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Kinder Morgan Inc. (KMI - Analyst Report) reported first quarter 2013 earnings of 28 cents a share from continuing operations, failing to meet the Zacks Consensus Estimate of 32 cents. However, the quarterly earnings increased from the year-earlier profit level of 23 cents on the back of higher volumes from most of its businesses.

Total revenue for the quarter increased 64.8% year over year to $3,060.0 million. The reported figure surpassed our expectation of $2,933.0 million.

*Note: During the quarter ended Mar 31, 2012, the Class A shares earnings per share as compared to the Class P shares earnings per share were primarily reduced by the dividends paid to the Class B shares on Feb 15, 2012. On Dec 26, 2012, all remaining Class A, B and C shares were converted into Class P shares and cancelled.


Kinder Morgan boosted its quarterly dividend to 38 cents a share ($1.52 per share annualized), up 19% from 32 cents ($1.28 per share annualized) paid in the first quarter of 2012.

For 2013, management expects a hike of 6% in declared cash distributions per unit compared to 2012.

The company’s growth curve will be driven by its ownership of the general partners of Kinder Morgan Energy Partners, L.P. (KMP - Analyst Report) and El Paso Pipeline Partners, L.P. (EPB). The natural gas assets acquired by Kinder Morgan through the El Paso Corporation will further augment dividend growth.

Operational Highlights

Total expenses in the quarter were $2,040.0 million, representing a 52.1% increase from $1,341.0 million spent in the first quarter of 2012.

Operating income came in at $1,020.0 million, representing a substantial 97.7% growth from the comparable quarter a year ago. Operating margin was 33.3% compared with 27.8% in the year-ago quarter.


Cash available for dividend payments was $513.0 million in the first quarter of 2013, an increase of 69.3% from $303.0 million in the comparable quarter last year. As of Mar 31, 2013 Kinder Morgan reported $164 million of cash and cash equivalents, while long-term debt was $7,954 million.


Kinder Morgan holds a Zacks Rank #2 (short-term Buy rating). There are other stocks in the oil and gas industry, like Range Resources Corporation (RRC - Analyst Report) and Stone Energy Corporation (SGY - Analyst Report), which appear more promising and carry a Zacks Rank #1 (Strong Buy).

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