kmi-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

F O R M 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to_____

Commission file number: 001-35081

KINDER MORGAN, INC.

(Exact name of registrant as specified in its charter)


Delaware			80-0682103
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1001 Louisiana Street, Suite 1000, Houston, Texas 77002

(Address of principal executive offices)(zip code)

Registrant’s telephone number, including area code: 713-369-9000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class P Common Stock	KMI	New York Stock Exchange
2.250% Senior Notes due 2027	KMI 27 A	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

As of July 20, 2023, the registrant had 2,228,165,367 shares of Class P common stock outstanding.

KINDER MORGAN, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


			Page Number
	Glossary		2
	Information Regarding Forward-Looking Statements		3
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three and Six Months Ended June 30, 2023 and 2022		4
	Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 3 0 , 2023 and 2022		5
	Consolidated Balance Sheets - as of June 30 , 2023 and December 31, 2022		6
	Consolidated Statements of Cash Flows - Six Months Ended June 30 , 2023 and 2022		7
	Consolidated Statements of Stockholders’ Equity - Three and Six Months Ended June 30 , 2023 and 2022		9
	Notes to Consolidated Financial Statements		11
	Note 1 .	General	11
	Note 2.	Losses on Impairments	12
	Note 3.	Debt	13
	Note 4.	Stockholders’ Equity	14
	Note 5.	Risk Management	15
	Note 6.	Revenue Recognition	20
	Note 7.	Reportable Segments	23
	Note 8.	Income Taxes	24
	Note 9.	Litigation and Environmental	24
	Note 10.	Recent Accounting Pronouncements	29
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	General and Basis of Presentation		30
	Results of Operations		30
	Overview		30
	Consolidated Earnings Results		33
	Non-GAAP Financial Measures		36
	Segment Earnings Results		40
	Liquidity and Capital Resources		47
	Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries		53
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		54
Item 4.	Controls and Procedures		54
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		54
Item 1A.	Risk Factors		54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		54
Item 3.	Defaults Upon Senior Securities		55
Item 4.	Mine Safety Disclosures		55
Item 5.	Other Information		55
Item 6.	Exhibits		56
	Signature		57

KINDER MORGAN, INC. AND SUBSIDIARIES

GLOSSARY

Company Abbreviations

EPNG

El Paso Natural Gas Company, L.L.C.

Ruby

Ruby Pipeline Holding Company, L.L.C.

KMBT

Kinder Morgan Bulk Terminals, Inc.

SFPP

SFPP, L.P.

KMI

Kinder Morgan, Inc. and its majority-owned and/or controlled subsidiaries

SNG

Southern Natural Gas Company, L.L.C.

TGP

Tennessee Gas Pipeline Company, L.L.C.

KMLT

Kinder Morgan Liquid Terminals, LLC

Unless the context otherwise requires, references to “we,” “us,” “our,” or “the Company” are intended to mean Kinder Morgan, Inc. and its majority-owned and/or controlled subsidiaries.

Common Industry and Other Terms

per day

FERC

Federal Energy Regulatory Commission

Bbl

barrels

GAAP

U.S. Generally Accepted Accounting Principles

BBtu

billion British Thermal Units

LLC

limited liability company

Bcf

billion cubic feet

LIBOR

London Interbank Offered Rate

CERCLA

Comprehensive Environmental Response, Compensation and Liability Act

MBbl

thousand barrels

MMBbl

million barrels

CO2

carbon dioxide or our CO2 business segment

MMtons

million tons

DCF

distributable cash flow

NGL

natural gas liquids

DD&A

depreciation, depletion and amortization

NYMEX

New York Mercantile Exchange

EBDA

earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments

OTC

over-the-counter

PHMSA

Pipeline and Hazardous Materials Safety Administration

EBITDA

earnings before interest, income taxes, depreciation, depletion and amortization expenses, and amortization of excess cost of equity investments

RNG

Renewable natural gas

ROU

Right-of-Use

EPA

U.S. Environmental Protection Agency

U.S.

