Kinder Morgan, Inc. (KMI) Q3 2026 Earnings Call Transcript

Good afternoon and thank you for standing by. Welcome to the Kinder Morgan's third quarter 2026 Earnings Results Conference Call. Your lines are in a listen-only mode until the question and answer session of today's conference. At that time, you may press star followed by the number one to ask a question. Please unmute your phones and state your name when prompted. Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan.

Thank you, Michelle. Before we begin, as usual, I'd like to remind you that KMI's earnings release today and this call include forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest filings with the SEC for important material assumptions, expectations, and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements. Let me begin by sharing some projections from credible third parties that once again support our belief that the demand for natural gas is destined to dramatically increase both in America and the rest of the world in the coming years and even decades. Shell projects that global LNG demand will grow to nearly 750 million tons per year by 2050, and that's an increase of 65 percent from 2025. That's an enormous increase and one that we believe will especially benefit the U.S., given the preference of international customers for sourcing their supply here. On the domestic front, the North American Electrical Liability Corporation is predicting that peak demand for electricity in this country will grow by between 225 and 245 gigawatts by 2035, and obviously much of that astounding growth will be met by natural gas generation. These two estimates just reinforce and strengthen what we believe is a bullish natural gas story. Now let me turn to our own story at Kinder Morgan. The third quarter was another good quarter for us with results exceeding both the comparable period in 2025 and our budget for this year. Perhaps more importantly, we made substantial additions to our backlog of new projects. Our additions constitute one of the largest increases in any one quarter in our corporate history, and our backlog of U.S. natural gas projects now stands at an all-time record. And I would add that we expect these new projects to lead to even more expansion opportunities over the coming months and years. In a broader sense, I believe the existing new projects we announced demonstrate the strength that comes from a large national midstream footprint. That footprint, which we are constantly expanding and extending, allows us to offer more diversified connectivity to our customers as they seek alternative and expanded sources of supply. To put the size and utilization of our natural gas network in perspective, I remind you that we deliver about 40% of all the natural gas in America, including approximately 40% of all LNG feed gas, and over 50% of gas exports to Mexico. Our network connects almost every producing basin with the great majority of demand locations throughout the country. I'm highly confident that our assets will allow us to continue to serve the multifaceted needs of our customers and at the same time deliver real and sustainable value to our shareholders. As I've said before, but it certainly deserves repeating, our strategy is not complicated. We have assets that generate large amounts of recurring cash flow. We are in a business that is in need of substantial additional infrastructure. Because of the size and reach of our system, we're in a unique position to capture a substantial portion of that need by developing projects supported by long-term take-or-pay agreements with credit-worthy entities. And our strong cash flow allows us to build that infrastructure by using primarily our own cash without undue leverage. We were able to earn good returns from these investments, thus increasing our EBITDA and EPS in the years ahead. For me, it's hard to think of a better strategy that combines consistent growth with minimal risk. And now let me turn it over to Kim.

Okay, thanks, Rich. This was another outstanding quarter for Kinder Morgan. Adjusted EPS increased by 21 percent. Adjusted EBITDA grew by 9 percent. and every one of our business segments contributed to that growth. Those results reflect both the strength of our assets and the outstanding execution of our employees. For the full year, we expect adjusted EPS growth to exceed budget by more than 13% and EBITDA to exceed budget by more than 6%. Our financial position continues to strengthen as well. We ended the quarter at approximately 3.5 times debt to EBITDA, the low end of our targeted range. Roughly $3 billion of annual cash flow available to fund Expansion CapEx. We have significant flexibility to fund our organic growth while maintaining a strong balance sheet. SHAP flexibility is important because our project backlog increased from $9.6 to $14.4 billion this quarter. We added $5.4 billion in new projects and placed $700 million of projects into service. The backlog multiple remains very attractive at 5.7 times. In the $5.4 billion of additions are two highly strategic joint venture projects. S&G's Southeast Connector, and NGPL's Permian Link. Together, Kinder Morgan's share of these projects is approximately $4.7 billion. Both projects are supported by at least 20-year take-or-pay contracts with credit-worthy shippers, providing the type of long-term, stable cash flow we seek to create. Importantly, Southeast Connector is contracted with strong investment-grade utilities, while Permian Link is contracted with an A-rated hyperscaler. These projects also highlight the quality of opportunities we see in front of us. Southeast Connector is a transformational project that connects diverse supply with one of the fastest-growing natural gas demand regions in the country. Large load interconnection requests across the southeast now exceed 200 gigawatts, which could represent roughly 8 B.C.F. a day of natural gas demand if it all came to fruition and if it was all served by gas fire generation. Southeast Connector is designed to meet that need by delivering approximately 2.6 B.C.F. a day of natural gas into the region. In addition, we expect this project, like many of our other large projects, to drive future expansion opportunities. Permian Link captures a similar compelling opportunity by moving abundant, low-cost Permian natural gas north to meet growing power demand in the Texas panhandle. Together these projects demonstrate how our network is uniquely positioned to connect growing supply basins with growing demand centers. More broadly, as Rich mentioned, the long-term outlook for natural gas remains exceptionally strong. Wood McKinsey projects North American natural gas demand to increase by approximately 46 BCF a day by 2035, given primarily by LNG exports and power generation demand. Projects of this size and quality do not happen by accident. The commercial creativity, customer relationships, project management and legal expertise, and and the patience and perseverance required to bring these opportunities together are remarkable. And I could not be more proud of what our team has accomplished. Finally, these projects extend our visible growth runway. Before this quarter, most of our EBITDA from our backlog was expected to be online by the end of 2029. With Permian Link and Southeast Connector entering service between 2030 and 2032, We have meaningfully extended the period of high-quality cash flow growth supported by approved maker-pay contracts. Simply put, we are delivering strong results today while continuing to build a longer runway for high-quality future growth. And with that, I'll turn it over to Dax to give you details on our business performance.

