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Investing.com -- Kinder Morgan Inc (NYSE:KMI). provided their 2025 business update today, outlining plans for continued growth based on the company’s strong fundamentals. As of 2024, Kinder Morgan operates the largest U.S. natural gas transmission network, spanning approximately 66,000 miles and transporting around 40% of the country’s natural gas production. The company also has interest in over 700 billion cubic feet (bcf) of working storage capacity, accounting for about 15% of U.S. capacity.
As the largest independent transporter and terminal operator of refined products in the U.S., Kinder Morgan transports around 1.7 million barrels per day (mmbbld) of refined product volumes. The company’s infrastructure includes approximately 9,500 miles of refined products and crude pipelines, 139 liquids and bulk terminals, and 16 Jones Act vessels. It also boasts a total liquids storage capacity of 135 million barrels (mmbbl).
In addition, Kinder Morgan is one of the largest carbon dioxide (CO2) transporters in the U.S., with about 1,500 miles of CO2 pipelines with a transport capacity of around 1.5 billion cubic feet per day (bcfd). The company produces and transports CO2 for enhanced oil recovery, and has a growing energy transition portfolio, including a renewable natural gas (RNG) production capacity of 6.4 bcf.
Kinder Morgan’s long-term shareholder value is driven by its midstream natural gas operations, which account for approximately two-thirds of the company’s cash flows. The company has a net debt to adjusted EBITDA ratio of around 3.8x for the year ending 2025, and maintains a BBB investment-grade balance sheet. Its committed projects are valued at approximately $8.1 billion, with a build multiple of less than 6x EBITDA.
The company’s cash flows are highly contracted and predictable. About 64% are take-or-pay, meaning Kinder Morgan is entitled to payment regardless of throughput, while 26% are fee-based, with fixed fees collected irrespective of commodity price. Over 40% of the company’s cash flows come from highly stable refined product operations.
Kinder Morgan has seen continued improvement since 2014, with natural gas transmissions and storage increasing by 16%. Meanwhile, natural gas gathering and processing (g&p) decreased by 5% and CO2 reduced by 10%. The company’s refined products remained steady.
The company maintains a disciplined approach to project backlogs. Every project must meet disciplined return criteria before being added to the backlog. The company’s current project backlog, being constructed at less than 6x EBITDA build multiple, is valued at approximately $8.1 billion.
Kinder Morgan’s position for sustained growth is underlined by strong earnings growth. Adjusted earnings per share (EPS) and adjusted EBITDA are projected to grow by 7% and 5% year-over-year, respectively. The company generated $5.6 billion in cash flow from operations (CFFO) and $3.0 billion in free cash flow in 2024. For 2025, it forecasts $5.9 billion in CFFO and $2.8 billion in free cash flow.
The company has seen a 64% total shareholder return, returning $2.6 billion via dividends. It plans to increase its dividend for the 8th consecutive year. Since 2016, approximately 33% of the market cap value has been returned to shareholders.
Kinder Morgan also highlighted the growing power needs boosting demand for natural gas, driven by factors such as population migration and economic growth, coal-to-gas conversions, industrial reshoring, renewable backup, and data center demand. The company forecasts a 3 billion cubic feet per day (bcfd) increase in natural gas fired power demand by 2030 and is actively pursuing well in excess of 5 bcfd of power opportunities.
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