, an things On Tallgrass are markets other the here. HH have some it flows so that then into two pipeline about system. Express

announced we commitments basis. a in provide up Tallgrass in open to up to service right signed those order some available from we on is and for our be customers, And firm we've on those to customers everybody. firm to to need it make able We firm open season, the HH about in and to announced expansion But really an season, certainly that perspective, the there. including think potential way

we're that firm we've to the an season to the but process made. in doing all open going available capacity make up already we're customers through order commitments So to

The our definitive And of the gas, second region and underutilized takeaway don't on. and for we update exploring the we for opportunity natural something of use that's kind for. natural existing is use potential assets that still Bakken in crude any have to gas the are DJ. western you really piece out our But them

Operator

question with next Salisbury is Ann Bernstein. from Our Jean

Your line open. is

Jean Ann Salisbury

not HH tough Tallgrass think you to NGL like maybe other follow [Dapo] wanted mentioned Hey, Liberty sign people It and Bakken [ph] decided ultimately why might year, Cushing. at another your still? forward, the be get way Can service. ago, Analysts I on A you the you'd looking converting both Day it chance is possibility to to up any for just that to any going of on go into up there expansion I last provide for to to with project. color seems And while it

Steve Kean

would project we that was commitments in the get ultimately announced FID. didn't require we competing And so a there. Yes,

And that so that soaked opportunity of it kind demand. up

Jean Ann Salisbury

Okay, got are that starts Permian as much about follow-up. it. Gulf cannibalization Coast any you up, the quick you out just a pretty gas everything existing or take-or-pay? on Express near-term concerned it’s When of pipelines have And already your of

Steve Kean

we under of for after gas have loans opportunities our associated us would of or pay, be lot is for there relief, out which year opportunity GCX and West with things transaction some very pipelines incremental And I short-term what take generated online. like a a parks will this those period expect that’s and that. some think will comes we reduce Well, lot we've

reduction, we're is that is gas -- much the brought look I worth, going at think it's XXX when you online. to expecting expecting or think a how not available we're a GCX I what it's gas to and day being for that's the elimination be and something, in an But flared Permian,

we're fill a We experiencing have quickly. of out opportunity the that short-term on does up Permian expect GCX the reduction very transactions of we'll And out of find today West. to But the constraint it burning.

Operator

is next Suisse. Spiro Our with question from Dounis Credit

is open. line Your

Spiro Dounis

everyone. Hey, good afternoon,

September concerns once coming. on up in of little just now you're that? go, just the terms And that serve nowhere of GCX, because gas that? see for give I looks how investing Dulce can in to that’s a the lot what's $XXX facilitate downstream bit there follow a about color about of you’re like us asked I initially a the Just so influx timing guess to on we has your problem -- I gas thinking Agua solving hits million

Steve Kean

-- So And -- as talk additional think projects, so is we've expansion. of I it's crossover very that about that's a capacity about BCF done $XXX which two projects. crossover efficient million, our we're away one going to out get there, we about capital take already X.X

-- from continue the evaluating see I projects our think, other we of in waves as for need Permian. additional the Intrastate, on other debottlenecking Texas we're coming the gas additional to

it. are that's [ph] And that the to enables to probably we it more distribute that's And areas the of throughout coast. takes us current what really it the And for those so [KD] industrial and of gas get investment and toward come. there downstream

on In crossover two, terms of time of the the completion timing, next year.

Spiro Dounis

Great, appreciate that.

growth share? How capture guys CapEx When consider tell the years. about next to the more higher and more and and in slightly the producer here here defensive you get thinking point you aggressive try maybe Is the at in two more in market it from market generally thinking activity Just level. this over a to Or about right near-term? commodity that slowdown be speaking? does tape you

Steve Kean

think things shippers to the for that, doing justify going they about up assumptions, to et I cetera. And we're do, we capital capacity terminal is look always forward reasonable sign it just come on for I conservatively. the that our commitments we're assumptions, firm the keep way when way value need think thinking we to which including

Rich Kinder

Again, our so speak. we're living within means to

previously CapEx the will in our anticipate expenditures range. we over stay the so you range gone in And namely $X with we've

Operator

from Bean Colton Our is question next with TPH.

