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

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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 2023 Form 10-K; (ii) our management’s discussion and analysis of financial condition and results of operations included in our 2023 Form 10-K; (iii) “Information Regarding Forward-Looking Statements” at the beginning of this report and in our 2023 Form 10-K; and (iv) “Risk Factors” in Part I, Item 1 in our 2023 Form 10-K.

Acquisition and Divestitures

The following acquisition and divestitures were made during the 2024 period. See Note 2. “Acquisitions and Divestitures” to our consolidated financial statements for further information on these transactions.

EventDescriptionBusiness Segment
North McElroy Unit acquisition $60 million (June 2024)We acquired AVAD Energy Partners’ interest in the North McElroy Unit (NMU). NMU is an existing waterflood that currently produces approximately 1,250 Bbl/d of crude oil. Our analysis suggests that NMU could be a candidate for CO2 flooding.CO2 (Oil and Gas Producing activities)
CO2 assets divestiture $25 million (June 2024)We sold our interests in the Katz Unit, Goldsmith Landreth San Andres Unit, Tall Cotton Field and Reinecke Unit, along with certain shallow interests in the Diamond M Field, all located in the Permian Basin, and received a leasehold interest in an undeveloped leasehold directly adjacent to the SACROC unit.CO2 (Oil and Gas Producing activities)
Oklahoma assets divestiture $43 million (February 2024)We sold our Oklahoma midstream assets consisting of our Oklahoma system and Cedar Cove.Natural Gas Pipelines (Midstream)

2024 Dividends and Discretionary Capital

We expect to declare dividends of $1.15 per share for 2024, a 2% increase from the 2023 declared dividends of $1.13 per share. We now expect to invest $2.15 billion in expansion projects, acquisitions, and contributions to joint ventures during 2024.

The expectations for 2024 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 Net income attributable to Kinder Morgan, Inc. and Segment earnings before DD&A expenses, including amortization of excess cost of equity investments, (EBDA) (as presented in Note 8 “Reportable Segments”). Management also considers the non-GAAP financial measures of Adjusted Net Income Attributable to Common Stock, and distributable cash flow (DCF), both in the aggregate and per share for each, Adjusted Segment EBDA, Adjusted Net Income Attributable to Kinder Morgan, Inc., Adjusted earnings before interest, income taxes, DD&A expenses, including amortization of excess cost of equity investments, (EBITDA) and Net Debt.

GAAP Financial Measures

Our Consolidated Earnings Results for the three and six months ended June 30, 2024 and 2023 present Net income attributable to Kinder Morgan, Inc., as prepared and presented in accordance with GAAP, and Segment EBDA, which is disclosed in Note 8 “Reportable Segments” pursuant to FASB ASC 280. The composition of Segment EBDA is not addressed nor prescribed by generally accepted accounting principles. 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 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 our consolidated non-GAAP financial measures by reviewing our comparable GAAP measures identified in the descriptions of consolidated non-GAAP measures below, 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 attributable to Kinder Morgan, Inc., but typically either (i) do not have a cash impact (for example, unsettled commodity hedges and asset impairments), or (ii) by their nature are separately identifiable from our normal business operations and in most cases are likely to occur only sporadically (for example, certain legal settlements, enactment of new tax legislation and casualty losses). (See the tables included in “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Kinder Morgan, Inc.,” “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted EBITDA” below). We also include adjustments related to joint ventures (see “—Amounts from Joint Ventures” below). The following table summarizes our Certain Items for the three and six months ended June 30, 2024 and 2023, which are also described in more detail in the footnotes to tables included in “—Segment Earnings Results” below.

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Certain Items
Fair value amortization$—$4$—$—
Change in fair value of derivative contracts(a)2(62)52(130)
(Gain) loss on divestitures and impairment, net(41)—(70)67
Income tax Certain Items(b)1012113
Other2—2—
Total Certain Items(c)(d)$(27)$(46)$(15)$(50)

(a)Gains or losses are reflected when realized.

(b)Represents the income tax provision on Certain Items plus discrete income tax items. Includes the impact of KMI’s income tax provision on Certain Items affecting earnings from equity investments and is separate from the related tax provision recognized at the investees by the joint ventures which are also taxable entities.

(c)Amounts for the periods ending June 30, 2023 include the following amounts reported within “Earnings from equity investments” on the accompanying consolidated statements of income: (i) $1 million and $(1) million for the three and six-month periods, respectively, included within “Change in fair value of derivative contracts” and (ii) $67 million for the six-month period only included within “(Gain) loss on divestitures and impairment, net” for a non-cash impairment related to our investment in Double Eagle Pipeline LLC in our Products Pipelines business segment (see Note 3 “Losses on Impairments*—Impairments*”).

(d)Amounts for the periods ending June 30, 2024 and 2023 include, in the aggregate, $(1) million and $(5) million for the three-month periods, respectively, and $1 million and $(13) million for the six-month periods, respectively, included within “Interest, net” on the accompanying consolidated statements of income which consist of (i) $4 million and none for the 2023 three and six-month periods, respectively, of “Fair value amortization” and (ii) $(1) million and $(9) million for the three-month periods, respectively, and $1 million and $(13) million for the six-month periods, respectively, of “Change in fair value of derivative contracts.”

Adjusted Net Income Attributable to Kinder Morgan, Inc.

Adjusted Net Income Attributable to Kinder Morgan, Inc. is calculated by adjusting Net income attributable to Kinder Morgan, Inc. for Certain Items. Adjusted Net Income Attributable to Kinder Morgan, Inc. is used by us, investors and other

external users of our financial statements as a supplemental measure that provides decision-useful information regarding our period-over-period performance and ability to generate earnings that are core to our ongoing operations. We believe the GAAP measure most directly comparable to Adjusted Net Income Attributable to Kinder Morgan, Inc. is Net income attributable to Kinder Morgan, Inc. See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Kinder Morgan, Inc.” below.

Adjusted Net Income Attributable to Common Stock and Adjusted EPS

Adjusted Net Income Attributable to Common Stock is calculated by adjusting Net income attributable to Kinder Morgan, Inc., the most comparable GAAP measure, for Certain Items, and further for net income allocated to participating securities and adjusted net income in excess of distributions for participating securities. We believe Adjusted Net Income Attributable to Common Stock allows for calculation of adjusted earnings per share (Adjusted EPS) on the most comparable basis with earnings per share, the most comparable GAAP measure to Adjusted EPS. Adjusted EPS is calculated as Adjusted Net Income Attributable to Common Stock divided by our weighted average shares outstanding. Adjusted EPS applies the same two-class method used in arriving at basic earnings per share. Adjusted EPS is used by us, investors and other external users of our financial statements as a per-share supplemental measure that provides decision-useful information regarding our period-over-period performance and ability to generate earnings that are core to our ongoing operations. See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Common Stock” below.

