Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

General and Basis of Presentation

The following discussion and analysis should be read in conjunction with our accompanying interim consolidated financial statements and related notes included elsewhere in this report, and in conjunction with (i) our consolidated financial statements and related notes in our 2020 Form 10-K; (ii) our management’s discussion and analysis of financial condition and results of operations included in our 2020 Form 10-K; (iii) “Information Regarding Forward-Looking Statements” at the beginning of this report and in our 2020 Form 10-K; and (iv) “Risk Factors” in our 2020 Form 10-K.

Long-lived Asset Impairment

During the second quarter 2021 we recognized a non-cash, long-lived asset impairment of $1,600 million related to our South Texas gathering and processing assets within our Natural Gas Pipeline business segment, which was driven by lower expectations regarding the volumes and rates associated with the re-contracting of contracts expiring through 2024.

Stagecoach Acquisition

On July 9, 2021, we completed the acquisition of subsidiaries of Stagecoach Gas Services LLC (Stagecoach), a natural gas pipeline and storage joint venture between Consolidated Edison, Inc. and Crestwood Equity Partners, LP, for approximately $1,228 million, including a preliminary purchase price adjustment for working capital. The Stagecoach assets include 4 natural gas storage facilities with a total FERC-certificated working capacity of 41 Bcf and a network of FERC-regulated natural gas transportation pipelines with multiple interconnects to major interstate natural gas pipelines in the northeast region of the U.S., including TGP. The acquired assets are included in our Natural Gas Pipelines business segment.

Kinetrex Energy Acquisition

On August 20, 2021, we completed the acquisition of Indianapolis-based Kinetrex Energy (Kinetrex) from an affiliate of Parallel49 Equity for $318 million, including a preliminary purchase price adjustment for working capital. Kinetrex is a supplier of liquefied natural gas in the Midwest and a producer and supplier of renewable natural gas (RNG) under long-term contracts to transportation service providers. Kinetrex has a 50% interest in the largest RNG facility in Indiana and we commenced construction on three additional landfill-based RNG facilities in September 2021. The acquired assets are included as part of our new Energy Transition Ventures group within our CO2 business segment.

Sale of an Interest in NGPL Holdings LLC

On March 8, 2021, we and Brookfield Infrastructure Partners L.P. (Brookfield) completed the sale of a combined 25% interest in our joint venture, NGPL Holdings LLC (NGPL Holdings), to a fund controlled by ArcLight Capital Partners, LLC (ArcLight). We received net proceeds of $412 million for our proportionate share of the interests sold which included the transfer of $125 million of our $500 million related party promissory note receivable from NGPL Holdings to ArcLight with quarterly interest payments at 6.75%. We recognized a pre-tax gain of $206 million for our proportionate share, which is included within “Other, net” in our accompanying consolidated statement of operations for the nine months ended September 30, 2021. We and Brookfield now each hold a 37.5% interest in NGPL Holdings.

February 2021 Winter Storm

Our year-to-date earnings reflect impacts of the February 2021 winter storm that affected Texas, which are largely nonrecurring. See “—Segment Earnings Results” below. Some of the transactions executed during the winter storm remain subject to risks, including counterparty financial risk, potential disputed purchases and sales and potential legislative or regulatory action in response to, or litigation arising out of, the unprecedented circumstances of the winter storm, which could adversely affect our future earnings, cash flows and financial condition.

2021 Dividends and Discretionary Capital

We expect to declare dividends of $1.08 per share for 2021, a 3% increase from the 2020 declared dividends of $1.05 per share. Excluding the recent acquisitions, we expect to invest $0.8 billion in expansion projects and contributions to joint ventures during 2021.

The expectations for 2021 discussed above involve risks, uncertainties and assumptions, and are not guarantees of performance. Many of the factors that will determine these expectations are beyond our ability to control or predict, and because of these uncertainties, it is advisable not to put undue reliance on any forward-looking statement.

Results of Operations

Overview

As described in further detail below, our management evaluates our performance primarily using the GAAP financial measures of Segment EBDA (as presented in Note 8, “Reportable Segments”) and Net income (loss) attributable to Kinder Morgan, Inc., along with the non-GAAP financial measures of Adjusted Earnings and DCF, both in the aggregate and per share for each, Adjusted Segment EBDA, Adjusted EBITDA and Net Debt.

GAAP Financial Measures

The Consolidated Earnings Results for the three and nine months ended September 30, 2021 and 2020 present Segment EBDA and Net income (loss) attributable to Kinder Morgan, Inc. which are prepared and presented in accordance with GAAP. Segment EBDA is a useful measure of our operating performance because it measures the operating results of our segments before DD&A and certain expenses that are generally not controllable by our business segment operating managers, such as general and administrative expenses and corporate charges, interest expense, net, and income taxes. Our general and administrative expenses and corporate charges include such items as unallocated employee benefits, insurance, rentals, unallocated litigation and environmental expenses, and shared corporate services including accounting, information technology, human resources and legal services.

Non-GAAP Financial Measures

Our non-GAAP financial measures described below should not be considered alternatives to GAAP Net income (loss) attributable to Kinder Morgan, Inc. or other GAAP measures and have important limitations as analytical tools. Our computations of these non-GAAP financial measures may differ from similarly titled measures used by others. You should not consider these non-GAAP financial measures in isolation or as substitutes for an analysis of our results as reported under GAAP. Management compensates for the limitations of these non-GAAP financial measures by reviewing our comparable GAAP measures, understanding the differences between the measures and taking this information into account in its analysis and its decision making processes.

Certain Items

Certain Items, as adjustments used to calculate our non-GAAP financial measures, are items that are required by GAAP to be reflected in Net income (loss) attributable to Kinder Morgan, Inc., but typically either (i) do not have a cash impact (for example, asset impairments), or (ii) by their nature are separately identifiable from our normal business operations and in our view are likely to occur only sporadically (for example, certain legal settlements, enactment of new tax legislation and casualty losses). We also include adjustments related to joint ventures (see “Amounts from Joint Ventures” below and the tables included in “—Consolidated Earnings Results (GAAP)—Certain Items Affecting Consolidated Earnings Results,” “—Non-GAAP Financial Measures—Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted EBITDA” and “—Non-GAAP Financial Measures—Supplemental Information” below). In addition, Certain Items are described in more detail in the footnotes to tables included in “—Segment Earnings Results” and “—DD&A, General and Administrative and Corporate Charges, Interest, net, and Noncontrolling Interests” below.

Adjusted Earnings

Adjusted Earnings is calculated by adjusting Net income (loss) attributable to Kinder Morgan, Inc. for Certain Items. Adjusted Earnings is used by us and certain external users of our financial statements to assess the earnings of our business excluding Certain Items as another reflection of our ability to generate earnings. We believe the GAAP measure most directly comparable to Adjusted Earnings is Net income (loss) attributable to Kinder Morgan, Inc. Adjusted Earnings per share uses Adjusted Earnings and applies the same two-class method used in arriving at basic earnings (loss) per share. See “—Non-GAAP Financial Measures—Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted Earnings to DCF” below.

DCF

DCF is calculated by adjusting Net income (loss) attributable to Kinder Morgan, Inc. for Certain Items (Adjusted Earnings), and further by DD&A and amortization of excess cost of equity investments, income tax expense, cash taxes, sustaining capital expenditures and other items. We also include amounts from joint ventures for income taxes, DD&A and sustaining capital expenditures (see “Amounts from Joint Ventures” below). DCF is a significant performance measure useful to management and external users of our financial statements in evaluating our performance and in measuring and estimating the ability of our assets to generate cash earnings after servicing our debt, paying cash taxes and expending sustaining capital, that could be used for discretionary purposes such as dividends, stock repurchases, retirement of debt, or expansion capital expenditures. DCF should not be used as an alternative to net cash provided by operating activities computed under GAAP. We believe the GAAP measure most directly comparable to DCF is Net income (loss) attributable to Kinder Morgan, Inc. DCF per share is DCF divided by average outstanding shares, including restricted stock awards that participate in dividends. See “—Non-GAAP Financial Measures—Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted Earnings to DCF” and “—Adjusted Segment EBDA to Adjusted EBITDA to DCF” below.

