Skip to content
    KMI
    Earnings call· Sep 2025(Q3 FY25)

    KINDER MORGAN, INC. KMI

    Oct 22, 2025 Source

    Executive summary

    Kinder Morgan Q3 FY25 — Strong Natural Gas Performance & Growth Project Execution

    Kinder Morgan delivered a strong quarter, driven by robust natural gas demand from LNG exports and emerging AI data center needs, which are expected to ensure significant long-term growth. The company is executing on a $9.3 billion expansion backlog and actively pursuing over $10 billion in potential projects, primarily in natural gas, leveraging its extensive infrastructure and strong cash generation to fund growth while maintaining a healthy dividend.

    Highlights

    5

    • EBITDA increased 6% year-on-year, reflecting strong business performance.

    • Adjusted EPS grew 16% year-on-year, driven by natural gas expansion projects and the Outrigger acquisition.

    • The Natural Gas segment, accounting for two-thirds of the business, outperformed its budget.

    • Net debt to adjusted EBITDA improved to 3.9x, down from 4.1x at the end of Q1 FY25.

    • Fitch upgraded KMI's senior unsecured rating to BBB+ in August.

    Concerns

    3

    • Lower than budgeted D3 RIN prices impacted overall performance.

    • RNG volumes were initially below budget, though now closer to target.

    • The CO2 segment experienced a 4% decrease in oil production volumes and a 14% decrease in CO2 volumes year-on-year.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2025 Adjusted EBITDA growth
    above 4%
    high materiality
    High
    Full-year 2025 Adjusted EPS growth
    above 10%
    high materiality
    High
    Full-year 2025 Natural Gas gathering volumes
    5% above 2024
    medium materiality
    High
    Full-year 2025 Refined products volumes
    1% higher than 2024
    medium materiality
    High
    Full-year 2025 CO2 oil production volumes
    4% below 2024
    medium materiality
    High
    Natural gas demand growth (LNG feedgas)
    double (130%) between 2024 and 2030
    high materiality
    High
    Natural gas demand growth (total US)
    28 Bcf/d increase by 2030
    high materiality
    High
    Haynesville natural gas production growth
    11 Bcf/d between 2024 and 2030
    medium materiality
    High
    Western Gateway Pipeline in-service date
    2029
    medium materiality
    Medium
    Hiland Express NGL conversion project readiness
    Q1 next year
    medium materiality
    High
    TGP Appalachia egress capacity
    north of 0.5 Bcf
    low materiality
    Low

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Natural Gas
    Transport volumes primarily due to LNG deliveries on Tennessee Gas Pipeline, new contracts from Texas Intrastate expansion projects, and increased Permian deliveries to Waha and Mexico on El Paso Natural Gas. Gathering volume growth across all G&P assets, largest impacts from Haynesville and Eagle Ford systems. Outperforming budget even excluding Outrigger.
    Transport volumes: up 6% YoYGathering volumes: up 9% YoYGathering volumes (sequential): up 11% QoQ
    		—6%——
    Products Pipelines
    Refined product volumes down 1% YoY. Crude and condensate volumes decline primarily driven by taking Double H out of service for NGL conversion project. Full-year refined products volumes forecasted to be about 1% higher than 2024 and in line with budget.
    Refined product volumes: down 1% YoYCrude and condensate volumes: down 3% YoY
    		—-1%——
    Terminals
    Market conditions supportive of strong rates and high utilization at key hubs (Houston Ship Channel, New York Harbor). Opportunistically chartered significant percentage of fleet at higher market rates. Doing very well this year and should exceed budget.
    Liquids leased capacity: 95%Jones Act tanker fleet leased: 100% through 2026Jones Act tanker fleet leased: 97% through 2027Average length of firm contract commitments: nearly 4 years
    		————
    CO2
    Full-year 2025 oil volumes forecasted to be 4% below 2024 and 1% below budget. This segment is experiencing some weakness.
    Oil production volumes: down 4% YoYNGL volumes: up 4% YoYCO2 volumes: down 14% YoY
    		————

    Operational metrics

    11
    Adjusted EBITDA
    up 6%YoY
    Q3 FY25

    Reflects strength of underlying business and continued execution on growth projects.

