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MarketScreener Homepage  >  Equities  >  Nyse  >  Kinder Morgan Inc    KMI

KINDER MORGAN INC

(KMI)
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KINDER MORGAN : Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

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07/19/2019 | 04:15pm EDT

General and Basis of Presentation


The following discussion and analysis should be read in conjunction with our
accompanying interim consolidated financial statements and related notes
included elsewhere in this report, and in conjunction with (i) our consolidated
financial statements and related notes and (ii) our management's discussion and
analysis of financial condition and results of operations included in our 2018
Form 10-K.

Sale of Trans Mountain Pipeline System and Its Expansion Project


On August 31, 2018, KML completed the sale of the TMPL, the TMEP, Puget Sound
pipeline system and Kinder Morgan Canada Inc., the Canadian employer of our
staff that operate the business, which were indirectly acquired by the
Government of Canada through Trans Mountain Corporation (a subsidiary of the
Canada Development Investment Corporation) for net cash consideration of C$4.4
billion (U.S.$3.4 billion), net of working capital adjustments (TMPL Sale).
During the first quarter of 2019, KML settled the remaining C$37 million
(U.S.$28 million) of working capital adjustments, which amount is included in
the accompanying consolidated statement of cash flows within "Sales of assets
and equity investments, net of working capital settlements" for the six months
ended June 30, 2019 and for which we had substantially accrued for as of
December 31, 2018.

On January 3, 2019, KML distributed the net proceeds from the TMPL Sale to its
shareholders as a return of capital. Public owners of KML's restricted voting
shares, reflected as noncontrolling interests by us, received approximately $0.9
billion (C$1.2 billion), and most of our approximate 70% portion of the net
proceeds of $1.9 billion (C$2.5 billion) (after Canadian tax) were used to repay
our outstanding commercial paper borrowings of $0.4 billion, and in February
2019, to pay down approximately $1.3 billion of maturing long-term debt.

Results of Operations

Overview


Our management evaluates our performance primarily using the measures of Segment
EBDA and, as discussed below under "-Non-GAAP Financial Measures," DCF and
Segment EBDA before certain items. Segment EBDA is a useful measure of our
operating performance because it measures the operating results of our segments
before DD&A and certain expenses that are generally not controllable by our
business segment operating managers, such as general and administrative
expenses, interest expense, net, and income taxes. Our general and
administrative expenses include such items as unallocated employee benefits,
insurance, rentals, unallocated litigation and environmental expenses, and
shared corporate services including accounting, information technology, human
resources and legal services.

In our discussions of the operating results of individual businesses that
follow, we generally identify the important fluctuations between periods that
are attributable to dispositions and acquisitions separately from those that are
attributable to businesses owned in both periods.

For segment reporting purposes, effective January 1, 2019, certain assets were
transferred among our business segments. As a result, individual segment results
for the three and six months ended June 30, 2018 have been reclassified to
conform to the current presentation in the following Management Discussion and
Analysis tables. The reclassified amounts were not material.

                                       43
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Consolidated Earnings Results

                                                         Three Months Ended June 30,
                                                                                                  Earnings
                                                            2019              2018           increase/(decrease)
                                                                    (In millions, except percentages)
Segment EBDA(a)
Natural Gas Pipelines                                 $       1,088$       310$    778           251  %
Products Pipelines                                              307               321          (14 )          (4 )%
Terminals                                                       290               275           15             5  %
CO2                                                             196               157           39            25  %
Kinder Morgan Canada(b)                                           -                46          (46 )        (100 )%
Total Segment EBDA(c)                                         1,881             1,109          772            70  %
DD&A                                                           (579 )            (571 )         (8 )          (1 )%
Amortization of excess cost of equity investments               (19 )             (24 )          5            21  %
General and administrative and corporate charges(d)            (155 )            (174 )         19            11  %
Interest, net(e)                                               (452 )            (516 )         64            12  %
Income (loss) before income taxes                               676              (176 )        852           484  %
Income tax (expense) benefit(f)                                (148 )              46         (194 )        (422 )%
Net income (loss)                                               528              (130 )        658           506  %
Net income attributable to noncontrolling interests             (10 )             (11 )          1             9  %
Net income (loss) attributable to Kinder Morgan, Inc.           518              (141 )        659           467  %
 Preferred stock dividends                                        -               (39 )         39           100  %

Net Income (Loss) Available to Common Stockholders $ 518 $

     (180 )   $    698           388  %


                                                        Six Months Ended June 30,
                                                                                                Earnings
                                                         2019               2018           increase/(decrease)
                                                                  (In millions, except percentages)
Segment EBDA(a)
Natural Gas Pipelines                               $      2,291$      1,438$    853            59  %
Products Pipelines                                           583                587           (4 )          (1 )%
Terminals                                                    589                571           18             3  %
CO2                                                          394                356           38            11  %
Kinder Morgan Canada(b)                                       (2 )               92          (94 )        (102 )%
Total Segment EBDA(c)                                      3,855              3,044          811            27  %
DD&A                                                      (1,172 )           (1,141 )        (31 )          (3 )%
Amortization of excess cost of equity investments            (40 )              (56 )         16            29  %

General and administrative and corporate charges(d) (316 )

   (334 )         18             5  %
Interest, net(e)                                            (912 )             (983 )         71             7  %
Income before income taxes                                 1,415                530          885           167  %
Income tax expense(f)                                       (320 )             (118 )       (202 )        (171 )%
Net income                                                 1,095                412          683           166  %

Net income attributable to noncontrolling interests (21 )

     (29 )          8            28  %
Net income attributable to Kinder Morgan, Inc.             1,074                383          691           180  %
 Preferred stock dividends                                     -                (78 )         78           100  %

Net Income Available to Common Stockholders $ 1,074 $

     305     $    769           252  %


_______

(a) Includes revenues, earnings from equity investments, and other, net, less

operating expenses, (gain) loss on impairments and divestitures, net, and

other income, net. Operating expenses include costs of sales, operations and

maintenance expenses, and taxes, other than income taxes.

(b) As a result of the TMPL Sale on August 31, 2018, this segment does not have

results of operations on a prospective basis.



Certain items affecting Total Segment EBDA (see "-Non-GAAP Financial Measures"
below)
(c) Three and six month 2019 amounts include net increases in earnings of $29

million and $21 million, respectively, and three and six month 2018 amounts

    include net decreases in earnings of $785 million and $801 million,
    respectively, related to the combined effect of



                                       44
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the certain items. The extent to which these items affect each of our business
segments is discussed below in the footnotes to the tables within "-Segment
Earnings Results."
(d) Three and six month 2019 amounts include net increases in expense of $3

million and $6 million, respectively, and three and six month 2018 amounts

include net increases in expense of $14 million and $10 million,

respectively, related to the combined effect of the certain items disclosed

below in "-General and Administrative and Corporate Charges, Interest, net

and Noncontrolling Interests."