Your line open. is

Colton Bean

Good afternoon.

Just of on Oak and this. to the to JVs. touch switch crude over KMCC just to wanted Gray side I

lateral Given that between specifically where a would be? interconnect you the and plan Halene do lines Houston, diameters chunk there [ph] have for then the varying

Steve Kean

be going Yes, to that’s really at the station [Technical Difficulty].

Colton Bean

okay. the Into XX,

terms in you to into ultimately could is if I thinking capacity Difficulty] about capacities. XX-inch tying there, are it ultimate so match pipe of XX-inch KMCC that’s And the right a [Technical mean, about think

Steve Kean

right could, day. a the [Technical barrels Difficulty] we expansion now Possibly project where but

Colton Bean

with And consideration main the just the Okay. horsepower? incremental

Steve Kean

right. Yes, that’s

Colton Bean

be any a there. consideration Perfect. to and bit and with here that as Eagle I bidirectional went Eagle corpus you could maybe Double have from a just guess Double little of of give on looping connection in segue get terms you up would as through barrels header that XX-inch more there well ultimately you maybe if

Steve Kean

joint Double we’d explore venture have so to joint kind of a was partner. venture our with Eagle it

Colton Bean

just outlook volume just with pretty the strong I I Understood. Haynesville there counterparty count you guess the a two, statuesque? think on quick at there or the that reduction in back to all for rig growth half do execute called one, has have guys shifted of out XXXX

Steve Kean

attractive volumes in seeing as We But without investment, benefit see volumes growth invest strong but we area. are strong. going being that substantial our accommodate of we're that some still very very remains to have able to ramp continued to return the very, system probably debottleneck still to capital up there, further additional we capital to projects, had what have

Operator

question SunTrust. Richardson next is with Our from Tristan

open. is line Your

Tristan Richardson

afternoon. good Hey,

would in forward, capital rolling and with and suggest off for? thinking on could PHP views real again free a priorities over out just cash I love that opportunity about the at the be and looking with the what hear for months, used opportunities to is priorities rate of for year strategic your next think growth there that combined both dividend planned your and those next years thinking flow GCX and XX combined Just to

Steve Kean

other of off adhere then we return our laid is quite to to billion look We on sheet investment maintain as the that’s to we there, we that’s a think are flow out the terms been cash towards We we said, available -- dividend when but have free there. our the grade We’ve continue the at are range us we’ll $X extent $X shadow think that's we Yes, stay our sure ahead probably the not for of that think there. level. reasonable while. a and And backlog will option to the in use the gotten build things will we we balance first to the network, is obviously from of priority for it and there, that. make always billion horizon those our as range opportunities And for back in shares. highest that Rich we range shareholders put the will plan we've buy the that opportunities

Tristan Richardson

very guys much. you thank Helpful,

Operator

from question Our is with Wolfe Keith next Stanley Research.

is line now Your open.

Keith Stanley

got and just update approval export on any and on the good Gulf Hi, to project viability your LNG talk timeline you project? of afternoon, there just I recently the discussions FERC potential wanted commercial

Steve Kean

it a really would Not I and ways it’s off. say quite so

we You're a right, applied we eminent that’s did FERC is for but on step, did nothing -- approval our that we there receive and had nice asset there.

Keith Stanley

Thank you.

Operator

Christine Our Barclays. is from next Cho question with

Your line open. is

Christine Cho

relative to maybe just Good with that’s budget? Permian permitting. all evening. on an tracking wanted actually right-of-way of on we Can how challenges Highway, to with the update start get I

Rich Kinder

We're still on schedule.