Thanks, Kim. Starting with the natural gas business unit, transport volumes were up 3% in the quarter versus the third quarter of 2025. The incremental demand was primarily a result of increased LNG feed gas deliveries on Tennessee gas pipeline and incremental demand on our intrastate system. Natural gas gathering volumes were up 14% in the quarter from the third quarter of 2025, with most all the increase coming from our Kinderhawk system in the Haynesville, which was up 40%. As we've continued to say, demand for gas on our pipes remains high and our system remains highly utilized. While we announced the sanctioning of two very important projects today, looking forward and consistent with Kim's comments, we continue to see significant incremental project opportunities across our natural gas pipeline network driven primarily by power and LMGD, and we will continue to pursue them aggressively. In our products pipeline segment, refined product volumes were down 3% in the quarter compared to the third quarter of 2025, and crude condensate volumes were down 11 percent more than half the decline in crude volumes is explained by the removal of double h from service for the ngl conversion early in the third quarter of 2025 with the remaining decrease resulting from fewer well connects at highland crude as previously announced we along with our partners were proud to reach a final investment decision on our western gateway project during the third quarter the project which will fundamentally change the way clean products are delivered to the desert southwest and southern California will ensure the availability of these products to consumers for decades to come. Kinder Morgan's $300 million total cash investment, which includes our $250 million contribution to the JV and a $50 million investment in our non-contributed assets, has been added to our project backlog and is expected to reach in service in 2029. In our terminals business segment, our liquids lease capacity remains high at almost 93%. Market conditions continue to remain supportive of strong rates, and the utilization of tanks available for use is just under 96% at our key hubs on the Houston Ship Channel and in Carteret, New Jersey. While the temporary Jones Act waiver has added some market uncertainty, our tanker fleet remains exceptionally well contracted, assuming likely options are exercised, our fleet is 100 percent leased through the rest of this year, 97 percent leased through 2027, and 80 percent leased through 2028. We have opportunistically chartered a significant percentage of the fleet at higher market rates and have an average length of firm contract commitments of almost three years. The worldwide shortage in refined product supplies and the associated price dislocations have both been significant positives for our export terminals and the Houston Ship Channel Hub. In Q3, we saw 427,000 barrels a day move across our 11 docks, which represented an increase of 39% over Q3 2025 and an all-time record. The CO2 segment saw 8% higher net oil production volumes compared to Q3 2025, which was led by an 11% increase in production at SACROP. NGL volumes were 9% higher and CO2 volumes were 3% lower. Finally, rng volumes increased 18 percent as the significantly improved operations that are driving both greater uptime and hydrocarbon recovery at our facilities continued in the third quarter with that i'll turn it over to david okay thank you dex we're declaring a quarterly dividend of 29.75 cents per share which is a dollar 19 per share annualized and an increase of 2% over 2025.

