Kinder Morgan, Inc.
Analysis
Kinder Morgan's gas network is running full, demand is arriving faster than management forecast, and guidance went up again. The risk is timing: the spending lands years before the contracts that pay for it. How much of the guidance raise came from winter weather?
- The gas network went from underused to full.
Five of Kinder Morgan's largest pipelines run above 90% of capacity and Houston Ship Channel tank space is spoken for, while gathering volumes rose 26% in Q2 FY2026. Growth now depends on building rather than filling spare pipe. How much of that gathering growth is coming from the Haynesville?
- Guidance went up again, and not on one-off gains.
Guidance is now at least 5% above budget for EBITDA and at least 12% above for earnings per share, after a Q2 FY2026 where every segment grew. Management called nothing onetime, so the beat came from volumes, not luck.
- The bill for the build arrives years before the money it earns.
Capital spending jumped to $982 million in Q2 FY2026 from $647 million a year ago, and the biggest projects carry no gas until 2027. Nothing is earned on that spending until they run, so a slipped date is lost cash. How much of the approved backlog starts earning before 2028?
- LNG and power demand growthThe bull case is that demand for gas from LNG export terminals and power plants is growing faster than the pipelines needed to move it, leaving KMI's lines full.
- Unsanctioned opportunity setManagement says its unsanctioned opportunity set is mostly power and LNG work, and it expects to convert a meaningful share into approved, long-term contracted projects.
- Cash flow funds growthGrowth spending is covered by internally generated cash flow, so the company can build out its network without stretching the balance sheet or cutting the dividend.
- Contested project biddingThe bear case is that the best projects are contested by rival pipelines, so winning the volumes may require accepting lower returns than the company has earned historically.
- Drilling and commodity exposureParts of the business, including carbon dioxide oil production and some gathering systems, still depend on drilling activity and commodity prices management does not control.
- Partner negotiation delaysProject approvals slip when contract talks and partner agreements take longer than planned, which delays the earnings that the growth case depends on.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 31 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Jun 12 | Aug 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | May 15 | Jul 1 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 2 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Jan 23 | May 13 |
Congressional trading data provided by QuiverQuant
How Kinder Morgan turned $16.9B of revenue into $4.7B of operating income.
| Revenue | ||
|---|---|---|
| Natural Gas Pipelines | $11.0B | ▲ 23.12% YoY |
| Products Pipelines | $2.7B | ▼ 9.10% YoY |
| Terminals | $2.1B | ▲ 4.06% YoY |
| CO2 | $1.2B | ▼ 2.82% YoY |
| Total revenue | $16.9B | |
| Gross profit | $11.4B | 67.4% |
| Operating income | $4.7B | 27.9% |