So was be the a knew piece of we going country, through this which to pipeline is challenge. the hill going

the use of the challenge had extra to had good I allowed the decent victory a and expected a good victory. of project in in our But discussions pace. the time with and acquisition victory we and at so area right-of-way we continuing in think our attempt and for domain And landowners are and a imminent we continuing

this So schedule. time we that extra through we on we allowed that to with expect will the that get process

Christine Cho

What about side? on cost the

Rich Kinder

side, the we as look cost On budget on still well. good, expect we be very to

Christine Cho

York we pipeline your think about be with any. how would products just on to the Harbor business, Philadelphia your thoughts Okay. in And the as should then if for New curious impact closing refinery down, your

Rich Kinder

Go ahead John.

John Schlosser

have additional in to with short see are We York momentary a term to think release be have the that imports [Technical it we them We to off Harbor Difficulty], long XXX,XXX in because will right be it York will to New expect there. the quality do be more expect New barrels they run, do able exact expect important positive impact. in, volumes in supply we three but we the But now. coming

run, long for in New month the so. we it'll impact coming next and So for be York. think have Negative into us or the maybe positive an

Christine Cho

the term contracts? think the cost pumps, not recent should you that it's And then but one the KMCC just And that guessing for much will in talked it's quick just headwinds that of offset re-contracting for the one, that we the of last project? because about quarters? me, I'm benefit what's the project

David Michels

so cost now right the about initial to year. project $XX Yes, this of spend the million we're going

I'm that that, be so XXX,XXX and day with And initial Difficulty] kick get XX,XXX. to really agreements a sorry, some -- get at us $XXX in million we'll barrels [Technical able off

Steve Kean

three not what way into offset. And The here be objective And real to get a on barrels years complete accomplishes. a and term. for the partial KMCC wanted this to we find is to term but a it'll Permian offset of the up that's interconnect

Operator

Lynch. Our next America question is Merrill from Dennis Bank of with Coleman

open. line Your is

Dennis Coleman

you. I Hi, go I if Permian can. everyone. want Thank project the Pass to to back

of the target talked or and LNG happened for You on area, given you any where like being about And the bit there a if mostly gas demand. But there projects above LNG. beyond sounds Wonder you talked a been it it what's particular already if this relies target or pull lot a is little push producer project. about announced. of sort deliver

Steve Kean

of we industrial our and I serving east. won Gulf LNG would going of system. the into Arthur back it's network farther of side FID interstate on Port that volume connectivity be where promising. Then projects volume so expect we go serve side LNG the are other not But East several Coast that of to pretty also intrastate forward Texas, customers potential Texas. Golden this will there's crossing clearly the pipelines and just proportion pass is on mean, we our customer,

will that an so And also market. alternative be

Dennis Coleman

can have couple versus then already think a returns you've on that you development. the two comments give if And how under maybe projects Okay. about quick you just

harder build it's pipelines. these to Just harder becoming and

issues of as a able We the the I because capture producers project think Is it you pipeline of we can agree that face. we from demand where sort a of you some Highway. are or there risk on talked to Permian return time can developer all with that. about higher greater just as

Steve Kean

good returns projects, with long-term what and after cash we good they're talk are on returns, about double previous but returns or with in digit so flows. we've experiencing securing underpinning don't competition contracts in the The line levered specifics, those them got they're tax been we've

these In be the and risk account them which projects. we're the and we making are to in we to for of by what able those other to -- pretty of get sure I returns, we building mean project manage your adequately that in are and glad to environment try terms part are our good question we seeing

select so into And and how that the factors into the process, how it route, the things. goes those we we acquisitions goes process schedule permitting into right-of-way all of

it by for us So that we risk the returns manage getting right, we it and compensate the costing scheduling think the right we're risk.

Operator

Our question next Lapides is from Michael Goldman Sachs. with

Your open. line is

Michael Lapides

Hey guys.

are weak risk million stand remains $XXX you process the going Where do terms XXXX? what of Analysts traditional left for the of for that and pipeline And number this tracking the projects business. of year you that then thinking about a XXX-G have back question into negotiated the Day half and on does how rates, kind and out you put Just you still hold? in at gas or

Steve Kean

Okay.

