Oil and Gas

Kinder Morgan profit jumps 26% on Gulf Coast Express pipeline strength

Jan 22 (Reuters) - U.S. pipeline operator Kinder Morgan Inc reported a 26% rise in quarterly profit on Wednesday, benefiting from higher gas takeaway from Permian Basin through its Gulf Coast Express pipeline.

The pipeline, which can transport 2 billion cubic feet per day (bcfd), came into service in September last year when drillers were burning off natural gas at record rates due to lack of transportation capacity from the shale-rich Permian Basin.

Earnings from natural gas transport volumes rose 14% and from natural gas liquids transport volumes jumped 23% from a year earlier.

The pipeline operator generated $1.35 billion, or 59 cents per share, in distributable cash flow (DCF) in the fourth quarter, higher than $1.14 billion, or 50 cents per share, in the prior quarter. On a year-over-year basis, DCF rose 6%.

Investors have been pushing U.S. oil and gas pipeline operators to deliver positive free cash flow as low energy prices and idle shale rigs pressure earnings.

The Houston-based company, which has pipelines as well as storage terminals, said net income rose to $610 million, or 27 cents per share, in the quarter ended Dec. 31, from $483 million, or 21 cents per share, a year earlier.

Net income got a boost from a $1.3 billion non-cash gain related to the sale of Kinder Morgan Canada and the U.S. portion of its Cochin pipeline.

However, the company’s CO2 segment, which ships carbon dioxide to oilfields where it is used to extract crude, came under pressure from lower production due to volatile oil prices. (Reporting by Arunima Kumar in Bengaluru; Editing by Amy Caren Daniel)