Adjusted Segment EBDA

Adjusted Segment EBDA is calculated by adjusting Segment EBDA for Certain Items attributable to the segment. Adjusted Segment EBDA is used by management in its analysis of segment performance and management of our business. We believe Adjusted Segment EBDA is a useful performance metric because it provides management and external users of our financial statements additional insight into the ability of our segments to generate cash earnings on an ongoing basis. We believe it is useful to investors because it is a measure that management uses to allocate resources to our segments and assess each segment’s performance. We believe the GAAP measure most directly comparable to Adjusted Segment EBDA is Segment EBDA. See “—Consolidated Earnings Results (GAAP)—Certain Items Affecting Consolidated Earnings Results” for a reconciliation of Segment EBDA to Adjusted Segment EBDA by business segment.

Adjusted EBITDA

Adjusted EBITDA is calculated by adjusting EBITDA for Certain Items. We also include amounts from joint ventures for income taxes and DD&A (see “Amounts from Joint Ventures” below). Adjusted EBITDA is used by management and external users, in conjunction with our Net Debt (as described further below), to evaluate certain leverage metrics. Therefore, we believe Adjusted EBITDA is useful to investors. We believe the GAAP measure most directly comparable to Adjusted EBITDA is Net income (loss) attributable to Kinder Morgan, Inc. In prior periods Net income (loss) was considered the comparable GAAP measure and has been updated to Net income (loss) attributable to Kinder Morgan, Inc. for consistency with our other non-GAAP performance measures. See “—Adjusted Segment EBDA to Adjusted EBITDA to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted EBITDA” below*.*

Amounts from Joint Ventures

Certain Items, DCF and Adjusted EBITDA reflect amounts from unconsolidated joint ventures and consolidated joint ventures utilizing the same recognition and measurement methods used to record “Earnings from equity investments” and “Noncontrolling interests,” respectively. The calculations of DCF and Adjusted EBITDA related to our unconsolidated and consolidated joint ventures include the same items (DD&A and income tax expense, and for DCF only, also cash taxes and sustaining capital expenditures) with respect to the joint ventures as those included in the calculations of DCF and Adjusted EBITDA for our wholly-owned consolidated subsidiaries. (See “—Non-GAAP Financial Measures—Supplemental Information” below.) Although these amounts related to our unconsolidated joint ventures are included in the calculations of DCF and Adjusted EBITDA, such inclusion should not be understood to imply that we have control over the operations and resulting revenues, expenses or cash flows of such unconsolidated joint ventures.

Net Debt

Net Debt is calculated, based on amounts as of September 30, 2021, by subtracting the following amounts from our debt balance of $32,824 million: (i) cash and cash equivalents of $102 million; (ii) debt fair value adjustments of $1,014 million; and (iii) the foreign exchange impact on Euro-denominated bonds of $90 million for which we have entered into currency swaps. Net Debt is a non-GAAP financial measure that is useful to investors and other users of our financial information in evaluating our leverage. We believe the most comparable measure to Net Debt is debt net of cash and cash equivalents.

Consolidated Earnings Results (GAAP)

The following tables summarize the key components of our consolidated earnings results.

			Three Months Ended September 30,
			2021						2020						Earnings increase/(decrease)
			(In millions, except percentages)
Segment EBDA(a)
Natural Gas Pipelines			$	1,069					$	1,091					$	(22)					(2)		%
Products Pipelines			279						223						56						25		%
Terminals			216						246						(30)						(12)		%
CO2			163						156						7						4		%
Total Segment EBDA			1,727						1,716						11						1		%
DD&A			(526)						(539)						13						2		%
Amortization of excess cost of equity investments			(21)						(32)						11						34		%
General and administrative and corporate charges			(167)						(150)						(17)						(11)		%
Interest, net			(368)						(383)						15						4		%
Income before income taxes			645						612						33						5		%
Income tax expense			(134)						(140)						6						4		%
Net income			511						472						39						8		%
Net income attributable to noncontrolling interests			(16)						(17)						1						6		%
Net income attributable to Kinder Morgan, Inc.			$	495					$	455					$	40					9		%

			Nine Months Ended September 30,
			2021						2020						Earnings increase/(decrease)
			(In millions, except percentages)
Segment EBDA(a)
Natural Gas Pipelines			$	2,602					$	2,284					$	318					14		%
Products Pipelines			792						719						73						10		%
Terminals			689						732						(43)						(6)		%
CO2			599						(453)						1,052						232		%
Total Segment EBDA			4,682						3,282						1,400						43		%
DD&A			(1,595)						(1,636)						41						3		%
Amortization of excess cost of equity investments			(56)						(99)						43						43		%
General and administrative and corporate charges			(465)						(472)						7						1		%
Interest, net			(1,122)						(1,214)						92						8		%
Income (loss) before income taxes			1,444						(139)						1,583						1,139		%
Income tax expense			(248)						(304)						56						18		%
Net income (loss)			1,196						(443)						1,639						370		%
Net income attributable to noncontrolling interests			(49)						(45)						(4)						(9)		%
Net income (loss) attributable to Kinder Morgan, Inc.			$	1,147					$	(488)					$	1,635					335		%

(a)Includes revenues, earnings from equity investments, and other, net, less operating expenses, loss on impairments and divestitures, net, and other income, net. Operating expenses include costs of sales, operations and maintenance expenses, and taxes, other than income taxes.

Net income attributable to Kinder Morgan, Inc. increased $40 million and $1,635 million for the three and nine months ended September 30, 2021, respectively, as compared to the respective prior year periods. The third quarter increase in results were impacted by higher earnings from our Products Pipelines business segment, lower interest expense and DD&A expense (including amortization of excess cost of equity investments) partially offset by lower earnings from our Terminals and Natural Gas Pipelines business segments and higher general and administrative and corporate charges expense. The year-to-date increase was primarily impacted by higher earnings from our Natural Gas Pipelines and CO2 business segments primarily related to the February 2021 winter storm and therefore largely nonrecurring, and a decrease of $362 million of impairments in 2021 as compared to 2020 primarily reflecting the $1,600 million pre-tax non-cash asset impairment loss related to South Texas gathering and processing assets within our Natural Gas Pipeline segment in 2021 compared to the combined $1,950 million of non-cash impairments recognized in 2020 of goodwill associated with our Natural Gas Pipelines Non-Regulated and CO2 reporting units and non-cash asset impairments of certain oil and gas producing assets in our CO2 business segment. The impacts of the long-lived asset impairments for both periods were partially offset by associated tax benefits. The year-to-date increase was also impacted by higher earnings from our Products Pipelines business segment, lower interest expense and DD&A expense (including amortization of excess cost of equity investments) partially offset by lower earnings from our Terminals business segment.

