Kinder Morgan expects earnings to decline in 2020

Pipeline operator Kinder Morgan Inc on Thursday forecast a drop in core earnings next year, as growth from expansion projects would likely be offset by higher spending and lower contract rates on some of its gas and oil pipelines.The company said it expects 2020 adjusted earnings before interest, tax and depreciation (EBITDA) to be $7.6 billion compared with 2019 forecast of $7.8 billion.

Kinder Morgan would generate $5.1 billion of distributable cash flow in 2020, which is nearly 3% higher than the current forecast for 2019.

It also said it would increase its dividend per common share in 2020 to $1.25 per share, while spending $2.4 billion on expansion projects and joint ventures next year.

The Houston-based pipeline operator said 2019 net debt-to-adjusted EBITDA ratio would improve to 4.4 times, versus long-term target of about 4.5 times. Kinder Morgan expects the ratio to further improve to 4.3 times in 2020.

A decline in U.S. drilling activity has slowed development of one of Kinder Morgan’s planned natural gas pipeline projects in the Permian Basin of West Texas and New Mexico, Chief Executive Officer Steven Kean said last month.