HOUSTON, Feb. 14 /PRNewswire-FirstCall/ -- Kinder Morgan Energy Partners, L.P. (NYSE:KMP), celebrates its 10-year anniversary today, having delivered an average annual return of 30 percent to unitholders over that time period. KMP has grown from a company with a few small assets and an enterprise value of about $325 million in 1997, into one of the largest energy transportation and storage players in the industry today with an enterprise value of more than $16 billion.
One of America's largest pipeline master limited partnerships (MLP), KMP has more than 27,000 miles of pipelines and approximately 150 terminals. In the United States, KMP is: -- the largest independent transporter of refined petroleum products like
gasoline, jet fuel and diesel;
-- a major transporter and storage operator of natural gas in the Texas,
Rocky Mountain and Midwest areas;
-- the largest transporter and marketer of carbon dioxide for enhanced
oil recovery projects, and the second largest oil producer in Texas;
and
-- the largest independent terminal operator storing liquids like
petroleum products and chemicals and handling bulk materials like
coal.
"Ten years ago we aimed to build a different type of energy company by utilizing the MLP structure as a growth vehicle, something that had really never been done before," said Chairman and CEO Richard D. Kinder. "We committed to being lean and frugal, focusing on being a strong asset operator and generating maximum returns to our unitholders. That philosophy still holds true today and our portfolio of primarily fee-based assets, which is instrumental to our country's energy infrastructure, continues to produce strong, reliable cash flow." KMP expects to declare distributions of approximately $1.4 billion for 2007, compared to $17 million for 1996.
History KMP was formed Feb. 14, 1997, when a group of investors, headed by Kinder and William V. Morgan, KMP's former vice chairman and president, acquired the general partner of Enron Liquids Pipeline, L.P., a small MLP which began in August of 1992.
Following the acquisition, the management team developed a strategy that the company still follows today: focus on stable, fee-based assets which are core to the energy infrastructure of growing markets; increase utilization of assets while controlling costs; leverage economies of scale from incremental acquisitions and expansions; and maximize the benefit of a unique financial structure which fits with the strategy.
KMP believes that transparency drives accountability and publishes both its annual budget and monthly environmental, health and safety performance on its web site for investors and the public to track.
Kinder Morgan Management, LLC (NYSE:KMR), which was formed in February 1991, is a limited partner in and manages and controls the business and affairs of KMP. KMR has no properties and its success is dependent upon its operation and management of KMP and KMP's resulting performance. KMR was formed to facilitate institutional ownership of KMP equity.
Past Growth In the early years, KMP grew mostly through acquisitions, including the purchase of Santa Fe Pipeline Partners in 1998. This acquisition provided KMP approximately 3,000 miles of refined products pipelines that serve some of the fastest growing markets in California and Arizona. Other significant acquisitions included Shell CO2 Company in 2000, the U.S. pipeline and terminal businesses from GATX in 2001, a large Texas intrastate natural gas pipeline system (Tejas Gas, LLC) in 2002, and various natural gas asset contributions from Kinder Morgan, Inc. (NYSE:KMI).
"We have been fortunate to acquire some premier energy assets that have produced outstanding growth due to both the markets in which they operate and the expansion opportunities that they have presented," Kinder said. In recent years, KMP's growth has been fueled more by capital expansions. Combined, the company invested more than $11 billion in acquisitions and expansions through 2006, and has invested substantial capital in maintenance, repairs and integrity management programs to ensure its assets operate safely.
Unitholder Returns A $1,000 investment in KMP units on Jan. 7, 1997 (the day before the announcement that investors including Kinder were acquiring the general partner), purchased 36.36 units. KMP has had two, two-for-one unit splits since then, so an investor who purchased then and held all of his units would now own 145.45 units. Since Jan. 7, 1997, the investor would have received over three times his initial investment ($3,192) in distributions, including the $0.83 per unit declared for the fourth quarter 2006 and paid today. For 2007, the investor would expect to receive $500 in distributions -- another 50 percent of his original investment -- based on KMP's 2007 budgeted distribution per unit of $3.44. Additionally, the investor would still own the units, which would now be worth over seven times his original investment ($7,332) based on the closing price of $50.41 on Jan. 31, 2007.
Future Growth Today, KMP continues to identify and pursue industry megatrends to further grow the company. The company expects to grow the per unit distribution by about 8 percent per year over the next several years, due in part to new infrastructure projects (two examples below) and capital expansions that will be coming online in the future. Combined, the 8 percent growth in distributions per unit and the yield of about 6.5 percent on the units equates to an expected annual return to unitholders in the mid teens.
-- Rockies Express Pipeline -- a $4.4 billion project that will move
natural gas from the prolific producing basins in Wyoming and Colorado
to eastern Ohio. The project will be one of the largest of its kind
ever constructed in North America and will have the capability to
transport 1.8 billion cubic feet per day (Bcf/d) of natural gas. It
will be brought online in segments and is expected to be totally
completed by June 2009, subject to regulatory approvals. This is a
joint venture of KMP, Sempra Energy and ConocoPhillips.
-- Kinder Morgan Louisiana Pipeline -- a $500 million project that
involves construction of a new interstate natural gas pipeline that
will provide 3.2 Bcf/d of take-away capacity from the Cheniere Sabine
Pass liquefied natural gas plant under construction in Louisiana. The
137-mile pipeline will interconnect with various interstate and
intrastate pipelines. The entire project is expected to be in service
in the second quarter of 2009.
"What started out as a small MLP has steadily grown into a business far exceeding anyone's expectations," Kinder said. "KMP plans to invest $6.5 billion in new infrastructure and expansion projects over the next four years alone. We are all very proud of KMP's accomplishments and grateful to our customers and employees who have made KMP a leading energy company that has been able to deliver extraordinary value to its unitholders." Kinder Morgan Energy Partners, L.P. is one of the largest publicly traded pipeline limited partnerships in America. KMP owns or operates more than 27,000 miles of pipelines and approximately 150 terminals. Its pipelines transport more than 2 million barrels/day of gasoline and other petroleum products and up to 9 billion cubic feet/day of natural gas and its terminals handle over 80 million tons of coal and other bulk materials annually and have a liquids storage capacity of about 70 million barrels for petroleum products and chemicals. KMP is also the leading provider of CO2 for enhanced oil recovery projects in the United States.
The general partner of KMP is owned by Kinder Morgan, Inc., one of the largest energy transportation, storage and distribution companies in North America. Combined, the two companies have an enterprise value of more than $35 billion.
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Kinder Morgan believes that its expectations are based on reasonable assumptions, it can give no assurance that such assumptions will materialize. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are enumerated in Kinder Morgan's Forms 10-K and 10-Q as filed with the Securities and Exchange Commission. DATASOURCE: Kinder Morgan Energy Partners, L.P.
CONTACT: Emily Mir Thompson, Media Relations, +1-713-369-8060, or Mindy Mills, Investor Relations, +1-713-369-9490, both of Kinder Morgan Energy Partners, L.P.
Web site: http://www.kindermorgan.com/
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