We delivered a record-setting quarter once again with net income attributable to KMI and adjusted EBITDA reaching record levels for the third quarter. Our third quarter performance was also ahead of internal expectations with EPS 15% above budget and adjusted EBITDA 6% above our budget. And this follows the first half of the year during which we achieved similar outperformance. Early financial performance, we had another very strong quarter for the third quarter, we generated net income attributable to KMI of $764 million and EPS of $0.34. Those are 22% and 21% higher than the third quarter of 2025, respectively. Adjusted EPS was $0.35, so that's 21% up from last year. Adjusted EBITDA grew by 9% to $2.18 billion for the quarter. Importantly, as Kim mentioned, the strength was broad-based with all four business segments delivering higher adjusted earnings year over year. Natural gas saw greater contributions from EPMG, Kinderhawk, TGP, and our Texas intrastate system. This performance was driven by greater volume and rates on capacity sales, park and loan contributions, expansion project contributions, and greater gathered volume. segment benefited from favorable commodity pricing, as well as greater butane blending volumes, partially offset by lower crude and refined product volumes. Our terminals segment benefited from expansion projects placed into service, higher commodity prices, stronger coal and petroleum coke handling activity, and higher Jones Act tanker rates. And our CO2 segment benefited from higher commodity prices, strong volume growth, particularly at Sacrock, which was up 11% from last year. Stepping back from the quarter, our year-to-date results have been exceptionally strong. Year-to-date versus 2025, EBITDA has grown 13% and adjusted EPS is up 32%. As Kim mentioned, we now expect our full-year adjusted EBITDA to be more than 6% above our budget and adjusted EPS to be more than 13% above our budget. It represents well more than 515 million dollars of additional EBITDA. Previously noted, during 2026 we've benefited from a handful of large items that may not be recurring. Winter storm fern and extended cold weather in the northeast, a terminal's contract buyout, a favorable FERC rate true-up, and unusually favorable Laha to Houston ship channel spread. Collectively, these items contribute approximately 225 million dollars to our outperformance in 2026. in additional in addition favorable commodity prices have contributed an additional 175 million dollars versus our budget if you recall our budgeted wti price was 60 per barrel tightness continues across our u.s infrastructure and that provides opportunities for us to capture additional margin when disruptions occur we expect those conditions will persist balance sheet our net debt to adjusted EBITDA ratio ended the quarter at 3.5 times, which is down from 3.8 times at the beginning of the year. Despite spending more this year due to our monument acquisition and greater than budgeted CapEx, we expect to end the year at 3.6 times leverage. And that's an improvement from the budget of 3.8 times driven by the EBITDA performance. Puts us well below the midpoint of our leverage year-to-date net debt increased five hundred and thirteen million dollars and here's a reconciliation of that we generated five point zero four billion dollars of cash flow from operations we've spent one point nine eight billion in dividends we've spent three point zero seven billion in capital and that's growth sustaining and our contributions to our JV's and then the monument acquisition was approximately five hundred million dollars and that gets you pretty close to the to the five hundred and thirteen $13 million debt increase. Now I'll turn it back to Kim for Q&A. Okay Michelle if you'll come on we'll take questions.

Thank you. At this time if you would like to ask a question you may press star followed by the number one. To withdraw your question you may press star two. Please unmute your phones and state your name when prompted. Our first caller is Theresa Chen with Barclays. Your line is open.

Good afternoon and congratulations on these major commercial milestones. I want to ask first on TGP. Following the successful non-binding open season for the 2019 South project, can you talk about the progress made on solidifying customer ship or commitments at this point? And how are you thinking about the ultimate size and scope for this project, given the elevated amount of interest beyond the half of the offered, as well as the downstream growth opportunities, especially on the heels of the Southeast Connector FID. Do you think TGP will play a meaningful role in surveying this incremental demand on SNG?

Teresa, this is Cecil. How are you doing? Well, one, I'm going to break this question up into a few parts. So the open season that we had, the non-binding open season, in terms of interest, over 2VCF of interest in that open season. Where we are right now with, you know, we've been intimating to the market and you guys that, you know, there's a demand equation here and ultimately will need to be solved with incremental molecule. We do feel 219 in some form is going to help contribute to that molecule shortfall. You know, when we think about what the project ultimately looks like, that's going to depend on who signs at the bottom line. One of the things that we're seeing right now is timing you know there's some customers that are further along than others we're managing through that to try and see how we can stage these projects maybe come in multiple forms if i had to kind of gauge uh where you know where i see the capex landing there you know roughly around a billion and a half dollars uh depending on ultimate interest you know we could adjust from there so uh a lot you know strong interest uh we do see the need i think when you think about the downstream Southeast connector, Tennessee is well positioned to serve that. But not only that, it's also that middle system power corridor that we have that I talked about on the last call. We see that corridor from Ohio, Kentucky, West Virginia, Tennessee, that's a growing demand center. And so, all in all, I think the opportunity set there for incremental supply bodes well.

Thank you for that detailed answer, people. On the Southeast Connector, the press release mentioned that the project can be scaled further with additional customer commitments. What is the realistic upside here beyond the 3.1 billion net to KMI? How much bigger can this project be?

Well, so a little too early. We're in the midst of the open season. I will tell you, we had significant interest in the open season, and this was a binding open season. We're still in the process of, you know, working through the pressing agreements, the interest on the commercial side, as well as a very important credit, you know, making sure we have the credit behind. And so we're working through those details, but needless to say, we can scale this, you know, up to three and a half, 3.5 BCF is plausible.

We have enough signed commitments today to support going forward in FID the project and then there are other customers even that are interested that we're working with on on PAs and they may come in later and that will cause us to scale ultimately it depends on who's right I mean that's that's oh understood thank you thank you our next caller is Julianne de Mullen Smith with Jeffrey your line is open sir hey good afternoon team nicely done got to hand it to you

impressive here let's keep focusing on the southeast connector while it's topical here maybe just to go back to that point you were bringing up on the middle system here on the power quarter how do you think about the size and scope of that opportunity the timeliness here i mean you allude to having some open seasons pending here but just what is the scope of contemplated there you talk about scaling it up to three and a half bcf a day a moment ago in parallel but can you elaborate maybe some other parameters and texture around there The Southeast connector, you know, we've got that open season.

