Delaware | 80-0682103 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Page Number | ||
Consolidated Statements of Income - Three Months Ended March 31, 2016 and 2015 | ||
Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2016 and 2015 | ||
Consolidated Balance Sheets - March 31, 2016 and December 31, 2015 | ||
Consolidated Statements of Cash Flows - Three Months Ended March 31, 2016 and 2015 | ||
Consolidated Statements of Stockholders’ Equity - Three Months Ended March 31, 2016 and 2015 | ||
KINDER MORGAN, INC. AND SUBSIDIARIES GLOSSARY Company Abbreviations | |||||
CIG | = | Colorado Interstate Gas Company, L.L.C. | KMI | = | Kinder Morgan, Inc. and its majority-owned and/or |
Copano | = | Copano Energy, L.L.C. | controlled subsidiaries | ||
CPG | = | Cheyenne Plains Gas Pipeline Company, L.L.C. | KMLP | = | Kinder Morgan Louisiana Pipeline LLC |
Elba Express | = | Elba Express Company, L.L.C. | KMP | = | Kinder Morgan Energy Partners, L.P. and its |
EPB | = | El Paso Pipeline Partners, L.P. and its majority- | majority-owned and controlled subsidiaries | ||
owned and controlled subsidiaries | KMR | = | Kinder Morgan Management, LLC | ||
EPNG | = | El Paso Natural Gas Company, L.L.C. | SFPP | = | SFPP, L.P. |
Hiland | = | Hiland Partners, LP | SLNG | = | Southern LNG Company, L.L.C. |
KMEP | = | Kinder Morgan Energy Partners, L.P. | SNG | = | Southern Natural Gas Company, L.L.C. |
KMGP | = | Kinder Morgan G.P., Inc. | TGP | = | Tennessee Gas Pipeline Company, L.L.C. |
Unless the context otherwise requires, references to “we,” “us,” or “our,” are intended to mean Kinder Morgan, Inc. and its majority-owned and/or controlled subsidiaries. | |||||
Common Industry and Other Terms | |||||
/d | = | per day | EPA | = | United States Environmental Protection Agency |
BBtu | = | billion British Thermal Units | FASB | = | Financial Accounting Standards Board |
Bcf | = | billion cubic feet | FERC | = | Federal Energy Regulatory Commission |
CERCLA | = | Comprehensive Environmental Response, | GAAP | = | United States Generally Accepted Accounting |
Compensation and Liability Act | Principles | ||||
CO2 | = | carbon dioxide or our CO2 business segment | LLC | = | limited liability company |
DCF | = | distributable cash flow | MBbl | = | thousand barrels |
DD&A | = | depreciation, depletion and amortization | MMBbl | = | million barrels |
EBDA | = | earnings before depreciation, depletion and | NGL | = | natural gas liquids |
amortization expenses, including amortization of | OTC | = | over-the-counter | ||
excess cost of equity investments | |||||
When we refer to cubic feet measurements, all measurements are at a pressure of 14.73 pounds per square inch. |
KINDER MORGAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Millions, Except Per Share Amounts) (Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Revenues | ||||||||
Natural gas sales | $ | 543 | $ | 785 | ||||
Services | 2,114 | 1,970 | ||||||
Product sales and other | 538 | 842 | ||||||
Total Revenues | 3,195 | 3,597 | ||||||
Operating Costs, Expenses and Other | ||||||||
Costs of sales | 731 | 1,090 | ||||||
Operations and maintenance | 565 | 505 | ||||||
Depreciation, depletion and amortization | 551 | 538 | ||||||
General and administrative | 190 | 216 | ||||||
Taxes, other than income taxes | 108 | 115 | ||||||
Loss on impairments and disposals of long-lived assets, net | 235 | 54 | ||||||
Other (income) expense, net | (1 | ) | 1 | |||||
Total Operating Costs, Expenses and Other | 2,379 | 2,519 | ||||||
Operating Income | 816 | 1,078 | ||||||
Other Income (Expense) | ||||||||
Earnings from equity investments | 94 | 76 | ||||||
Amortization of excess cost of equity investments | (14 | ) | (12 | ) | ||||
Interest, net | (441 | ) | (512 | ) | ||||
Other, net | 13 | 13 | ||||||
Total Other Expense | (348 | ) | (435 | ) | ||||
Income Before Income Taxes | 468 | 643 | ||||||