United States of America

FASB

Financial Accounting Standards Board

WTI

West Texas Intermediate

Information Regarding Forward-Looking Statements

This report includes forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. They use words such as “anticipate,” “believe,” “intend,” “plan,” “projection,” “forecast,” “strategy,” “outlook,” “continue,” “estimate,” “expect,” “may,” “will,” “shall,” or the negative of those terms or other variations of them or comparable terminology. In particular, expressed or implied statements concerning future actions, conditions or events, future operating results or the ability to generate sales, income or cash flow, service debt or pay dividends, are forward-looking statements. Forward-looking statements in this report include, among others, express or implied statements pertaining to: the long-term demand for our assets and services, our anticipated dividends and capital projects, including expected completion timing and benefits of those projects.

Important factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements in this report include: the timing and extent of changes in the supply of and demand for the products we transport and handle; commodity prices; the outcomes of challenges to new regulations; our ability to mitigate the impacts of and recover expenditures made in respect of new regulations; and the other risks and uncertainties described in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Part I, Item 3. “Quantitative and Qualitative Disclosures About Market Risk” and Part II, Item 1A. “Risk Factors” in this report, as well as “Information Regarding Forward-Looking Statements” and Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (except to the extent such information is modified or superseded by information in subsequent reports).

You should keep these risk factors in mind when considering forward-looking statements. These risk factors could cause our actual results to differ materially from those contained in any forward-looking statement. Because of these risks and uncertainties, you should not place undue reliance on any forward-looking statement. We disclaim any obligation, other than as required by applicable law, to publicly update or revise any of our forward-looking statements to reflect future events or developments.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

KINDER MORGAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts, unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues
Services	$	2,045	$	2,011	$	4,114	$	4,061
Commodity sales	1,421		3,100		3,206		5,308
Other	35		40		69		75
Total Revenues	3,501		5,151		7,389		9,444

Operating Costs, Expenses and Other
Costs of sales (exclusive of items shown separately below)	971		2,683		2,186		4,577
Operations and maintenance	685		663		1,324		1,248
Depreciation, depletion and amortization	557		543		1,122		1,081
General and administrative	169		152		335		308
Taxes, other than income taxes	103		116		213		227

Gain on divestitures and impairments, net	(13)		(11)		(13)		(21)
Other income, net	(1)		(1)		(2)		(6)
Total Operating Costs, Expenses and Other	2,471		4,145		5,165		7,414

Operating Income	1,030		1,006		2,224		2,030

Other Income (Expense)
Earnings from equity investments	208		182		373		369

Amortization of excess cost of equity investments	(19)		(19)		(36)		(38)
Interest, net	(443)		(355)		(888)		(688)
Other, net	2		23		4		42
Total Other Expense	(252)		(169)		(547)		(315)

Income Before Income Taxes	778		837		1,677		1,715

Income Tax Expense	(168)		(184)		(364)		(378)

Net Income	610		653		1,313		1,337






Net Income Attributable to Noncontrolling Interests	(24)		(18)		(48)		(35)

Net Income Attributable to Kinder Morgan, Inc.	$	586	$	635	$	1,265	$	1,302





Class P Common Stock
Basic and Diluted Earnings Per Share	$	0.26	$	0.28	$	0.56	$	0.57

Basic and Diluted Weighted Average Shares Outstanding	2,237		2,265		2,242		2,266

The accompanying notes are an integral part of these consolidated financial statements.

