Kinder Morgan Energy Partners LP's (KMP) first-quarter earnings fell 39% as the pipeline operator was forced to write down the values of assets it is required to sell amid its pending $21.1 billion acquisition of El Paso Corp. (EP).

Earnings from Kinder Morgan's pipeline operations were mixed as high oil prices boosted its sales of carbon dioxide to crude-oil producers while earnings for its refined-fuel segments were weak amid lackluster fuel demand.

Kinder Morgan Energy said earnings from its product-pipeline segment fell 4%, to $147 million, because of falling demand for diesel fuel and gasoline. Fuel demand was unlikely to return, forcing the company to grow the segment by increasing its transport of biofuels and condensates.

"We don't expect refined-product volume to increase, but we do expect these segments to grow," Kinder Morgan Energy Chief Executive Richard Kinder said during a conference call with investors.

High oil prices have fueled demand for Kinder Morgan Energy's carbon-dioxide transport service, which supplies the gas to add enough well pressure to recover oil from older wells. Net income from the company's carbon-dioxide transport business grew 50% year over year, to $233 million.

Kinder Morgan said it will boost capacity at its CO2 source field in Colorado by 60%, to 170 million cubic feet a day, and has signed 2.1 trillion cubic feet of new CO2 gas supply contracts.

Kinder Morgan Energy reported a profit of $206 million, down from $338 million a year earlier. On a per-unit basis, which is affected by the general partner's interest, the company posted a loss of 33 cents, compared with year-earlier earnings of 18 cents.

Revenue decreased 3.6%, to $1.84 billion. Analysts polled by Thomson Reuters most recently projected earnings of 65 cents per unit on revenue of $2.37 billion.

Overall operating margin rose to 30.6% from 19.7%.

Kinder Morgan Energy's common units closed Wednesday at $83.14, up 56 cents, and were inactive in after-hours trading. They are down 2.1% this year.

Meanwhile, Kinder Morgan Inc. (KMI), which owns Kinder Morgan Energy's general partner, reported sharply lower first-quarter earnings and would have had a loss without income attributable to noncontrolling interests.

Kinder Morgan Inc. posted first-quarter earnings of $21 million, down from $155 million a year earlier. The latest period included $94 million in income attributable to noncontrolling interests. On a per-share basis, earnings fell to 1 cent per Class A share from 12 cents. Revenue plunged 70%, to $1.86 billion.

Analysts expected earnings of 31 cents and revenue of $2.35 billion.

Kinder Morgan Inc.'s Class A shares were flat at $37.25 in after-hours trading. Through the close, they are up 16% this year.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjone.com

--Tess Stynes contributed to this article.

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