Income Tax Expense | (154 | ) | (224 | ) | ||||
Net Income | 314 | 419 | ||||||
Net Loss Attributable to Noncontrolling Interests | 1 | 10 | ||||||
Net Income Attributable to Kinder Morgan, Inc. | 315 | 429 | ||||||
Preferred Stock Dividends | (39 | ) | — | |||||
Net Income Available to Common Stockholders | $ | 276 | $ | 429 | ||||
Class P Shares | ||||||||
Basic Earnings Per Common Share | $ | 0.12 | $ | 0.20 | ||||
Basic Weighted Average Common Shares Outstanding | 2,229 | 2,141 | ||||||
Diluted Earnings Per Common Share | $ | 0.12 | $ | 0.20 | ||||
Diluted Weighted Average Common Shares Outstanding | 2,229 | 2,151 | ||||||
Dividends Per Common Share Declared for the Period | $ | 0.125 | $ | 0.480 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 314 | $ | 419 | |||
Other comprehensive income (loss), net of tax | |||||||
Change in fair value of hedge derivatives (net of tax (expense) benefit of $(43) and $1, respectively) | 73 | (2 | ) | ||||
Reclassification of change in fair value of derivatives to net income (net of tax benefit of $64 and $41, respectively) | (108 | ) | (72 | ) | |||
Foreign currency translation adjustments (net of tax (expense) benefit of $(45) and $62, respectively) | 78 | (108 | ) | ||||
Benefit plan adjustments (net of tax expense of $(3) and $(3), respectively) | 4 | 6 | |||||
Total other comprehensive income (loss) | 47 | (176 | ) | ||||
Comprehensive income | 361 | 243 | |||||
Comprehensive loss attributable to noncontrolling interests | 1 | 10 | |||||
Comprehensive income attributable to KMI | $ | 362 | $ | 253 |
KINDER MORGAN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Millions, Except Share and Per Share Amounts) | |||||||
March 31, 2016 | December 31, 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 175 | $ | 229 | |||
Accounts receivable, net | 1,203 | 1,315 | |||||
Fair value of derivative contracts | 454 | 507 | |||||
Inventories | 364 | 407 | |||||
Other current assets | 285 | 366 | |||||
Total current assets | 2,481 | 2,824 | |||||
Property, plant and equipment, net | 41,042 | 40,547 | |||||
Investments | 6,035 | 6,040 | |||||
Goodwill | 23,801 | 23,790 | |||||
Other intangibles, net | 3,496 | 3,551 | |||||
Deferred income taxes | 5,103 | 5,323 | |||||
Deferred charges and other assets | 2,271 | 2,029 | |||||
Total Assets | $ | 84,229 | $ | 84,104 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities | |||||||
Current portion of debt | $ | 1,702 | $ | 821 | |||
Accounts payable | 1,017 | 1,324 | |||||
Accrued interest | 506 | 695 | |||||
Accrued contingencies | 276 | 298 | |||||
Other current liabilities | 895 | 927 | |||||
Total current liabilities | 4,396 | 4,065 | |||||
Long-term liabilities and deferred credits | |||||||
Long-term debt | |||||||
Outstanding | 40,093 | 40,632 | |||||
Preferred interest in general partner of KMP | 100 | 100 | |||||
Debt fair value adjustments | 1,912 | 1,674 | |||||
Total long-term debt | 42,105 | 42,406 | |||||
Other long-term liabilities and deferred credits | 2,182 | 2,230 | |||||
Total long-term liabilities and deferred credits | 44,287 | 44,636 | |||||
Total Liabilities | 48,683 | 48,701 | |||||
Commitments and contingencies (Notes 3 and 9) | |||||||
Stockholders’ Equity | |||||||
Class P shares, $0.01 par value, 4,000,000,000 shares authorized, 2,229,232,375 and 2,229,223,864 shares, respectively, issued and outstanding | 22 | 22 | |||||
Preferred stock, $0.01 par value, 10,000,000 shares authorized, 9.75% Series A Mandatory Convertible, $1,000 per share liquidation preference, 1,600,000 shares issued and outstanding | — | — | |||||
Additional paid-in capital | 41,678 | 41,661 | |||||
Retained deficit | (6,106 | ) | (6,103 | ) | |||
Accumulated other comprehensive loss | (414 | ) | (461 | ) | |||
Total Kinder Morgan, Inc.’s stockholders’ equity | 35,180 | 35,119 | |||||
Noncontrolling interests | 366 | 284 | |||||