    Adjusted EPS
    up 16%YoY
    Q3 FY25

    Driven by greater contributions from natural gas expansion projects placed in service, the Outrigger acquisition, and strong demand across natural gas footprint.

    Net debt to adjusted EBITDA
    3.9xdown from 4.1x
    Q3 FY25

    Improved from 4.1x at the end of Q1 FY25, immediately following the Outrigger acquisition.

    Dividends per share
    $0.29252% increase over 2024
    Q3 FY25

    Quarterly dividend declared.

    Total capital spent
    $2.245B
    YTD

    Includes expansion projects and is part of the reconciliation for the $544 million increase in net debt year-to-date.

    Natural gas gathering volumes
    up 9%YoY
    Q3 FY25

    Growth across all G&P assets, with largest impacts from Haynesville and Eagle Ford systems. Significant ramp from producer customers to meet growing LNG demand.

    LNG feedgas demand from 2025 FIDs
    9 Bcf/d
    future

    Demand from 6 LNG projects that reached FID so far in 2025, when completed.

    Liquids leased capacity
    95%
    Q3 FY25

    Remains high, supported by strong rates and high utilization at key hubs.

    Jones Act tanker fleet leased
    100%
    through 2026

    Fully leased through remainder of 2025, and 100% through 2026 assuming likely options are exercised.

    Net income attributable to KMI
    $628Min line with Q3 2024
    Q3 FY25

    In line with prior year, which included favorable mark-to-market impacts on hedges and a one-time noncash tax benefit.

    EPS attributable to KMI
    $0.28in line with Q3 2024
    Q3 FY25

    In line with prior year, which included favorable mark-to-market impacts on hedges and a one-time noncash tax benefit.

    Industry KPIs

    5
    MetricValueDetails
    Pipeline throughput storageup 6%%
    Sanctioned expansion backlog$9.3BUSD
    Basin level production volumeup 15%%
    FCF shareholder distributions$1.95BUSD
    Take or pay contract structuresignificant portion

    Orderbook & backlog

    1
    Expansion backlog$9.3BQ3 FY25

    flat

    Approximately $500 million of new projects offset by projects placed in service. Multiple remains below 6x.

    Deals & partnerships

    2
    OutriggerAcquisition of assets$650M

    Acquisition completed at the beginning of the year, contributing to strong double-digit growth in adjusted net income and EPS.

    Phillips 66Joint ownership and development of refined products pipeline system

    Binding open season launched for transportation service on the Western Gateway Pipeline. KMI's SFPP East Line will be jointly owned with Phillips 66, with KMI's capital contribution for new assets being less due to asset contribution.

    Capital programs

    4
    Approved capital projectsapproved$9B plus
    Funding: internally generated cash

    Benefit: substantial growth in EBITDA and EPS

    Projects already approved by the Board, funded internally while maintaining a healthy and modestly growing dividend. Track record of completing projects on time and on budget.

    Haynesville investmentunderway$500M

    Benefit: treating capacity and incremental pipe capacity

    Investment to accommodate customer volumes and future growth in the Haynesville basin, which is approaching new daily volume records.

    Hiland Express NGL conversion projectunderway

    On track to be ready for initial commitment in Q1 next year. Involves taking Double H out of service for the conversion.

    Western Gateway Pipelineannounced

    Benefit: movement of refined products from Texas to Arizona and California, with connectivity to Las Vegas

    Jointly owned by KMI and Phillips 66. Open season scheduled to run through December 19. KMI's capital expenditure for new assets would be less due to contributing existing assets (SFPP East Line) to the 50-50 JV.

    Risks & headwinds

    5
    Lower D3 RIN pricesQ3 FY25

    lower than budgeted

    Mitigation: None explicitly stated, but company expects to exceed full-year budget despite this.

    RNG volumes below budgetQ3 FY25

    lower than budgeted

    Mitigation: Volumes are now much closer to budget, indicating some recovery or adjustment.

    CO2 segment oil production declineQ3 FY25

    down 4% YoY

    Mitigation: None explicitly stated, but full-year 2025 oil volumes are forecasted to be 4% below 2024 and 1% below budget.

    CO2 segment CO2 volumes declineQ3 FY25

    down 14% YoY

    Mitigation: None explicitly stated.