DCF

DCF is calculated by adjusting Net income attributable to Kinder Morgan, Inc. for Certain Items, and further for DD&A and amortization of excess cost of equity investments, income tax expense, cash taxes, sustaining capital expenditures and other items. We also adjust amounts from joint ventures for income taxes, DD&A, cash taxes and sustaining capital expenditures (see “—Amounts from Joint Ventures” below). DCF is a significant performance measure used by us, investors and other external users of our financial statements to evaluate our performance and to measure and estimate the ability of our assets to generate economic earnings after paying interest expense, paying cash taxes and expending sustaining capital. DCF provides additional insight into the specific costs associated with our assets in the current period and facilitates period-to-period comparisons of our performance from ongoing business activities. DCF is also used by us, investors, and other external users to compare the performance of companies across our industry. DCF per share serves as the primary financial performance target for purposes of annual bonuses under our annual incentive compensation program and for performance-based vesting of equity compensation grants under our long-term incentive compensation program. 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 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 Attributable to Kinder Morgan, Inc. to DCF” below.

Adjusted Segment EBDA

Adjusted Segment EBDA is calculated by adjusting segment earnings before DD&A and amortization of excess cost of equity investments, general and administrative expenses and corporate charges, interest expense, and income taxes (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, investors and other external users of our financial statements additional insight into performance trends across our business segments, our segments’ relative contributions to our consolidated performance and the ability of our segments to generate earnings on an ongoing basis. Adjusted Segment EBDA is also used as a factor in determining compensation under our annual incentive compensation program for our business segment presidents and other business segment employees. 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. See “—Non-GAAP Financial Measures—Reconciliation of Segment EBDA to Adjusted Segment EBDA” below.

Adjusted EBITDA

Adjusted EBITDA is calculated by adjusting Net income attributable to Kinder Morgan, Inc. for Certain Items and further for DD&A and amortization of excess cost of equity investments, income tax expense and interest. 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, investors and other external users, in conjunction with our Net Debt (as described further below), to evaluate our leverage. Management and external users also use Adjusted EBITDA as an important metric to compare the valuations of

companies across our industry. Our ratio of Net Debt-to-Adjusted EBITDA is used as a supplemental performance target for purposes of our annual incentive compensation program. We believe the GAAP measure most directly comparable to Adjusted EBITDA is Net income attributable to Kinder Morgan, Inc. See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. 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; further, we remove the portion of these adjustments attributable to non-controlling interests. (See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted EBITDA” 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 June 30, 2024, by subtracting the following amounts from our debt balance of $31,711 million: (i) cash and cash equivalents of $98 million; (ii) debt fair value adjustments of $89 million; and (iii) the foreign exchange impact on Euro-denominated bonds of $(7) million for which we have entered into currency swaps to convert that debt to U.S. dollars. Net Debt, on its own and in conjunction with our Adjusted EBITDA as part of a ratio of Net Debt-to-Adjusted EBITDA, is a non-GAAP financial measure that is used by management, investors and other external users of our financial information to evaluate our leverage. Our ratio of Net Debt-to-Adjusted EBITDA is also used as a supplemental performance target for purposes of our annual incentive compensation program. We believe the most comparable measure to Net Debt is total debt.

Consolidated Earnings Results

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

Three Months Ended June 30,
20242023Earnings increase/(decrease)
(In millions, except percentages)
Revenues$3,572$3,501$712%
Operating Costs, Expenses and Other
Costs of sales (exclusive of items shown separately below)(967)(971)4—%
Operations and maintenance(741)(685)(56)(8)%
DD&A(584)(557)(27)(5)%
General and administrative(179)(169)(10)(6)%
Taxes, other than income taxes(109)(103)(6)(6)%
Gain on divestitures, net451332246%
Other income, net11——%
Total Operating Costs, Expenses and Other(2,534)(2,471)(63)(3)%
Operating Income1,0381,03081%
Other Income (Expense)
Earnings from equity investments208208——%
Amortization of excess cost of equity investments(13)(19)632%
Interest, net(464)(443)(21)(5)%
Other, net12(1)(50)%
Total Other Expense(268)(252)(16)(6)%
Income Before Income Taxes770778(8)(1)%
Income Tax Expense(168)(168)——%
Net Income602610(8)(1)%
Net Income Attributable to Noncontrolling Interests(27)(24)(3)(13)%
Net Income Attributable to Kinder Morgan, Inc.$575$586$(11)(2)%
Basic and diluted earnings per share$0.26$0.26$——%
Basic and diluted weighted average shares outstanding2,2192,237(18)(1)%
Declared dividends per share$0.2875$0.2825$0.0052%
Six Months Ended June 30,
20242023Earnings increase/(decrease)
(In millions, except percentages)
Revenues$7,414$7,389$25—%
Operating Costs, Expenses and Other
Costs of sales (exclusive of items shown separately below)(2,074)(2,186)1125%
Operations and maintenance(1,421)(1,324)(97)(7)%
DD&A(1,171)(1,122)(49)(4)%
General and administrative(354)(335)(19)(6)%
Taxes, other than income taxes(220)(213)(7)(3)%
Gain on divestitures, net771364492%
Other income, net1028400%
Total Operating Costs, Expenses and Other(5,153)(5,165)12—%
Operating Income2,2612,224372%
Other Income (Expense)
Earnings from equity investments4513737821%
Amortization of excess cost of equity investments(25)(36)1131%
Interest, net(936)(888)(48)(5)%
Other, net14(3)(75)%
Total Other Expense(509)(547)387%
Income Before Income Taxes1,7521,677754%
Income Tax Expense(377)(364)(13)(4)%
Net Income1,3751,313625%
Net Income Attributable to Noncontrolling Interests(54)(48)(6)(13)%
Net Income Attributable to Kinder Morgan, Inc.$1,321$1,265$564%
Basic and diluted earnings per share$0.59$0.56$0.035%
Basic and diluted weighted average shares outstanding2,2192,242(23)(1)%
Declared dividends per share$0.575$0.565$0.012%

Our consolidated revenues primarily consist of services and sales revenue. Our services revenues include fees for transportation and other midstream services that we perform. Fluctuations in our consolidated services revenue largely reflect changes in volumes and/or in the rates we charge. Our consolidated sales revenues include sales of natural gas (includes natural gas, RNG and RINs) and products (includes NGL, crude oil, CO2 and transmix). Our consolidated sales revenue will fluctuate with commodity prices and volumes, and the costs of sales associated with purchases will usually have a commensurate and offsetting impact, except for the CO2 segment, which produces, instead of purchases, the crude oil and CO2 it sells. Additionally, fluctuations in revenues and costs of sales may be further impacted by gains or losses from derivative contracts that we use to manage our commodity price risk.