(e) Three and six month 2019 amounts include net decreases in expense of $3

million and $1 million, respectively, and the three and six month 2018

amounts include net increases in expense of $39 million and $34 million,

respectively, related to the combined effect of the certain items disclosed

below in "-General and Administrative and Corporate Charges, Interest, net

and Noncontrolling Interests."

(f) Three and six month 2019 amounts include net increases in expense of $5

million and $7 million, respectively, and three and six month 2018 amounts

include net decreases in expense of $191 million and $194 million,

respectively, related to the combined net effect of the certain items

representing the income tax provision on certain items plus discrete income

    tax items.



The certain item totals reflected in footnotes (c) through (e) to the table
above accounted for an $867 million increase in income before income taxes for
the second quarter of 2019, as compared to the same prior year period
(representing the difference between an increase of $29 million and a decrease
of $838 million in income before income taxes for the second quarter of 2019 and
2018, respectively) and an $861 million increase in income before income taxes
for the six months ended June 30, 2019, as compared to the same prior year
period (representing the difference between an increase of $16 million and a
decrease of $845 million in income before income taxes for the six months ended
June 30, 2019 and 2018, respectively).

After giving effect to these certain items, which are discussed in more detail
in the discussion that follows, the remaining decrease in income before income
taxes from the prior year quarter was $15 million (2%) and the remaining
increase in income before income taxes from the prior year-to-date period was
$24 million (2%). The quarter-to-date decrease from 2018 is primarily
attributable to lower earnings from our CO2 , Terminals, and Products Pipelines
business segments and lower earnings from our Kinder Morgan Canada business
segment as a result of the TMPL Sale, partially offset by increased performance
from our Natural Gas Pipelines business segment and decreased interest expense,
net. The year-to-date increase from 2018 is primarily attributable to increased
performance from our Natural Gas Pipelines business segment, decreased interest
expense, net and decreased general and administrative expense, partially offset
by lower earnings from our CO2, Terminals, and Products Pipelines business
segments, lower earnings from our Kinder Morgan Canada business segment as a
result of the TMPL Sale and increased DD&A expense.

Non-GAAP Financial Measures


Our non-GAAP performance measures are DCF, both in the aggregate and per share,
and Segment EBDA before certain items. Certain items, as used to calculate our
non-GAAP measures, are items that are required by GAAP to be reflected in net
income, but typically either (i) do not have a cash impact (for example, asset
impairments), or (ii) by their nature are separately identifiable from our
normal business operations and in our view are likely to occur only sporadically
(for example, certain legal settlements, enactment of new tax legislation and
casualty losses).

Our non-GAAP performance measures described below should not be considered
alternatives to GAAP net income or other GAAP measures and have important
limitations as analytical tools. Our computations of DCF and Segment EBDA before
certain items may differ from similarly titled measures used by others. You
should not consider these non-GAAP performance measures in isolation or as
substitutes for an analysis of our results as reported under GAAP. DCF should
not be used as an alternative to net cash provided by operating activities
computed under GAAP. Management compensates for the limitations of these
non-GAAP performance measures by reviewing our comparable GAAP measures,
understanding the differences between the measures and taking this information
into account in its analysis and its decision making processes.

DCF


DCF is calculated by adjusting net income available to common stockholders
before certain items for DD&A, total book and cash taxes, sustaining capital
expenditures and other items. DCF is a significant performance measure useful to
management and external users of our financial statements in evaluating our
performance and in measuring and estimating the ability of our assets to
generate cash earnings after servicing our debt, paying cash taxes and expending
sustaining capital, that could be used for discretionary purposes such as common
stock dividends, stock repurchases, retirement of debt, or expansion capital
expenditures. We believe the GAAP measure most directly comparable to DCF is net
income available to common stockholders. A reconciliation of net income
available to common stockholders to DCF is provided in the table below. DCF per
common share is DCF divided by average outstanding common shares, including
restricted stock awards that participate in dividends.

                                       45
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Reconciliation of Net Income (Loss) Available to Common Stockholders to DCF

                                                    Three Months Ended June 30,          Six Months Ended June 30,
                                                      2019               2018             2019               2018
                                                                (In millions, except per share amounts)
Net Income (Loss) Available to Common
Stockholders                                     $        518$       (180 )$      1,074$        305
Add/(Subtract):
Certain items before book tax(a)                          (29 )              838              (16 )              889
Noncontrolling interest certain items(b)                   (1 )               (8 )             (1 )               (8 )
Book tax certain items(c)                                   5               (191 )              7               (194 )
Impact of 2017 Tax Reform(d)                                -                  -                -                (44 )
Total certain items                                       (25 )              639              (10 )              643

Net Income Available to Common Stockholders
before certain items                                      493                459            1,064                948
Add/(Subtract):
DD&A expense(e)                                           691                684            1,399              1,374
Total book taxes(f)                                       162                159              357                343
Cash taxes(g)                                             (51 )              (33 )            (64 )              (46 )
Other items(h)                                             22                 11               47                 22
Sustaining capital expenditures(i)                       (189 )             (163 )           (304 )             (277 )
DCF                                              $      1,128       $      

1,117 $ 2,499$ 2,364


Weighted average common shares outstanding for
dividends(j)                                            2,275              2,214            2,275              2,216
DCF per common share                             $       0.50$       0.50$       1.10$       1.07
Declared dividends per common share              $       0.25       $       

0.20 $ 0.50$ 0.40

_______

(a) Consists of certain items summarized in footnotes (c) through (e) to the

"-Results of Operations-Consolidated Earnings Results" table included above,

and described in more detail below in the footnotes to tables included in

"-Segment Earnings Results" and "-General and Administrative and Corporate

Charges, Interest, net and Noncontrolling Interests" below.

(b) Represents noncontrolling interests associated with certain items.

(c) Represents income tax provision on certain items plus discrete income tax

items.

(d) Six month 2018 amount primarily relates to our share of certain equity

investees' 2017 Tax Reform provisional adjustments and 2017 Tax Reform

adjustments related to our FERC-regulated business.

(e) Includes DD&A and amortization of excess cost of equity investments. Three

and six month 2019 amounts also include $93 million and $187 million,

respectively, and three and six month 2018 amounts also include $89 million

and $177 million, respectively, of our share of certain equity investees'

DD&A, net of the noncontrolling interests' portion of KML DD&A and

consolidating joint venture partners' share of DD&A.