Certain Items Affecting Consolidated Earnings Results

			Three Months Ended September 30,
			2021																		2020
			GAAP						Certain Items						Adjusted						GAAP						Certain Items						Adjusted						Adjusted amounts increase/(decrease) to earnings
			(In millions)
Segment EBDA
Natural Gas Pipelines			$	1,069					$	21					$	1,090					$	1,091					$	(9)					$	1,082					$	8
Products Pipelines			279						1						280						223						46						269						11
Terminals			216						17						233						246						—						246						(13)
CO2			163						(9)						154						156						(2)						154						—
Total Segment EBDA(a)			1,727						30						1,757						1,716						35						1,751						6
DD&A and amortization of excess cost of equity investments			(547)						—						(547)						(571)						—						(571)						24
General and administrative and corporate charges(a)			(167)						—						(167)						(150)						11						(139)						(28)
Interest, net(a)			(368)						(8)						(376)						(383)						(8)						(391)						15
Income before income taxes			645						22						667						612						38						650						17
Income tax expense(b)			(134)						(12)						(146)						(140)						(8)						(148)						2
Net income			511						10						521						472						30						502						19
Net income attributable to noncontrolling interests(a)			(16)						—						(16)						(17)						—						(17)						1
Net income attributable to Kinder Morgan, Inc.			$	495					$	10					$	505					$	455					$	30					$	485					$	20

			Nine Months Ended September 30,
			2021																		2020
			GAAP						Certain Items						Adjusted						GAAP						Certain Items						Adjusted						Adjusted amounts increase/(decrease) to earnings
			(In millions)
Segment EBDA
Natural Gas Pipelines			$	2,602					$	1,646					$	4,248					$	2,284					$	993					$	3,277					$	971
Products Pipelines			792						44						836						719						50						769						67
Terminals			689						17						706						732						—						732						(26)
CO2			599						(3)						596						(453)						938						485						111
Total Segment EBDA(a)			4,682						1,704						6,386						3,282						1,981						5,263						1,123
DD&A and amortization of excess cost of equity investments			(1,651)						—						(1,651)						(1,735)						—						(1,735)						84
General and administrative and corporate charges(a)			(465)						—						(465)						(472)						36						(436)						(29)
Interest, net(a)			(1,122)						(17)						(1,139)						(1,214)						(8)						(1,222)						83
Income (loss) before income taxes			1,444						1,687						3,131						(139)						2,009						1,870						1,261
Income tax expense(b)			(248)						(439)						(687)						(304)						(114)						(418)						(269)
Net income (loss)			1,196						1,248						2,444						(443)						1,895						1,452						992
Net income attributable to noncontrolling interests(a)			(49)						—						(49)						(45)						—						(45)						(4)
Net income (loss) attributable to Kinder Morgan, Inc.			$	1,147					$	1,248					$	2,395					$	(488)					$	1,895					$	1,407					$	988

(a)For a more detailed discussion of Certain Items, see the footnotes to the tables within “—Segment Earnings Results” and “—DD&A, General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests” below.

(b)The combined net effect of the income tax Certain Items represents the income tax provision on Certain Items plus discrete income tax items.

Net income attributable to Kinder Morgan, Inc. adjusted for Certain Items (Adjusted Earnings) increased by $20 million and $988 million for the three and nine months ended September 30, 2021, respectively, as compared to the respective prior year periods. The third quarter increase was primarily due to higher earnings from our Products Pipelines and Natural Gas Pipelines business segments and lower DD&A expense (including amortization of excess cost of equity investments) and interest expense partially offset by higher general and administrative and corporate charges expense and lower earnings from our Terminals business segment. The year-to-date increase was impacted by higher earnings from our Natural Gas Pipelines and CO2 business segments primarily related to the February 2021 winter storm, and therefore largely nonrecurring, higher earnings from our Products Pipelines business segment and lower DD&A expense (including amortization of excess cost of equity investments) and interest expense partially offset by higher general and administrative and corporate charges expense and lower earnings from our Terminals business segment.

Non-GAAP Financial Measures

Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted Earnings to DCF

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions)
Net income (loss) attributable to Kinder Morgan, Inc. (GAAP)			$	495					$	455					$	1,147					$	(488)
Total Certain Items			10						30						1,248						1,895
Adjusted Earnings(a)			505						485						2,395						1,407
DD&A and amortization of excess cost of equity investments for DCF(b)			612						662						1,854						2,012
Income tax expense for DCF(a)(b)			165						171						754						484
Cash taxes(b)			(12)						(49)						(56)						(57)
Sustaining capital expenditures(b)			(241)						(177)						(558)						(477)
Other items(c)			(16)						(7)						(22)						(22)
DCF			$	1,013					$	1,085					$	4,367					$	3,347

Adjusted Segment EBDA to Adjusted EBITDA to DCF

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions, except per share amounts)
Natural Gas Pipelines			$	1,090					$	1,082					$	4,248					$	3,277
Products Pipelines			280						269						836						769
Terminals			233						246						706						732
CO2			154						154						596						485
Adjusted Segment EBDA(a)			1,757						1,751						6,386						5,263
General and administrative and corporate charges(a)			(167)						(139)						(465)						(436)
Joint venture DD&A and income tax expense(a)(b)			84						114						270						343
Net income attributable to noncontrolling interests(a)			(16)						(17)						(49)						(45)
Adjusted EBITDA			1,658						1,709						6,142						5,125
Interest, net(a)			(376)						(391)						(1,139)						(1,222)
Cash taxes(b)			(12)						(49)						(56)						(57)
Sustaining capital expenditures(b)			(241)						(177)						(558)						(477)
Other items(c)			(16)						(7)						(22)						(22)
DCF			$	1,013					$	1,085					$	4,367					$	3,347
Adjusted Earnings per share			$	0.22					$	0.21					$	1.05					$	0.62
Weighted average shares outstanding for dividends(d)			2,279						2,276						2,278						2,276
DCF per share			$	0.44					$	0.48					$	1.92					$	1.47
Declared dividends per share			$	0.27					$	0.2625					$	0.81					$	0.7875

(a)Amounts are adjusted for Certain Items. See tables included in “—Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted EBITDA” and “—Supplemental Information” below.

(b)Includes or represents DD&A, income tax expense, cash taxes and/or sustaining capital expenditures (as applicable for each item) from joint ventures. See tables included in “—Supplemental Information” below.

(c)Includes pension contributions, non-cash pension expense and non-cash compensation associated with our restricted stock program.

(d)Includes restricted stock awards that participate in dividends.

Reconciliation of Net Income (Loss) Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted EBITDA

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions)
Net income (loss) attributable to Kinder Morgan, Inc. (GAAP)(a)			$	495					$	455					$	1,147					$	(488)
Certain Items:
Fair value amortization			(7)						(5)						(15)						(17)
Legal, environmental and taxes other than income tax reserves			—						46						112						38
Change in fair value of derivative contracts(b)			22						(6)						64						(10)
Loss on impairments, divestitures and other write-downs, net(c)			4						11						1,515						382
Loss on impairments of goodwill(d)			—						—						—						1,600
COVID-19 costs			—						11						—						11
Income tax Certain Items			(12)						(8)						(439)						(114)
Other			3						(19)						11						5
Total Certain Items(e)			10						30						1,248						1,895
DD&A and amortization of excess cost of equity investments			547						571						1,651						1,735
Income tax expense(f)			146						148						687						418
Joint venture DD&A and income tax expense(f)(g)			84						114						270						343
Interest, net(f)			376						391						1,139						1,222
Adjusted EBITDA			$	1,658					$	1,709					$	6,142					$	5,125

(a)In prior periods, Net income (loss) was considered the comparable GAAP measure and has been updated to Net income (loss) attributable to Kinder Morgan, Inc. for consistency with our other non-GAAP performance measures.

(b)Gains or losses are reflected in our DCF when realized.

(c)Three and nine months ended September 30, 2021 amounts include a non-cash impairment of $14 million related to the reclassification of an asset to held for sale within our Terminals business segment, offset partially by a gain of $10 million on the sale of assets within our CO2 business segment. Nine months ended September 30, 2021 amount also includes a pre-tax non-cash impairment loss of $1,600 million related to our South Texas gathering and processing assets within our Natural Gas Pipelines business segment resulting from lower expectations regarding the volumes and rates associated with re-contracting and a write-down of $117 million, reported within “Earnings from equity investments” on the accompanying consolidated statement of operations, on a long-term subordinated note receivable from an equity investee, Ruby, offset partially by a pre-tax gain of $206 million, reported within “Other, net” on the accompanying consolidated statement of operations, associated with the sale of a partial interest in our equity investment in NGPL Holdings. Nine months ended September 30, 2020 amount includes a pre-tax non-cash impairment loss of $350 million related to oil and gas producing assets in our CO2 business segment driven by low oil prices and $21 million for asset impairments in our Products Pipelines business segment. Except as otherwise noted above, these amounts are reported within “Loss on impairments and divestitures, net” on the accompanying consolidated statement of operations.