KINDER MORGAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	610	$	653	$	1,313	$	1,337
Other comprehensive income (loss), net of tax
Net unrealized gain (loss) from derivative instruments (net of taxes of $(14), $24, $(46) and $149, respectively)	49		(78)		155		(489)
Reclassification into earnings of net derivative instruments loss to net income (net of taxes of $—, $(48), $15 and $(89), respectively)	(2)		157		(51)		292

Benefit plan adjustments (net of taxes of $(1), $(1), $(2) and $(5), respectively)	4		3		8		16
Total other comprehensive income (loss)	51		82		112		(181)

Comprehensive income	661		735		1,425		1,156
Comprehensive income attributable to noncontrolling interests	(24)		(18)		(48)		(35)
Comprehensive income attributable to KMI	$	637	$	717	$	1,377	$	1,121

The accompanying notes are an integral part of these consolidated financial statements.

KINDER MORGAN, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts, unaudited)


	June 30, 2023		December 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	497	$	745
Restricted deposits	23		49
Accounts receivable	1,284		1,840
Fair value of derivative contracts	153		231
Inventories	569		634


Other current assets	192		304
Total current assets	2,718		3,803

Property, plant and equipment, net	35,759		35,599
Investments	7,665		7,653
Goodwill	19,965		19,965
Other intangibles, net	1,696		1,809


Deferred charges and other assets	1,270		1,249
Total Assets	$	69,073	$	70,078

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of debt	$	2,760	$	3,385
Accounts payable	1,142		1,444

Accrued interest	511		515

Fair value of derivative contracts	251		465

Other current liabilities	939		1,121
Total current liabilities	5,603		6,930

Long-term liabilities and deferred credits
Long-term debt
Outstanding	28,536		28,288

Debt fair value adjustments	96		115
Total long-term debt	28,632		28,403
Deferred income taxes	1,010		623

Other long-term liabilities and deferred credits	1,919		2,008

Total long-term liabilities and deferred credits	31,561		31,034
Total Liabilities	37,164		37,964
Commitments and contingencies (Notes 3 and 9)
Stockholders’ Equity

Class P Common Stock, $0.01 par value, 4,000,000,000 shares authorized, 2,228,894,500 and 2,247,681,626 shares, respectively, issued and outstanding	22		22
Additional paid-in capital	41,387		41,673
Accumulated deficit	(10,550)		(10,551)
Accumulated other comprehensive loss	(290)		(402)
Total Kinder Morgan, Inc.’s stockholders’ equity	30,569		30,742
Noncontrolling interests	1,340		1,372
Total Stockholders’ Equity	31,909		32,114
Total Liabilities and Stockholders’ Equity	$	69,073	$	70,078

The accompanying notes are an integral part of these consolidated financial statements.


KINDER MORGAN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)

	Six Months Ended June 30,
	2023		2022
Cash Flows From Operating Activities
Net income	$	1,313	$	1,337
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, depletion and amortization	1,122		1,081
Deferred income taxes	354		369
Amortization of excess cost of equity investments	36		38

Change in fair value of derivative contracts	(129)		51
Gain on divestitures and impairments, net	(13)		(21)

Earnings from equity investments	(373)		(369)
Distributions from equity investment earnings	367		348
Changes in components of working capital
Accounts receivable	573		(414)
Inventories	101		(108)
Other current assets	89		(39)
Accounts payable	(370)		499
Accrued interest, net of interest rate swaps	(6)		(53)

Other current liabilities	(132)		33
Rate reparations, refunds and other litigation reserve adjustments	(2)		(53)
Other, net	(47)		(51)
Net Cash Provided by Operating Activities	2,883		2,648

Cash Flows From Investing Activities

Acquisition of assets	(14)		—
Capital expenditures	(1,042)		(779)

Contributions to investments	(136)		(20)
Distributions from equity investments in excess of cumulative earnings	118		104

Other, net	(12)		23
Net Cash Used in Investing Activities	(1,086)		(672)

Cash Flows From Financing Activities
Issuances of debt	3,119		4,622
Payments of debt	(3,511)		(5,848)
Debt issue costs	(15)		(7)
Dividends	(1,264)		(1,247)

Repurchases of shares	(317)		(173)





