KINDER MORGAN, INC. KMI

Kinder Morgan reported a strong second quarter, with adjusted EBITDA increasing 12% and adjusted EPS rising 32% compared to Q2 2025. This performance was significantly ahead of internal budget expectations, leading the company to increase its full-year guidance. KMI now expects full-year adjusted EBITDA to be at least 5% above budget and adjusted EPS to be at least 12% above budget, representing over $430 million in additional EBITDA contribution. The outperformance was broad-based, with all business segments contributing positively.

The company highlighted the robust fundamentals supporting its natural gas business, driven by increasing demand for LNG exports and electric power generation. Wood Mackenzie's outlook projects U.S. natural gas demand to exceed 160 billion cubic feet per day by 2035, an incremental growth of approximately 46 billion cubic feet per day from 2025. This demand creates numerous opportunities for new midstream infrastructure, with KMI currently developing projects to serve over 10 Bcf/day in the power generation sector and approximately 3 Bcf/day in the LNG sector.

Kinder Morgan maintains a strong financial position, ending the quarter with a net debt to adjusted EBITDA ratio of 3.6x, down from 3.8x at the beginning of the year and below budget. This provides significant flexibility to fund attractive growth opportunities. The company emphasized its ability to fund new projects almost entirely with internally generated cash flow, while continuing to pay a growing dividend and maintaining leverage at the lower end of its target range. Year-to-date, KMI generated $3.45 billion in cash flow from operations and spent $1.92 billion in total capital.

The sanctioned backlog decreased modestly from $10.1 billion to $9.6 billion, primarily due to placing over $650 million of projects into service, partially offset by $200 million in new additions. However, the Board contingently approved nearly $400 million of projects awaiting contract execution, and KMI anticipates adding significant projects from its over $10 billion opportunity set before year-end. Major natural gas expansion projects like Mississippi Crossing, South System Expansion 4, and Trident are progressing on schedule and on budget, with FERC certificate expected soon for the first two.

The Western Gateway project, a joint venture with Phillips 66, is moving forward, with the aim to complete partnership documents and FID within the next month or two, despite initial delays due to complexity. The Permian Link project, targeting a 2030 in-service date, is seeing significant interest, particularly due to its link to storage and growing power opportunities in the ERCOT region. KMI is in discussions with customers and will sanction the project once contracts with acceptable returns are secured.

Kinder Morgan has a significant footprint in the Haynesville basin, where volumes were up 54% on its KinderHawk system in Q2. The company is investing $500 million to bring on incremental transport and processing capacity, including an additional 1 Bcf/day of treating capacity, to meet expected significant growth in the region between 2025 and 2030. This project is on time and on budget, and most expected volumes are considered price insensitive due to customer hedging.