XXX-G about believe exposure an have talked we we behind largely is what are that which on this. So the we us behind

million for growing we're decisions remaining $XXX we've amounts two it $XX final have settlements. on. full smaller year both to next done, the of We with of with pipes waiting year that for But at on year, those the issue effect ones million that was the this

them, a And them didn't headwind believe a to we budget said, but because get predict, happy we for we as budget we were and risk term resolved they longer hard to to didn't they're so we the company. very

$XX and $XXX million year this So it's next year. million

XXXX. and contract the risk is of is FEP, time in the I and concentrated terms think is Fayetteville question, In XXXX, your where roll off that our really Pipeline there Express frame Pipeline, Ruby

Michael Lapides

help borderline incremental you in much type add question I capacity similar the had the get do compression built little it? of with capacity Obviously, the Northeast. the into Con into Got new contract a to then to Edison see projects a Northeast. How noticed impossible region? it's to And pipelines via bit of -- opportunity do incremental

Steve Kean

second is this think one. I Okay, the

formidable Where first we we've our build pipelines. to them we're we can pipelines line to our we help expansions signing that think they permitted. these moratoria Massachusetts up very for debottlenecking get new and one. customers, this place in trying that's to have permitted XXX where one on customers. are can’t in the Lift find what example, And get So And then one opportunities is those got project do

that permitting public very These thoughtful in much think in are been we've very together, the valuable we're putting and we Northeast. how way because of projects, And the the very them risk about careful the are interest.

two. those So we'll we've continue to look already had for

Michael Lapides

Got it. it. Thanks, Much appreciate Steve.

Operator

is Capital Advisors. with Our Becca U.S. next Followill question from

Your line is open.

Becca Followill

the in the Thank of taking you. much out How COX Good the projects? due backlog million afternoon. is to delta $XXX

Steve Kean

million. $XXX Yes,

Becca Followill

And then on and FERC the ROE. second NOI

with You guys process very which thoughtful. Any here, timing the put up thoughts comments were the some on FERC? of

Steve Kean

on exactly. this, evaluation final there's of Nothing policy. anything little certificates it's still to that's They've we're project sort going to the that. I a proprietary. gone come through on hard similar And kind a think of if to macro And out like waiting this see of

lot comments are differences of filed, from one think fits others that there's I all. a think a it's we the not the hope apparent There commission. I circumstances, really to in size and

of us. what would front that's away looking come that's they that would the at guessing I in I'm record they think that probably, from

side there's hope terms in, of clear the competitive and And we would gas operate sector. distinction in find the that a electric in would the pretty I also, environment the natural side natural they that gas between

made other points, we people points made those too. those So

the one I laid a out, been think circumstances it's have policy. hard all to craft that fits from size

So expect one. we wouldn’t

Becca Followill

Thanks.

Operator

from is Markets. with Capital question next Our RBC Robert Kwan

Your open. is line

Robert Kwan

Good afternoon.

buyback. share KML the at looking Just

going First there buyback a mechanically, prorata is share? the to be KMI of

Steve Kean

buyback applies public that to is the this the flow. No program

Robert Kwan

you opportunity. acquisitions on things then [ph] looking or new the of potential what I'm cited accretion types or DCF And an MCIB growth just kind do wondering, other are of it also an Okay. metrics it look you basis Is at? you attractive as and versus initiatives? at absolute projects,

Steve Kean

that about capital. to primary DCF at very We focus to attention be evaluating anything our accretion there that it thing was the place for be right. of place the the opportunities time, certainly we put it agreed on. will here, we did have the other we the thing our to And economically in KML as in shareholders. look But thought the certainly program. that to right board going But good use opportunistic we for are we're we will don't have it kind shareholders. use mean, we being do But formulaic our I and -- Robert, of for what Yeah, was

Robert Kwan

language. guess assume I also bid at but technically a right it. is decided examines point. thing just the substantial MCIB larger, selectively of Board the an kind issuer of Got something that this that And opportunistic like the I kind

Steve Kean

think I that's conclusion. a fair

Robert Kwan

great. Okay, you. Thank that's

Operator

Catellier open. Our is with Rob line Capital is question next Markets, CIBC from your

Robert Catellier

Thank you.

was I Thank question, bid. my about answered the Just you. curious substantial of issuer a evaluation

Steve Kean

Thank you.

