The Quarterly Earnings Conference Call for Kinder Morgan has begun with Executive Chairman Rich Kinder providing a reminder about forward-looking statements and non-GAAP financial measures. He also discusses the increasing demand for natural gas due to LNG export facilities and the expected growth in electric power demand, particularly from data centers driven by the need for AI. This demand is projected to increase by 13-15% annually through 2030, with data centers using about 2.5% of U.S. electricity in 2022 and projected to use 20% by 2030.

The increased demand for AI and data centers is projected to be about 15% of total demand in 2030, with 40% of that demand being served by natural gas. This would result in an incremental demand of 7 to 10 Bcf a day. Utilities are already seeing a significant increase in demand and are concerned about how to handle it. Reliability and affordability are key factors in meeting this demand, and renewables alone cannot provide the uninterrupted power needed. Natural gas and nuclear power will continue to play an important role in meeting this demand, as big tech companies are beginning to recognize. The use of batteries to overcome shortfalls in renewable energy is not practical or economically feasible.

The article discusses the current state of the energy market and the role of natural gas in power generation. It mentions the challenges of incorporating renewable energy into the grid and the continued growth in demand for natural gas. The company's strong financial performance and plans for dividend increases are also highlighted. Overall, the outlook for natural gas remains positive despite current low prices.

The article discusses the anticipated increase in gas demand from power associated with AI and data centers, as well as the impact of the LNG pause on planned projects and the growth of the LNG market. The petroleum products business is expected to produce stable cash flow and has potential for growth in areas such as product blending and renewable diesel. The backlog of projects has increased and there are opportunities to add more within the next year. In the ETV business, port space has been secured for CO2 sequestration. The company had a successful quarter in terms of growth and has a sound balance sheet. The details of the business performance for the quarter will be discussed by Tom Martin.

In the first quarter of 2024, transport volumes increased by 2% compared to the same period in 2023, driven by increased flows into the Mid-Continent region and LNG customers in Texas. However, volumes delivered to local distribution companies on the East Coast decreased due to warmer weather. Natural gas gathering volumes also increased by 17%, with the Haynesville and Eagle Ford regions showing the highest increases. Due to low prices, gathering volumes are expected to be 5% below the 2024 plan, but still 7% higher than 2023. The integration of newly acquired assets in South Texas is going well and is expected to bring long-term earnings and value. In the Products Pipeline segment, refined product and crude and condensate volumes were down 1% compared to 2023, with decreases in gasoline volumes partially offset by increases in diesel and jet fuel.

In the first quarter of 2024, RD volumes in California increased, and the company is looking to expand RD capabilities in the Pacific Northwest. The Terminals segment had high utilization rates, and the CO2 business segment saw lower oil production and higher NGL volumes. The company declared a dividend of $0.2875 per share, representing a 2% increase from 2023. Revenues decreased by $38 million, but gross margin increased by 3%. Earnings from equity investments were up, mainly due to a non-cash impairment taken in the first quarter of last year. Natural gas, products, and terminals businesses saw growth from project contributions and acquired assets. Interest expense was higher, and net income and EPS both increased by 10% from the first quarter of last year.

In the first quarter, we generated $758 million in adjusted net income, a 12% increase from the previous year. Our adjusted EPS also increased by 13% to $0.34. Our average share count decreased by 1% due to share repurchases. Our DCF per share was $0.64, a 5% increase from last year. We ended the quarter with $31.9 billion in net debt, which increased by $94 million from the beginning of the year. We adjusted our long-term leverage target from around 4.5 times to a range of 3.5 to 4.5 times, which we believe is appropriate for a company with significant scale, stable cash flows, and multiyear contracts.

The company has changed its leverage target from 4.5 times to 3.5 to 4.5 times, in line with their current operating practices. This change will not affect their capital allocation philosophy. The company is expecting a big demand ramp in the power generation market and sees opportunities for growth, as they currently serve 20% of the market. However, it is still early and the specifics of these opportunities are not yet clear.

The speaker believes that the power market will primarily focus on gas, with some renewable aspect and gas backup. They expect to realize a significant portion of this opportunity due to their large network. They also mention the uncertainty of the exact demand and the potential for 5-10 Bcf a day of natural gas demand. They also mention the negative impact of Waha prices on their business.

The speaker discusses the current price macro on micro and states that it is a result of the warm winter. They mention the potential for another pipeline and state that they are still working on commercializing it. They also mention a little bit of capacity on PHP and GCX and how they participate in the margins when spreads blow out. The speaker then answers a question about gathering volumes coming in below budget.

Tom Martin and Kim Dang discuss the volumes in different basins and how they are slightly below budget, but still showing growth year-over-year. They believe this is a temporary blip and anticipate meeting the demand for these volumes in the future. They also discuss how Kinder thinks about their business and the synergies between their different commodity lines, including natural gas, petroleum products, and CO2. They believe the CO2 business will continue to be important and give them expertise in the CCS business.

The businesses owned and operated by the company are stable fee-based assets in the energy infrastructure sector. The company is open to selling these assets at a great price, but otherwise, they are satisfied with their current portfolio. There will be no changes in the company's capital allocation philosophy. The integration of the recently acquired South Texas assets is going well, and there may be opportunities for commercial and development projects sooner than expected.

The speaker discusses the company's increased backlog of $300 million, which includes $100 million in projects that have been completed. They also mention adding new projects related to gas and power, particularly in the Southeast where a data center is looking to connect to their system for reliable power supply and incremental capacity.

The data center is looking for additional storage to support their backup power generator, which is an example of the broader themes that the company is discussing. These themes include access to reliable power, large populations, and water for cooling purposes. The company also sees significant opportunities for growth in the next year or so, including supply from various basins, demand from LNG and industrial growth, and power growth in Mexico and the West Coast. However, not all of the opportunities being considered will come to fruition.

The speaker believes that as they continue to look at larger opportunities, they will add them to their backlog and some may come to fruition within the next year. The leverage target remains the same, but factors such as potential acquisitions or periods of less opportunity could cause it to fluctuate within the range. The rating agencies may view this change positively as it aligns with their previous target of 4.5 times leverage. However, they have always operated with some cushion below that target.

In paragraph 16, the speaker discusses a change in the company's leverage target and its potential impact on the rating agencies and fixed income investors. They believe the new target is more in line with their previous operations and will positively affect their financial policy. The operator then ends the call.

This summary was generated with AI and may contain some inaccuracies.