(f) Excludes book tax certain items. Three and six month 2019 amounts also

include $19 million and $44 million, respectively, and three and six month

2018 amounts also include $14 million and $31 million, respectively, of our

share of taxable equity investees' book taxes, net of the noncontrolling

interests' portion of KML book taxes.

(g) Three and six month 2019 amounts also include $(34) million for both periods

and three and six month 2018 amounts also include $(28) million and $(38)

million, respectively, of our share of taxable equity investees' cash taxes.

(h) Includes non-cash pension expense and non-cash compensation associated with

our restricted stock program.

(i) Three and six month 2019 amounts include $(31) million and $(50) million,

respectively, and three and six month 2018 amounts include $(24) million and

$(40) million, respectively, of our share of (i) certain equity investees';

(ii) KML's; and (iii) certain consolidating joint venture subsidiaries'

sustaining capital expenditures.

(j) Includes restricted stock awards that participate in common share dividends.

Segment EBDA Before Certain Items


Segment EBDA before certain items is used by management in its analysis of
segment performance and management of our business. General and administrative
expenses are generally not under the control of our segment operating managers,
and therefore, are not included when we measure business segment operating
performance. We believe Segment EBDA before certain items is a significant
performance metric because it provides us and external users of our financial
statements additional insight into the ability of our segments to generate
segment cash earnings on an ongoing basis. We believe it is useful to investors
because it is a performance measure that management uses to allocate resources
to our segments and assess each segment's performance. We believe the GAAP
measure most directly comparable to Segment EBDA before certain items is Segment
EBDA.

                                       46
--------------------------------------------------------------------------------

In the tables for each of our business segments under "- Segment Earnings
Results" below, Segment EBDA before certain items and Revenues before certain
items are calculated by adjusting the Segment EBDA and Revenues for the
applicable certain item amounts, which are totaled in the tables and described
in the footnotes to those tables. Revenues before certain items is provided to
further enhance our analysis of Segment EBDA before certain items but is not a
performance measure.

Segment Earnings Results

Natural Gas Pipelines
                                                    Three Months Ended June 30,          Six Months Ended June 30,
                                                      2019               2018              2019              2018
                                                              (In millions, except operating statistics)
Revenues                                         $      1,968$      2,107$     4,169$     4,233
Operating expenses                                     (1,030 )           (1,245 )         (2,197 )          (2,446 )
Gain (loss) on impairments and divestitures, net           10               (599 )             10              (599 )
Other income                                                1                  1                2                 1
Earnings from equity investments                          131                 29              290               216
Other, net                                                  8                 17               17                33
Segment EBDA                                            1,088                310            2,291             1,438
Certain items(a)(b)                                       (17 )              688             (19)               634
Segment EBDA before certain items                $      1,071$        998$     2,272$     2,072

Change from prior period                                                  Increase/(Decrease)
Revenues before certain items                    $       (144 )               (7 )%   $       (55 )              (1 )%
Segment EBDA before certain items                $         73                  7  %   $       200                10  %

Volumetric data
Transport volumes (BBtu/d)(c)                          34,790             31,704           35,413            31,913
Sales volumes (BBtu/d)(c)                               2,323              2,445            2,327             2,468
Gathering volumes (BBtu/d)(c)                           3,323              2,871            3,312             2,801
NGLs (MBbl/d)(c)                                          128                121              124               119


_______

Certain items affecting Segment EBDA (a) Includes revenue certain item amounts of $(8) million for the three months

ended June 30, 2019 and $(3) million and $(9) million for the three and six

months ended June 30, 2018, respectively. Certain item amounts are primarily

related to non-cash mark-to-market derivative contracts used to hedge

forecasted natural gas, NGL and crude oil sales in the 2019 and 2018 periods,

and additionally in the 2018 periods, to a transportation contract refund and

the early termination of a long-term natural gas transportation contract.

(b) Includes non-revenue certain item amounts of $(9) million and $(19) million

for the three and six months ended June 30, 2019, respectively, and $691

million and $643 million for the three and six months ended June 30, 2018,

respectively. 2018 certain item amounts primarily related to (i) a $600

million non-cash loss on impairment of certain gathering and processing

assets in Oklahoma; (ii) a net loss of $89 million in our equity investment

in Gulf LNG Holdings Group, LLC (Gulf LNG), due to a ruling by an arbitration

panel affecting a customer contract, which resulted in a non-cash impairment

of our investment partially offset by our share of earnings recognized by

Gulf LNG on the respective customer contract; and (iii) an increase in

earnings of $44 million (six month 2018 period) for our share of certain

equity investees' 2017 Tax Reform provisional adjustments and 2017 Tax Reform

adjustments related to our FERC-regulated business.

Other

(c) Joint venture throughput is reported at our ownership share.

                                       47
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Below are the changes in both Segment EBDA before certain items and revenues
before certain items, in the comparable three and six month periods ended June
30, 2019 and 2018:

    Three Months Ended June 30, 2019 versus Three Months Ended June 30, 2018
                                                                                                  Revenues before
                                                     Segment EBDA before certain items             certain items
                                                            increase/(decrease)                 increase/(decrease)
                                                                   (In millions, except percentages)
West Region                                      $         28                   12  %        $       29           10  %
North Region                                               26                    8  %                42           11  %
Midstream                                                  18                    6  %              (220 )        (17 )%
South Region                                               (1 )                 (1 )%                 3            4  %
Other                                                       2                  200  %                 2          200  %
Total Natural Gas Pipelines                      $         73                    7  %        $     (144 )         (7 )%


      Six Months Ended June 30, 2019 versus Six Months Ended June 30, 2018
                                                                                               Revenues before
                                                   Segment EBDA before certain items            certain items
                                                          increase/(decrease)                increase/(decrease)
                                                                 (In millions, except percentages)
West Region                                      $          64                13  %       $      61           10  %
North Region                                                83                13  %              84           10  %
Midstream                                                   52                 9  %            (205 )         (8 )%
South Region                                                (3 )              (1 )%               7            4  %
Other                                                        4               133  %               4          133  %
Intrasegment eliminations                                    -                 -  %              (6 )        (43 )%
Total Natural Gas Pipelines                      $         200                10  %       $     (55 )         (1 )%



The changes in Segment EBDA for our Natural Gas Pipelines business segment are
further explained by the following discussion of the significant factors driving
Segment EBDA before certain items in the comparable three and six month periods
ended June 30, 2019 and 2018:
•    West Region's increases of $28 million (12%) and $64 million (13%),

respectively, were primarily due to increases in earnings from EPNG and CIG.