Below is a discussion of significant changes in our Consolidated Earnings Results for the comparable three and six-month periods ended June 30, 2024 and 2023:

Revenues

Revenues increased $71 million and $25 million for the three and six months ended June 30, 2024, respectively, as compared to the respective prior year periods. The increases were primarily due to higher services revenues of $131 million and $284 million, respectively, driven by (i) our acquisition of the STX Midstream assets partially offset by a reduction in revenues related to divested assets; (ii) higher volumes, including expansion projects; and (iii) rate escalations, partially offset by lower product sales of $13 million and $28 million, respectively, driven by lower volumes partially offset by higher commodity prices, and lower natural gas sales of $5 million and $178 million, respectively, due to lower commodity prices

partially offset by higher commodity volumes and higher RIN sales. Revenues were further reduced by $53 million and $130 million, respectively, for the impacts of derivative contracts used to hedge commodity sales which includes both realized and unrealized gains and losses from derivatives. The decreases in sales revenues, which include the impact of our divested assets, had corresponding decreases in our costs of sales as described below under “Operating Costs, Expenses and Other—Costs of sales.”

Operating Costs, Expenses and Other

Costs of sales

Costs of sales decreased $4 million and $112 million for the three and six months ended June 30, 2024, respectively, as compared to the respective prior year periods. The decreases, which include the impact of our divested assets, were primarily due to lower costs of sales for products of $63 million and $73 million, respectively, which were driven primarily by lower volumes partially offset by higher commodity prices, and an increase in costs of sales of $51 million and $134 million, respectively, related to derivative contracts used to hedge commodity purchases which includes both realized and unrealized gains and losses from derivatives. The year-to-date decrease was also impacted by lower costs of sales for natural gas of $166 million primarily due to lower commodity prices partially offset by higher volumes.

Operations and Maintenance

Operations and maintenance increased $56 million and $97 million for the three and six months ended June 30, 2024, respectively, as compared to the respective prior year periods. The increases were primarily driven by other expenses, including integrity and service costs, higher labor and fuel costs, related to greater activity levels and inflation.

Other Income (Expense)

Interest, net

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 interest expense, net increased $21 million and $48 million for the three and six months ended June 30, 2024, respectively, as compared to the respective prior year periods. The increases were primarily due to higher average short-term debt balances and higher interest rates associated with our fixed-to-floating interest rate swaps and our long-term debt partially offset by lower fixed-to-floating hedged debt and average long-term debt balances.

Non-GAAP Financial Measures

Reconciliations from Net Income Attributable to Kinder Morgan, Inc.

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions, except per share amounts)
Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Kinder Morgan, Inc.
Net income attributable to Kinder Morgan, Inc.$575$586$1,321$1,265
Certain Items(a)
Fair value amortization—4——
Change in fair value of derivative contracts2(62)52(130)
(Gain) loss on divestitures and impairment, net(41)—(70)67
Income tax Certain Items1012113
Other2—2—
Total Certain Items(27)(46)(15)(50)
Adjusted Net Income Attributable to Kinder Morgan, Inc.$548$540$1,306$1,215
Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Common Stock
Net income attributable to Kinder Morgan, Inc.$575$586$1,321$1,265
Total Certain Items(b)(27)(46)(15)(50)
Net income allocated to participating securities(c)(3)(4)(7)(7)
Other(d)—1——
Adjusted Net Income Attributable to Common Stock$545$537$1,299$1,208
Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to DCF
Net income attributable to Kinder Morgan, Inc.$575$586$1,321$1,265
Total Certain Items(b)(27)(46)(15)(50)
DD&A5845571,1711,122
Amortization of excess cost of equity investments13192536
Income tax expense(e)158156376351
Cash taxes(13)(8)(11)(9)
Sustaining capital expenditures(241)(195)(410)(351)
Amounts from joint ventures
Unconsolidated joint venture DD&A8680172161
Remove consolidated joint venture partners’ DD&A(15)(15)(31)(31)
Unconsolidated joint venture income tax expense(f)(g)19204146
Unconsolidated joint venture cash taxes(f)4(52)(53)(52)
Unconsolidated joint venture sustaining capital expenditures(55)(46)(89)(75)
Remove consolidated joint venture partners’ sustaining capital expenditures2254
Other items(h)10182033
DCF$1,100$1,076$2,522$2,450
Basic weighted average shares outstanding2,2192,2372,2192,242
Adjusted EPS$0.25$0.24$0.59$0.54
Weighted average shares outstanding for dividends(i)2,2322,2502,2322,255
DCF per share$0.49$0.48$1.13$1.09
Declared dividends per share$0.2875$0.2825$0.575$0.565

(a)See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above.

(b)See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted Net Income Attributable to Kinder Morgan, Inc.” for a detailed listing.

(c)Net income allocated to common stock and participating securities is 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, as applicable.

(d)Adjusted net income in excess of distributions for participating securities.

(e)To avoid duplication, adjustments for income tax expense for the periods ended June 30, 2024 and 2023 exclude $10 million and $12 million for the three-month periods, respectively, and $1 million and $13 million for the six-month periods, respectively, which amounts are already included within “Certain Items.” See table included in “*—Overview—Non-GAAP Financial Measu**res—*Certain Items” above.

(f)Associated with our Citrus, NGPL Holdings and Products (SE) Pipe Line equity investments.

(g)Includes the tax provision on Certain Items recognized by the investees that are taxable entities. The impact of KMI’s income tax provision on Certain Items affecting earnings from equity investments is included within “Certain Items.” See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above.

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

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

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Reconciliation of Net Income Attributable to Kinder Morgan, Inc. to Adjusted EBITDA
Net income attributable to Kinder Morgan, Inc.$575$586$1,321$1,265
Certain Items(a)
Fair value amortization—4——
Change in fair value of derivative contracts2(62)52(130)
(Gain) loss on divestitures and impairment, net(41)—(70)67
Income tax Certain Items1012113
Other2—2—
Total Certain Items(27)(46)(15)(50)
DD&A5845571,1711,122
Amortization of excess cost of equity investments13192536
Income tax expense(b)158156376351
Interest, net(c)465448935901
Amounts from joint ventures
Unconsolidated joint venture DD&A8680172161
Remove consolidated joint venture partners’ DD&A(15)(15)(31)(31)
Unconsolidated joint venture income tax expense(d)19204146
Adjusted EBITDA$1,858$1,805$3,995$3,801

(a)See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above.