(d)Nine months ended September 30, 2020 amount includes non-cash impairments of goodwill of $1,000 million and $600 million associated with our Natural Gas Pipelines Non-Regulated and our CO2 reporting units, respectively.

(e)Three months ended September 30, 2021 and 2020 amounts include $2 million and $(4) million, respectively, and nine months ended September 30, 2021 and 2020 amounts include $129 million and $(4) million, respectively, reported within “Earnings from equity investments” on our consolidated statements of operations.

(f)Amounts are adjusted for Certain Items. See tables included in “—Supplemental Information” and “—DD&A, General and Administrative and Corporate Charges, Interest, net, and Noncontrolling Interests” below.

(g)Represents joint venture DD&A and income tax expense. See tables included in “—Supplemental Information” below.

Supplemental Information

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions)
DD&A (GAAP)			$	526					$	539					$	1,595					$	1,636
Amortization of excess cost of equity investments (GAAP)			21						32						56						99
DD&A and amortization of excess cost of equity investments			547						571						1,651						1,735
Joint venture DD&A			65						91						203						277
DD&A and amortization of excess cost of equity investments for DCF			$	612					$	662					$	1,854					$	2,012
Income tax expense (GAAP)			$	134					$	140					$	248					$	304
Certain Items			12						8						439						114
Income tax expense(a)			146						148						687						418
Unconsolidated joint venture income tax expense(a)(b)			19						23						67						66
Income tax expense for DCF(a)			$	165					$	171					$	754					$	484
Additional joint venture information
Unconsolidated joint venture DD&A			$	76					$	101					$	236					$	306
Less: Consolidated joint venture partners’ DD&A			11						10						33						29
Joint venture DD&A			65						91						203						277
Unconsolidated joint venture income tax expense(a)(b)			19						23						67						66
Joint venture DD&A and income tax expense(a)			$	84					$	114					$	270					$	343
Unconsolidated joint venture cash taxes(b)			$	(13)					$	(41)					$	(47)					$	(51)
Unconsolidated joint venture sustaining capital expenditures			$	(29)					$	(32)					$	(81)					$	(84)
Less: Consolidated joint venture partners’ sustaining capital expenditures			(2)						(2)						(5)						(4)
Joint venture sustaining capital expenditures			$	(27)					$	(30)					$	(76)					$	(80)

(a)Amounts are adjusted for Certain Items.

(b)Amounts are associated with our Citrus, NGPL and Products (SE) Pipe Line equity investments.

Segment Earnings Results

Natural Gas Pipelines

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions, except operating statistics)
Revenues			$	2,555					$	1,809					$	8,656					$	5,255
Operating expenses			(1,634)						(878)						(4,981)						(2,455)
Loss on impairments and divestitures, net			—						(11)						(1,599)						(1,011)
Other income			—						—						2						1
Earnings from equity investments			144						169						311						484
Other, net			4						2						213						10
Segment EBDA			1,069						1,091						2,602						2,284
Certain Items(a)			21						(9)						1,646						993
Adjusted Segment EBDA			$	1,090					$	1,082					$	4,248					$	3,277
Change from prior period			Increase/(Decrease)
Adjusted Segment EBDA			$	8											$	971
Volumetric data(b)
Transport volumes (BBtu/d)			38,527						37,475						38,593						37,887
Sales volumes (BBtu/d)			2,616						2,382						2,480						2,330
Gathering volumes (BBtu/d)			2,808						2,925						2,662						3,109
NGLs (MBbl/d)			29						22						30						27

Certain Items affecting Segment EBDA

(a)Includes Certain Item amounts of $21 million and $1,646 million for the three and nine months ended September 30, 2021, respectively, and $(9) million and $993 million for the three and nine months ended September 30, 2020, respectively. Three and nine months ended September 30, 2021 amounts include decreases in revenues of $14 million and $36 million, respectively, related to non-cash mark-to-market derivative contracts used to hedge forecasted natural gas and NGL sales. Nine months ended September 30, 2021 amount also includes a pre-tax non-cash asset impairment loss of $1,600 million resulting from lower expectations regarding the volumes and rates associated with re-contracting related to our South Texas gathering and processing assets, a write-down of $117 million on a long-term subordinated note receivable from an equity investee, Ruby, and an increase in expense of $69 million related to a litigation reserve partially offset by a pre-tax gain of $206 million associated with the sale of a partial interest in our equity investment in NGPL Holdings. Three and nine months ended September 30, 2020 amounts both include an increase in revenues of $(14) million of amortization of regulatory liabilities, largely offset by non-cash amounts related to mark-to-market derivative contracts. Nine months ended September 30, 2020 amount also includes a $1,000 million non-cash goodwill impairment on our Natural Gas Pipelines Non-Regulated reporting unit.

Other

(b)Joint venture throughput is reported at our ownership share. Volumes for assets sold are excluded for all periods presented. Volumes for acquired pipelines are included for all periods presented, however, EBDA contributions from acquisitions are included only for the periods subsequent to their acquisition.

Below are the changes in Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
Midstream			$	29					11%
East Region			8						1%
West Region			(29)						(11)%
Total Natural Gas Pipelines			$	8					1		%

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
Midstream			$	998					123%
East Region			25						1%
West Region			(52)						(7)%
Total Natural Gas Pipelines			$	971					30		%

The changes in Segment EBDA for our Natural Gas Pipelines business segment are further explained by the following discussion of the significant factors driving Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

• $29 million (11%) and $998 million (123%) increases, respectively, in Midstream were primarily due to (i) higher equity earnings due to the Permian Highway Pipeline being placed in service in January 2021; (ii) higher sales margins driven by higher commodity prices on our Texas intrastate natural gas pipeline operations; (iii) higher earnings on Kinder Morgan Altamont LLC primarily due to higher commodity prices and volumes; and (iv) higher volumes on our Hiland Midstream assets. The year-to-date increase was also impacted by higher commodity prices as a result of the February 2021 winter storm on our South Texas assets and Texas intrastate natural gas pipeline operations partially offset by the impacts of lower volumes on KinderHawk and certain purchase contract obligations on our Oklahoma assets. Overall Midstream’s revenues increased primarily due to higher commodity prices which was partially offset by corresponding increases in costs of sales;

• $8 million (1%) and $25 million (1%) increases, respectively, in the East Region were primarily due to our July 2021 acquisition of the Stagecoach assets partially offset by lower earnings on Fayetteville Express Pipeline LLC driven by lower revenues resulting from contract expirations. The year-to-date increase was also impacted by higher earnings from TGP due to weather-driven increases in reservation and park and loan revenues mostly during the first quarter of 2021 and increased earnings from Elba Liquefaction Company, L.L.C. resulting from the liquefaction units of the Elba Liquefaction project being fully operational as of August 2020; and

• $29 million (11%) and $52 million (7%) decreases, respectively, in the West Region were primarily due to lower earnings from Wyoming Interstate Company, LLC, Colorado Interstate Gas Company, L.L.C. and Cheyenne Plains Gas Pipeline Company, L.L.C. driven by lower revenues due to contract expirations and lower equity earnings from Ruby. The third quarter decrease was also impacted by lower earnings from EPNG driven by lower park and loan revenues.

