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Kinder Morgan’s forecast for 2015 shows growth

Kinder Morgan announced that it doesn’t expect decreasing oil prices to impact its pipelines and storage business.

The Houston-based company expects to invest $4.4 billion in development and small acquisitions in 2015.  Kinder Morgan also plans to generate $8.2 billion in earnings across its several segments.  For this year, the company said it expected to invest $3.6 billion in projects and expects to generate $8 billion in its businesses.

The company also stated it has revised its 2015 average U.S. oil price expectation to $70 per barrel and that it would see minimal negative effect from the decrease in oil prices that has concerned producers since this summer.

Kinder Morgan’s revenue mainly comes from shipment and storage fees paid by oil producers, which allows the company to not directly depend on commodity prices.

According to the company’s CFO, about 82 percent of Kinder Morgan’s cash flows were fee-based this year.

Robert Grattan of Fuel Fix reported “Kinder Morgan’s largest exposure to commodity prices comes from its carbon dioxide business segment, which owns a handful of oilfields in the Permian Basin. The division produced about 57,000 barrels per day of oil in the third quarter of 2014. Those barrels were 82 percent hedged at $95 in 2014 and are 64 percent hedged at $91 in 2015 as of the end of September.”

The company said that in total it could see an estimated $7 million impact on its distributable cash flow for each single dollar shift in the price of oil, with a bit more exposure in the years where it has not hedged as entirely.

Back in December, the Chief Financial Officer of Kinder Morgan, Kimberly Dang said the company had an estimated $400 million in excess coverage that would allow the company to cope with oil price swings without affecting the reserve cash to be paid to shareholders as dividends.

During the company’s January meeting, the board of directors expect to approve the comprehensive 2015 budget.

In related news, Kinder Morgan merger ranks as the 2nd largest energy deal in U.S. history.

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