The Quarterly Earnings Conference Call begins with a reminder about forward-looking statements and non-GAAP financial measures. The Executive Chairman discusses the increased demand for natural gas due to LNG export facilities and the expected growth in electricity demand, specifically from AI and new data centers. He also mentions anecdotal evidence from power users, utilities, and regulators.

The author provides anecdotal evidence to support the idea that there will be a significant increase in demand for electricity in Texas, driven by the growth of data centers and other tech companies. However, relying solely on renewables for this demand is not feasible, and natural gas is expected to play a major role in meeting the demand. This is evidenced by the oversubscription of a low-cost loan program for new natural gas-fired generating facilities in Texas.

The oversubscription of natural gas facilities is evidence of projected increased demand for natural gas. US utilities plan to add 133 new gas plants in the next few years. This is reflected in a new project in the Southeastern United States. The future looks robust for natural gas demand and the midstream industry. In the third quarter, adjusted EPS and EBITDA increased by 4% and 3%, respectively. The company has a debt-to-EBITDA ratio of 4.1 and continues to return value to shareholders. The long-term fundamentals for natural gas are strong, with expected demand from power and data centers.

WoodMac projects a 20 Bcf growth in gas demand by 2030, driven by a doubling of LNG exports and a 50% increase in exports to Mexico. However, they also project a decrease in power demand, which Kinder Morgan disagrees with. They believe that the growth in gas demand will be higher due to AI and data center demand, coal conversions, and new power capacity. They are currently evaluating 1.6 Bcf a day of potential opportunities and have seen estimates of 3-10 Bcf of incremental gas demand associated with AI. Kinder Morgan is also having commercial discussions on over 5 Bcf a day of opportunities related to power demand. Additionally, their successful open season for the South System 4 Expansion project will help meet the growing demand in the Southeastern markets.

The company's backlog increased by $1.9 billion due to a project that reflects the high demand for natural gas. The Supreme Court's decision to stay the Good Neighbor Plan and overturn the Chevron doctrine will help mitigate regulatory challenges. In terms of business performance, natural gas transport volumes increased slightly while gathering volumes were up 10%, with expectations for a slight pullback in gathering volumes due to current gas prices. The company anticipates higher production volumes will be necessary to meet LNG demand in 2025.

The company has many opportunities for growth in the natural gas pipeline network, with plans to convert a pipeline from crude oil to natural gas liquid service. Their Terminals business segment is also performing well, with high utilization rates and strong project opportunities. However, their CO2 segment experienced lower volumes in the quarter and for the full year, and the company made some asset portfolio changes in the Permian Basin.

The company has divested its interest in five fields and acquired new ones with potential for CO2 flood projects. They are also discussing carbon capture sequestration projects. The company is declaring a dividend and changing their Investor Day presentation to biannual. The team is also recognized for their hard work and dedication during a tough close and hurricane.

In the second quarter, the company's revenue increased by $71 million and gross margin by 3%. The growth was driven by natural gas products and terminals businesses, as well as contributions from acquired assets. However, CO2 business was down due to lower crude oil volumes. Net income and EPS remained flat, but adjusted net income and EPS increased by 1% and 4%, respectively. The company's net debt decreased by $306 million and their net debt to adjusted EBITDA ratio remained consistent. They generated $2.9 billion in cash flow from operations and paid out $1.3 billion in dividends.

The company has experienced a $1.9 billion increase in backlog, mainly due to two projects, South System 4 and Double H. The multiple has also increased slightly, but the company's focus is on achieving a high internal rate of return and a threshold well above their cost of capital. The multiple may vary depending on the risk of a project, but those connected to existing infrastructure tend to have a higher multiple.

The speaker responded to a question about the demand for natural gas from data centers. They mentioned that despite initial beliefs that data centers would only be interested in renewable sources, they are now seeing demand for natural gas due to its reliability and ability to feed the market. The speaker also mentioned that there are currently discussions for 5 Bcf of power demand, but did not specify the location or speed-to-market.