The increase on EPNG was the result of capacity sales and usage due to

increased activity in the Permian Basin as well as an increase in

utilization of storage facilities, partially offset by the negative impact

of EPNG's 501-G rate settlement. Increased earnings on CIG were due to

capacity sales and usage resulting from increased activity in the Denver

     Julesburg basin;


•    North Region's increases of $26 million (8%) and $83 million (13%),

respectively, were the result of an increase in earnings from TGP and Kinder

Morgan Louisiana Pipeline LLC (KMLP). The increase on TGP was driven by

expansion projects placed into service in 2018 and higher capacity sales in

2019, slightly offset by lower usage revenues and higher operations and

maintenance expense. Increased earnings at KMLP were driven by revenues from

the Sabine Pass expansion project that was placed into service in December

     2018; and


•    Midstream's increases of $18 million (6%) and $52 million (9%),

respectively, were primarily due to increased earnings from KinderHawk Field

Services LLC, South Texas Midstream, Cochin pipeline and Texas intrastate

natural gas pipeline operations partially offset by decreased earnings from

Hiland Midstream. KinderHawk Field Services LLC and South Texas Midstream

     benefited from increased drilling and production in the Haynesville and
     Eagle Ford basins, respectively. Cochin pipeline's increased earnings was

primarily driven by higher volumes and higher tariff rates. Texas intrastate

natural gas operations were favorably impacted by higher sales margins

partially offset by lower storage margins. Hiland Midstream's decreased

earnings was primarily due to lower commodity prices and higher operations

and maintenance expense. Overall Midstream's revenues decreased primarily

due to lower commodity prices which was largely offset by corresponding

     decreases in costs of sales.




                                       48
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Products Pipelines

                                                    Three Months Ended June 30,           Six Months Ended June 30,
                                                      2019                2018             2019                2018
                                                               (In millions, except operating statistics)
Revenues                                         $       442$       503$       866$       945
Operating expenses                                      (157 )              (199 )           (323 )              (392 )
Other income                                               -                   2                -                   2
Earnings from equity investments                          17                  16               35                  32
Other, net                                                 5                  (1 )              5                   -
Segment EBDA                                             307                 321              583                 587
Certain items(a)                                           -                  (1 )             17                  30
Segment EBDA before certain items                $       307$       320$       600$       617

Change from prior period                                                   Increase/(Decrease)
Revenues                                         $       (61 )               (12 )%   $       (79 )                (8 )%
Segment EBDA before certain items                $       (13 )                (4 )%   $       (17 )                (3 )%

Volumetric data
Gasoline(b)                                            1,090               1,083            1,035               1,031
Diesel fuel                                              379                 384              358                 363
Jet fuel                                                 303                 305              298                 297
Total refined product volumes(c)                       1,772               1,772            1,691               1,691
Crude and condensate(c)                                  651                 639              647                 616
Total delivery volumes (MBbl/d)                        2,423               2,411            2,338               2,307


_______

Certain items affecting Segment EBDA (a) Includes non-revenue certain item amounts of $17 million for the six months

ended June 30, 2019 and $(1) million and $30 million for the three and six

months ended June 30, 2018, respectively, primarily related to an adjustment

of tax reserves, other than income taxes (six month 2019 period) and a

Pacific operations litigation matter (six month 2018 period).

Other

(b) Volumes include ethanol pipeline volumes.

(c) Joint venture throughput is reported at our ownership share.

Below are the changes in both Segment EBDA before certain items and revenues before certain items, in the comparable three and six month periods ended June 30, 2019 and 2018.


    Three Months Ended June 30, 2019 versus Three Months Ended June 30, 2018
                                                                                                  Revenues before
                                                     Segment EBDA before certain items             certain items
                                                            increase/(decrease)                 increase/(decrease)
                                                                   (In millions, except percentages)
Crude & Condensate                               $           (10 )              (8 )%        $     (44 )        (20 )%
West Coast Refined Products                                   (7 )              (5 )%                1            1  %
Southeast Refined Products                                     4                 6  %              (18 )        (17 )%
Total Products Pipelines                         $           (13 )              (4 )%        $     (61 )        (12 )%



                                       49
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      Six Months Ended June 30, 2019 versus Six Months Ended June 30, 2018
                                                                                                  Revenues before
                                                     Segment EBDA before certain items             certain items
                                                            increase/(decrease)                 increase/(decrease)
                                                                   (In millions, except percentages)
Crude & Condensate                               $           (18 )              (7 )%        $     (67 )        (17 )%
West Coast Refined Products                                   (7 )              (3 )%                7            2  %
Southeast Refined Products                                     8                 6  %              (19 )         (9 )%
Total Products Pipelines                         $           (17 )              (3 )%        $     (79 )         (8 )%



The changes in Segment EBDA for our Products Pipelines business segment are
further explained by the following discussion of the significant factors driving
Segment EBDA before certain items in the comparable three and six month periods
ended June 30, 2019 and 2018:
•    Crude & Condensate's decreases of $10 million (8%) and $18 million (7%),

respectively, were primarily due to a decrease of earnings from Kinder

Morgan Crude & Condensate Pipeline driven by lower services revenues as a

result of unfavorable rates on contract renewals and a decrease in

recognition of deficiency revenue, and to a lesser extent contributions from

Kinder Morgan Condensate Processing Facility and Double Eagle Pipeline;

• West Coast Refined Products' decreases of $7 million (5%) and $7 million

     (3%), respectively, were primarily due to an increase in environmental
     reserves on Pacific operations; and

• Southeast Refined Products' increases of $4 million (6%) and $8 million

(6%), respectively, were primarily due to increased earnings from South East

Terminals driven primarily by a gain recognized from an exchange of joint

venture interests, and to a lesser extent, contributions from Central

Florida Pipeline. The year-to-date increase was also impacted by increased

equity earnings from Plantation Pipe Line as a result of increased

transportation revenues driven by higher volumes and average tariff rate.

Overall Southeast Refined Products' revenues decreased primarily due to

lower sales volumes as a result of a Transmix facility temporary shutdown in

     second quarter 2019 which was largely offset by corresponding decreases in
     costs of sales.



