U.S. pipeline operator Kinder Morgan Inc posted a second straight quarterly loss as it took a $1-billion impairment charge after a steep fall in natural gas prices caused by the coronavirus crisis hurt the value of some of its assets.
Energy companies have been hard hit by the COVID-19 pandemic that slashed energy demand by about 30%, hurting natural gas prices and leading to lower demand for crude to be refined into products.
“Sharp declines in crude oil and natural gas production along with reduced demand for refined products due to the economic shutdown in the wake of the pandemic clearly affected our business and will continue to do so in the near term”, KMI President Kim Dang said.
The virus impact first peaked in the US during the April-June period, with feedgas deliveries to Gulf Coast liquefaction terminals falling dramatically amid widespread cargo cancellations. That has meant lower volumes on some pipelines and has trickled upstream to shale producers.
Kinder Morgan, which in addition to moving more than one-third of the gas consumed in the US also relies on fixed fees from throughput of crude and refined products on its common carrier pipelines, kicked off the earnings reporting season for the US midstream sector. Its performance and outlook will be a barometer for the rest of the sector as its peers report their latest results in the days and weeks ahead. Kinder Morgan operates the Gulf Coast Express gas pipeline in the Permian, in addition to building the Permian Highway Pipeline, which is slated to start up in early 2021.
The company’s CO2 segment, which ships carbon dioxide to oilfields for extracting crude, also came under pressure due to lower production and volatile oil prices.
Net loss attributable to the company stood at $637 million, or 28 cents per share, in the second quarter ended June 30, compared with a profit of $518 million, or 23 cents per share, a year earlier.