Products Pipelines

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions, except operating statistics)
Revenues			$	605					$	442					$	1,572					$	1,282
Operating expenses			(341)						(233)						(828)						(585)
Loss on impairments and divestitures, net			—						—						—						(21)
Earnings from equity investments			15						14						48						42
Other, net			—						—						—						1
Segment EBDA			279						223						792						719
Certain Items(a)			1						46						44						50
Adjusted Segment EBDA			$	280					$	269					$	836					$	769
Change from prior period			Increase/(Decrease)
Adjusted Segment EBDA			$	11											$	67
Volumetric data(b)
Gasoline(c)			1,023						941						987						888
Diesel fuel			389						383						395						371
Jet fuel			250						160						217						184
Total refined product volumes			1,662						1,484						1,599						1,443
Crude and condensate			491						530						503						570
Total delivery volumes (MBbl/d)			2,153						2,014						2,102						2,013

Certain Items affecting Segment EBDA

(a)Includes Certain Item amounts of $1 million and $44 million for the three and nine months ended September 30, 2021, respectively, and $46 million and $50 million for the three and nine months ended September 30, 2020, respectively. Nine month 2021 amount includes increases in expense of $28 million and $15 million related to a litigation reserve and an environmental reserve adjustment, respectively. Three and nine month 2020 amounts both include a $46 million unfavorable rate case reserve adjustment. Nine month 2020 amount also includes a non-cash loss on impairment of our Belton Terminal of $21 million partially offset by a $17 million favorable adjustment for tax reserves, other than income taxes.

Other

(b)Joint venture throughput is reported at our ownership share.

(c)Volumes include ethanol pipeline volumes.

Below are the changes in Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
West Coast Refined Products			$	17					15		%
Southeast Refined Products			6						10		%
Crude and Condensate			(12)						(12)		%
Total Products Pipelines			$	11					4		%

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
West Coast Refined Products			$	38					11		%
Southeast Refined Products			39						25		%
Crude and Condensate			(10)						(4)		%
Total Products Pipelines			$	67					9		%

The changes in Segment EBDA for our Products Pipelines business segment are further explained by the following discussion of the significant factors driving Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

• $17 million (15%) and $38 million (11%) increases, respectively, in West Coast Refined Products were primarily due to increased earnings on Pacific (SFPP), and to a lesser extent, on Calnev Pipe Line LLC and West Coast terminals driven by higher revenues from the continued recovery of volumes in 2021 compared to 2020 which was impacted by COVID-19, partially offset by higher operating expense primarily as a result of higher integrity management spending on SFPP;

• $6 million (10%) and $39 million (25%) increases, respectively, in Southeast Refined Products were primarily due to South East Terminals resulting from increased revenues from higher volumes driven by continued recovery of volumes from 2020. The year-to-date increase was also driven by higher 2021 earnings at our Transmix processing operations primarily due to higher prices and first quarter 2020 unfavorable inventory adjustments, and an increase in equity earnings from Products (SE) Pipe Line primarily due to product net gains resulting from higher prices; and

• $12 million (12%) and $10 million (4%) decreases, respectively, in Crude and Condensate were primarily due to decreased earnings from the Bakken Crude assets and KM Condensate Processing Facility (KMCC - Splitter) partially offset by increased earnings from Kinder Morgan Crude & Condensate Pipeline (KMCC). The Bakken Crude assets’ decreased earnings were driven by lower volumes, contracts renewed at lower average rates, and contract expirations partially offset by lower field operating expenses. KMCC - Splitter’s decreased earnings were driven by higher field maintenance expenses. KMCC’s increased earnings were primarily due to higher deficiency revenues and lower field operating expense partially offset by contract expirations. Bakken Crude assets’ and KMCC’s year-to-date changes respectively, were also impacted by first quarter 2020 unfavorable inventory valuation adjustments. In addition, increased marketing activities within KMCC have resulted in third quarter and year-to-date increases in revenues with corresponding increases in cost of sales.

Terminals

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions, except operating statistics)
Revenues			$	422					$	424					$	1,275					$	1,285
Operating expenses			(200)						(185)						(588)						(570)
Loss on impairments and divestitures, net			(14)						—						(14)						(5)
Other income			4						—						4						—
Earnings from equity investments			3						7						10						19
Other, net			1						—						2						3
Segment EBDA			216						246						689						732
Certain Items(a)			17						—						17						—
Adjusted Segment EBDA			$	233					$	246					$	706					$	732
Change from prior period			Increase/(Decrease)
Adjusted Segment EBDA			$	(13)											$	(26)
Volumetric data(b)
Liquids leasable capacity (MMBbl)			79.9						79.6						79.9						79.6
Liquids utilization %(c)			94.2		%				96.3		%				94.2		%				96.3		%
Bulk transload tonnage (MMtons)			13.5						11.3						38.1						35.4

Certain Items affecting Segment EBDA

(a)Includes Certain Item amounts of $17 million for both three and nine months ended September 30, 2021 primarily resulting from a pre-tax non-cash impairment loss of $14 million related to the reclassification of an asset to held for sale.

Other

(b)Volumes for assets sold are excluded for all periods presented.

(c)The ratio of our tankage capacity in service to tankage capacity available for service.

Below are the changes in Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
Marine operations			$	(15)					(29)		%
Gulf Central			5						19		%
Mid Atlantic			4						40		%
Northeast			(2)						(7)		%
All others (including intrasegment eliminations)			(5)						(4)		%
Total Terminals			$	(13)					(5)		%

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
Marine operations			$	(39)					(25)		%
Gulf Central			(7)						(8)		%
Mid Atlantic			8						21		%
Northeast			9						13		%
All others (including intrasegment eliminations)			3						1		%
Total Terminals			$	(26)					(4)		%

The changes in Segment EBDA for our Terminals business segment are further explained by the following discussion of the significant factors driving Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

• $15 million (29%) and $39 million (25%) decreases, respectively, in Marine operations were primarily due to lower fleet utilization and average charter rates;

• $5 million (19%) increase and $7 million (8%) decrease, respectively, in the Gulf Central terminals. The third quarter increase in earnings was primarily due to higher revenues resulting from higher ethanol, petroleum coke, and coal volumes. The year-to-date decrease in earnings was primarily driven by unfavorable petroleum coke volumes due to refinery outages associated with the February 2021 winter storm as well as an increase in property tax expense at Battleground Oil Specialty Terminal Company LLC;

• $4 million (40%) and $8 million (21%) increases, respectively, in the Mid Atlantic terminals were primarily due to higher coal volumes at our Pier IX facility; and

• $2 million (7%) decrease and $9 million (13%) increase, respectively, in the Northeast terminals. The year-to-date increase was primarily driven by increased revenues associated with higher throughput levels and new contracts.

CO**2

			Three Months Ended September 30,												Nine Months Ended September 30,
			2021						2020						2021						2020
			(In millions, except operating statistics)
Revenues			$	257					$	251					$	729					$	792
Operating expenses			(112)						(99)						(161)						(312)
Gain (loss) on impairments and divestitures, net			11						—						8						(950)
Earnings from equity investments			7						4						23						17
Segment EBDA			163						156						599						(453)
Certain Items(a)			(9)						(2)						(3)						938
Adjusted Segment EBDA			$	154					$	154					$	596					$	485
Change from prior period			Increase/(Decrease)
Adjusted Segment EBDA			$	—											$	111
Volumetric data
SACROC oil production			20.1						21.2						19.9						22.1
Yates oil production			6.5						6.4						6.5						6.7
Katz and Goldsmith oil production			2.1						2.6						2.3						2.8
Tall Cotton oil production			1.1						1.4						1.0						1.9
Total oil production, net (MBbl/d)(b)			29.8						31.6						29.7						33.5
NGL sales volumes, net (MBbl/d)(b)			9.7						9.1						9.3						9.4
CO2 sales volumes, net (Bcf/d)			0.4						0.4						0.4						0.5
Realized weighted average oil price ($ per Bbl)			$	53.03					$	54.83					$	52.21					$	53.28
Realized weighted average NGL price ($ per Bbl)			$	28.01					$	17.65					$	23.73					$	17.77

Certain Items affecting Segment EBDA

(a)Includes Certain Item amounts of $(9) million and $(3) million for the three and nine months ended September 30, 2021, respectively, and $(2) million and $938 million for the three and nine months ended September 30, 2020, respectively. Nine month 2020 amount primarily resulted from a $600 million goodwill impairment on our CO2 reporting unit and non-cash impairments of $350 million on our oil and gas producing assets.

Other

(b)Net of royalties and outside working interests.