You know, it'll close. We'll get some clarity around that. As far as the middle system, there are several power projects that have been evaluating, particularly on our 219 South project. And so really the timing there is what we're talking about. There's some that are further along than others. And so what we're going to have to do is really, really position ourselves to sanction parts of the project to be able to accommodate the immediate demand. And then the team is still creatively thinking on how we can accommodate the broader interest. That's going to take a few quarters to kind of button up in some form or fashion. And then ultimately, as usual, we're going to have to – we'll sanction when we get customers that sign to the bottom line.

Awesome. Excellent. A little bit bigger picture. You know, after adding $5 billion this quarter, how has the greater than $10 billion commentary or opportunity set changed, right? Should investors view the Southeast Connector and Permian Link as conversion from the shadow backlog into a more formal backlog? Or, as you just alluded to a second ago, has continued customer activity effectively replenished that funnel? I don't want to put words in your mouth, but I'd love to hear how you kind of frame that shadow today.

So, I mean, the shadow backlog today, there is substantial remaining shadow backlog. And I'd say that, you know, as we talk about these big projects, we think that, and, you know, we've talked about some of them on this call. But, you know, as a result of getting these signed up, does it create bottlenecks in other places that we will have to alleviate that will lead to more projects. And so I think the industry fundamentals in natural gas, as we talked about also in our opening comments, remain very, very strong. You know, we are confident that there will be meaningful additions, you know, conversions, if you will, into the backlog.

Fair enough. I'll leave it. Actually, just quickly, lastly, on Southeast Connector in particular, how does it fit into the broader permitting reform regime? Just quickly, if you can comment on that.

How does it fit into the permitting reform?

Yeah, go for it.

The bill that's in Congress?

Indeed.

You said yes.

So the bill that's in Congress obviously hasn't passed yet. Now, you know, the current permitting regime, I think we are very comfortable with and, you know, had very good success working with the FERC to get MSX and Southwest to work within a year, which is, you know, the fastest in recent time on permits of this size. And so I think that the current permitting regime, we will be able to get this project done. No concerns there. I think the permit bill that is in Congress is a good one. And I think, you know, it does some things that could help on certain projects not ours run into problems, but for one, you know, it eliminates the state's ability to what I'll call game, the 401 water permit. It eliminates the vacature as a remedy of the court, and it strengthens the nationwide 12 program. So, you know, I think it would be great if it got passed. We think it would be very helpful, and we are very supportive of it. But we are very comfortable completing these projects in the current permitting environment.

Excellent. No, I appreciate it. Thank you, guys.

Thank you. Our next caller is Jeremy Tenet with J.P. Morgan.

Hi. Good afternoon.

Good afternoon, Jeremy.

Just wanted to follow up on the capital opportunity set, as you've been describing here. You announced some, you know, pretty sizable projects here, and just wondering, I guess, as you think about, you know, what could be coming forward here. Do you see other projects of this type of size, or were these kind of like the two big ones that you had seen, and how do you think about run rate CapEx at this point?

Well, let me say, it's hard to project exactly what is going to be coming in, but, I mean, Cecil just talked about another billion and a half project, And, you know, we've talked about other projects that we think will come about as a result of Southeast Connector. So, you know, I think that the reason for the shadow backlog back in the beginning was, you know, was because people did not believe in the opportunity set that we were seeing on natural gas. And so we were providing this number to try to help you understand the opportunity set. I think, you know, at this point with a $14.4 billion backlog, you know, I hope we've established some credibility about being able to bring these things. So, with respect to run rate, I think, you know, it's probably going to be around $4 billion-ish for the next few years in terms of the CapEx that we would expect.

Got it. That's very helpful there. Thanks. And, Dave, I wanted to pick up, I think, on some of the comments you laid out when looking forward to 27, and some one-time upside optimization that I would imagine is not baked into the guide for next year. And it seems as far as major projects coming online, it's more tried in, but that's very late 27, more 28-weighted. I know it's premature to ask, but just any other thoughts as we think about 27 when we are modeling it, the EBITDA?

Yeah, we're going to avoid previewing the 2027 guide for right now. But, yeah, I think it's important to note that some of those items that we experienced this year, you know, it's unlikely that we're going to see those again next year. You know, winter weather is always hard to predict, but we're not going to budget a colder or more severe winter weather than we normally do. And then the commodity price uplift piece, that just depends on it. You guys all have your own commodity price deck, so you can put that in there. We'll give you the sensitivities.

Let me just address, you know, 2027, as David said, we're in the middle of our budget process. You know, it'll bring in quite a bit of cash. It's true that, you know, because those projects don't come on evenly over all the years, the growth is not going to be even every single year. And, you know, an example of that is, you know, Trident, the contracted EBITDA comes on in 2027. You know, 26, because it has some of these items, is going to be a difficult year to replicate. But the underlying business here always remains.