Distributions to noncontrolling interests	(80)		(53)
Other, net	(3)		—
Net Cash Used in Financing Activities	(2,071)		(2,706)


Net Decrease in Cash, Cash Equivalents and Restricted Deposits	(274)		(730)
Cash, Cash Equivalents and Restricted Deposits, beginning of period	794		1,147
Cash, Cash Equivalents and Restricted Deposits, end of period	$	520	$	417


KINDER MORGAN, INC. AND SUBSIDIARIES (Continued)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)

	Six Months Ended June 30,
	2023		2022
Cash and Cash Equivalents, beginning of period	$	745	$	1,140
Restricted Deposits, beginning of period	49		7
Cash, Cash Equivalents and Restricted Deposits, beginning of period	794		1,147

Cash and Cash Equivalents, end of period	497		100
Restricted Deposits, end of period	23		317
Cash, Cash Equivalents and Restricted Deposits, end of period	520		417

Net Decrease in Cash, Cash Equivalents and Restricted Deposits	$	(274)	$	(730)

Non-cash Investing and Financing Activities
Assets contributed to equity investment	$	16	$	—
ROU assets and operating lease obligations recognized including adjustments	31		(8)

Increase in property, plant and equipment from both accruals and contractor retainage	74
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for interest (net of capitalized interest)	919		792
Cash paid during the period for income taxes, net	9		10

The accompanying notes are an integral part of these consolidated financial statements.

KINDER MORGAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, unaudited)


	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Stockholders’ equity attributable to KMI		Non- controlling interests		Total
	Issued shares	Par value
Balance at March 31, 2023	2,241	$	22	$	41,575	$	(10,499)	$	(341)	$	30,757	$	1,357	$	32,114



Repurchases of shares	(12)			(204)						(204)				(204)

Restricted shares				19						19				19
Net income						586				586		24		610
Dividends						(637)				(637)				(637)
Distributions										—		(41)		(41)


Other				(3)						(3)				(3)
Other comprehensive income								51		51				51
Balance at June 30, 2023	2,229	$	22	$	41,387	$	(10,550)	$	(290)	$	30,569	$	1,340	$	31,909


	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Stockholders’ equity attributable to KMI		Non- controlling interests		Total
	Issued shares	Par value
Balance at March 31, 2022	2,267	$	23	$	41,813	$	(10,544)	$	(674)	$	30,618	$	1,089	$	31,707



Repurchases of shares	(10)			(172)						(172)				(172)

Restricted shares				13						13				13
Net income						635				635		18		653
Dividends						(631)				(631)				(631)
Distributions										—		(27)		(27)




Other comprehensive income								82		82				82
Balance at June 30, 2022	2,257	$	23	$	41,654	$	(10,540)	$	(592)	$	30,545	$	1,080	$	31,625

The accompanying notes are an integral part of these consolidated financial statements.

KINDER MORGAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(In millions, unaudited)


	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Stockholders’ equity attributable to KMI		Non- controlling interests		Total
	Issued shares	Par value
Balance at December 31, 2022	2,248	$	22	$	41,673	$	(10,551)	$	(402)	$	30,742	$	1,372	$	32,114



Repurchases of shares	(19)			(317)						(317)				(317)

Restricted shares				34						34				34
Net income						1,265				1,265		48		1,313
Dividends						(1,264)				(1,264)				(1,264)
Distributions										—		(80)		(80)


Other				(3)						(3)				(3)
Other comprehensive income								112		112				112
Balance at June 30, 2023	2,229	$	22	$	41,387	$	(10,550)	$	(290)	$	30,569	$	1,340	$	31,909


	Common stock			Additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Stockholders’ equity attributable to KMI		Non- controlling interests		Total
	Issued shares	Par value
Balance at December 31, 2021	2,267	$	23	$	41,806	$	(10,595)	$	(411)	$	30,823	$	1,098	$	31,921
Impact of adoption of ASU 2020-06 (Note 4)				(11)						(11)				(11)
Balance at January 1, 2022	2,267	23		41,795		(10,595)		(411)		30,812		1,098		31,910