Below are the changes in Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
Oil and Gas Producing activities			$	(42)					(40)		%
Source and Transportation activities			40						82		%
Subtotal			(2)						(1)		%
Energy Transition Ventures			2						n/a
Total CO2			$	—					—		%

Nine Months Ended September 30, 2021 versus Nine Months Ended September 30, 2020

			Adjusted Segment EBDA increase/(decrease)
			(In millions, except percentages)
Oil and Gas Producing activities			$	73					23		%
Source and Transportation activities			36						22		%
Subtotal			109						22		%
Energy Transition Ventures			2						n/a
Total CO2			$	111					23		%

n/a - not applicable

The changes in Segment EBDA for our CO2 business segment are further explained by the following discussion of the significant factors driving Adjusted Segment EBDA in the comparable three and nine-month periods ended September 30, 2021 and 2020:

• $42 million (40%) decrease and $73 million (23%) increase, respectively, in Oil and Gas Producing activities. The third quarter decrease was primarily due to a settlement for a terminated affiliate purchase contract with Source and Transportation activities which increased operating expenses by $38 million and lower crude oil sales revenues of $14 million due to lower volumes and realized prices partially offset by higher realized NGL prices which increased revenues by $12 million. The year-to-date increase was primarily due to lower operating expenses of $118 million driven by a benefit in the 2021 period realized from returning power to the grid by curtailing oil production during the February 2021 winter storm, net of the impact of the terminated affiliate contract noted above, and higher realized NGL prices which increased revenues by $27 million, partially offset by lower crude oil volumes which decreased revenues by $45 million, driven in part, by the curtailed oil production and by lower realized crude oil prices which decreased revenues by $22 million; and

• $40 million (82%) and $36 million (22%) increases, respectively, in Source and Transportation activities primarily due to a settlement for a terminated affiliate sales contract with Oil and Gas Producing activities which resulted in an increase in revenues of $38 million. The year-to-date increase was also impacted by a decrease in revenues of $19 million related to lower CO2 sales volumes partially offset by an increase in equity earnings of $6 million and lower operating expenses of $5 million.

We believe that our existing hedge contracts in place within our CO2 business segment substantially mitigate commodity price sensitivities in the near-term and to lesser extent over the following few years from price exposure. Below is a summary of our CO2 business segment hedges outstanding as of September 30, 2021.

			Remaining 2021						2022						2023						2024						2025
Crude Oil(a)
Price ($ per Bbl)			$	50.38					$	53.41					$	51.70					$	50.97					$	52.19
Volume (MBbl/d)			25.70						17.00						11.20						5.90						2.85
NGLs
Price ($ per Bbl)			$	36.39					$	47.76
Volume (MBbl/d)			6.03						2.56
Midland-to-Cushing Basis Spread
Price ($ per Bbl)			$	0.26					$	0.59
Volume (MBbl/d)			24.55						14.00

(a)Includes West Texas Intermediate hedges.

DD&A, General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests

			Three Months Ended September 30,												Earnings increase/(decrease)
			2021						2020
			(In millions, except percentages)
DD&A (GAAP)			$	(526)					$	(539)					$	13					2		%
General and administrative (GAAP)			$	(174)					$	(153)					$	(21)					(14)		%
Corporate benefit			7						3						4						133		%
Certain Items(a)			—						11						(11)						(100)		%
General and administrative and corporate charges(b)			$	(167)					$	(139)					$	(28)					(20)		%
Interest, net (GAAP)			$	(368)					$	(383)					$	15					4		%
Certain Items(c)			(8)						(8)						—						—		%
Interest, net(b)			$	(376)					$	(391)					$	15					4		%
Net income attributable to noncontrolling interests (GAAP)			$	(16)					$	(17)					$	1					6		%
Certain Items(d)			—						—						—						—		%
Net income attributable to noncontrolling interests(b)			$	(16)					$	(17)					$	1					6		%

			Nine Months Ended September 30,												Earnings increase/(decrease)
			2021						2020
			(In millions, except percentages)
DD&A (GAAP)			$	(1,595)					$	(1,636)					$	41					3		%
General and administrative (GAAP)			$	(490)					$	(461)					$	(29)					(6)		%
Corporate benefit (charges)			25						(11)						36						327		%
Certain Items(a)			—						36						(36)						(100)		%
General and administrative and corporate charges(b)			$	(465)					$	(436)					$	(29)					(7)		%
Interest, net (GAAP)			$	(1,122)					$	(1,214)					$	92					8		%
Certain Items(c)			(17)						(8)						(9)						(113)		%
Interest, net(b)			$	(1,139)					$	(1,222)					$	83					7		%
Net income attributable to noncontrolling interests (GAAP)			$	(49)					$	(45)					$	(4)					(9)		%
Certain Items(d)			—						—						—						—		%
Net income attributable to noncontrolling interests(b)			$	(49)					$	(45)					$	(4)					(9)		%

Certain items

(a)Three and nine month 2020 amounts both include an increase in expense of $11 million related to costs incurred associated with COVID-19 mitigation. Nine month 2020 amount also includes an increase in expense of $23 million associated with the non-cash fair value adjustment of and the dividend accrual prior to the sale of our investment in Pembina common stock.

(b)Amounts are adjusted for Certain Items.

(c)Three and nine month 2021 amounts include decreases in interest expense of $7 million and $15 million, respectively, related to non-cash debt fair value adjustments associated with acquisitions. Three and nine month 2020 amounts include (i) decreases in interest expense of $5 million and $17 million, respectively, related to non-cash debt fair value adjustments associated with acquisitions and (ii) a decrease in expense of $3 million and an increase in expense of $11 million, respectively, related to non-cash mismatches between the change in fair value of interest rate swaps and change in fair value of hedged debt.

(d)Three and nine months ended September 30, 2021 and 2020 amounts each include less than $1 million of noncontrolling interests associated with Certain Items.

General and administrative expenses and corporate charges adjusted for Certain Items for the three and nine months ended September 30, 2021 when compared with the respective prior year periods increased $28 million and $29 million, respectively, primarily due to lower capitalized costs of $18 million and $41 million, respectively, reflecting reduced capital spending primarily by our Natural Gas Pipelines business segment, non-recurring cost savings realized in the 2020 period as a result of the global pandemic of $10 million and $17 million, respectively, and higher benefit-related costs of $10 million and $16 million, respectively, partially offset by $12 million and $36 million, respectively, of cost savings in the 2021 period associated with organizational efficiency efforts, and lower pension costs of $4 million and $14 million, respectively.

In the table above, we report our interest expense as “net,” meaning that we have subtracted interest income and capitalized interest from our total interest expense to arrive at one interest amount. Our consolidated interest expense, net adjusted for Certain Items for the three and nine months ended September 30, 2021 when compared with the respective prior year periods decreased $15 million and $83 million, respectively, primarily due to lower long-term debt balances, lower LIBOR rates, and lower long-term interest rates, partially offset by lower capitalized interest.

We use interest rate swap agreements to convert a portion of the underlying cash flows related to our long-term fixed rate debt securities (senior notes) into variable rate debt in order to achieve our desired mix of fixed and variable rate debt. As of September 30, 2021 and December 31, 2020, approximately 15% and 16%, respectively, of the principal amount of our debt balances were subject to variable interest rates—either as short-term or long-term variable rate debt obligations or as fixed-rate debt converted to variable rates through the use of interest rate swaps. The percentage at September 30, 2021 includes our variable-to-fixed interest rate derivative contracts not designated as hedging instruments which hedge our exposure through 2021. For more information on our interest rate swaps, see Note 6 “Risk Management—Interest Rate Risk Management” to our consolidated financial statements.

Net income attributable to noncontrolling interests represents the allocation of our consolidated net income attributable to all outstanding ownership interests in our consolidated subsidiaries that are not owned by us.