(b)To avoid duplication, adjustments for income tax expense for the periods ended June 30, 2024 and 2023 exclude $10 million and $12 million for the three-month periods, respectively, and $1 million and $13 million for the six-month periods, respectively, which amounts are already included within “Certain Items.” See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above.

(c)To avoid duplication, adjustments for interest, net for the periods ended June 30, 2024 and 2023 exclude $(1) million and $(5) million for the three-month periods, respectively, and $1 million and $(13) million for the six-month periods, respectively, which amounts are already included within “Certain Items.” See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items,” above.

(d)Includes that tax provision on Certain Items recognized by the investees that are taxable entities associated with our Citrus, NGPL Holdings and Products (SE) Pipe Line equity investments. The impact of KMI’s income tax provision on Certain Items affecting earnings from equity investments is included within “Certain Items” above.

Below is a discussion of significant changes in our Adjusted Net Income Attributable to Kinder Morgan, Inc., DCF and Adjusted EBITDA:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Adjusted Net Income Attributable to Kinder Morgan, Inc.$548$540$1,306$1,215
DCF1,1001,0762,5222,450
Adjusted EBITDA1,8581,8053,9953,801
Change from prior periodIncrease/(Decrease)
Adjusted Net Income Attributable to Kinder Morgan, Inc.$8$91
DCF$24$72
Adjusted EBITDA$53$194

Adjusted Net Income Attributable to Kinder Morgan, Inc. increased $8 million and $91 million for the three and six months ended June 30, 2024, respectively, as compared to the respective prior year periods. The increases were primarily driven by favorable margins from our Natural Gas Pipelines, Products Pipelines and Terminals business segments, all of which were also primary drivers of the increase in DCF of $24 million and $72 million, respectively, and the increase in Adjusted EBITDA of $53 million and $194 million, respectively. The three and six-month period increases in DCF were also unfavorably impacted by an increase in sustaining capital expenditures and for the three-month period only, favorably impacted by a decrease in tax payments associated with taxable joint ventures.

General and Administrative and Corporate Charges

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
General and administrative$(179)$(169)$(354)$(335)
Corporate charges(5)(10)(10)(23)
Certain Items(a)2—2—
General and administrative and corporate charges$(182)$(179)$(362)$(358)
Change from prior periodEarnings increase/(decrease)
General and administrative$(10)$(19)
Corporate charges513
Total$(5)$(6)

General and administrative expenses increased $10 million and $19 million, and corporate charges decreased $5 million and $13 million for the three and six months ended June 30, 2024, respectively, when compared with the respective prior year periods. The combined changes for the three and six-month periods include $9 million and $16 million, respectively, consisting of higher labor and benefit-related costs, higher legal costs and higher corporate development costs, offset by lower pension costs of $8 million and $13 million, respectively. In addition, the combined changes described above include $2 million of costs for both the three and six-month 2024 periods, which we treated as Certain Items.

Reconciliation of Segment EBDA to Adjusted Segment EBDA

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Segment EBDA(a)
Natural Gas Pipelines Segment EBDA$1,227$1,255$2,741$2,750
Certain Items(b)
Change in fair value of derivative contracts4(54)43(119)
Gain on divestiture——(29)—
Natural Gas Pipelines Adjusted Segment EBDA$1,231$1,201$2,755$2,631
Products Pipelines Segment EBDA$301$285$593$469
Certain Items(b)
Change in fair value of derivative contracts—111
Loss on impairment———67
Products Pipelines Adjusted Segment EBDA$301$286$594$537
Terminals Segment EBDA$281$261$550$515
CO2 Segment EBDA$206$175$364$347
Certain Items(b)
Change in fair value of derivative contracts(1)—71
Gain on divestitures(41)—(41)—
CO2 Adjusted Segment EBDA$164$175$330$348

(a)Includes revenues; earnings from equity investments; operating expenses; gain on divestitures, net; other income; net, and other, net. Operating expenses include costs of sales, operations and maintenance expenses, and taxes, other than income taxes. See “—Overview—GAAP Financial Measures” above.

(b)See “*—Overview—Non-GAAP Financial Measures—*Certain Items” above.

Segment Earnings Results

Natural Gas Pipelines

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions, except operating statistics)
Revenues$1,993$1,991$4,329$4,457
Costs of sales(567)(574)(1,298)(1,439)
Other operating expenses(381)(354)(725)(666)
Gain on divestitures, net—9299
Other income11102
Earnings from equity investments183175398375
Other, net(2)7(2)12
Segment EBDA1,2271,2552,7412,750
Certain Items:
Change in fair value of derivative contracts4(54)43(119)
Gain on divestiture——(29)—
Certain Items(a)4(54)14(119)
Adjusted Segment EBDA$1,231$1,201$2,755$2,631
Change from prior periodIncrease/(Decrease)
Segment EBDA$(28)$(9)
Adjusted Segment EBDA$30$124
Volumetric data(b)
Transport volumes (BBtu/d)42,12242,01442,86442,666
Sales volumes (BBtu/d)2,4572,2202,5112,169
Gathering volumes (BBtu/d)4,0133,6614,0133,530
NGLs (MBbl/d)42343933

(a)See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above. For the periods ending June 30, 2024 and 2023, Certain Items of (i) $4 million and $(55) million for the three-month periods, respectively, and $14 million and $(118) million for the six-month periods, respectively, are associated with our Midstream business and (ii) $1 million for the 2023 three-month period and $(1) million for the 2023 six-month period are associated with our East business. For more detail of significant Certain Items, see the discussion of changes in Segment EBDA below.

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

Below are the changes in Natural Gas Pipelines Segment EBDA:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
East$622$645$1,367$1,341
West213216478475
Midstream392394896934
Total Natural Gas Pipelines$1,227$1,255$2,741$2,750
Change from prior periodIncrease/(Decrease)
East$(23)$26
West$(3)$3
Midstream$(2)$(38)

The changes in Natural Gas Pipelines Segment EBDA in the comparable three and six-month periods ended June 30, 2024 and 2023 are explained by the following discussion:

  • The $23 million (4%) decrease and $26 million (2%) increase, respectively, in East were impacted by (i) lower equity earnings from Midcontinent Express Pipeline LLC that was driven by lower contracted rates; (ii) lower firm revenues on our Stagecoach assets as a result of lower rates in the Northeast; (iii) lower revenues on Southern LNG Company, L.L.C. due to timing of revenue recognition associated with a prepaid customer contract; and (iv) on TGP, an increase in legal reserves and higher pipeline maintenance costs offset by higher revenues due to an expansion project that went into service in November 2023. The year-to-date increase was further impacted by increased demand for services on our Stagecoach assets.