Repurchases of shares	(10)			(173)						(173)				(173)
EP Trust I Preferred security conversions				1						1				1
Restricted shares				31						31				31
Net income						1,302				1,302		35		1,337
Dividends						(1,247)				(1,247)				(1,247)
Distributions										—		(53)		(53)




Other comprehensive loss								(181)		(181)				(181)
Balance at June 30, 2022	2,257	$	23	$	41,654	$	(10,540)	$	(592)	$	30,545	$	1,080	$	31,625

The accompanying notes are an integral part of these consolidated financial statements.

KINDER MORGAN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. General

Organization

We are one of the largest energy infrastructure companies in North America. We own an interest in or operate approximately 82,000 miles of pipelines, 140 terminals, 700 Bcf of working natural gas storage capacity and 3.8 Bcf per year of RNG generation capacity. Our pipelines transport natural gas, refined petroleum products, crude oil, condensate, CO2, renewable fuels and other products, and our terminals store and handle various commodities including gasoline, diesel fuel, jet fuel, chemicals, metals, petroleum coke and ethanol and other renewable fuels and feedstocks.

Basis of Presentation

General

Our accompanying unaudited consolidated financial statements have been prepared under the rules and regulations of the U.S. Securities and Exchange Commission (SEC). These rules and regulations conform to the accounting principles contained in the FASB’s Accounting Standards Codification (ASC), the single source of GAAP. In compliance with such rules and regulations, all significant intercompany items have been eliminated in consolidation.

In our opinion, all adjustments, which are of a normal and recurring nature, considered necessary for a fair statement of our financial position and operating results for the interim periods have been included in the accompanying consolidated financial statements, and certain amounts from prior periods have been reclassified to conform to the current presentation. Interim results are not necessarily indicative of results for a full year; accordingly, you should read these consolidated financial statements in conjunction with our consolidated financial statements and related notes included in our 2022 Form 10-K.

The accompanying unaudited consolidated financial statements include our accounts and the accounts of our subsidiaries over which we have control or are the primary beneficiary. We evaluate our financial interests in business enterprises to determine if they represent variable interest entities where we are the primary beneficiary. If such criteria are met, we consolidate the financial statements of such businesses with those of our own.

Goodwill

In addition to periodically evaluating long-lived assets and goodwill for impairment based on changes in market conditions, we evaluate goodwill for impairment on May 31 of each year. For our May 31, 2023 evaluation, we grouped our businesses into seven reporting units as follows: (i) Natural Gas Pipelines Regulated; (ii) Natural Gas Pipelines Non-Regulated; (iii) CO2; (iv) Products Pipelines (excluding associated terminals); (v) Products Pipelines Terminals (evaluated separately from Products Pipelines for goodwill purposes); (vi) Terminals and (vii) Energy Transition Ventures.

The fair value estimates used in our goodwill impairment test include Level 3 inputs of the fair value hierarchy. The inputs include valuation estimates using market and income approach valuation methodologies, which include assumptions primarily involving management’s significant judgments and estimates with respect to market multiples, comparable sales transactions, general economic conditions and the related demand for products handled or transported by our assets as well as assumptions regarding future cash flows based on production growth assumptions, terminal values and discount rates. Changes to any one or a combination of these factors would result in a change to the reporting unit fair values, which could lead to future impairment charges. Such potential non-cash impairments could have a significant effect on our results of operations.

The results of our May 31, 2023 annual impairment test indicated that for each of our reporting units, the reporting unit’s fair value exceeded the carrying value, with our Terminals reporting unit’s fair value in excess of its carrying value by less than 10% which was impacted by a decline in market multiples.