Income Taxes

Our tax expense for the three months ended September 30, 2021 was approximately $134 million as compared with $140 million of expense for the same period of 2020. The $6 million decrease in tax expense was due to a slightly lower 2021 effective tax rate caused by multiple factors.

Our tax expense for the nine months ended September 30, 2021 was approximately $248 million as compared with $304 million of expense for the same period of 2020. The $56 million decrease in tax expense was due primarily to (i) the prior year disallowance of a tax benefit for the non-tax deductible goodwill impairment, (ii) higher dividend-received deductions in 2021, and (iii) the current year release of the valuation allowance on our investment in NGPL Holdings, partially offset by federal and state taxes on higher pre-tax book income in 2021 and the refund of alternative minimum tax sequestration credits in 2020.

Liquidity and Capital Resources

General

As of September 30, 2021, we had $102 million of “Cash and cash equivalents,” a decrease of $1,082 million from December 31, 2020. We used $1.2 billion of cash on hand to complete the acquisition on July 9, 2021 of subsidiaries of Stagecoach. Additionally, as of September 30, 2021, we had borrowing capacity of approximately $3.8 billion under our credit facilities (discussed below in “—Short-term Liquidity”). As discussed further below, we believe our cash flows from operating activities, cash position and remaining borrowing capacity on our credit facilities are more than adequate to allow us to manage our day-to-day cash requirements and anticipated obligations.

We have consistently generated substantial cash flows from operations, providing a source of funds of $4,440 million and $3,282 million in the first nine months of 2021 and 2020, respectively. The period-to-period increase is discussed below in “—Cash Flows—Operating Activities.” We primarily rely on cash provided from operations to fund our operations as well as our debt service, sustaining capital expenditures, dividend payments and our growth capital expenditures; however, we may access the debt capital markets from time to time to refinance our maturing long-term debt.

Our board of directors declared a quarterly dividend of $0.27 per share for the third quarter of 2021, consistent with the dividend declared for the previous quarter. We expect to fully fund our dividend payments as well as our discretionary spending for 2021 without funding from the capital markets.

On February 11, 2021, we issued in a registered offering $750 million aggregate principal amount of 3.60% senior notes due 2051 and received net proceeds of $741 million which were used to repay maturing senior notes.

On August 20, 2021, we entered into a new $3.5 billion revolving credit facility (the “New Credit Facility”) due August 2026 and amended our existing facility (the “Existing Facility”) to reduce the borrowing capacity to $500 million and terminate the letter of credit commitments and the swing line capacity thereunder (together, the “Credit Facilities”).

Short-term Liquidity

As of September 30, 2021, our principal sources of short-term liquidity are (i) cash from operations; and (ii) our combined $4.0 billion of Credit Facilities and associated commercial paper program. The loan commitments under our Credit Facilities can be used for working capital and other general corporate purposes and as a backup to our commercial paper program. Commercial paper borrowings reduce borrowings allowed under our Credit Facilities and letters of credit reduce borrowings allowed under our New Credit Facility. We provide for liquidity by maintaining a sizable amount of excess borrowing capacity under our Credit Facilities and, as previously discussed, have consistently generated strong cash flows from operations. We do not anticipate any significant limitations from the impacts of COVID-19 with respect to our ability to access funding through our Credit Facilities.

As of September 30, 2021, our $2,822 million of short-term debt consisted primarily of senior notes that mature in the next twelve months. We intend to fund our debt, as it becomes due, primarily through cash on hand, credit facility borrowings, commercial paper borrowings, cash flows from operations, and/or issuing new long-term debt. Our short-term debt balance as of December 31, 2020 was $2,558 million.

We had working capital (defined as current assets less current liabilities) deficits of $3,139 million and $1,871 million as of September 30, 2021 and December 31, 2020, respectively. From time to time, our current liabilities may include short-term borrowings used to finance our expansion capital expenditures, which we may periodically replace with long-term financing and/or pay down using retained cash from operations. The overall $1,268 million unfavorable change from year-end 2020 was primarily due to (i) a $1,082 million decrease in cash and cash equivalents primarily resulting from utilizing cash on hand to acquire subsidiaries of Stagecoach; (ii) a net unfavorable short-term fair value adjustment of $253 million on derivative contract assets and liabilities in 2021; (iii) an increase in accounts payable, net of change in accounts receivable, of $212 million; (iv) a $160 million increase in commercial paper borrowings; and (iv) an increase of $104 million in senior notes that mature in the next twelve months, partially offset by (i) a $193 million decrease in accrued interest; (ii) an increase of $152 million in restricted deposits primarily related to margin calls in our derivative activities; (iii) a $109 million increase in inventories, primarily storage gas and product inventories; and (iv) a $61 million decrease in accrued contingencies. Generally, our working capital balance varies due to factors such as the timing of scheduled debt payments, timing differences in the collection and payment of receivables and payables, the change in fair value of our derivative contracts, and changes in our cash and cash equivalent balances as a result of excess cash from operations after payments for investing and financing activities.

Counterparty Creditworthiness

Some of our customers or other counterparties may experience severe financial problems that may have a significant impact on their creditworthiness. These financial problems may arise from our current global economic conditions, continued volatility of commodity prices, or otherwise. In such situations, we utilize, to the extent allowable under applicable contracts, tariffs and regulations, prepayments and other security requirements, such as letters of credit, to enhance our credit position relating to amounts owed from these counterparties. While we believe we have taken reasonable measures to protect against counterparty credit risk, we cannot provide assurance that one or more of our customers or other counterparties will not become financially distressed and will not default on their obligations to us or that such a default or defaults will not have a material adverse effect on our business, financial position, future results of operations, or future cash flows. The balance of our allowance for credit losses as of September 30, 2021 and December 31, 2020, was $2 million and $26 million, respectively, reflected in “Other current assets” on our consolidated balance sheets*.*

Capital Expenditures

We account for our capital expenditures in accordance with GAAP. We also distinguish between capital expenditures that are maintenance/sustaining capital expenditures and those that are expansion capital expenditures (which we also refer to as discretionary capital expenditures). Expansion capital expenditures are those expenditures that increase throughput or capacity from that which existed immediately prior to the addition or improvement, and are not deducted in calculating DCF (see “Results of Operations—Overview—Non-GAAP Financial Measures—DCF”). With respect to our oil and gas producing

activities, we classify a capital expenditure as an expansion capital expenditure if it is expected to increase capacity or throughput (i.e., production capacity) from the capacity or throughput immediately prior to the making or acquisition of such additions or improvements. Maintenance capital expenditures are those that maintain throughput or capacity. The distinction between maintenance and expansion capital expenditures is a physical determination rather than an economic one, irrespective of the amount by which the throughput or capacity is increased.

Budgeting of maintenance capital expenditures is done annually on a bottom-up basis. For each of our assets, we budget for and make those maintenance capital expenditures that are necessary to maintain safe and efficient operations, meet customer needs and comply with our operating policies and applicable law. We may budget for and make additional maintenance capital expenditures that we expect to produce economic benefits such as increasing efficiency and/or lowering future expenses. Budgeting and approval of expansion capital expenditures are generally made periodically throughout the year on a project-by-project basis in response to specific investment opportunities identified by our business segments from which we generally expect to receive sufficient returns to justify the expenditures. Generally, the determination of whether a capital expenditure is classified as a maintenance/sustaining or as an expansion capital expenditure is made on a project level. The classification of our capital expenditures as expansion capital expenditures or as maintenance capital expenditures is made consistent with our accounting policies and is generally a straightforward process, but in certain circumstances can be a matter of management judgment and discretion. The classification has an impact on DCF because capital expenditures that are classified as expansion capital expenditures are not deducted from DCF, while those classified as maintenance capital expenditures are.