  • The $3 million (1%) decrease and $3 million (1%) increase, respectively, in West were primarily due to less favorable spreads on EPNG compared to 2023, higher pipeline maintenance costs and, to a greater extent in the six-month period, lower gas sales margin. These decreases were partially offset by increased earnings from Cheyenne Plains Gas Pipeline Company, L.L.C. and Wyoming Interstate Company, L.L.C. driven by increased demand for services. The year-to-date increase was partially the result of an insurance settlement received by EPNG in the 2024 period.

  • The $2 million (1%) and $38 million (4%) decreases, respectively, in Midstream resulted from the impacts of non-cash mark-to-market derivative contracts used to hedge forecasted commodity sales and purchases, which primarily increased costs of sales, partially offset by a gain on sale of assets in the 2024 six-month period, all of which we treated as Certain Items.

In addition, Midstream was favorably impacted by (i) an increase in earnings related to our STX Midstream acquired assets partially offset by a reduction in earnings related to divested assets; (ii) higher services revenues driven by increased volumes and rates on our Texas intrastate systems, and in the three-month period, higher gas sales margin due to lower prices on costs of sales; and (iii) higher revenues driven by increased volumes partially offset by higher operating costs on our KinderHawk assets. These increases were partly reduced by lower gas sales margin driven by lower commodity prices and volumes on our Altamont assets . The year-to-date decrease was also impacted by lower sales margins on our Texas intrastate natural gas pipeline operations largely driven by lower commodity prices.

Overall, Midstream’s revenue changes are partially offset by corresponding changes in costs of sales.

Products Pipelines

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions, except operating statistics)
Revenues$776$735$1,504$1,403
Costs of sales(373)(374)(722)(701)
Other operating expenses(117)(100)(221)(213)
Earnings from equity investments152432(20)
Segment EBDA301285593469
Certain Items:
Change in fair value of derivative contracts—111
Loss on impairment———67
Certain Items(a)—1168
Adjusted Segment EBDA$301$286$594$537
Change from prior periodIncrease/(Decrease)
Segment EBDA$16$124
Adjusted Segment EBDA$15$57
Volumetric data(b)
Gasoline(c)1,0081,004966976
Diesel fuel360356347342
Jet fuel308290291281
Total refined product volumes1,6761,6501,6041,599
Crude and condensate493495475477
Total delivery volumes (MBbl/d)2,1692,1452,0792,076

(a)See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above. For the periods ending June 30, 2024 and 2023, Certain Items of (i) $1 million for the 2023 three-month period, and $1 million for each of the six-month periods, respectively, are associated with our Southeast Refined Products business and (ii) $67 million for the 2023 six-month period is associated with our Crude and Condensate business. For more detail of significant Certain Items, see the discussion of changes in Segment EBDA below.

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

(c)Volumes include ethanol pipeline volumes.

Below are the changes in Products Pipelines Segment EBDA:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
West Coast Refined Products$150$135$290$243
Southeast Refined Products7763154134
Crude and Condensate748714992
Total Products Pipelines$301$285$593$469
Change from prior periodIncrease (Decrease)
West Coast Refined Products$15$47
Southeast Refined Products$14$20
Crude and Condensate$(13)$57

The changes in Products Pipelines Segment EBDA in the comparable three and six-month periods ended June 30, 2024 and 2023 are explained by the following discussion:

  • The $15 million (11%) and $47 million (19%) increases, respectively, in West Coast Refined Products as a result of higher transportation rates and higher renewable diesel volumes partially offset by higher pipeline maintenance costs on our Pacific operations. The year-to-date increase was also impacted by lower other operating costs driven by favorable net product gains.

  • The $14 million (22%) and $20 million (15%) increases, respectively, in Southeast Refined Products were driven by (i) higher product sales margin as a result of higher butane blending volumes at our South East Terminals; (ii) an increase in equity earnings from Products (SE) Pipe Line that primarily benefited from higher rates; and (iii) favorable product pricing and processing volumes at our Transmix processing operations.

  • The $13 million (15%) decrease and $57 million (62%) increase, respectively, in in Crude and Condensate was impacted in the 2023 six-month period only by a $67 million non-cash impairment related to our investment in Double Eagle Pipeline LLC, which decreased equity earnings, and which we treated as a Certain Item.

In addition, Crude and Condensate was unfavorably impacted by a decrease in equity earnings, excluding the impairment discussed above, from Double Eagle Pipeline LLC due to unfavorable recontracting partially offset by higher sales margin on our Bakken Crude assets due to increased marketing activities and an escalated rate on our KM Condensate Processing facility in the six-month period. Our Crude and Condensate business also had lower revenues with a corresponding decrease in costs of sales, resulting primarily from decreased volumes partially offset by higher commodity prices.

Terminals

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions, except operating statistics)
Revenues$509$478$1,005$939
Costs of sales(12)(9)(22)(14)
Other operating expenses(226)(215)(447)(420)
Gain on divestitures, net5373
Earnings from equity investments2244
Other, net3233
Segment EBDA$281$261$550$515
Change from prior periodIncrease/(Decrease)
Segment EBDA$20$35
Volumetric data(a)
Liquids leasable capacity (MMBbl)78.678.678.678.6
Liquids utilization %(b)94.3%93.6%94.1%93.2%
Bulk transload tonnage (MMtons)14.113.727.727.1

(a)Volumes for facilities divested, idled and/or held for sale are excluded for all periods presented.

(b)The ratio of our tankage capacity in service to liquids leasable capacity.

For purposes of the following tables and related discussions, the results of operations of our terminals held for sale or divested, including any associated gain or loss on sale, are reclassified for all periods presented from the historical business grouping and included within the Other group.

Below are the changes in Terminals Segment EBDA:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Liquids$162$145$323$294
Bulk7470135134
Jones Act tankers45439084
Other—323
Total Terminals$281$261$550$515
Change from prior periodIncrease/(Decrease)
Liquids$17$29
Bulk$4$1
Jones Act tankers$2$6
Other$(3)$(1)

The changes in Terminals Segment EBDA in the comparable three and six-month periods ended June 30, 2024 and 2023 are explained by the following discussion:

  • The $17 million (12%) and $29 million (10%) increases, respectively, in Liquids were primarily due to increased revenues driven by (i) contributions from expansion projects; (ii) higher volumes and associated ancillaries; and (iii) higher rates and utilization, primarily at our New York Harbor hub facilities, partially offset by higher maintenance and

labor expenses.