Earnings per Share

We calculate earnings per share using the two-class method. Earnings were allocated to Class P common stock and participating securities based on the amount of dividends paid in the current period plus an allocation of the undistributed

earnings or excess distributions over earnings to the extent that each security participates in earnings or excess distributions over earnings. Our unvested restricted stock awards, which may be restricted stock or restricted stock units issued to employees and non-employee directors and include dividend equivalent payments, do not participate in excess distributions over earnings.

The following table sets forth the allocation of net income available to shareholders of Class P common stock and participating securities:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(In millions, except per share amounts)
Net Income Available to Stockholders	$	586	$	635	$	1,265	$	1,302
Participating securities:
Less: Net Income Allocated to Restricted Stock Awards(a)	(4)		(2)		(7)		(6)
Net Income Allocated to Class P Stockholders	$	582	$	633	$	1,258	$	1,296

Basic Weighted Average Shares Outstanding	2,237		2,265		2,242		2,266
Basic Earnings Per Share	$	0.26	$	0.28	$	0.56	$	0.57

(a)As of June 30, 2023, there were 13 million restricted stock awards outstanding.

The following table presents the maximum number of potential common stock equivalents which are antidilutive and accordingly are excluded from the determination of diluted earnings per share. As we have no other common stock equivalents, our diluted earnings per share are the same as our basic earnings per share for all periods presented.


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
	(In millions on a weighted average basis)
Unvested restricted stock awards	13	12	13	13
Convertible trust preferred securities	3	3	3	3

2. Losses on Impairments

Impairments

During the first quarter of 2023, we recognized an impairment of $67 million related to our investment in Double Eagle Pipeline LLC (Double Eagle). The impairment was driven by lower expected renewal rates on contracts that expire in the second half of 2023. The impairment is recognized on our accompanying consolidated statement of income for the six months ended June 30, 2023 within “Earnings from equity investments.” Our investment in Double Eagle and associated earnings is included within our Products Pipelines business segment.

Ruby Chapter 11 Bankruptcy

On January 13, 2023, the bankruptcy court confirmed a plan of reorganization satisfactory to all interested parties regarding Ruby, which involved payment of Ruby’s outstanding senior notes with the proceeds from the sale of Ruby to Tallgrass, a settlement by KMI and Pembina of certain potential causes of action relating to the bankruptcy, and cash on hand. Our payment to the bankruptcy estate, net of payments received in respect of a long-term subordinated note receivable from Ruby, was approximately $28.5 million which was accrued for as of December 31, 2022. Consummation of the settlement and the sale of Ruby to Tallgrass occurred on January 13, 2023. We fully impaired our equity investment in Ruby in the fourth quarter of 2019 and fully impaired our investment in Ruby’s subordinated notes in the first quarter of 2021.

3. Debt

The following table provides information on the principal amount of our outstanding debt balances:


	June 30, 2023		December 31, 2022
	(In millions, unless otherwise stated)
Current portion of debt
$3.5 billion credit facility due August 20, 2027	$	—	$	—
$500 million credit facility due November 16, 2023	—		—
Commercial paper notes	—		—
Current portion of senior notes
3.15% due January 2023	—		1,000
Floating rate, due January 2023	—		250
3.45% due February 2023	—		625
3.50% due September 2023	600		600
5.625% due November 2023	750		750
4.15% due February 2024	650		—
4.30% due May 2024	600		—
Trust I preferred securities, 4.75%, due March 2028(a)	111		111
Current portion of other debt	49		49
Total current portion of debt	2,760		3,385

Long-term debt (excluding current portion)
Senior notes	27,899		27,638
EPC Building, LLC, promissory note, 3.967%, due 2023 through 2035	320		330

Trust I preferred securities, 4.75%, due March 2028	109		109
Other	208		211
Total long-term debt	28,536		28,288
Total debt(b)	$	31,296	$	31,673

(a)Reflects the portion of cash consideration payable if all the outstanding securities as of the end of the reporting period were converted by the holders.

(b)Excludes our “Debt fair value adjustments” which, as of June 30, 2023 and December 31, 2022, increased our total debt balances by $96 million and $115 million, respectively.

