Q3 2012 Earnings Call Transcript

Transcript Call Date 10/17/2012

Operator: Welcome to the Quarterly Earnings Conference Call. At this time all participants are in a listen-only mode until the question-and-answer portion of today's call. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I'd now like to turn the call over to Rich Kinder, Chairman and CEO of Kinder Morgan. You may begin, sir.

Richard D. Kinder - Chairman and CEO: Thank you, Craig, and welcome to the Kinder Morgan third quarter analyst call. As usual, we will be making statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934.

We'll be talking about Kinder Morgan, Inc. which I will refer to as KMI, Kinder Morgan Energy Partners which I will refer to as KMP and El Paso Pipeline Partners which I will refer to as EPB. Together, these three companies make up the Kinder Morgan family of companies. We own and operate pipelines and terminals. We're the largest midstream energy company in North America and the third largest energy company of any kind in North America with an enterprise – combined enterprise value of about $100 billion.

I'll give an overview of the quarter and then I will turn it over to Kim Dang, our Chief Financial Officer who will go through the detailed financials and then we'll throw it open for questions. We've got our senior management team here ready to answer any questions you may have. I'm going to try to be briefer than normal, so we have more time for question and answer. I know particularly in the east it gets little late when these calls get going.

Post the El Paso merger we've noticed each call we have additional participants on the line, so I think it's important that I sort of remind you of the philosophy of Kinder Morgan and the way we operate. We own and operate assets about 75,000 miles of pipeline and 180 plus terminals around North America. These assets produce large amounts of cash flow and our primary goal is to grow that cash flow and distribute it to our unit holders at KMP and EPB and to our shareholders at KMI.

At our two MLPs, we view the key measurement as being distributable cash flow per unit and at KMI its cash available for dividends per share. Post the El Paso acquisition we said that between 2011 using that as the base year and 2015 we could grow dividends per share at KMI by about 12.5% per year that we could grow distributions per unit at KMP and its sister security KMR by about 7% a year and we could grow distributions at EPB by about 9% a year and we still expect to achieve those goals. Consistent with our philosophy and goals, all three of our entities raised their distributions and all three improved the cash available for share or unit by measurable amounts during this past quarter.

Let me start with KMI. We raised the dividend to $0.36 per share, that's up 20% from the dividend rate a year ago and represents $1.44 on an annualized basis. Our cash available for dividends increased by 93% from the third quarter of '11 and year-to-date it increased to $972 million from $623 million during the first nine months of '11, that's an increase of 56%. We expect to generate cash available for dividends well in excess of $1.325 billion for the full year of 2012 and to declare dividends of at least a $1.40. $1.40 would be an increase of 17% from the $1.20 that we declared in 2011.

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