  • The $4 million (6%) and $1 million (1%) increases, respectively, in Bulk were primarily due to an increase in revenues driven by increased volume and related ancillaries for coal and soda ash and, in the three-month period, petroleum coke largely offset by (i) higher labor and maintenance expenses; (ii) demurrage costs incurred at our International Marine Terminal; and, in the six-month period, (iii) refinery turnarounds and unplanned outages associated with our petroleum coke handling activities.

  • The $2 million (5%) and $6 million (7%) increases, respectively, in Jones Act tankers were primarily due to higher average charter rates.

CO**2

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions, except operating statistics)
Revenues$298$302$586$599
Costs of sales(19)(18)(40)(39)
Other operating expenses(121)(117)(240)(228)
Gain on divestitures, net401411
Earnings from equity investments871714
Segment EBDA206175364347
Certain Items:
Change in fair value of derivative contracts(1)—71
Gain on divestitures(41)—(41)—
Certain Items(a)(42)—(34)1
Adjusted Segment EBDA$164$175$330$348
Change from prior periodIncrease/(Decrease)
Segment EBDA$31$17
Adjusted Segment EBDA$(11)$(18)
Volumetric data(b)
SACROC oil production18.9122.2719.0120.77
Yates oil production6.096.556.176.65
Other1.051.091.061.08
Total oil production, net (MBbl/d)(c)26.0529.9126.2428.50
NGL sales volumes, net (MBbl/d)(c)7.979.658.428.90
CO2 sales volumes, net (Bcf/d)0.3160.3420.3260.352
RNG sales volumes (BBtu/d)9585
Realized weighted average oil price ($ per Bbl)$69.47$67.73$69.08$67.45
Realized weighted average NGL price ($ per Bbl)$27.29$31.22$27.78$32.54

(a)See table included in “*—Overview—Non-GAAP Financial Measures—*Certain Items” above. The 2024 and 2023 Certain Items are associated with our Oil and Gas Producing activities. For more detail of significant Certain Items, see the discussion of changes in Segment EBDA below.

(b)Volumes for acquired assets are included for all periods presented, however, EBDA contributions from acquisitions are included only for the periods subsequent to their acquisition. Volumes for assets sold are excluded for all periods presented.

(c)Net of royalties and outside working interests.

Below are the changes in CO2 Segment EBDA:

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(In millions)
Oil and Gas Producing activities$145$135$252$253
Source and Transportation activities48399688
Subtotal193174348341
Energy Transition Ventures131166
Total CO2$206$175$364$347
Change from prior periodIncrease/(Decrease)
Oil and Gas Producing activities$10$(1)
Source and Transportation activities$9$8
Energy Transition Ventures$12$10

The changes in CO2 Segment EBDA in the comparable three and six-month periods ended June 30, 2024 and 2023 are explained by the following discussion:

  • The $10 million (7%) increase and $1 million (—%) decrease, respectively, in Oil and Gas Producing activities resulted from a $41 million gain on sale of oil and gas producing fields and non-cash mark-to-market derivative hedge contracts which increased revenues for the three-month period and decreased revenues for the six-month period, and which we treated as Certain Items.

In addition, Oil and Gas Producing activities was impacted by decreased revenues primarily due to (i) lower crude oil volumes partially related to the timing of the recovery of production at SACROC after an outage in 2023; (ii) lower realized NGL prices and volumes; and (iii) our divested assets offset by an increase in revenues related to our acquired assets.

  • The $9 million (23%) and $8 million (9%) increases, respectively, in Source and Transportation activities were primarily due to higher revenues from the Wink Pipeline as a result of a refinery outage in 2023 and lower integrity maintenance costs in 2024 partially offset by lower CO2 sales volumes partly offset by higher realized prices.

  • The $12 million (1,200%) and $10 million (167%) increases, respectively, in Energy Transition Ventures were primarily due to higher RIN sales margin resulting from increased volumes partially offset by higher operating expenses.

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 a lesser extent over the following few years from price exposure. Below is a summary of our CO2 business segment hedges outstanding as of June 30, 2024:

Remaining 20242025202620272028
Crude Oil(a)
Price ($ per Bbl)$66.21$65.43$65.72$65.66$64.53
Volume (MBbl/d)22.9015.409.907.100.60
NGLs
Price ($ per Bbl)$48.34$50.17
Volume (MBbl/d)4.241.09

(a)Includes WTI hedges.

Liquidity and Capital Resources

General

As of June 30, 2024, we had $98 million of “Cash and cash equivalents,” an increase of $15 million from December 31, 2023. Additionally, as of June 30, 2024, we had borrowing capacity of approximately $2.7 billion under our credit facility (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 facility is 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 $2,876 million and $2,883 million in the first six months of 2024 and 2023, respectively. The period-to-period decrease is discussed below in “—Cash Flows—Operating Activities.” We primarily rely on cash flow provided by operations to fund our operations as well as our debt service, sustaining capital expenditures, dividend payments and our expansion capital expenditures; however, we may access the debt capital markets from time to time to refinance our maturing long-term debt and finance incremental investments, if any. From time to time, our short-term debt borrowings are 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.

As of June 30, 2024 and December 31, 2023, approximately $6,125 million (19%) and $8,253 million (26%), respectively, of the principal amount of our debt balances were subject to variable interest rates. The amounts at June 30, 2024 and December 31, 2023 include $5,350 million and $6,200 million, respectively, of interest rate swap agreements and $735 million and $1,989 million, respectively, of commercial paper notes. We use interest rate swap agreements to convert a portion of the underlying cash flows related to our long-term fixed rate debt securities into variable rate debt in order to achieve our desired mix of fixed and variable rate debt. For more information on our interest rate swaps, see Note 6 “Risk Management—Interest Rate Risk Management” to our consolidated financial statements.

Our board of directors declared a quarterly dividend of $0.2875 per share for the second quarter of 2024, a 2% increase over the dividend declared for the second quarter of 2023.

On February 1, 2024, we issued, in a registered offering, two series of senior notes consisting of $1,250 million aggregate principal amount of 5.00% senior notes due 2029 and $1,000 million aggregate principal amount of 5.40% senior notes due 2034 for combined net proceeds of $2,230 million, which were used to repay short-term borrowings, fund maturing debt and for general corporate purposes.

