Kinder Morgan (KMI) Q1 FY26 earnings call: guidance and Q&A

Can you provide more details on the expected Western Gateway project, including initial capacity, diameter, total project costs, and how capital contributions will be allocated between partners?

KMI is still negotiating the JV terms with Phillips 66, which will determine the exact capital contributions, including asset and cash contributions. Specifics on total cost and capacity will be disclosed once the project reaches FID. The East and West lines of the SFPP system (El Paso to Phoenix) will be contributed to the JV, not the entire SFPP system.

“we've still got to negotiate the JV terms, and that will obviously impact what our capital contributions are going to be.”

asked by Luke on for Julien Dumoulin-Smith · answered by Kimberly Dang

Given the growing recognition of the need for more gas egress into New England, could the Tennessee Gas Pipeline be a solution, and would state/regional levels need to re-evaluate growth opportunities?

The need for gas in the Northeast is clear, but KMI requires certainty on state permits and commercial support, specifically long-term capacity agreements from utilities, as IPPs lack reimbursement mechanisms. KMI is unwilling to repeat past experiences of writing off capital without these assurances, stating that someone needs to 'roll out the red carpet' for such projects.

“Somebody is going to have to roll out the red carpet and then I think we would love to take advantage of the opportunity.”

asked by Luke on for Julien Dumoulin-Smith · answered by Kimberly Dang

What is the rationale behind the Monument pipeline acquisition, including synergies, growth opportunities, and how the 'less than 8.0x multiple' valuation is achieved, particularly regarding incremental CapEx and current LTM multiple?

The $500 million acquisition is underpinned by long-term contracts (9-year weighted average life) with over 90% utilities/industrials. It integrates well with KMI's existing assets, allowing access to storage and providing low nitrogen supply. Ongoing expansion activity requiring incremental capital will help bring the initial high single-digit multiple down over time. Synergies include unlocking value with existing storage.

“weighted average contract life on this is about 9 years. It's over 90% utilities and industrials with good credit ratings.”

asked by Theresa Chen · answered by Kimberly Dang

How is demand evolving in the refined products market, particularly in California and Western Gateway, in light of higher pricing and global tightness, and could this create expansion opportunities for the project?

The global situation highlights California's need to import supply. Western Gateway will allow California and Arizona to access domestic refined product supply from Texas and the Eastern U.S., reducing reliance on international markets. This project is seen as a solution for supply reliability rather than driving overall demand expansion in California.

“what this does is instead of bringing in a fair amount of product over the water, they'll now be bringing in supply from Texas and from the Eastern United States.”

asked by Brandon Bingham · answered by Kimberly Dang

With the GCS expansion and Trident pipeline having staggered start dates, and more Permian gas moving to East Texas, could this lead to pricing dislocations before egress to Port Arthur/Henry Hub is fully established?

Both GCS and Trident projects are on track. While pricing dislocations are always a possibility when demand and supply come online separately, there is also significant power demand growing in Texas that could absorb the supply. KMI benefits modestly from short-term pricing dislocations due but primarily relies on long-term take-or-pay contracts.

“there are always going to be dislocations, right, as you look forward when you have demand coming on separately than the supply getting across, and it goes in both directions.”

asked by Manav Gupta · answered by Sital Mody

Does the Western Gateway project need to compete with gas pipeline investments for capital, and is any lost EBITDA from taking an existing pipe out of service factored into the overall project economics?

KMI's capital allocation strategy remains consistent; Western Gateway's returns must compete with natural gas projects, targeting the same risk-adjusted return range. KMI will invest additional capital to generate incremental EBITDA at a good return, evaluating the full project IRR.

“no change in our capital allocation strategy. We continue to target risk-adjusted returns in the same range that we always have.”

asked by Michael Blum · answered by Kimberly Dang

Is Western Gateway currently in the project backlog, and how difficult or risky is it to reach FID compared to completing the open season?

Western Gateway is not yet in the $10.1 billion project backlog, as projects are only added once approved or FID-ed. Completing the open season was likely the more challenging step. While regulatory aspects remain, KMI has experience with the relevant regulators and is confident in moving forward.

“no, it is not in our $10.1 billion backlog. We don't generally put any projects in there until they are approved/FID-ed.”

asked by Jason Gabelman · answered by Kimberly Dang