Total Stockholders’ Equity | 35,546 | 35,403 | |||||
Total Liabilities and Stockholders’ Equity | $ | 84,229 | $ | 84,104 |
KINDER MORGAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash Flows From Operating Activities | |||||||
Net income | $ | 314 | $ | 419 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation, depletion and amortization | 551 | 538 | |||||
Deferred income taxes | 179 | 221 | |||||
Amortization of excess cost of equity investments | 14 | 12 | |||||
Loss on impairments and disposals of long-lived assets, net | 235 | 54 | |||||
Earnings from equity investments | (94 | ) | (76 | ) | |||
Distributions from equity investment earnings | 91 | 92 | |||||
Changes in components of working capital, net of the effects of acquisitions | |||||||
Accounts receivable, net | 116 | 216 | |||||
Income tax receivable | — | 195 | |||||
Inventories | 46 | 6 | |||||
Other current assets | 16 | — | |||||
Accounts payable | (172 | ) | (241 | ) | |||
Accrued interest, net of interest rate swaps | (159 | ) | (89 | ) | |||
Accrued contingencies and other current liabilities | (23 | ) | (12 | ) | |||
Rate reparations, refunds and other litigation reserve adjustments | 31 | 60 | |||||
Other, net | (95 | ) | (139 | ) | |||
Net Cash Provided by Operating Activities | 1,050 | 1,256 | |||||
Cash Flows From Investing Activities | |||||||
Acquisitions of assets and investments, net of cash acquired | (330 | ) | (1,864 | ) | |||
Capital expenditures | (811 | ) | (897 | ) | |||
Contributions to investments | (44 | ) | (30 | ) | |||
Distributions from equity investments in excess of cumulative earnings | 43 | 50 | |||||
Other, net | (2 | ) | (34 | ) | |||
Net Cash Used in Investing Activities | (1,144 | ) | (2,775 | ) | |||
Cash Flows From Financing Activities | |||||||
Issuances of debt | 4,610 | 7,136 | |||||
Payments of debt | (4,336 | ) | (6,305 | ) | |||
Debt issue costs | (6 | ) | (16 | ) | |||
Issuances of common shares | — | 1,626 | |||||
Cash dividends - common shares | (279 | ) | (962 | ) | |||
Cash dividends - preferred shares | (37 | ) | — | ||||
Contributions from noncontrolling interests | 87 | — | |||||
Distributions to noncontrolling interests | (4 | ) | (10 | ) | |||
Other, net | — | (1 | ) | ||||
Net Cash Provided by Financing Activities | 35 | 1,468 | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | 5 | (5 | ) | ||||
Net decrease in Cash and Cash Equivalents | (54 | ) | (56 | ) | |||
Cash and Cash Equivalents, beginning of period | 229 | 315 | |||||
Cash and Cash Equivalents, end of period | $ | 175 | $ | 259 | |||
Non-cash Investing and Financing Activities | |||||||
Assets acquired by the assumption or incurrence of liabilities | $ | 43 | $ | 1,606 | |||
Net assets contributed to equity investment | $ | — | $ | 27 | |||
Supplemental Disclosures of Cash Flow Information | |||||||
Cash paid during the period for interest (net of capitalized interest) | $ | 659 | $ | 592 | |||
Cash refunded during the period for income taxes, net | $ | (2 | ) | $ | (196 | ) |
Common stock | Preferred stock | ||||||||||||||||||||||||||||||||||||
Issued shares | Par value | Issued shares | Par value | Additional paid-in capital | Retained deficit | Accumulated other comprehensive loss | Stockholders’ equity attributable to KMI | Non-controlling interests | Total | ||||||||||||||||||||||||||||
Balance at December 31, 2015 | 2,229 | $ | 22 | 2 | $ | — | $ | 41,661 | $ | (6,103 | ) | $ | (461 | ) | $ | 35,119 | $ | 284 | $ | 35,403 | |||||||||||||||||
Restricted shares | 17 | 17 | 17 | ||||||||||||||||||||||||||||||||||
Net income | 315 | 315 | (1 | ) | 314 | ||||||||||||||||||||||||||||||||
Distributions | — | (4 | ) | (4 | ) | ||||||||||||||||||||||||||||||||
Contributions | — | 87 | 87 | ||||||||||||||||||||||||||||||||||
Preferred stock dividends | (39 | ) | (39 | ) | (39 | ) | |||||||||||||||||||||||||||||||
