Kinder Morgan Energy Partners, L.P. (KMP - News) today declared a cash distribution per common unit of $1.05 ($4.20 annualized) payable on Aug. 14, 2009, to unitholders of record as of July 31, 2009. The distribution represents a 6 percent increase over the second quarter 2008 cash distribution per unit of $0.99 ($3.96 annualized).
KMP reported second quarter distributable cash flow before certain items of $274.2 million compared to $293.6 million for the same period last year. Distributable cash flow per unit before certain items was $0.99 compared to $1.14 per unit for the second quarter of 2008. Net income attributable to KMP before certain items was $325.8 million versus $363.3 million for the same period last year. Including certain items, net income attributable to KMP was $323.8 million compared to $362.2 million for the second quarter of 2008.
For the first six months of 2009, KMP produced distributable cash flow before certain items of $534.2 million compared to $574.1 million for the same period last year. Distributable cash flow per unit before certain items for the first two quarters was $1.95 versus $2.26 for the comparable period in 2008. Net income attributable to KMP before certain items was $607.7 million versus $712.2 million for the same period last year. Including certain items, net income attributable to KMP for the first two quarters was $587.7 million compared to $708.9 million for the same period last year.
Chairman and CEO Richard D. Kinder said, “We are very pleased with our overall second quarter results considering the ongoing recessionary environment and economic headwinds that we anticipated and have been experiencing all year. In fact, we are better positioned at mid-year than we expected to be just last quarter. Strong operational performance from the Products Pipelines business segment and increased oil production at SACROC, combined with reduced costs and lower interest rates, helped offset budget shortfalls created by lower refined products transportation volumes, decreased steel handling at our bulk terminals and lower crude oil prices. Given this environment, we are proud that our stable, cash-generating assets are expected to generate growth for the year above our 2008 results in all five of our business segments. We remain confident that we will achieve our budget target of $4.20 per unit in cash distributions for the year, which would represent 4.5 percent growth over the 2008 distribution. We also continue to make progress in executing our multi-billion dollar capital investment program which will drive future growth at KMP.”
As previously announced, KMP expects to declare cash distributions of $4.20 per unit for 2009, which would represent a 4.5 percent increase over 2008. “While various macroeconomic factors continue to put pressure on our financial results, we have made great progress in offsetting potential shortfalls and we remain confident that we will meet our published annual distribution target,” Kinder said. He noted that most of the $2.1 billion in distributable cash that was forecast in KMP’s 2009 budget is secure and not subject to volatile market conditions.
KMP’s 2009 budget, which was initially announced in November 2008, assumes an average West Texas Intermediate (WTI) crude oil price of $68 per barrel for the year. The majority of cash generated by KMP is fee based and is not sensitive to commodity prices. In its CO2 segment, the company hedges the majority of its oil production, but does have exposure to unhedged volumes, most of which are natural gas liquids. For full year 2009, every $1 change in the average WTI crude oil price per barrel is expected to impact the CO2 segment by approximately $6 million (or about 0.2 percent of our combined business segments’ anticipated distributable cash flow).
Kinder Morgan Management, LLC ( KMR - News) also expects to declare distributions of $4.20 per share for 2009.
Disclosure I am long KMR shares in my Oil and Gas Folio.
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