Got it. I'll leave it there.

Thank you. Our next caller is Praneeth Satish with Wells Fargo. Your line is open, sir.

Thanks. Thanks, good afternoon, and congrats on an incredible quarter here with Project FIDs. Maybe just going back to TGP 219 South, I guess we were a little bit surprised with the 1.5 billion CapEx estimate seems lower than we would have thought.

I guess does that 1.5 billion get you all the way to a 2 BCF per day project, or is that based on the 500 MMCF per day open season that you went out with? guess where does this this project um you know transition from brownfield to greenfield well it ultimately depends on the the the shipper uh receipt deliveries right i mean i can tell you uh you know if if we if we scale to a if we scale to a two to three bcf number would be higher than the one and a half billion uh we're we're really focused on at this point just the brownfield component and then ultimately we'll adjust accordingly with incremental volume

mad and that's the way i would think about that okay that makes sense um and then maybe switching to to the permian here so permian link adding another 2.8 bcf per day of takeaway um i guess how do you think about the risk of overbuilding in the permian i mean i know that you're protected on this project because of the take or pay contracts but um i guess i'm thinking more about you know uh some of the some of the other pipes some of your older pipes like gulf coast express and when those come off contract? Do you see any risk there on the recontracting side, or do you think we're all too conservative with our Permian supply growth estimates here on the gas side and there's going to be enough gas to fill all these pipes?

Here's how I think of both those types. Our intrastate system, I talked about this on the last call, our Permian Highway and GCX, they're in the heart of the demand centers that are coming and further developing. Our focus have shifted from you know to to really focus on these demand pools what we see there uh especially across our php pipeline system is uh we see a you know power demand center corridor forming and so to the extent that uh there's any push pullback by any of the producers that are underpinning the project we see demand pull uh the same thing is out there in our gulf coast systems you know they were both of these types with some of the first types books or from a cost perspective uh relatively low on the cost spectrum and so what we see there is gcx there's so much incremental lng demand that is yet to come and so i think uh we feel pretty good about that and then overall our focus has been on market pull right and so we see those underpinned by long-term contracts so from a portfolio perspective we feel pretty good yeah i mean And people's point, we've got like 6,000 miles of intra-state pipe and 145 BCF of storage.

And, you know, those pipes tie into that, you know, are part of that system and tie into a lot of demand. And so we feel good from a demand pull standpoint that we can continue, those pipes will continue to have opportunities.

Understood. Thank you.

Thank you.

Our next caller is Manav Gupta with UBS. good afternoon um just for the record we always viewed your claims of 10 billion shadow backlog very credibly and you did say that the two projects add further credibility even if they would not have been announced we would have been very confident that your backlog would end over well over 10 billion before year end so just wanted to put that out there um uh quick question I wanted to go a little to Trident. There's a lot of gas getting on the Gulf Coast, and you have the ability to eventually move it around. So can you give us an update on what the Phase 1 and Phase 2 of Trident is looking like and how you'll be able to help other industrial companies and LNG producers by being able to move the gas around Gulf Coast?

Okay. Let me talk. Trident is on time and on budget and should be delivered in February of next year. Do you want to talk about the market?

So, I mean, look, we've talked about this when we sanctioned the project. You know, Trident, we saw a need. There's an industrial corridor developing perspective on the industrial side. But beyond that, you know, we ultimately pulled, you know, you get down to the LNG corridor, and we saw the need to go from there further west to the Gulf Coast corridor, we see incremental demand. And so that coupled with our KMLP header and the KMLP expansions that we've got, we've got an ability to serve the Texas, Louisiana, Gulf Coast, and we see significant demand developing there as well. So, you know, as Rich alluded to earlier, you get these stems inside and you get ancillary, secondary and tertiary expansions off of those stems. So we feel pretty good about that, and we think we can help on the demand side as this demand develops.

Perfect. My quick follow-up was a little bit just focused on the Florida gas market. It's a steadily growing gas market. If you could comment on it and obviously talk a little bit about your next phase of expansion at FGT, how that is progressing. Thank you.

Okay. Well, I will talk broadly. You know, as you know, we're not the operator at FGT. We'll let Energy Transfer talk about the details. But I will tell you this. You know, we've been talking about this thematically in the southeast. at least, we see strong demand in Florida. You know, FGT sanctioned a few projects already. We're obviously in discussions with other customers on future potential expansions, and we see the demand profile as being strong. And so I'll just leave it at that. And, you know, as you know, we're not the operator there. We work with the operator, but we feel pretty good about that as well.

And it's not just FGT. who also can help serve some of that growing market thank you so much thank you our next caller is jean and saltberry with bank of america hi congrats on the great quarter uh can you speak to whether the anchor hyperscaler of permian link is planning to be online prior to when permian link starts and you'll kind of replace it as the gas source or if you're planning to ramp together And so your timing is basically linked to their timing.