Common stock dividends | (279 | ) | (279 | ) | (279 | ) | |||||||||||||||||||||||||||||||
Other comprehensive income | 47 | 47 | 47 | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2016 | 2,229 | $ | 22 | 2 | $ | — | $ | 41,678 | $ | (6,106 | ) | $ | (414 | ) | $ | 35,180 | $ | 366 | $ | 35,546 |
Common stock | Preferred stock | ||||||||||||||||||||||||||||||||||||
Issued shares | Par value | Issued shares | Par value | Additional paid-in capital | Retained deficit | Accumulated other comprehensive loss | Stockholders’ equity attributable to KMI | Non-controlling interests | Total | ||||||||||||||||||||||||||||
Balance at December 31, 2014 | 2,125 | $ | 21 | — | $ | — | $ | 36,178 | $ | (2,106 | ) | $ | (17 | ) | $ | 34,076 | $ | 350 | $ | 34,426 | |||||||||||||||||
Issuances of common shares | 39 | 1 | 1,625 | 1,626 | 1,626 | ||||||||||||||||||||||||||||||||
EP Trust I Preferred security conversions | 1 | 19 | 19 | 19 | |||||||||||||||||||||||||||||||||
Warrants exercised | 1 | 1 | 1 | ||||||||||||||||||||||||||||||||||
Restricted shares | 16 | 16 | 16 | ||||||||||||||||||||||||||||||||||
Net income | 429 | 429 | (10 | ) | 419 | ||||||||||||||||||||||||||||||||
Distributions | — | (10 | ) | (10 | ) | ||||||||||||||||||||||||||||||||
Common stock dividends | (962 | ) | (962 | ) | (962 | ) | |||||||||||||||||||||||||||||||
Other comprehensive loss | (176 | ) | (176 | ) | (176 | ) | |||||||||||||||||||||||||||||||
Balance at March 31, 2015 | 2,165 | $ | 22 | — | $ | — | $ | 37,839 | $ | (2,639 | ) | $ | (193 | ) | $ | 35,029 | $ | 330 | $ | 35,359 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Class P | $ | 275 | $ | 426 | |||
Participating securities: | |||||||
Restricted stock awards(a) | 1 | 3 | |||||
Net Income Available to Common Stockholders | $ | 276 | $ | 429 |
Three Months Ended March 31, | |||||
2016 | 2015 | ||||
Basic Weighted Average Common Shares Outstanding | 2,229 | 2,141 | |||
Effect of dilutive securities: | |||||
Warrants | — | 10 | |||
Diluted Weighted Average Common Shares Outstanding | 2,229 | 2,151 |
(a) | As of March 31, 2016, there were approximately 8 million such restricted stock awards. |
Three Months Ended March 31, | |||||
2016 | 2015 | ||||
Unvested restricted stock awards | 8 | 7 | |||
Warrants to purchase our Class P shares(a) | 293 | 289 | |||
Convertible trust preferred securities | 8 | 9 | |||
Mandatory convertible preferred stock(b) | 58 | n/a |
Acquisitions | |||||||||||
BP Terminal Assets | Hiland | Royal Vopak Terminal Assets | |||||||||
Purchase Price Allocation: | |||||||||||
Current assets | $ | 2 | $ | 79 | $ | 2 | |||||
Property, plant and equipment | 395 | 1,492 | 155 | ||||||||
Goodwill | — | 310 | 6 | ||||||||
Deferred charges and other assets(a) | — | 1,498 | — | ||||||||
Total assets acquired | 397 | 3,379 | 163 | ||||||||
Current liabilities | — | (253 | ) | (1 | ) | ||||||
Debt | — | (1,413 | ) | — | |||||||
Other liabilities | (49 | ) | (4 | ) | (4 | ) | |||||
Cash consideration | $ | 348 | $ | 1,709 | $ | 158 |
(a) | Primarily consists of customer contracts and relationships with a weighted average amortization period of 16.4 years. |
March 31, 2016 | December 31, 2015 | |||||||
KMI | ||||||||
Unsecured term loan facility, variable rate, due January 26, 2019(a) | $ | 1,000 | $ | — | ||||
Senior notes, 1.50% through 8.25%, due 2016 through 2098(b) | 13,344 | 13,346 | ||||||
Credit facility due November 26, 2019(c) | 900 | — | ||||||
Commercial paper borrowings(c) | 48 | — | ||||||
KMP | ||||||||
Senior notes, 2.65% through 9.00%, due 2016 through 2044 | 19,485 | 19,985 | ||||||
TGP senior notes, 7.00% through 8.375%, due 2016 through 2037(a) | 1,540 | 1,790 | ||||||
EPNG senior notes, 5.95% through 8.625%, due 2017 through 2032 | 1,115 | 1,115 | ||||||
Copano senior notes, 7.125%, due April 1, 2021 | 332 | 332 | ||||||