We and substantially all of our wholly owned domestic subsidiaries are parties to a cross guarantee agreement whereby each party to the agreement unconditionally guarantees, jointly and severally, the payment of specified indebtedness of each other party to the agreement.

On January 31, 2023, we issued in a registered offering $1,500 million aggregate principal amount of 5.20% senior notes due 2033 for net proceeds of $1,485 million, which were used to repay short-term borrowings, maturing debt and for general corporate purposes.

Credit Facilities and Restrictive Covenants

As of June 30, 2023, we had no borrowings outstanding under our credit facilities, no borrowings outstanding under our commercial paper program and $81 million in letters of credit. Our availability under our credit facilities as of June 30, 2023 was $3.9 billion. For the period ended June 30, 2023, we were in compliance with all required covenants.

Fair Value of Financial Instruments

The carrying value and estimated fair value of our outstanding debt balances are disclosed below:


	June 30, 2023				December 31, 2022
	Carrying value		Estimated fair value(a)		Carrying value		Estimated fair value(a)
	(In millions)
Total debt	$	31,392	$	29,845	$	31,788	$	30,070

(a)Included in the estimated fair value are amounts for our Trust I Preferred Securities of $203 million and $195 million as of June 30, 2023 and December 31, 2022, respectively.

We used Level 2 input values to measure the estimated fair value of our outstanding debt balance as of both June 30, 2023 and December 31, 2022.

4. Stockholders’ Equity

Class P Common Stock

On July 19, 2017, our board of directors approved a $2 billion share buy-back program that began in December 2017. On January 18, 2023, our board of directors approved an increase in our share repurchase authorization to $3 billion. During the six months ended June 30, 2023, we repurchased 19 million of our shares for $317 million at an average price of $16.59 per share. Subsequent to June 30, 2023 and through July 20, 2023, we repurchased less than 1 million shares for $13 million at an average price of $16.93 per share. All shares we have repurchased are canceled and are no longer outstanding.

Dividends

The following table provides information about our per share dividends:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Per share cash dividend declared for the period	$	0.2825	$	0.2775	$	0.565	$	0.555
Per share cash dividend paid in the period	0.2825		0.2775		0.56		0.5475

On July 19, 2023, our board of directors declared a cash dividend of $0.2825 per share for the quarterly period ended June 30, 2023, which is payable on August 15, 2023 to shareholders of record as of the close of business on July 31, 2023.

Adoption of Accounting Pronouncement

On January 1, 2022, we adopted Accounting Standards Update (ASU) No. 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” This ASU (i) simplifies an issuer’s accounting for convertible instruments by eliminating two of the three models in Subtopic 470-20 that require separate accounting for embedded conversion features, (ii) amends diluted earnings per share calculations for convertible instruments by requiring the use of the if-converted method and (iii) simplifies the settlement assessment entities are required to perform on contracts that can potentially settle in an entity’s own equity by removing certain requirements. Using the modified retrospective method, the adoption of this ASU resulted in a pre-tax adjustment of $14 million to unwind the remaining unamortized debt discount within “Debt fair value adjustments” on our consolidated balance sheet and an adjustment of $11 million to unwind the balance of the conversion feature classified in “Additional paid in capital” on our consolidated statement of stockholders’ equity for the six months ended June 30, 2022.