Terminals
                                                    Three Months Ended June 30,          Six Months Ended June 30,
                                                      2019                2018             2019              2018
                                                              (In millions, except operating statistics)
Revenues                                         $       507$       515$     1,016$     1,010
Operating expenses                                      (221 )              (191 )           (437 )            (398 )
Loss on impairments and divestitures, net                  -                 (54 )              -               (54 )
Earnings from equity investments                           4                   5                9                12
Other, net                                                 -                   -                1                 1
Segment EBDA                                             290                 275              589               571
Certain items(a)(b)                                        -                  34                -                35
Segment EBDA before certain items                $       290$       309$       589$       606

Change from prior period                                                  Increase/(Decrease)
Revenues before certain items                    $        (7 )                (1 )%   $         8                 1  %
Segment EBDA before certain items                $       (19 )                (6 )%   $       (17 )              (3 )%

Volumetric data
Liquids tankage capacity available for service
(MMBbl)                                                 88.9                87.7             88.9              87.7
Liquids utilization %(c)                                93.3 %              93.0  %          93.3 %            93.0  %
Bulk transload tonnage (MMtons)                         15.1                16.9             29.8              31.3


_______

Certain items affecting Segment EBDA (a) Includes revenue certain item amounts of $(1) million and $(2) million for

the three and six months ended June 30, 2018, respectively.

(b) Includes non-revenue certain item amounts of $35 million and $37 million for

the three and six months ended June 30, 2018, respectively, primarily related

to losses on impairments and divestitures, net and hurricane damage insurance

    recoveries, net of repair costs.



                                       50
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Other

(c) The ratio of our tankage capacity in service to tankage capacity available

    for service.



Below are the changes in both Segment EBDA before certain items and revenues before certain items, in the comparable three and six month periods ended June 30, 2019 and 2018.


    Three Months Ended June 30, 2019 versus Three Months Ended June 30, 2018
                                                                                               Revenues before
                                                   Segment EBDA before certain items            certain items
                                                          increase/(decrease)                increase/(decrease)
                                                                  (In millions, except percentages)
Alberta Canada                                   $          (6 )             (16 )%       $      3            7  %
Marine Operations                                           (6 )             (12 )%             (3 )         (3 )%
Gulf Central                                                (4 )             (24 )%             (5 )        (19 )%
Midwest                                                     (4 )             (17 )%             (3 )         (7 )%
Gulf Liquids                                                 4                 5  %              4            4  %
All others (including intrasegment eliminations)            (3 )              (3 )%             (3 )         (1 )%
Total Terminals                                  $         (19 )              (6 )%       $     (7 )         (1 )%



      Six Months Ended June 30, 2019 versus Six Months Ended June 30, 2018
                                                                                                Revenues before
                                                   Segment EBDA before certain items             certain items
                                                          increase/(decrease)                 increase/(decrease)
                                                                   (In millions, except percentages)
Alberta Canada                                   $         (11 )             (14 )%       $       9              10  %
Marine Operations                                           (3 )              (3 )%               -               -  %
Gulf Central                                                (7 )             (21 )%              (7 )           (13 )%
Midwest                                                     (2 )              (5 )%               1               1  %
Gulf Liquids                                                10                 7  %              11               5  %
All others (including intrasegment eliminations)            (4 )              (2 )%              (6 )            (1 )%
Total Terminals                                  $         (17 )              (3 )%       $       8               1  %



The changes in Segment EBDA for our Terminals business segment are further
explained by the following discussion of the significant factors driving Segment
EBDA before certain items in the comparable three and six month periods ended
June 30, 2019 and 2018:
•    decreases of $6 million (16%) and $11 million (14%), respectively, from our

Alberta Canada terminals primarily due to an increase in operating expenses

associated with lease fees at our Edmonton South Terminal following the TMPL

Sale partially offset by an increase in earnings due to the commencement of

operations at our Base Line Terminal joint venture;

• decreases of $6 million (12%) and $3 million (3%), respectively, from our

Marine Operations primarily due to scheduled dry dock days and unscheduled

off-hire time for and repairs to certain of our Jones Act tankers due to

historically high water levels on the Mississippi River, partially offset by

higher charter rates;

• decreases of $4 million (24%) and $7 million (21%), respectively, from our

Gulf Central terminals primarily related to the termination of a customer

contract in August 2018 and an unfavorable impact resulting from certain

tanks being temporarily out of service for scheduled inspections and

repairs;

• decreases of $4 million (17%) and $2 million (5%), respectively, from our

Midwest terminals primarily related to the historically high water levels on

the Mississippi River which resulted in reduced volumes from service

disruptions in the second quarter of 2019; and

• increases of $4 million (5%) and $10 million (7%), respectively, from our

Gulf Liquids terminals primarily driven by higher volumes and associated

ancillary fees as well as annual rate escalations on existing storage

contracts. The year-to-date increase was also impacted by a customer rebate

     adversely impacting revenue recognized in the prior comparable period.




                                       51
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CO2
                                                    Three Months Ended June 30,          Six Months Ended June 30,
                                                      2019               2018              2019              2018
                                                              (In millions, except operating statistics)
Revenues                                         $        310$        250$       615$       554
Operating expenses                                       (123 )             (101 )           (240 )            (216 )
Earnings from equity investments                            9                  8               19                18
Segment EBDA                                              196                157              394               356
Certain items(a)(b)                                       (12 )               64              (21 )             102
Segment EBDA before certain items                $        184$        221$       373$       458

Change from prior period                                                  Increase/(Decrease)
Revenues before certain items                    $        (37 )              (11 )%   $       (83 )             (12 )%
Segment EBDA before certain items                $        (37 )              (17 )%   $       (85 )             (19 )%

Volumetric data
SACROC oil production                                    24.4               24.3             24.4              24.4
Yates oil production                                      7.3                7.4              7.3               7.6
Katz and Goldsmith oil production                         3.8                4.7              4.0               5.0
Tall Cotton oil production                                2.4                2.2              2.5               2.1
Total oil production, net (MBbl/d)(c)                    37.9               38.6             38.2              39.1
NGL sales volumes, net (MBbl/d)(c)                       10.4               10.1             10.2              10.1
CO2 production, net (Bcf/d)                               0.6                0.6              0.6               0.6

Realized weighted-average oil price per Bbl(d) $ 49.95$ 58.08$ 49.31$ 58.90 Realized weighted-average NGL price per Bbl(e) $ 23.58$ 32.88$ 24.75$ 31.64

_______

Certain items affecting Segment EBDA (a) Includes revenue certain item amounts of $(12) million and $(21) million for

the three and six months ended June 30, 2019, respectively, and $85 million

and $123 million for the three and six months ended June 30, 2018,

respectively. Certain item amounts are primarily related to unrealized gains

and losses associated with derivative contracts used to hedge forecasted

commodity sales.

(b) Includes non-revenue certain item amounts of $(21) million for both the three

and six months ended June 30, 2018 as a result of a severance tax refund.

Other

(c) Net after royalties and outside working interests.