CIG senior notes, 6.85%, due June 15, 2037 | 100 | 100 | ||||||
SNG notes, 4.40% through 8.00%, due 2017 through 2032 | 1,211 | 1,211 | ||||||
Other Subsidiary Borrowings (as obligor) | ||||||||
Kinder Morgan Finance Company, LLC, senior notes, 5.70% through 6.40%, due 2016 through 2036(a) | 786 | 1,636 | ||||||
Hiland Partners Holdings LLC, senior notes, 5.50% and 7.25%, due 2020 and 2022 | 974 | 974 | ||||||
EPC Building, LLC, promissory note, 3.967%, due 2016 through 2035 | 440 | 443 | ||||||
Trust I preferred securities, 4.75%, due March 31, 2028 | 221 | 221 | ||||||
KMGP, $1,000 Liquidation Value Series A Fixed-to-Floating Rate Term Cumulative Preferred Stock | 100 | 100 | ||||||
Other miscellaneous debt | 299 | 300 | ||||||
Total debt – KMI and Subsidiaries | 41,895 | 41,553 | ||||||
Less: Current portion of debt(a)(d) | 1,702 | 821 | ||||||
Total long-term debt – KMI and Subsidiaries(e) | $ | 40,193 | $ | 40,732 |
(a) | On January 26, 2016, we entered into a $1.0 billion three-year unsecured term loan facility with a variable interest rate, which is determined in the same manner as interest on our revolving credit facility borrowings. In January 2016, we repaid $850 million of maturing 5.70% senior notes, and in February 2016, we repaid $250 million of maturing 8.00% senior notes primarily using proceeds from the three-year term loan. |
(b) | Amount includes senior notes that are denominated in Euros and have been converted and are respectively reported above at the March 31, 2016 exchange rate of 1.1380 U.S. dollars per Euro and the December 31, 2015 exchange rate of 1.0862 U.S. dollars per Euro. For the three months ended March 31, 2016, our debt increased by $65 million as a result of the change in the exchange rate of U.S. dollars per Euro. At the time of issuance, we entered into cross-currency swap agreements associated with these senior notes, effectively converting these Euro-denominated senior notes to U.S. dollars (see Note 5 “Risk Management—Foreign Currency Risk Management”). |
(c) | As of March 31, 2016, the weighted average interest rate on our credit facility borrowings, including commercial paper borrowings, was 1.86%. |
(d) | Amounts include outstanding credit facility borrowings, commercial paper borrowings and other debt maturing within 12 months (see “—Current Portion of Debt” below). |
(e) | Excludes our “Debt fair value adjustments” which, as of March 31, 2016 and December 31, 2015, increased our combined debt balances by $1,912 million and $1,674 million, respectively. In addition to all unamortized debt discount/premium amounts, debt issuance costs and purchase accounting on our debt balances, our debt fair value adjustments also include amounts associated with the offsetting entry for hedged debt and any unamortized portion of proceeds received from the early termination of interest rate swap agreements. |
2016 | $600 million 6.00% notes due February 2017 | |
2015 | $500 million 3.50% notes due March 2016 |
Issuances | $1.0 billion unsecured term loan facility due 2019 | |
Repayments | $850 million 5.70% notes due 2016 | |
$500 million 3.50% notes due 2016 | ||
$250 million 8.00% notes due 2016 | ||
$67 million 8.25% notes due 2016 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Per common share cash dividend declared for the period | $ | 0.125 | $ | 0.48 | |||
Per common share cash dividend paid in the period | $ | 0.125 | $ | 0.45 |
Net open position long/(short) | ||||
Derivatives designated as hedging contracts | ||||
Crude oil fixed price | (21.4 | ) | MMBbl | |
Crude oil basis | (5.6 | ) | MMBbl | |
Natural gas fixed price | (41.0 | ) | Bcf | |
Natural gas basis | (31.5 | ) | Bcf | |
Derivatives not designated as hedging contracts | ||||
Crude oil fixed price | (0.4 | ) | MMBbl | |
Crude oil basis | (1.0 | ) | MMBbl | |
Natural gas fixed price | (13.0 | ) | Bcf | |
Natural gas basis | (1.8 | ) | Bcf | |
