U.S. pipeline operator Kinder Morgan said it expects its core earnings to increase slightly in 2020, Kallanish Energy reports.
The company said it intends to cut its debt and increase its dividend next year. The company last week outlined its financial expectations for 2020.
The 2020 budget will be reviewed by Kinder’s board in January, and shared at its investor’s day in Houston, Texas, on Jan. 29.
The company expects higher contributions next year from existing projects, expansion developments, increased tariffs, lower interest rates and higher prices in its carbon dioxide business, partially offset by lower recontracting rates on some natural gas pipeline assets and crude and condensate assets.
Kinder said it expects 2020 pre-tax earnings of $7.6 billion, up slightly from a recent forecast of $7.56 billion in 2019. In late 2018, the company had predicted adjusted pre-tax earnings of $7.8 billion, but lowered estimates by roughly 3% due to lower commodity prices and delays in completing its Elba Island LNG facility in Georgia.
Kinder Morgan said it expects to spend $2.4 billion on capital spending and joint ventures next year, down from $3.1 billion in 2019. Most. If not all, of that money will come from the company’s free cash flow.
It expects to generate $5.1 billion of distributable cash flow, or $2.24 per share in 2020, about 3% more than the current forecast for 2019. It’s projecting adjusted EBITDA to be $7.6 billion.
Kinder intends to use the proceeds from selling the U.S. portion of its Cochin pipeline and its Canadian unit to pay down debt. The company’s moves will give Kinder Morgan the financial flexibility to either repurchase shares or to invest in attractive projects with an estimated $1.2 billion available next year, the company said.
“We think that building this financial flexibility into our 2020 budget is the right decision for our shareholders,” said CEO Steve Kean in a statement.
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