Operator

Capital Our line next open. question is Spiro Your from with Dounis Suisse is

Spiro Dounis

for in back me one had up. Hey, guys. squeezing Thanks just follow

given a the obvious, comment bit buying a on of be bit this of kind you're date? to you compelled but answer nice can the you’re pace so just might thinking this that this just since So how rapid what buying ask point, little changed the uptick Rich, still the up the year, just year, Maybe about valuation last year at far and given stock? run to this year,

Rich Kinder

believer I'm really attractive. more have opportunities even company, and for dividend policy much the makes upside in say to I huge this kind the have of Obviously, on a don't it that. we

be. and shareholder to interested am I continue So will

Spiro Dounis

Fair enough. Pretty color. good

Operator

next from Our Tonet Jeremy is JPMorgan. question with

open. is line Your

Jeremy Tonet

to think for Elba, in more, wondering going do bit learn to is Just I little touched everything I causing want that in subsequent I as with But dive well, solved? thanks at this could you squeezing on point? there. briefly was confidence had the be there? cryogenic issues a guess you as Hi, gives to that there as good Is what if get was and the to come What far what trains with you temperatures back it issues any you

Steve Kean

sure that and had the cold associated as I low of was solidifying a a the some and had so making LNG having issues with at we actually box had LNG, we temperature mechanical too it. make we issue we where uniformly mentioned, Yes, that

that And get so bottom the top what we uniformly needed slower cool the startup. required box was and a of to with the

say were I to So too start essentially, fast. would we it trying

very, and And so it, as very we making progress. gradually good we're stepped into

performance as then and uniformly the And in it's day eight with it turning it we and speak. we’re an up, up cold we then box, Now, turning about service. test have

with sorts as think of we a and I observed had this, seal, valve like through we've things. the those issues where gone or we've

make so working And the are we're to sure those addressed. units on ahead all that other

got with, one so, of issue And it be dealing final working it’s to we're so we've approach kind our to operational that seems and fine.

the that's we’ve startup problems up have startup we've so is lessons running. slow the unit. cause soon. the up And the we’ve that very from that we the the startups, now the and as But little delay. are first if to will lessons it the be it to once be being the further startup down said, a on down the with the that problem, applied unit to be case we're critical first operable that and which confident way fix bit a learned will unit unit soon, contract, in from could for that commercially will that for its narrowed the And a bit If remaining

of complete, slight commission course the for them that. -- then all said, maybe into this over assembly, well process the one drifting for with are we're on Elba the of mechanically units I maybe including As year, one and through and the as the Island going of first the a

Jeremy Tonet

kind you real to like of is that curves lead pricing That's there be below not level to maintain just levels could that that at there? want a decline could to because of to Or come the very just wanted or of production up with far more reduced And that [ph] want? picking base CapEx as as that a helpful. anything spend economic where to you Thanks. where there that kind don't spend certain the the able quick you is EOR and fall

Steve Kean

As every on always, look a we projects at return of these one basis.

than we this, hurdle will do our this that's how That's oil higher at an incremental the economic our of investing it. rate that we prices with businesses. reasonable identify that’s associated produce and can remaining invest range at return other we So

have or that there's for of And not capital level to base spend we we some reasons. so a feel operational other

COX there, effectively fine done be to really has We we deployed, other it. going do don't the that's returns team going I basis. it project-by-project it we're of not job when capital knowing And And provide we spend deploy a each and team finding a find project basis a the or and proceed. places to return on then to the think is that can't that, attractive if way on

have returns demonstrates We deploy confidence we of investors. the being that adequate we have a believe And here group the capital and on that the discipline, think the I I have to COX lot around to in our that.

Operator

At this time I'm showing no further questions.

Rich Kinder

very evening. all a Have thank All right. you much. Well, good

Operator

this lines at Thank time. in today's may participating disconnect conference. you All for

Kinder Morgan (KMI) 17 Jul 192019 Q2 Earnings call transcript