NGL and other fixed price | (2.5 | ) | MMBbl |
Fair Value of Derivative Contracts | ||||||||||||||||||
Asset derivatives | Liability derivatives | |||||||||||||||||
March 31, 2016 | December 31, 2015 | March 31, 2016 | December 31, 2015 | |||||||||||||||
Location | Fair value | Fair value | ||||||||||||||||
Derivatives designated as hedging contracts | ||||||||||||||||||
Natural gas and crude derivative contracts | Fair value of derivative contracts/(Other current liabilities) | $ | 287 | $ | 359 | $ | (8 | ) | $ | (13 | ) | |||||||
Deferred charges and other assets/(Other long-term liabilities and deferred credits) | 226 | 244 | (2 | ) | — | |||||||||||||
Subtotal | 513 | 603 | (10 | ) | (13 | ) | ||||||||||||
Interest rate swap agreements | Fair value of derivative contracts/(Other current liabilities) | 126 | 111 | — | — | |||||||||||||
Deferred charges and other assets/(Other long-term liabilities and deferred credits) | 529 | 273 | — | (9 | ) | |||||||||||||
Subtotal | 655 | 384 | — | (9 | ) | |||||||||||||
Cross-currency swap agreements | Fair value of derivative contracts/(Other current liabilities) | — | — | (29 | ) | (6 | ) | |||||||||||
Deferred charges and other assets/(Other long-term liabilities and deferred credits) | 56 | — | — | (46 | ) | |||||||||||||
Subtotal | 56 | — | (29 | ) | (52 | ) | ||||||||||||
Total | 1,224 | 987 | (39 | ) | (74 | ) | ||||||||||||
Derivatives not designated as hedging contracts | ||||||||||||||||||
Natural gas, crude, NGL and other derivative contracts | Fair value of derivative contracts/(Other current liabilities) | 27 | 35 | (4 | ) | (1 | ) | |||||||||||
Subtotal | 27 | 35 | (4 | ) | (1 | ) | ||||||||||||
Interest rate swap agreements | Fair value of derivative contracts/(Other current liabilities) | 11 | 1 | — | (11 | ) | ||||||||||||
Deferred charges and other assets/(Other long-term liabilities and deferred credits) | 27 | — | — | (5 | ) | |||||||||||||
Subtotal | 38 | 1 | — | (16 | ) | |||||||||||||
Power derivative contracts | Fair value of derivative contracts/(Other current liabilities) | 3 | 1 | (6 | ) | (17 | ) | |||||||||||
Subtotal | 3 | 1 | (6 | ) | (17 | ) | ||||||||||||
Total | 68 | 37 | (10 | ) | (34 | ) | ||||||||||||
Total derivatives | $ | 1,292 | $ | 1,024 | $ | (49 | ) | $ | (108 | ) |
Derivatives in fair value hedging relationships | Location | Gain/(loss) recognized in income on derivatives and related hedged item | ||||||||
Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
Interest rate swap agreements | Interest, net | $ | 280 | $ | 145 | |||||
Hedged fixed rate debt | Interest, net | $ | (284 | ) | $ | (139 | ) |
Derivatives in cash flow hedging relationships | Gain/(loss) recognized in OCI on derivative (effective portion)(a) | Location | Gain/(loss) reclassified from Accumulated OCI into income (effective portion)(b) | Location | Gain/(loss) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) | |||||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||
Energy commodity derivative contracts | $ | 27 | $ | 35 | Revenues—Natural gas sales | $ | 21 | $ | 24 | Revenues—Natural gas sales | $ | — | $ | — | ||||||||||||||
Revenues—Product sales and other | 57 | 64 | Revenues—Product sales and other | 1 | 7 | |||||||||||||||||||||||
Costs of sales | (10 | ) | (5 | ) | Costs of sales | — | — | |||||||||||||||||||||
Interest rate swap agreements(c) | (4 | ) | (3 | ) | Interest, net | (1 | ) | (1 | ) | Interest, net | — | — | ||||||||||||||||
Cross-currency swap | 50 | (34 | ) | Other, net | 41 | (10 | ) | Other, net | — | — | ||||||||||||||||||
Total | $ | 73 | $ | (2 | ) | Total | $ | 108 | $ | 72 | Total | $ | 1 | $ | 7 |
(a) | We expect to reclassify an approximate $132 million gain associated with cash flow hedge price risk management activities included in our accumulated other comprehensive loss balances as of March 31, 2016 into earnings during the next twelve months (when the associated forecasted sales and purchases are also expected to occur), however, actual amounts reclassified into earnings could vary materially as a result of changes in market prices. |