(d) Includes all crude oil production properties.


(e) Includes all NGL sales.


Below are the changes in both Segment EBDA before certain items and revenues before certain items, in the comparable three and six month periods ended June 30, 2019 and 2018.


    Three Months Ended June 30, 2019 versus Three Months Ended June 30, 2018
                                                                                               Revenues before
                                                   Segment EBDA before certain items            certain items
                                                          increase/(decrease)                increase/(decrease)
                                                                 (In millions, except percentages)
Oil and Gas Producing Activities                 $         (40 )             (27 )%       $     (44 )        (18 )%
Source and Transportation Activities                         3                 4  %               6            6  %
Intrasegment eliminations                                    -                 -  %               1           14  %
Total CO2                                        $         (37 )             (17 )%       $     (37 )        (11 )%




                                       52
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      Six Months Ended June 30, 2019 versus Six Months Ended June 30, 2018
                                                                                               Revenues before
                                                   Segment EBDA before certain items            certain items
                                                          increase/(decrease)                increase/(decrease)
                                                                 (In millions, except percentages)
Oil and Gas Producing Activities                 $         (91 )             (29 )%       $     (95 )        (19 )%
Source and Transportation Activities                         6                 4  %               9            5  %
Intrasegment eliminations                                    -                 -  %               3           19  %
Total CO2                                        $         (85 )             (19 )%       $     (83 )        (12 )%



The changes in Segment EBDA for our CO2 business segment are further explained
by the following discussion of the significant factors driving Segment EBDA
before certain items in the comparable three and six month periods ended June
30, 2019 and 2018:
•    decreases of $40 million (27%) and $91 million (29%), respectively, from our

Oil and Gas Producing activities primarily due to decreased revenues of $44

million and $95 million, respectively, driven by lower realized crude oil

and NGL prices which reduced revenues by $41 million and $85 million,

respectively, and lower volumes which reduced revenues by $3 million and $10

million, respectively and higher severance tax expense for both periods of

     $1 million partially offset by lower operating expenses of $5 million for
     both periods; and


•    increases of $3 million (4%) and $6 million (4%), respectively, from our

Source and Transportation activities primarily due to higher CO2 sales of $5

million and $8 million, respectively, driven by higher volumes of $8 million

and $11 million, respectively, partially offset by lower contract sales

prices of $3 million for both periods and $1 million increased earnings from

an equity investee for both periods partially offset by higher operating

expenses and Ad Valorem tax expense of $3 million for both periods.




General and Administrative and Corporate Charges, Interest, net and
Noncontrolling Interests

                                                     Three Months Ended June 30,
                                                       2019                2018           Increase/(decrease)
                                                                (In millions, except percentages)
General and administrative and corporate
charges(a)                                       $        155$        174$     (19 )        (11 )%
Certain items(a)                                           (3 )                (14 )          11           79  %
General and administrative and corporate charges
before certain items(a)                          $        152$        160$      (8 )         (5 )%

Interest, net(b)                                 $        452$        516$     (64 )        (12 )%
Certain items(b)                                            3                  (39 )          42          108  %
Interest, net, before certain items(b)           $        455         $     

477 $ (22 ) (5 )%


Net income attributable to noncontrolling
interests                                        $         10         $         11     $      (1 )         (9 )%
Noncontrolling interests associated with certain
items                                                       1                    8            (7 )        (88 )%
Net income attributable to noncontrolling
interests before certain items                   $         11         $         19     $      (8 )        (42 )%



                                       53
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                                                     Six Months Ended June 30,
                                                      2019               2018           Increase/(decrease)
                                                               (In millions, except percentages)
General and administrative and corporate
charges(a)                                       $       316$       334$     (18 )         (5 )%
Certain items(a)                                          (6 )               (10 )           4           40  %
General and administrative and corporate charges
before certain items(a)                          $       310$       324$     (14 )         (4 )%

Interest, net(b)                                 $       912$       983$     (71 )         (7 )%
Certain items(b)                                           1                 (34 )          35          103  %
Interest, net, before certain items(b)           $       913         $      

949 $ (36 ) (4 )%


Net income attributable to noncontrolling
interests                                        $        21$        29$      (8 )        (28 )%
Noncontrolling interests associated with certain
items                                                      1                   8            (7 )        (88 )%
Net income attributable to noncontrolling
interests before certain items                   $        22$        37$     (15 )        (41 )%


Certain items (a) Three and six month 2018 amounts include increases in expense of (i) $10

million for both periods associated with an environmental reserve adjustment;

(ii) $1 million and $7 million, respectively, related to certain corporate

litigation matters; and (iii) $2 million for both periods of asset sale

related costs. Six month 2018 amount also includes a decrease in expense of

$12 million related to an adjustment of tax reserves, other than income

taxes.

(b) Three and six month 2019 amounts include (i) decreases in interest expense of

$7 million and $15 million, respectively, related to non-cash debt fair value

adjustments associated with historical acquisitions; and (ii) increases in

expense of $3 million and $13 million, respectively, related to non-cash

mismatches between the change in fair value of interest rate swaps and hedged

debt. Three and six month 2018 amounts include (i) decreases in interest

expense of $8 million and $18 million, respectively, related to non-cash debt

fair value adjustments associated with historical acquisitions; (ii)

increases in expense of $3 million and $8 million, respectively, related to

non-cash mismatches between the change in fair value of interest rate swaps

and hedged debt; and (iii) increases in interest expense of $46 million for

both periods related to the write-off of capitalized KML credit facility

    fees.



The decreases in general and administrative expenses and corporate charges
before certain items of $8 million and $14 million for the three and six months
ended June 30, 2019, respectively, when compared with the respective prior year
periods were primarily due to higher capitalized costs of $13 million and $31
million, respectively, driven by our large Permian basin pipeline projects and
lower expenses of $7 million and $14 million, respectively, due to the sale of
TMPL, partially offset by higher pension and benefit-related costs of $15
million and $32 million, respectively.

In the table above, we report our interest expense as "net," meaning that we
have subtracted interest income and capitalized interest from our total interest
expense to arrive at one interest amount. Our consolidated interest expense net
of interest income before certain items for the three and six months ended June
30, 2019 when compared with the respective prior year periods decreased $22
million and $36 million, respectively. The decreases in interest expense were
primarily due to lower average debt balances, partially offset by higher LIBOR
rates which impacted our interest rate swap agreements. The year-to-date
decrease in interest expense was also impacted by lower weighted average
long-term debt interest rates.