Without getting into the customer details, I'll tell you, we are trying to accommodate multiple customers on this project. I mean, we've got an anchor hyperscaler, but we have significant interest. We're also talking to those other customers. I think the anchor tenant obviously is driving the need for speed. And I think one of the benefits that PermianLink brings to the power market, as we've talked about before, is the link to storage and the flexibility and reliability that helps these hyperscalers achieve their seven nines of reliability. I think that's a real differentiator here. You know, the next phase, you know, we look at all of our storage facilities to see where we can kind of enhance service and flexibility, and that's what I think differentiates this.

That makes sense. Thanks. And then building on Teresa's earlier question, do you anticipate all the gas that's feeding Southeast Corridor? It's like, will it substantially all originate from Appalachia? And if that's the case, would you potentially require even more expansion than just TGP can provide?

So look, one of the beauties of kind of the locations we've picked is we've got access to multiple pipeline corridors, right? Tennessee, selfishly, we want to grow jennessee but we have we have interconnects with columbia gas uh we've got interconnected petco we've got interconnects planned with several other major interstates there and ultimately those pipes also have forward haul backhaul capabilities and so when you think about where the supply could come from always said we need incremental molecules to move not just gas on gas competition and so you basically could get a molecule from the gulf coast to that point via all of the major trunk pipes, including Tennessee, and then also from the Appalachia, Marcella, Southwest, Utica, down to that point. And so it's multiple basins that can kind of serve that takeoff point. That's the beauty of it.

That's helpful.

Thank you.

Thank you. Our next caller is Brandon Bingham with Scotia Bank. Your line is open, sir.

Hey, thanks for taking the questions. I wanted to maybe kind of go back to the U.S. Gulf Coast LNG dynamics, and in particular as it relates to Permian and Haynesville as the supply source, obviously some puts and takes with both, but just with the rate of change in Permian gas here and maybe not the most favorable price signals for broader Haynesville development, just how do you see those two basins playing out in the fight for U.S. Gulf Coast capacity and who You could be the primary driver there.

We've said all along that we believe it's going to be all of the above. We see the demand profile that we started off with, it's significant. That's significant growth, and it's going to take more than those basins to satisfy that growth. So we think there's plenty of resource. The key is going to be building that infrastructure in the middle, which we're really focused on, and then ultimately the price will take care of itself.

And I mean, if you look at wood magnum, and I think they're pretty similar to our internal numbers, you know, they've got Hainesville growing by 13 BCF, you know, Permian growing by a little over 10, and Marcellus growing by 13. So those are the three big producing basins that are helping to get that 46 BCF of growth that we referenced between now and 20. You need them all.

No, it's, yeah, absolutely fair. And then just maybe quickly kind of going back to those Wood Mac numbers or just anybody who's kind of put together the longer dated total gas demand picture would be kind of curious to hear your commentary and perspective just around like a capture rate to Kinder Morgan of all of that. Like looking at the S&G comments that you've made.

So, I mean, there's no science behind this other than we move about 40% of the gas in the U.S. market. And so we move about 50% of the gas to Mexico, 40% going to LNG, and 45% of the power demand across the South. So, I mean, I think that's as good a number as any.

Great. Thank you.

Thank you. Our next caller is Keith Stanley with Wolf Research. Your line is open, sir.

Hi, good afternoon. First, I wanted to clarify the SEC project you're sanctioning today. Does that include the SEC extension line up to the Nashville area? And then if you could comment at all on the phasing for both SEC and Permian Link, you know, they start up in the fourth quarter of 2030. When would you get to the targeted build multiple?

Yes, it does include, SEC does include the Greenfield line. Permian Link, it comes online in 2030. And then on SEC, it comes on 2030, 2031, and 2032.

Got it. Thank you for that. Second one on Western Gateway. So you're investing $250 million and contributing SFPP for your interest, and TSX, I think, is constructing most of it. how does risk sharing work in that JV for the investment in the event there were cost overruns or delays during construction? Would you have to fund your share of that, or is there a separate mechanism given how you're contributing to the JV?

Let me say a couple of things on that. One is I think we're being very prudent approaching this project in terms of spending capital until we get more comfort and make sure we're very confident that we can get built. And then secondly, what I'll say, and I'm not going to go into a lot of detail about it, but there are, we do have certain cost protections, you know, against cost.

That's helpful. Thank you.

Thank you. Our next caller is John McKay with Goldman Sachs. Your line is open, sir.

Hey, team. Thanks for the time. I wanted to pick up on kind of the general tone of this, and Kim, you answered it a little bit, and certainly the backlog increase is a bit of an answer. but there has been at least a perceived kind of slow down and kind of broader contracting activity, you know, some volatility in the markets.

I'd love just to hear from you guys, like, has the tone with customers changed all that much over the last couple months, you know, compared to, let's say, earlier this year?

No, I mean, John, we haven't seen the change. I think, you know, our customers continue to engage, and we continue to look for our opportunities. I think they see this, you know, as we become an increasingly globally connected market, you know, I think there's been more focus on how to handle some of the volatility through our storage assets. And so we've just seen the dialogue continue. It's been good.