(b) | Amounts reclassified were the result of the hedged forecasted transactions actually affecting earnings (i.e., when the forecasted sales and purchases actually occurred). |
(c) | Amounts represent our share of an equity investee’s accumulated other comprehensive income (loss). |
Derivatives not designated as accounting hedges | Location | Gain/(loss) recognized in income on derivatives | ||||||||
Three Months Ended March 31, | ||||||||||
2016 | 2015 | |||||||||
Energy commodity derivative contracts | Revenues—Natural gas sales | $ | 6 | $ | 4 | |||||
Revenues—Product sales and other | (2 | ) | 45 | |||||||
Costs of sales | (5 | ) | (3 | ) | ||||||
Interest rate swap agreements | Interest, net | 53 | — | |||||||
Total(a) | $ | 52 | $ | 46 |
Net unrealized gains/(losses) on cash flow hedge derivatives | Foreign currency translation adjustments | Pension and other postretirement liability adjustments | Total accumulated other comprehensive loss | ||||||||||||
Balance as of December 31, 2015 | $ | 219 | $ | (322 | ) | $ | (358 | ) | $ | (461 | ) | ||||
Other comprehensive gain before reclassifications | 73 | 78 | 4 | 155 | |||||||||||
(Gains) losses reclassified from accumulated other comprehensive income (loss) | (108 | ) | — | — | (108 | ) | |||||||||
Net current-period other comprehensive gain | (35 | ) | 78 | 4 | 47 | ||||||||||
Balance as of March 31, 2016 | $ | 184 | $ | (244 | ) | $ | (354 | ) | $ | (414 | ) |
Net unrealized gains/(losses) on cash flow hedge derivatives | Foreign currency translation adjustments | Pension and other postretirement liability adjustments | Total accumulated other comprehensive loss | ||||||||||||
Balance as of December 31, 2014 | $ | 327 | $ | (108 | ) | $ | (236 | ) | $ | (17 | ) | ||||
Other comprehensive loss before reclassifications | (2 | ) | (108 | ) | 6 | (104 | ) | ||||||||
(Gains) losses reclassified from accumulated other comprehensive income (loss) | (72 | ) | — | — | (72 | ) | |||||||||
Net current-period other comprehensive loss | (74 | ) | (108 | ) | 6 | (176 | ) | ||||||||
Balance as of March 31, 2015 | $ | 253 | $ | (216 | ) | $ | (230 | ) | $ | (193 | ) |
• | Level 1 Inputs—quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; |
• | Level 2 Inputs—inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability; and |
• | Level 3 Inputs—unobservable inputs for the asset or liability. These unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances (which might include the reporting entity’s own data). |
Balance sheet asset fair value measurements by level | Net amount | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Gross amount | Contracts available for netting | Cash collateral held(b) | ||||||||||||||||||||||
As of March 31, 2016 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | 20 | $ | 520 | $ | 3 | $ | 543 | $ | (12 | ) | $ | (8 | ) | $ | 523 | |||||||||||
Interest rate swap agreements | $ | — | $ | 693 | $ | — | $ | 693 | $ | — | $ | — | $ | 693 | |||||||||||||
Cross-currency swap agreements | $ | — | $ | 56 | $ | — | $ | 56 | $ | (29 | ) | $ | — | $ | 27 | ||||||||||||
As of December 31, 2015 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | 48 | $ | 589 | $ | 2 | $ | 639 | $ | (12 | ) | $ | (37 | ) | $ | 590 | |||||||||||
Interest rate swap agreements | $ | — | $ | 385 | $ | — | $ | 385 | $ | (8 | ) | $ | — | $ | 377 | ||||||||||||
Cross-currency swap agreements | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Balance sheet liability fair value measurements by level | Net amount | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Gross amount | Contracts available for netting | Collateral posted(c) | ||||||||||||||||||||||