During the six months ended June 30, 2024, upon maturity, we repaid our 4.15% senior notes and our 4.30% senior notes.

Short-term Liquidity

As of June 30, 2024, our principal sources of short-term liquidity are (i) cash from operations; and (ii) our $3.5 billion credit facility with an available capacity of approximately $2.7 billion and an associated $3.5 billion commercial paper program. The loan commitments under our credit facility can be used for working capital and other general corporate purposes and as a backup to our commercial paper program. Commercial paper borrowings and letters of credit reduce borrowings allowed under our $3.5 billion credit facility. We provide for liquidity by maintaining a sizable amount of excess borrowing capacity under our credit facility and, as previously discussed, have consistently generated strong cash flows from operations.

As of June 30, 2024, our $3,062 million of short-term debt consisted primarily of senior notes that mature in the next twelve months and outstanding commercial paper borrowings. We intend to fund our debt as it becomes due, primarily through credit facility borrowings, commercial paper borrowings, cash flows from operations and/or issuing new long-term debt. Our short-term debt as of December 31, 2023 was $4,049 million.

We had working capital (defined as current assets less current liabilities) deficits of $3,768 million and $4,679 million as of June 30, 2024 and December 31, 2023, respectively. The overall $911 million favorable change from year-end 2023 was primarily due to (i) a $1,254 million decrease in commercial paper borrowings resulting from refinancing a portion of our short-term borrowings into long-term debt with the issuance of senior notes in 2024; (ii) a $99 million decrease in other current liabilities, primarily related to reductions in bonus accruals and cash margins; and (iii) a $49 million decrease in accrued taxes, partially offset by (i) a $250 million increase in senior notes that mature in the next twelve months; (ii) a $133 million net unfavorable change in our accounts receivables and payables; and (iii) unfavorable net short-term fair value adjustments of $103 million on derivative contract assets and liabilities in 2024. Generally, our working capital 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 equivalents as a result of excess cash from operations after payments for investing and financing activities.

Capital Expenditures

We account for our capital expenditures in accordance with GAAP. Additionally, we distinguish between capital expenditures as follows:

Type of ExpenditurePhysical Determination of Expenditure
Sustaining capital expenditures•Investments to maintain the operational integrity and extend the useful life of our assets
Expansion capital expenditures (discretionary capital expenditures)•Investments to expand throughput or capacity from that which existed immediately prior to the making or acquisition of additions or improvements

Budgeting of maintenance capital expenditures, which we refer to as sustaining capital expenditures, is done annually on a bottom-up basis. For each of our assets, we budget for and make those sustaining 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 sustaining 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 generally occurs 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. Assets comprising expansion capital projects could result in additional sustaining capital expenditures over time. The need for sustaining capital expenditures in respect of newly constructed assets tends to be minimal but tends to increase over time as such assets age and experience wear and tear. Regardless of whether assets result from sustaining or expansion capital expenditures, once completed, the addition of such assets to our depreciable asset base will impact our calculation of depreciation, depletion and amortization over the remaining useful lives of the impacted or resulting assets.

Generally, the determination of whether a capital expenditure is classified as sustaining or as expansion capital expenditures is made on a project level. The classification of our capital expenditures as expansion capital expenditures or as sustaining 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 in calculating DCF, while those classified as sustaining capital expenditures are.

Our capital expenditures for the six months ended June 30, 2024, and the amount we expect to spend for the remainder of 2024 to sustain our assets and expand our business are as follows:

Six Months Ended June 30, 20242024 RemainingTotal 2024
(In millions)
Capital expenditures:
Sustaining capital expenditures$410$585$995
Expansion capital expenditures7571,1841,941
Accrued capital expenditures, contractor retainage and other33——
Capital expenditures$1,200$1,769$2,936
Add:
Sustaining capital expenditures of unconsolidated joint ventures(a)$89$107$196
Investments in unconsolidated joint ventures(b)47128175
Less: Consolidated joint venture partners’ sustaining capital expenditures(5)(8)(13)
Less: Consolidated joint venture partners’ expansion capital expenditures(11)(13)(24)
Acquisition60—60
Accrued capital expenditures, contractor retainage and other(33)——
Total capital investments$1,347$1,983$3,330

(a)Sustaining capital expenditures by our joint ventures generally do not require cash outlays by us.

(b)Reflects cash contributions to unconsolidated joint ventures. Also includes contributions to an unconsolidated joint venture that are netted within the amount the joint venture declares as a distribution to us.

Our capital investments consist of the following:

Six Months Ended June 30, 20242024 RemainingTotal 2024
(In millions)
Sustaining capital investments
Capital expenditures for property, plant and equipment$410$585$995
Sustaining capital expenditures of unconsolidated joint ventures(a)89107196
Less: Consolidated joint venture partners’ sustaining capital expenditures(5)(8)(13)
Total sustaining capital investments4946841,178
Expansion capital investments
Capital expenditures for property, plant and equipment7571,1841,941
Investments in unconsolidated joint ventures(b)47128175
Less: Consolidated joint venture partners’ expansion capital expenditures(11)(13)(24)
Acquisition60—60
Total expansion capital investments8531,2992,152
Total capital investments$1,347$1,983$3,330

(a)Sustaining capital expenditures by our joint ventures generally do not require cash outlays by us.

(b)Reflects cash contributions to unconsolidated joint ventures. Also includes contributions to an unconsolidated joint venture that are netted within the amount the joint venture declares as a distribution to us.

Impact of Regulation

The trend toward increasingly stringent regulations creates uncertainty regarding our capital and operating expenditure requirements over the longer term. For example, on June 5, 2023, the EPA’s final rule known as the “Good Neighbor

Plan” (the Plan) was published in the Federal Register. As a precursor to the Plan, the EPA disapproved 21 State Implementation Plans (SIPs) and found that two other states had failed to submit SIPs under the interstate transport (Good Neighbor) provisions of the Clean Air Act for the 2015 Ozone NAAQS. The Plan imposes prescriptive emission standards for several sectors, including new and existing internal combustion engines of a certain size used in pipeline transportation of natural gas. The EPA subsequently proposed to disapprove five additional state SIPs and apply the Plan or portions of the Plan to sources in those states, including one state that would affect our operations.