That's great. And then when we look at the implied returns on these new projects being sub-six times, or if you look at something like the billions CapEx per BCF of capacity numbers kind of going up over time, could you just touch a little bit about kind of customer willingness to kind of take some of these higher implied rates and what that means maybe from looking at a kind of producer side versus the demand side customer? Thank you.

A couple of things. One thing is the cost per pipeline mile or whatever has gone up, and that's largely going to be a function of a couple of things. One, steel price. We have not – I mean, we didn't change our returns or decrease those, and, again, the increase in the materials cost.

Just any comments on kind of customer mix in terms of producer willingness to engage versus the demand side?

I mean, well, all the projects we're sanctioning today are demand pull, and that, you know, that is our preference when we do these projects because I think, you know, that demand can be, you know, basins can come and go to some extent. Now, some of them have been there for a long time, but the demand pull, you know, it is there for decades, the customers on these projects.

Appreciate the time. Thank you.

Thank you. Our next caller is Spiro Dunes with City. Your line is open, sir.

Thanks, operator. I want to start first with project timing. You talked about adding cash flow out to that 2032 timeframe, but it sounds like you're still filling in some growth for 29 and 2030. Kim, you also mentioned a $4 billion spending cadence from here. And on my math, PTP219 South should pretty much get you to that level once it's FID. So I wanted to understand how you're thinking about, I guess, what's needed to fill up more growth in 29 and 2030, or if we should expect most of the major project announcements from here beyond TGP, of course, maybe to be more weighted or added to the 2030-plus timeframe?

Well, 29 and 2030 is, you know, we're getting S&G. South System 4 is coming online, Q4 of 2028 and Q4 of 2029, so that will drive growth in 29 and 2030. 30. And then I think MF mid-year 2029. And then these projects, you know, you'll get a fourth quarter probably roughly. You'll get Army and Lincoln. So as I said, it's not going to be exactly the same growth rate every year. It'll vary year in and year out, seven times multiple as we get these things built because these are, again, backed by take or pay contracts with either credit-worthy entities or that have significant collateral postage.

Second question, talked about Trident, but I want to go to the other side of the Permian and go to Arizona. Hearing more on the utility side about maybe the potential need for another pipeline, just given some utility plans in Arizona, West Valley, and some data center development there. You, of course, had Copper State Connector at one point. Just curious about maybe the prospects you see to make another move into Arizona.

Look, I mean, on the western side, we do see opportunities. You know, we have both of our legs. Pipeline goes to Arizona and Mexico. And I would caveat, I would characterize it as we do see significant power demand there. We also see traditional conversions, you know, coal plant conversions as opportunities on the western side. I'm willing to comment on kind of where and how those get to present.

We do have discussions ongoing out west as well. leave it there thanks everyone thank you our next caller is gabe marine with mizuho your line is open sir hey good afternoon everyone i'm not sure if it's allowed but i'd like to ask some questions on your non-natural gas businesses um right right um so okay thank you kim um one i was going to ask just with the forward curve on crude oil have moved up nicely here in 27 and beyond whether that puts some CO2 expansions back into play potentially. And then also, I think there may be some inorganic opportunities out there on R&G. I'm just curious your thoughts on potentially expanding that business as well.

Yeah, Gabe, thank you for tossing me a bone. Yeah, no, as you know, EOR and the forward curve has come up, but it's still what we can do and our ability to accelerate. But it's really no different in terms of her looking at that curve, and we'll be sensitizing that curve with what's called risk associated with that. And so there is some concerns then that we do on Cthul's businesses. And then on RNG, I don't think we can really kind of talk about, you know, ongoing third-party processes. We continue to kind of look.

R&G business. I mean, we did have some struggles, but we do have a team that has learned and who knows how to operate these at this point. And so I think we've developed some expertise there. But, you know, we also have a lot of lessons learned that we would take into account if anything we look at. And then, I mean, to Anthony's point on the CO2 stuff, I mean, you know, when we look at those, you know, those are long-term projects. And so we and we'll just jump because it's $85.

Thanks, Anthony. Thanks, Kim. And if I could just squeeze one more on the Bakken. I'm just curious sort of on a double H and outrigger update. It seems like there's some shifts going on there in the GNP landscape in the Bakken. Just wondering if that makes you more or less inclined to invest more capital up there.

Look, we've invested significant capital up there. I think we're pretty well positioned for what we see coming, and we can always adjust if we see the macro environment change a little bit. I think where I would take it is we're sitting in a good spot. We've got the infrastructure we need to accommodate any growth that might be.

Thank you. Our next caller is Zach Van Everen with TPH Research. Your line is open, sir.

Kyle, thanks for taking my question. Maybe back on gas supply, whether it's Waha, the Gulf Coast, or the southeast, it definitely feels like there's a fight for gas. As a part of any of these projects, have you helped customers, or was it contingent on them also signing supply agreements with producers just to make sure they could fill their FT?