    Commodity price uncertainty2026

    unknown

    Mitigation: None explicitly stated, but mentioned as a variable for the 2026 outlook.

    What to watch in Q4 FY25

    5

    Western Gateway Pipeline open season results

    next quarter
    CurrentOpen season running through December 19
    TargetSufficient commercial interest to proceed

    Why it matters

    Successful open season is a prerequisite for sanctioning this significant refined products pipeline project, impacting future growth and market positioning.

    This open season is scheduled to run through December 19. Following the successful open season, the Western Gateway Pipeline and KMI's SFPP East Line will be jointly owned by KMI and Phillips 66.

    Q&A highlights

    5

    What has driven the improved outlook for the $10 billion opportunity set, how quickly can these be commercialized, and where is interest highest?

    The $10 billion opportunity set, mostly natural gas, supports LNG exports, power generation, Mexico exports, and industrial growth across the Southern U.S. These projects are a mix of smaller and larger initiatives. KMI's existing footprint and track record provide a competitive advantage, and significant projects are expected to reach FID in 2026.

    “It's mostly natural gas. It supports the themes that we've mentioned here today, so export LNG, power, but there's also projects that support exports to Mexico and industrial growth.”

    asked by Theresa Chen · answered by Kimberly Dang

    2 min read6 chapters

    Detailed Narrative

    01

    Natural Gas Demand Driven by LNG and AI Data Centers

    Kinder Morgan highlighted two major drivers for natural gas demand: the rapid growth in LNG feedgas and increasing electricity demand from AI data centers. LNG export facilities are projected to double demand by 2030, with 6 projects reaching FID in 2025 alone, adding 9 Bcf/d. AI data centers require uninterrupted power, which natural gas is uniquely positioned to provide given the limitations of renewables and the long lead times for nuclear, ensuring a huge and growing market for natural gas.

    02

    Strategic Positioning and Growth Pipeline

    KMI's extensive gas infrastructure, including over 66,000 miles of pipeline, positions it as a critical player, transporting over 40% of U.S. natural gas. The company's internal projections estimate a 28 Bcf/d increase in natural gas demand by 2030. The current $9.3 billion expansion backlog provides a strong foundation, with a significant portion supported by take-or-pay contracts. KMI is actively pursuing over $10 billion in potential projects, primarily in natural gas, across the Southern U.S.

    03

    Western Gateway Pipeline Project

    Kinder Morgan and Phillips 66 launched a binding open season for the Western Gateway Pipeline, a newly proposed refined products system. This project aims to move products from Texas to Arizona and California, with connectivity to Las Vegas. The open season runs through December 19, with a target in-service date of 2029, contingent on regulatory approvals. The project involves reversing KMI's West line and building a new pipeline, with KMI contributing existing assets to a roughly 50-50 JV.

    04

    Strong Financial Performance and Balance Sheet

    The company reported a strong quarter with EBITDA up 6% and adjusted EPS up 16% year-on-year. The net debt to adjusted EBITDA ratio improved to 3.9x, down from 4.1x. Fitch upgraded KMI's senior unsecured rating to BBB+, and S&P and Moody's have positive outlooks. KMI expects to exceed its full-year budget for adjusted EBITDA and EPS, benefiting from tax advantages like full expensing of investments and adjustments to the corporate alternative minimum tax.

    05

    Haynesville Basin as a Key Growth Driver

    The Haynesville system is experiencing significant growth, with gathering volumes up 15% quarter-over-quarter and approaching new daily volume records. KMI's internal projections indicate the Haynesville will be one of the fastest-growing basins, expected to grow by 11 Bcf/d between 2024 and 2030. The company is investing $500 million in the Haynesville for treating and incremental pipe capacity to accommodate customer volumes and future growth.

    06

    Capital Allocation and M&A Strategy

    Kinder Morgan maintains a disciplined approach to capital allocation, funding its expansion projects internally while supporting a growing dividend. The company has ample free cash flow and balance sheet capacity to handle potential increases in CapEx. M&A is viewed opportunistically, focusing on fee-based energy infrastructure assets that fit its strategy and can be acquired at appropriate risk-adjusted returns without compromising its balance sheet metrics.

    AI-generated summary of the company’s earnings call. Not investment advice.