We use interest rate swap agreements to convert a portion of the underlying cash
flows related to our long-term fixed rate debt securities (senior notes) into
variable rate debt in order to achieve our desired mix of fixed and variable
rate debt. As of June 30, 2019 and December 31, 2018, approximately 30% and 31%,
respectively, of the principal amount of our debt balances were subject to
variable interest rates-either as short-term or long-term variable rate debt
obligations or as fixed-rate debt converted to variable rates through the use of
interest rate swaps. For more information on our interest rate swaps, see Note 5
"Risk Management-Interest Rate Risk Management" to our consolidated financial
statements.

Net income attributable to noncontrolling interests represents the allocation of
our consolidated net income attributable to all outstanding ownership interests
in our consolidated subsidiaries that are not owned by us. Net income
attributable to noncontrolling interests before certain items for the three and
six months ended June 30, 2019 when compared with the respective prior year
periods decreased $8 million and $15 million, respectively, primarily due to the
TMPL Sale.


                                       54
--------------------------------------------------------------------------------

Income Taxes


Our tax expense (benefit) for the three months ended June 30, 2019 was
approximately $148 million as compared with $(46) million for the same period of
2018. The $194 million increase in tax expense was primarily due to an increase
in pre-tax earnings.

Our tax expense for the six months ended June 30, 2019 was approximately $320 million as compared with $118 million for the same period of 2018. The $202 million increase in tax expense was primarily due to an increase in pre-tax earnings.

Liquidity and Capital Resources

General


As of June 30, 2019, we had $213 million of "Cash and cash equivalents," a
decrease of $3,067 million (94%) from December 31, 2018. The 2018 TMPL Sale
mentioned above in "-General and Basis of Presentation-Sale of Trans Mountain
Pipeline System and Its Expansion Project" was the primary source of cash on
hand as of December 31, 2018. We believe our cash position, remaining borrowing
capacity on our credit facility (discussed below in "-Short-term Liquidity"),
and cash flows from operating activities are adequate to allow us to manage our
day-to-day cash requirements and anticipated obligations as discussed further
below.

We have consistently generated substantial cash flow from operations, providing
a source of funds of $2,098 million and $2,468 million in the first six months
of 2019 and 2018, respectively. The period-to-period decrease is discussed below
in "-Cash Flows-Operating Activities." Generally, we primarily rely on cash
provided from operations to fund our operations as well as our debt service,
sustaining capital expenditures, dividend payments and our growth capital
expenditures. We also generally expect that our short-term liquidity needs will
be met primarily through retained cash from operations, short-term borrowings or
by issuing new long-term debt to refinance certain of our maturing long-term
debt obligations. Moreover, as a result of our current common stock dividend
policy and our continued focus on disciplined capital allocation, we do not
expect the need to access the equity capital markets to fund our growth projects
for the foreseeable future.

Short-term Liquidity

As of June 30, 2019, our principal sources of short-term liquidity are (i) cash
from operations; (ii) our $4.5 billion revolving credit facilities and
associated $4.0 billion commercial paper program; and (iii) KML's 4-year, C$500
million unsecured revolving credit facility (for KML's working capital needs).
The loan commitments under our revolving credit facilities can be used for
working capital and other general corporate purposes and, additionally for us,
as a backup to our commercial paper program. Letters of credit reduce borrowings
allowed under our and KML's respective credit facilities. Issuances of
commercial paper also reduce borrowings allowed under our credit facility. We
provide for liquidity by maintaining a sizable amount of excess borrowing
capacity under our credit facilities and, as previously discussed, have
consistently generated strong cash flows from operations.

As of June 30, 2019, our $3,054 million of short-term debt consisted primarily
of (i) $2,735 million of senior notes that mature in the next twelve months;
(ii) $136 million outstanding under our $4.0 billion commercial paper program;
and (iii) $27 million outstanding borrowings under KML's C$500 million revolving
credit facility. As it becomes due, we intend to fund our short-term debt
primarily through credit facility borrowings, commercial paper borrowings,
and/or issuing new long-term debt. Our short-term debt balance as of
December 31, 2018 was $3,388 million.

We had working capital (defined as current assets less current liabilities)
deficits of $3,359 million and $1,835 million as of June 30, 2019 and
December 31, 2018, respectively. Our current liabilities may include short-term
borrowings, which we may periodically replace with long-term financing and/or
pay down using cash from operations. The overall $1,524 million (83%)
unfavorable change from year-end 2018 was primarily due to a decrease in cash
and cash equivalents of $3,067 million partially offset by a decrease in
short-term debt and distributions payable of $1,210 million and a net decrease
in accrued interest and accrued taxes. Generally, our working capital balance
varies due to factors such as the timing of scheduled debt payments, timing
differences in the collection and payment of receivables and payables, the
change in fair value of our derivative contracts, and changes in our cash and
cash equivalent balances as a result of excess cash from operations after
payments for investing and financing activities.


                                       55
--------------------------------------------------------------------------------

Capital Expenditures


We account for our capital expenditures in accordance with GAAP. We also
distinguish between capital expenditures that are maintenance/sustaining capital
expenditures and those that are expansion capital expenditures (which we also
refer to as discretionary capital expenditures). Expansion capital expenditures
are those expenditures that increase throughput or capacity from that which
existed immediately prior to the addition or improvement, and are not deducted
in calculating DCF (see "Results of Operations-Non-GAAP Financial
Measures-DCF"). With respect to our oil and gas producing activities, we
classify a capital expenditure as an expansion capital expenditure if it is
expected to increase capacity or throughput (i.e., production capacity) from the
capacity or throughput immediately prior to the making or acquisition of such
additions or improvements. Maintenance capital expenditures are those that
maintain throughput or capacity. The distinction between maintenance and
expansion capital expenditures is a physical determination rather than an
economic one, irrespective of the amount by which the throughput or capacity is
increased.

Budgeting of maintenance capital expenditures is done annually on a bottom-up
basis. For each of our assets, we budget for and make those maintenance capital
expenditures that are necessary to maintain safe and efficient operations, meet
customer needs and comply with our operating policies and applicable law. We may
budget for and make additional maintenance capital expenditures that we expect
to produce economic benefits such as increasing efficiency and/or lowering
future expenses. Budgeting and approval of expansion capital expenditures are
generally made periodically throughout the year on a project-by-project basis in
response to specific investment opportunities identified by our business
segments from which we generally expect to receive sufficient returns to justify
the expenditures. Generally, the determination of whether a capital expenditure
is classified as a maintenance/sustaining or as an expansion capital expenditure
is made on a project level. The classification of our capital expenditures as
expansion capital expenditures or as maintenance capital expenditures is made
consistent with our accounting policies and is generally a straightforward
process, but in certain circumstances can be a matter of management judgment and
discretion. The classification has an impact on DCF because capital expenditures
that are classified as expansion capital expenditures are not deducted from DCF,
while those classified as maintenance capital expenditures are.