Multiple legal challenges have already been filed, including by us. See Note 10, “Litigation and Environmental—Environmental Matters—Challenge to Federal “Good Neighbor Plan,” to our consolidated financial statements. While we are unable to predict whether any legal challenges will result in changes to the Plan or how those changes, if any, would impact us, we believe that the EPA’s disapprovals of the SIPs were improper, that the Plan is deeply flawed and that numerous and substantial bases for challenging the Plan exist as evidenced by the U.S. Supreme Court ruling on June 27, 2024 that enforcement of the Plan shall be stayed pending a decision on the merits of the case by the U.S. Court of Appeals for the District of Columbia Circuit and any subsequent timely appeal to the Supreme Court. In reaching its decision, the Supreme Court found that the parties challenging the Plan are likely to prevail on their argument that the Plan was not reasonably explained, that the EPA failed to supply a satisfactory explanation for its action, and that the EPA ignored an important aspect of the problem it was attempting to solve by promulgating the Plan. The Supreme Court did not analyze all of the parties’ legal challenges to the Plan. In addition to the Supreme Court stay, several states in which we have affected assets had previously appealed the EPA’s disapprovals of SIPs and obtained stays of those disapprovals pending appeal. The criteria for those stays pending appeal include a requirement that the applicant show likelihood of success on the merits. Stays pending appeal were granted with respect to the EPA’s disapprovals of SIPs submitted by Alabama, Arkansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Nevada, Oklahoma, Texas, Utah and West Virginia. The EPA has no legal basis to enforce the Plan in any state while the Supreme Court stay remains in place, and in many of those states there are also stays of the underlying SIP disapprovals, which also serve to prevent enforcement of the Plan. In response to the stays of the EPA’s SIP disapprovals, the EPA published interim final rules on July 31, 2023, and September 29, 2023, acknowledging that the Plan requirements in those states were suspended and indicating that the Plan compliance deadlines in those states may be extended. The guidance afforded by the EPA in the interim final rules is uncertain so we filed petitions seeking review of the interim final rules in the U.S. Court of Appeals for the District of Columbia Circuit. On February 1, 2024, the Court ordered these cases be held in abeyance pending further order of the Court.

If the Plan were fully implemented, its emission standards would require installation of more stringent air pollution controls on hundreds of existing internal combustion engines used by our Natural Gas Pipelines business segment. The Plan, as initially published by EPA, would require that all impacted engines meet the stringent emission limits by May 1, 2026, unless compliance schedule extensions are granted by the EPA, which would need to be supported by us and approved by the EPA on an engine-by-engine basis. If the Plan ultimately were to take effect in its current form (including full compliance by a revised compliance deadline accounting for the stays, and assuming failure of all challenges to SIP disapprovals and the Plan), we currently estimate that it would have a material impact on us, including estimated costs necessary to comply with the Plan ranging from $1.5 billion to $1.8 billion (including costs for joint ventures that we operate, net to our interests in such joint ventures), potential shortages of equipment resulting in our inability to comply with the Plan, and operational disruptions. Given the extensive pending litigation, impacts of the Plan are difficult to predict. The outcomes of these numerous lawsuits may significantly decrease our exposure. In addition, we would seek to mitigate the impacts and to recover expenditures through adjustments to our rates on our regulated assets where available.

The cost estimates discussed above are preliminary, based on a number of assumptions and subject to significant variation, including outside of the ranges provided. Costs are assumed based on the average cost incurred historically for a typical retrofit of an average engine. These estimates reflect only the anticipated upgrades that would need to be performed (and in the case of joint ventures, only on assets that we operate) and do not take into account potential complications such as additional maintenance requirements that may be identified during the upgrade process.

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, 2023 in our 2023 Form 10-K.

Commitments for the purchase of property, plant and equipment as of June 30, 2024 and December 31, 2023 were $637 million and $469 million, respectively. The increase of $168 million was primarily driven by an overall increase of capital commitments related to our business segments.

Cash Flows

The following table summarizes our net cash flows provided by (used in) operating, investing and financing activities between 2024 and 2023.

Six Months Ended June 30,
20242023Changes
(In millions)
Net Cash Provided by (Used in)
Operating activities$2,876$2,883$(7)
Investing activities(1,172)(1,086)(86)
Financing activities(1,676)(2,071)395
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Deposits$28$(274)$302

Operating Activities

Net cash provided by operating activities was relatively flat for the comparable six-month periods ended June 30, 2024 and 2023.

Investing Activities

$86 million more cash used in investing activities in the comparable six-month periods ended June 30, 2024 and 2023 is explained by the following discussion:

  • a $158 million increase in capital expenditures primarily driven by expansion projects in our Natural Gas Pipelines business segment; partially offset by

  • a $92 million decrease in cash used for contributions to equity investees driven primarily by lower contributions to Permian Highway Pipeline LLC and Greenholly Gathering Pipeline LLC in the 2024 period compared to the 2023 period.

Financing Activities

$395 million less cash used in financing activities in the comparable six-month periods ended June 30, 2024 and 2023 is explained by the following discussion:

  • a $310 million decrease in cash used for share repurchases under our share buy-back program; and

  • a $92 million decrease in cash used related to debt activity as a result of lower net payments in the 2024 period compared to the 2023 period.

Dividends

We expect to declare dividends of $1.15 per share on our stock for 2024. The table below reflects our 2024 dividends declared:

Three months endedTotal quarterly dividend per share for the periodDate of declarationDate of recordDate of dividend
March 31, 2024$0.2875April 17, 2024April 30, 2024May 15, 2024
June 30, 20240.2875July 17, 2024July 31, 2024August 15, 2024

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—Risks Related to Ownership of Our Capital Stock—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 2023 Form 10-K. All of these matters will be taken into consideration by our board of directors when 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 will 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 (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 a Subsidiary Issuer is 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 the Obligated Group, 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 KMI and certain of its subsidiaries, with schedules updated as of June 30, 2024.”

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 June 30, 2024 and December 31, 2023, the Obligated Group had $30,873 million and $31,167 million, respectively, of Guaranteed Notes outstanding.

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

Summarized Combined Balance Sheet InformationJune 30, 2024December 31, 2023
(In millions)
Current assets$1,903$2,246
Current assets - affiliates717760
Noncurrent assets62,87062,877
Noncurrent assets - affiliates837903
Total Assets$66,327$66,786
Current liabilities$5,607$6,907
Current liabilities - affiliates730734
Noncurrent liabilities32,66931,681
Noncurrent liabilities - affiliates1,4621,306
Total Liabilities40,46840,628
Kinder Morgan, Inc.’s stockholders’ equity25,85926,158
Total Liabilities and Stockholders’ Equity$66,327$66,786
Summarized Combined Income Statement InformationThree Months Ended June 30, 2024Six Months Ended June 30, 2024
(In millions)
Revenues$3,212$6,712
Operating income8961,983
Net income4501,080

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