Kinder Morgan Sees $1B Windfall from Texas Storm

(Bloomberg) -- Kinder Morgan Inc. surprised investors with a $1 billion dollar windfall from the historic winter storm that crippled Texas and boosted natural gas and power prices.

The deadly mid-February storm swelled first-quarter results, President Kimberly Dang said during a conference call with investors on Wednesday. The gain was so outsized that the pipeline operator results surpassed the average estimate by almost three times.

Kinder Morgan “was not really on anyone’s list of potential winners from Winter Storm Uri,” said Gabriel Moreen, an analyst at Mizuho Americas LLC. “Shame on us.”

Kinder disclosed a $116 million net gain from voluntarily curbing power use during the disaster and reselling it at sky-high prices, which implies an $880 million windfall from gas sales. A Kinder Morgan spokesperson declined to comment on the figures.

Losers, Winners

Power producers and utilities across the Lone Star state incurred billions of dollars in losses when the Arctic blast hobbled the electricity grid and disrupted gas deliveries, pushing prices to unprecedented levels. On the other side of that market, Kinder and drillers such as Comstock Resources Inc. reaped fat profits.

Investors and analysts will be closely watching for similar positive surprises among Kinder’s pipeline-sector peers as they disclose first-quarter results in coming weeks.

“Our storage assets performed exceptionally well, allowing us to deliver gas into the market throughout the storm,” said Chief Executive Officer Steve Kean. “These storage withdrawals, along with gas we purchased before and during the event, enabled us to deliver significant volumes of gas at contractual or prevailing prices.”

Ramifications

Much of the extra gas Kinder sold went to power generators whose normal suppliers were shut down or blacked out as the catastrophe intensified, Kean said.

The storm may have long-term ramifications for Kinder if costumers pay up to guarantee uninterrupted gas deliveries, which in turn would elevate the value of the company’s conduits and storage facilities, Moreen said in an interview.

Peers such as Energy Transfer LP also may be poised to show hefty profits from the disaster. The units jumped as much as 3.3% to the highest since March 15. Energy Transfer is scheduled to release quarterly results on May 11.

Kinder’s first-quarter net income reached a record $1.41 billion, compared with the $550 million average of analysts’ estimates compiled by Bloomberg. The shares rose as much as 0.9% in New York.

--With assistance from Sheela Tobben.

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