I know the answer to your latter question is no. We don't do anything contingent. But, I mean, look, we explained the macro environment. They have to make their own judgments on this. I think there's plenty of resource. It's a price function. There's a dry gas window. There's an associated gas window. and then there's other basins in and around that can help meet the demand. It's, you know, once again, it's a function of supply and demand, and there's other basins that can feed through our networks and ultimately get into to serve the pipelines that we have from different areas. For example, the Eagle Surge can go the other direction as well. So that's how I would leave it. I think it's broad enough. I think folks understand that there's going, you know, they need to secure a molecule. I think we make sure that that's clear and the rest.

Got it. That makes sense. And then maybe a quick clarifying note, when you mentioned the 200 gigawatts in the southeast equating to about 8 BCF a day, is that a risk number because it feels a little lower than the general 150 M.M.C.F. a day per gigawatt that most people use?

I mean, I just – to keep my mind simple, inefficient plants. Inefficient plants. Right.

Inefficient plans, yeah. And look, I mean, that probably likely will all have the connection requests, assuming they all go, and that's all natural gas. And so, you know, it'll be some combination.

The point is, there is a huge amount of demand growth in the southeast, and, you know, that's part of what Southeast Connector is addressing. got it appreciate the time thanks all thank you our next caller is jason gableman with td cowen your line is open sir yeah hey thanks for taking my question um i want to ask about permian link and your kind of targeted uh irrs you you talk about kind of i think mid-teen after-tax irrs and i wonder given you know this this project with only one anchor shipper has some perception of of higher risk did that require you to kind of uh construct the project for a higher irr or

or you feel like the the risk profile of of this project is is similar to your existing business look we approach this project the same way we approach all of our other projects which is up and down on the risk return threshold meaning that if a customer is willing to share in some of the costs, then we can move down the return threshold a little bit. If the customer is not willing to share in cost overrun, then we need a higher return. We have some flexibility in how we approach that. Then as we negotiate, our customers at times have a preference between, hey, I don't want to cost share. I want you to take the cost risk. That's one rate. We put them one rate. Then if they're willing to share and the cost-risk, there's another race.

The other thing I'd say is PermianLink, you know, it has the ability to, we can add more shippers to this, lead to even – It's important, you know, when we talk about the scale of this – I mean the scope of this project, we have capabilities to serve incremental – and we're talking to incremental customers to basically fulfill the best.

Got it. Thanks for that. My other question is a bit separate. As you kind of pursue connectivity to move more gas from the Marcellus, I'm wondering if there's anything to be gained to move further kind of upstream into Marcellus GMP. Would you get anything? Is there any commercial value for controlling more of the gas upstream from your pipes or not really at this point?

I mean, look, we have some pretty good customers of our own that are very sophisticated in doing that. And, you know, I think we stick to what we do best, which is build large-scale infrastructure. Very similar to the power story. We're not focused on power. We're focused on building pipeline infrastructure. And so I think we would, you know, we would collaborate to do that. And I think that's probably the best course for us.

And I think there's a barrier established in that. And so, you know, typically they're going to have an income.

Thanks for the time.

Thank you.

Our next caller is Harry Moutier with Barclays. your line is open sir hi thanks good afternoon um you know both southeast connecter and permian link are being developed at jvs i'm curious how you plan to balance contributing capital into those jvs from kmi at least initially versus um you know using what i think appears to be pretty decent uh balance sheet capacity of both those jvs during the construction phase yeah i think you know it's going to be it's going to be a combination of you know the jv funding a portion of it and us contributing in capital.

So I think, you know, those JVs have nice cash flows. They can go to fund a portion of the CapEx. We can take on incremental debt at those JVs. If we do that, though, our plan is to do it in such a – well, we will do that, but our plan is to do it in such a way to maintain the existing ratings at those JV pipes. There will be some capital, in which case we will make equity contributions. And so now, you know, we also have the flexibility, given, you know, where our balance sheet is and our cash flow. We can fund that 100%. We could fund that CapEx 100%.

Thank you.

Thank you. Mr. Kendra, at this time we are showing no further questions, sir.

Okay. Well, let me just conclude with two remarks. Again, I want to say, and Kim mentioned this number, that if you look at the returns expected on this $14.4 billion of backlog, that's $2.5 billion of additional EBITDA. And if you look at that in terms of where we are presently, that pushes us between $11.5-$12 billion of EBITDA. The other thing I would mention is last call, there was some, let me call it skepticism about whether we can really bring these projects along. And I think I made the remark, well, we have to get the horses in the corral. I just want to say we've got a hell of a lot of those horses in the corral now with the saddles on, but we've got more horses just outside the corral, and I think you're going to see them. And they want to come in. That will be the message for the future. But thank you all for your good questions. We appreciate it. It's been a great quarter, and we hope to bring you more good news in the future. Thank you.

Thank you. This concludes today's conference call. You may disconnect at this time and have a great rest of your day.