The speaker discusses the increase in power demand across various markets, including Texas, Arkansas, Kentucky, Georgia, and the desert Southwest. They also mention the potential for portfolio optimization, including a CO2 asset swap and potential divestitures in the natural gas segment.

The company sold some fields and acquired new ones with good potential for flood and CO2 opportunities. They are also working on the SNG South System project, which has a broad customer base and is expected to be in service by 2028. The project will have initial phases in 2028 and some volumes trickling in after. The company is also looking at potential opportunities from the Texas loan program for gas-fired power plants.

The speaker is discussing the company's market share in connecting to power plants in Texas and the potential for opportunities in the intrastate system. They estimate their current market share to be around 40% and the cost to connect varies depending on the location. They also mention the potential for expansion of mainline capacity. The next question is about the Double H conversion project and how NGLs will be transported from Guernsey. The company's goal is to get the NGLs to market in Conway and Mont Belvieu. They see potential for growth in the basin and are working on egress opportunities for both residue and NGLs.

The speaker discusses the competitive nature of the Conway and Mont Belvieu markets and mentions that the NGL and gas markets are expected to grow due to an increase in GOR. They also mention that they are in discussions with customers for Permian gas egress and are open to different structures. The speaker cannot provide any updates on the potential for brownfield expansion or greenfield projects. They also mention that they are not prepared to sanction the GCX project yet. In regards to the Double H line, the speaker cannot disclose the exact capacity for NGL service but mentions that it will be converted in the first quarter of 2026 and may take some time to ramp up in commitments.

The company's capacity and capital spending plans are dependent on the hydraulic combinations of their suppliers and the market demand. They have a firm commitment for the project and it is scalable, with the ultimate capacity depending on the customer. The company expects to spend around $2 billion in capital, with potential for it to be slightly higher due to upcoming projects like SNG.

Kim Dang and Rich are discussing potential projects that could add up to 5 Bcf a day. This does not include the 1.2 Bcf a day project SNG. Kim also mentions regulatory events and potential interest rate cuts, which could be a tailwind for the company. David adds that they have a significant amount of floating rate debt exposure.

The company has intentionally reduced its floating rate debt exposure and locked in favorable interest rates for 2025. They are expecting to take advantage of potential short-term interest rate cuts. The company is also confident that they will meet their return hurdles on potential gas pipeline projects for data centers, but it is too early to quantify the exact returns. There may be competition for these projects, so the company does not expect to earn excessively high returns.

The speaker is clarifying the oil capacity of the Double H pipe and stating that the NGL capacity will depend on the receiving and delivery points. They also mention the importance of getting the product to market and how downstream points will affect capacity. In regards to the CO2 portfolio, they do not expect a significant change in annual capital numbers despite the recent acquisition of new assets.

In paragraph 19, the speaker mentions opportunities for the two new assets, including undeveloped acreage and North McElroy. They plan to do a pilot first before making further decisions on the latter. In terms of refined products, gasoline volumes are flat, but there has been a pickup in jet fuel and renewable diesel. The company is slightly below their budget for the season, but this is due to a combination of volume and price factors.

During a question and answer session, Harry Mateer from Barclays asked about funding for South System Expansion 4 and potential acquisition opportunities in RNG for Energy Transition Ventures. David Michels explained that they are still evaluating their options for funding, but generally prefer to fund at the parent level. Kim Dang added that they have not been actively pursuing acquisition opportunities in RNG due to difficulties operating the existing plants, but may reevaluate in the future once they are operating consistently.

The speaker discusses their company's progress and expectations for the second half of the year. They have signed long-term contracts for their new projects and are focused on securing good credit and cash flow. They are tracking below budget for gathering volumes, with the Eagle Ford, Haynesville, and Bakken basins being the main focus. There has been some weakness in the Haynesville due to pricing, but the company remains cautious.

Tom Martin and Sital Mody discuss the expected increase in demand for their company later this year and next year. Sunil Sibal thanks them and the operator announces that there are no further questions. Rich Kinder concludes the conference.

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