Accumulated Other Comprehensive Loss

Changes in the components of our “Accumulated other comprehensive loss” not including noncontrolling interests are summarized as follows:


	Net unrealized gains/(losses) on cash flow hedge derivatives		Pension and other postretirement liability adjustments		Total accumulated other comprehensive loss
	(In millions)
Balance as of December 31, 2022	$	(164)	$	(238)	$	(402)
Other comprehensive gain before reclassifications	155		8		163
Gain reclassified from accumulated other comprehensive loss	(51)		—		(51)
Net current-period change in accumulated other comprehensive loss	104		8		112
Balance as of June 30, 2023	$	(60)	$	(230)	$	(290)


	Net unrealized gains/(losses) on cash flow hedge derivatives		Pension and other postretirement liability adjustments		Total accumulated other comprehensive loss
	(In millions)
Balance as of December 31, 2021	$	(172)	$	(239)	$	(411)
Other comprehensive (loss) gain before reclassifications	(489)		16		(473)
Loss reclassified from accumulated other comprehensive loss	292		—		292
Net current-period change in accumulated other comprehensive loss	(197)		16		(181)
Balance as of June 30, 2022	$	(369)	$	(223)	$	(592)

5. Risk Management

Certain of our business activities expose us to risks associated with unfavorable changes in the market price of natural gas, NGL and crude oil. We also have exposure to interest rate and foreign currency risk as a result of the issuance of our debt obligations. Pursuant to our management’s approved risk management policy, we use derivative contracts to hedge or reduce our exposure to some of these risks.

Energy Commodity Price Risk Management

As of June 30, 2023, we had the following outstanding commodity forward contracts to hedge our forecasted energy commodity purchases and sales:


	Net open position long/(short)
Derivatives designated as hedging contracts
Crude oil fixed price	(17.8)	MMBbl
Crude oil basis	(2.1)	MMBbl
Natural gas fixed price	(75.3)	Bcf
Natural gas basis	(61.3)	Bcf
NGL fixed price	(0.6)	MMBbl
Derivatives not designated as hedging contracts
Crude oil fixed price	(1.0)	MMBbl
Crude oil basis	(8.0)	MMBbl
Natural gas fixed price	(7.1)	Bcf
Natural gas basis	(91.5)	Bcf
NGL fixed price	(0.7)	MMBbl

As of June 30, 2023, the maximum length of time over which we have hedged, for accounting purposes, our exposure to the variability in future cash flows associated with energy commodity price risk is through December 2027.

Interest Rate Risk Management

We utilize interest rate derivatives to hedge our exposure to both changes in the fair value of our fixed rate debt instruments and variability in expected future cash flows attributable to variable interest rate payments. The following table summarizes our outstanding interest rate contracts as of June 30, 2023:

Notional amount

Accounting treatment

Maximum term

(In millions)

Derivatives designated as hedging instruments

Fixed-to-variable interest rate contracts(a)(b)

7,400

Fair value hedge

March 2035

Derivatives not designated as hedging instruments

Variable-to-fixed interest rate contracts

3,445

Mark-to-Market

December 2023

(a)The principal amount of hedged senior notes consisted of $2,050 million included in “Current portion of debt” and $5,350 million included in “Long-term debt” on our accompanying consolidated balance sheet.

(b)During the three and six months ended June 30, 2023, certain optional expedients as set forth in Topic 848 – Reference Rate Reform were elected on certain of these contracts to preserve fair value hedge accounting treatment. See Note 10 for further information on Topic 848.

Foreign Currency Risk Management

We utilize foreign currency derivatives to hedge our exposure to variability in foreign exchange rates. The following table summarizes our outstanding foreign currency contracts as of June 30, 2023:

Notional amount

Accounting treatment

Maximum term

(In millions)

Derivatives designated as hedging instruments

EUR-to-USD cross currency swap contracts(a)

543

Cash flow hedge

March 2027

(a)These swaps eliminate the foreign currency risk associated with our Euro-denominated debt.

Impact of Derivative Contracts on Our Consolidated Financial Statements

The following table summarizes the fair values of our derivative contracts included on our accompanying consolidated balance sheets:

Fair Value of Derivative Contracts

Location

Derivatives Asset

Derivatives Liability

June 30,
2023

December 31,
2022

June 30,
2023

December 31,
2022

(In millions)

Derivatives designated as hedging instruments

Energy commodity derivative contracts

Fair value of derivative contracts/(Fair value of derivative contracts)

101

150