Kinder Morgan (KMI) reported earnings after the bell on Wednesday, providing details on its growing project backlog and constructive outlook, largely fueled by increasing demand for natural gas.
The midstream company emphasized the important role of liquefied natural gas (LNG) and power generation in its future growth. Additionally, Kinder Morgan’s backlog expanded, offering more favorable returns as lower-yield projects are completed and higher-return ventures take their place.
See more: One Big Beautiful Bill and MLP/Midstream Implications
The projected increase in global gas demand is a significant factor in the company’s constructive outlook. Richard Kinder, executive chairman, highlighted the expectation for worldwide natural gas demand to surge by 25% over the next 25 years. This growth is predominantly concentrated in the emerging markets of Asia and Africa, due to a rapidly expanding middle class. Limited local production and land-based delivery constraints mean LNG is expected to satisfy the bulk of the growing demand.
LNG: a Key Growth Opportunity for Midstream
Kinder spotlighted the increasingly vital role of the U.S. in the global LNG supply chain. “The U.S. has been the top global producer of natural gas for 15 consecutive years and the world’s top exporter of LNG since 2023,” he said during the call.
Recent geopolitical events in the Middle East amplify the U.S.’s position, as importing nations prioritize secure and uninterrupted supply. This provides a significant advantage for U.S. LNG exports, bolstering confidence that a substantial portion of future LNG will flow through U.S. liquefaction terminals, according to Kinder.
“Consistent with this view is the recent estimate of S&P Global Commodity Insights that LNG feed gas demand in America will increase by 3.5 Bcf a day this summer compared to the summer of 2024, and that it will more than double by 2030,” Kinder added. “That should be a real positive for Kinder Morgan…as we move about 40% of all the feed gas for those facilities.”
CEO Kimberly Dang underscored the constructive outlook: “This is certainly the best opportunity set I’ve seen during my 24 years in this industry. The underlying market fundamentals are strong, with U.S. natural gas demand expected to grow by 20% between now and 2030.”
Kinder Morgan Reports Financial Results in Line With Consensus
Kinder Morgan’s second-quarter results aligned with expectations. The company reported adjusted EBITDA of $1.97 billion and reaffirmed its 2025 guidance of $8.3 billion. It also maintained its quarterly dividend of $0.2925 per share. This amounts to $1.17 per share annualized, marking a 2% increase from its 2024 dividend.
Beyond opportunities in LNG, Kinder Morgan sees robust demand from the power sector, largely driven by data centers. Furthermore, the company’s project backlog expanded by 6% to $9.3 billion this quarter. Natural gas projects accounted for approximately 93% of the backlog, and 50% are specifically serving power demand.
Despite a competitive environment, Kinder Morgan is well positioned for securing new contracts. The company boasts existing infrastructure, track record of on-time and on-budget project delivery, extensive storage capacity, and customer service.
Adding to the positive outlook are favorable tax benefits resulting from the recently passed Big Beautiful Bill, which includes the reinstatement of bonus depreciation and greater interest expense deductibility. The company expects significantly lower projected cash tax liabilities beginning in 2025, pushing material cash taxes back to 2028.
For investors seeking exposure to these growth opportunities, Kinder Morgan is a top-10 holding in the Alerian Energy Infrastructure ETF (ENFR ). Additionally, the midstream company can be accessed through the ALPS Alerian Energy Infrastructure Portfolio (ALEFX), which delivers exposure in a VIT wrapper.
For more news, information, and analysis, visit the Energy Infrastructure Content Hub.
VettaFi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for ENFR and ALEFX, for which it receives an index licensing fee. However, ENFR and ALEFX are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of ENFR and ALEFX.