As of March 31, 2016 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | (2 | ) | $ | (13 | ) | $ | (5 | ) | $ | (20 | ) | $ | 12 | $ | 1 | $ | (7 | ) | ||||||||
Interest rate swap agreements | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Cross-currency swap agreements | $ | — | $ | (29 | ) | $ | — | $ | (29 | ) | $ | 29 | $ | — | $ | — | |||||||||||
As of December 31, 2015 | |||||||||||||||||||||||||||
Energy commodity derivative contracts(a) | $ | (4 | ) | $ | (10 | ) | $ | (17 | ) | $ | (31 | ) | $ | 12 | $ | — | $ | (19 | ) | ||||||||
Interest rate swap agreements | $ | — | $ | (25 | ) | $ | — | $ | (25 | ) | $ | 8 | $ | — | $ | (17 | ) | ||||||||||
Cross-currency swap agreements | $ | — | $ | (52 | ) | $ | — | $ | (52 | ) | $ | — | $ | — | $ | (52 | ) |
(a) | Level 1 consists primarily of New York Mercantile Exchange natural gas futures. Level 2 consists primarily of OTC West Texas Intermediate swaps and options. Level 3 consists primarily of power derivative contracts. |
(b) | Cash margin deposits held by us associated with our energy commodity contract positions and OTC swap agreements and reported within “Other current liabilities” on our accompanying consolidated balance sheets. |
(c) | Cash margin deposits posted by us associated with our energy commodity contract positions and OTC swap agreements and reported within “Other current assets” on our accompanying consolidated balance sheets. |
Significant unobservable inputs (Level 3) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Derivatives-net asset (liability) | |||||||
Beginning of Period | $ | (15 | ) | $ | (61 | ) | |
Total gains or (losses) included in earnings | (6 | ) | — | ||||
Settlements | 19 | 12 | |||||
End of Period | $ | (2 | ) | $ | (49 | ) | |
The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or (losses) relating to assets held at the reporting date | $ | 1 | $ | 1 |
March 31, 2016 | December 31, 2015 | ||||||||||||||
Carrying value | Estimated fair value | Carrying value | Estimated fair value | ||||||||||||
Total debt | $ | 43,807 | $ | 40,861 | $ | 43,227 | $ | 37,481 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
Natural Gas Pipelines | |||||||
Revenues from external customers | $ | 1,970 | $ | 2,177 | |||
Intersegment revenues | 1 | 3 | |||||
CO2 | 302 | 446 | |||||
Terminals | 465 | 457 | |||||
Products Pipelines | |||||||
Revenues from external customers | 391 | 444 | |||||
Intersegment revenues | 5 | — | |||||
Kinder Morgan Canada | 59 | 60 | |||||
Other | — | 4 | |||||
Total segment revenues | 3,193 | 3,591 | |||||
Other revenues | 8 | 9 | |||||
Less: Total intersegment revenues | (6 | ) | (3 | ) | |||
Total consolidated revenues | $ | 3,195 | $ | 3,597 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Segment EBDA(a) | |||||||
Natural Gas Pipelines | $ | 992 | $ | 1,015 | |||
CO2 | 186 | 336 | |||||
Terminals | 253 | 270 | |||||
Products Pipelines | 179 | 246 | |||||
Kinder Morgan Canada | 40 | 41 | |||||
Other | (8 | ) | (6 | ) | |||
Total segment EBDA | 1,642 | 1,902 | |||||
Total segment DD&A | (551 | ) | (538 | ) | |||
Total segment amortization of excess cost of equity investments | (14 | ) | (12 | ) | |||
Other revenues | 8 | 9 | |||||
General and administrative expense | (190 | ) | (216 | ) | |||
Interest expense, net of unallocable interest income | (442 | ) | (514 | ) | |||
Unallocable income tax expense | (139 | ) | (212 | ) | |||
Total consolidated net income | $ | 314 | $ | 419 |
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Natural Gas Pipelines | $ | 53,456 | $ | 53,704 | |||
CO2 | 4,548 | 4,706 | |||||
Terminals | 9,467 | 9,083 | |||||
Products Pipelines | 8,512 | 8,464 | |||||
Kinder Morgan Canada | 1,542 | 1,434 | |||||
Other | 344 | 418 | |||||
Total segment assets | 77,869 | 77,809 | |||||
Corporate assets(b) | 6,337 | 6,276 | |||||
Assets held for sale | 23 |