Our capital expenditures for the six months ended June 30, 2019, and the amount
we expect to spend for the remainder of 2019 to sustain and grow our businesses
are as follows:
                                      Six Months Ended
                                       June 30, 2019         2019 Remaining        Total 2019
                                                            (In millions)
Sustaining capital
expenditures(a)(b)                  $              304     $            403     $           707
KMI Discretionary capital
investments(b)(c)(d)                $            1,380     $          1,453     $         2,833
KML Discretionary capital
investments(b)                      $                8     $             19     $            27


_______

(a) Six months ended June 30, 2019, 2019 Remaining, and Total 2019 amounts

include $50 million, $75 million, and $125 million, respectively, for our

proportionate share of (i) certain equity investees'; (ii) KML's; and (iii)

certain consolidating joint venture subsidiaries' sustaining capital

expenditures.

(b) Six months ended June 30, 2019 amounts exclude $184 million of net changes

from accrued capital expenditures, contractor retainage, and other.

(c) Six months ended June 30, 2019 amount includes $648 million of our

contributions to certain unconsolidated joint ventures for capital

investments.

(d) Amounts include our actual or estimated contributions to certain equity

investees, net of actual or estimated contributions from certain partners in

non-wholly owned consolidated subsidiaries for capital investments.

Off Balance Sheet Arrangements


Other than commitments for the purchase of property, plant and equipment
discussed below, there have been no material changes in our obligations with
respect to other entities that are not consolidated in our financial statements
that would affect the disclosures presented as of December 31, 2018 in our 2018
Form 10-K.

Commitments for the purchase of property, plant and equipment as of June 30,
2019 and December 31, 2018 were $452 million and $304 million, respectively. The
increase of $148 million was primarily driven by capital commitments related to
our Natural Gas Pipelines business segment.


                                       56
--------------------------------------------------------------------------------

Cash Flows

Operating Activities


The net decrease of $370 million in cash provided by operating activities for
the six months ended June 30, 2019 compared to the respective 2018 period was
primarily attributable to:

$370 million of income tax payments made in the 2019 period primarily for

foreign income tax associated with the TMPL Sale.

Investing Activities


The $363 million net increase in cash used in investing activities for the six
months ended June 30, 2019 compared to the respective 2018 period was primarily
attributable to:

• a $701 million increase in cash used for contributions to equity

investments driven by higher contributions we made to Gulf Coast Express

       Pipeline LLC, Permian Highway Pipeline LLC, Citrus Corporation and
       Fayetteville Express Pipeline LLC in the 2019 period compared with the
       2018 period; partially offset by,


•      a $295 million decrease in capital expenditures in the 2019 period over
       the comparative 2018 period primarily due to no expenditures in 2019 for
       our Kinder Morgan Canada business segment due to the TMPL Sale and lower
       expenditures in our Terminals and CO2 business segments.


Financing Activities

The net increase of $2,403 million in cash used in financing activities for the six months ended June 30, 2019 compared to the respective 2018 period was primarily attributable to:

• a $1,545 million net increase in cash used related to debt activity as a

result of higher net debt payments in the 2019 period compared to the 2018

       period. See Note 3 "Debt" for further information regarding our debt
       activity;


•      an $879 million distribution of the TMPL Sale proceeds to the KML
       restricted shareholders in the 2019 period; and

• a $305 million increase in dividend payments to our common shareholders;

partially offset by,

• a $248 million decrease in cash used due to less common shares repurchased

under our common share buy-back program in the 2019 period compared to the

       2018 period; and


•      a $78 million decrease in cash used reflecting dividends paid to our
       mandatory convertible preferred shareholders in the 2018 period. All

mandatory convertible preferred shares were converted into common shares

in the fourth quarter of 2018.



Dividends

KMI Common Stock Dividends

We expect to declare common stock dividends of $1.00 per share on our common
stock for 2019.
                          Total quarterly
                           dividend per
                           share for the        Date of
  Three months ended          period          declaration     Date of record    Date of dividend
                                              January 16,
  December 31, 2018      $          0.20         2019        January 31, 2019   February 15, 2019
                                               April 17,
    March 31, 2019                  0.25         2019         April 30, 2019      May 15, 2019
    June 30, 2019                   0.25     July 17, 2019    July 31, 2019      August 15, 2019



The actual amount of common stock dividends to be paid on our capital stock will
depend on many factors, including our financial condition and results of
operations, liquidity requirements, business prospects, capital requirements,
legal, regulatory and contractual constraints, tax laws, Delaware laws and other
factors. See Item 1A. "Risk Factors-The guidance we provide for our anticipated
dividends is based on estimates. Circumstances may arise that lead to conflicts
between using funds to pay anticipated dividends or to invest in our business."
of our 2018 Form 10-K. All of these matters will be taken into consideration by
our board of directors in declaring dividends.


                                       57
--------------------------------------------------------------------------------

Our common stock dividends are not cumulative. Consequently, if dividends on our
common stock are not paid at the intended levels, our common stockholders are
not entitled to receive those payments in the future. Our common stock dividends
generally are expected to be paid on or about the 15th day of each February,
May, August and November.

Noncontrolling Interests

KML Distributions

KML has a dividend policy pursuant to which it may pay a quarterly dividend on
its restricted voting shares in an amount based on a portion of its
distributable cash flow. The payment of dividends is not guaranteed, and the
amount and timing of any dividends payable will be at the discretion of KML's
board of directors. KML intends to pay quarterly dividends, if any, on or about
the 45th day (or next business day) following the end of each calendar quarter
to holders of its restricted voting shares of record as of the close of business
on or about the last business day of the month following the end of each
calendar quarter.

On July 16, 2019, KML's board of directors declared a dividend for the quarterly
period ended June 30, 2019 of C$0.1625 per restricted voting share, payable on
August 15, 2019 to KML restricted voting shareholders of record as of the close
of business on July 31, 2019.

KML Dividends on its Series 1 Preferred Shares and Series 3 Preferred Shares


KML also pays dividends on its 12,000,000 Series 1 Preferred Shares and
10,000,000 Series 3 Preferred Shares, which are fixed, cumulative, preferential,
and payable quarterly in the annual amount of C$1.3125 per share and C$1.3000
per share, respectively, on the 15th day of February, May, August and November,
as and when declared by KML's board of directors, for the initial fixed rate
period to but excluding November 15, 2022 and February 15, 2023, respectively.

© Edgar Online, source Glimpses

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