Our capital expenditures for the nine months ended September 30, 2021, and the amount we expect to spend for the remainder of 2021 to sustain and grow our businesses are as follows:

			Nine Months Ended September 30, 2021						2021 Remaining						Total 2021
			(In millions)
Sustaining capital expenditures(a)(b)			$	558					$	300					$	858
Discretionary capital investments(b)(c)(d)			2,049						256						2,305

(a)Nine months ended September 30, 2021, 2021 Remaining, and Total 2021 amounts include $76 million, $31 million, and $107 million, respectively, for sustaining capital expenditures from unconsolidated joint ventures, reduced by consolidated joint venture partners’ sustaining capital expenditures. See table included in “Non-GAAP Financial Measures—Supplemental Information.”

(b)Nine months ended September 30, 2021 amount excludes $6 million due to increases in accrued capital expenditures and contractor retainage and net changes in other.

(c)Nine months ended September 30, 2021 amount includes $135 million of our contributions to certain unconsolidated joint ventures for capital investments. Both Nine months ended September 30, 2021 and Total 2021 amounts also include $1,508 million for our acquisitions of Stagecoach and Kinetrex.

(d)Amounts include our actual or estimated contributions to certain equity investees, net of actual or estimated contributions from certain partners in non-wholly owned consolidated subsidiaries for capital investments.

Off Balance Sheet Arrangements

There have been no material changes in our obligations with respect to other entities that are not consolidated in our financial statements that would affect the disclosures presented as of December 31, 2020 in our 2020 Form 10-K.

Commitments for the purchase of property, plant and equipment as of September 30, 2021 and December 31, 2020 were $201 million and $141 million, respectively. The increase of $60 million was primarily driven by capital commitments related to our Terminals business segment.

Cash Flows

Operating Activities

Cash provided by operating activities increased $1,158 million in the nine months ended September 30, 2021 compared to the respective 2020 period primarily due to:

• a $1,206 million increase in cash after adjusting the $1,639 million increase in net income by $433 million for the combined effects of the period-to-period net changes in non-cash items including the following: (i) loss from impairments and divestitures, net (see discussion above in “—Results of Operations”); (ii) gain from the sale of a partial interest in our equity investment in NGPL Holdings (see discussion above in “—General and Basis of Presentation”); (iii) DD&A expenses (including amortization of excess cost of equity investments); (iv) deferred

income taxes; and (v) earnings from equity investments (including a non-cash write-down of a related party note receivable from Ruby); partially offset by,

• a $48 million decrease in cash associated with net changes in working capital items and other non-current assets and liabilities. The decrease was driven, among other things, primarily by payments for litigation matters in the 2021 period which was partially offset by a net increase in working capital items and higher distributions from equity investment earnings in the 2021 period compared to the 2020 period.

Investing Activities

Cash used in investing activities increased $1,135 million for the nine months ended September 30, 2021 compared to the respective 2020 period primarily attributable to:

• a $1,502 million increase in expenditures for the acquisition of assets and investments, net of cash acquired, primarily driven by $1,197 million and $311 million of net cash used for the Stagecoach and the Kinetrex acquisitions, respectively, in the 2021 period. See Note 2 “Acquisitions” to our consolidated financial statements for further information regarding these transactions; and

• a $490 million decrease in cash primarily due to $412 million of net proceeds received from the sale of a partial interest in our equity investment in NGPL Holdings in the 2021 period, versus the $907 million of proceeds received from the sale of Pembina shares in the 2020 period. See Note 3 “Losses and Gains on Impairments, Divestitures and Other Write-downs” to our consolidated financial statements for further information regarding the transaction of the sale of an interest in NGPL Holdings; partially offset by,

• a $457 million decrease in capital expenditures reflecting an overall reduction of expansion capital projects in the 2021 period over the comparative 2020 period; and

• a $329 million decrease in cash used for contributions to equity investees driven primarily by lower contributions to Permian Highway Pipeline LLC and SNG in the 2021 period compared with the 2020 period.

Financing Activities

Cash used in financing activities increased $1,446 million for the nine months ended September 30, 2021 compared to the respective 2020 period primarily attributable to:

• a $1,403 million net increase in cash used related to debt activity as a result of higher net debt payments in the 2021 period compared to the 2020 period.

Dividends

We expect to declare dividends of $1.08 per share on our stock for 2021. The table below reflects our 2021 dividends declared:

Three months ended						Total quarterly dividend per share for the period						Date of declaration						Date of record						Date of dividend
March 31, 2021						$	0.27					April 21, 2021						April 30, 2021						May 17, 2021
June 30, 2021						0.27						July 21, 2021						August 2, 2021						August 16, 2021
September 30, 2021						0.27						October 20, 2021						November 1, 2021						November 15, 2021

The actual amount of dividends to be paid on our capital stock will depend on many factors, including our financial condition and results of operations, liquidity requirements, business prospects, capital requirements, legal, regulatory and contractual constraints, tax laws, Delaware laws and other factors. See Item 1A. “Risk Factors—The guidance we provide for our anticipated dividends is based on estimates. Circumstances may arise that lead to conflicts between using funds to pay anticipated dividends or to invest in our business.” of our 2020 Form 10-K. All of these matters will be taken into consideration by our board of directors in declaring dividends.

Our dividends are not cumulative. Consequently, if dividends on our stock are not paid at the intended levels, our stockholders are not entitled to receive those payments in the future. Our dividends generally are expected to be paid on or about the 15th day of each February, May, August and November.

Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries

KMI and certain subsidiaries (Subsidiary Issuers) are issuers of certain debt securities. KMI and substantially all of KMI’s wholly owned domestic subsidiaries (Subsidiary Guarantors), 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. Accordingly, with the exception of certain subsidiaries identified as Subsidiary Non-Guarantors, the parent issuer, subsidiary issuers and Subsidiary Guarantors (the “Obligated Group”) are all guarantors of each series of our guaranteed debt (Guaranteed Notes). As a result of the cross guarantee agreement, a holder of any of the Guaranteed Notes issued by KMI or subsidiary issuers are in the same position with respect to the net assets, and income of KMI and the Subsidiary Issuers and Guarantors. The only amounts that are not available to the holders of each of the Guaranteed Notes to satisfy the repayment of such securities are the net assets, and income of the Subsidiary Non-Guarantors.

In lieu of providing separate financial statements for subsidiary issuers and guarantors, we have presented the accompanying supplemental summarized combined income statement and balance sheet information for the Obligated Group based on Rule 13-01 of the SEC’s Regulation S-X. Also, see Exhibit 10.1 to this report “Cross Guarantee Agreement, dated as of November 26, 2014, among Kinder Morgan, Inc. and certain of its subsidiaries, with schedules updated as of September 30, 2021.”

All significant intercompany items among the Obligated Group have been eliminated in the supplemental summarized combined financial information. The Obligated Group’s investment balances in Subsidiary Non-guarantors have been excluded from the supplemental summarized combined financial information. Significant intercompany balances and activity for the Obligated Group with other related parties, including Subsidiary Non-Guarantors, (referred to as “affiliates”) are presented separately in the accompanying supplemental summarized combined financial information.

Excluding fair value adjustments, as of September 30, 2021 and December 31, 2020, the Obligated Group had $30,994 million and $32,563 million, respectively, of Guaranteed Notes outstanding.

Summarized combined balance sheet and income statement information for the Obligated Group follows:

Summarized Combined Balance Sheet Information			September 30, 2021						December 31, 2020
			(In millions)
Current assets			$	2,412					$	2,957
Current assets - affiliates			1,118						1,151
Noncurrent assets			62,129						61,783
Noncurrent assets - affiliates			507						616
Total Assets			$	66,166					$	66,507
Current liabilities			$	5,390					$	4,528
Current liabilities - affiliates			1,269						1,209
Noncurrent liabilities			31,803						33,907
Noncurrent liabilities - affiliates			1,006						1,078
Total Liabilities			39,468						40,722
Redeemable noncontrolling interest			661						728
Kinder Morgan, Inc.’s stockholders’ equity			26,037						25,057
Total Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity			$	66,166					$	66,507

Summarized Combined Income Statement Information			Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
			(In millions)
Revenues			$	3,472					$	11,211
Operating income			699						1,697
Net income			373						937