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Kinder Morgan reported that it will significantly boost its dividend as the energy industry continues to climb back from the oil bust, but the payout will still be less than half that of nearly two years ago.
The company also announced that it will spend $2 billion on a stock buyback program. The company announced the dividend increase as it reported profits of $337 million in the second quarter, up slightly from the $333 million in the same period a year earlier.
“We are pleased to fulfill our pledge to return value to shareholders through this combination of an attractive and growing dividend as well as a sizable share repurchase program. In essence, we expect to return substantially all of our operating cash flow in excess of growth capital needs to our shareholders through increasing the dividend and repurchasing shares, while maintaining robust coverage of the dividend,” said Richard D. Kinder, executive chairman, in a statement.
"This action comes on the heels of our successful initial public offering of our Canadian business, which in combination with the Elba, Utopia and SNG joint ventures drove much of our over $5.8 billion net debt reduction since the end of the third quarter of 2015," he continued.
Natural gas continues to be the fuel of choice for America and the world’s evolving energy needs, and industry experts are projecting U.S. natural gas demand, including net exports of liquefied natural gas (LNG) and net exports to Mexico, to increase by approximately 32 percent to almost 105 billion cubic feet per day (Bcf/d) over the next 10 years, the company said.
Of the natural gas consumed in the U.S., about 40 percent moves on KMI pipelines. While the majority of natural gas is consumed in industrial, commercial and residential heating uses, KMI expects future natural gas infrastructure opportunities will be driven by greater demand for gas-fired power generation across the country, LNG exports, exports to Mexico, and continued industrial development, particularly in the petrochemical industry. In fact, compared to the second quarter of 2016, natural gas deliveries on KMI pipelines to Mexico were up 8 percent, increasing by approximately 213,000 dekatherms per day (Dth/d), and deliveries to LNG facilities increased by approximately 335,000 Dth/d.
