# KINDER MORGAN, INC. (KMI) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from KINDER MORGAN, INC.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1506307/000150630723000023/kmi-20221231.htm
Accession: 0001506307-23-000023
Filing date: 2023-02-08
Report date: 2022-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/KMI/
All MD&A years: /company/KMI/mda/
Previous year: /company/KMI/mda/fy2021/ (FY 2021)
Next year: /company/KMI/mda/fy2023/ (FY 2023)

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto.  We prepared our consolidated financial statements in accordance with GAAP. Additional sections in this report which should be helpful to the reading of our discussion and analysis include the following: (i) a description of our business strategy found in Items 1 and 2. “Business and Properties—Narrative Description of Business—Business Strategy;” (ii) a description of developments during 2022, found in Items 1 and 2. “Business and Properties—General Development of Business—Recent Developments;” (iii) a description of terms for services and commodities we provide, found in Items 1 and 2.

“Business and Properties—Narrative Description of Business—Business Segments;” (iv) a description of risk factors affecting us and our business, found in Item 1A. “Risk Factors;” and (v) a discussion of forward-looking statements, found in “Information Regarding Forward-Looking Statements” at the beginning of this report.

A comparative discussion of our 2021 to 2020 operating results can be found in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 7, 2022.

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General

Significant Acquisitions and Dispositions

Following are significant acquisitions and dispositions during the reporting periods. See Note 3, “Acquisitions and Divestitures” to our consolidated financial statements for further information on these transactions.

[[GREPCENT_TABLE]]
[["Event","Description","Business Segment"],["Sale of interest in ELC(September 2022)","We sold a 25.5% interest in our joint venture ELC. We now own a 25.5% interest in ELC and continue to operate, have a controlling financial interest in and consolidate ELC.","Natural Gas Pipelines business segment(East Region)"],["North American Natural Resources acquisition(August 2022)","We acquired seven landfill assets with the purchase of North American Natural Resources, Inc. and, its sister companies, North American Biofuels, LLC and North American-Central, LLC (NANR) consisting of GTE facilities in Michigan and Kentucky.","CO2 business segment(Energy Transition Ventures group)"],["Mas Ranger acquisition(July 2022)","We acquired three landfill assets with the purchase of Mas Ranger, LLC and its subsidiaries from Mas CanAm, LLC, comprising an RNG facility in Arlington, Texas and medium Btu facilities in Shreveport, Louisiana and Victoria, Texas.","CO2 business segment(Energy Transition Ventures group)"]]
[[/GREPCENT_TABLE]]

February 2021 Winter Storm

Our earnings for 2021 reflect impacts of the February 2021 winter storm that affected Texas, which are largely nonrecurring. See “—Segment Earnings Results” below.

2023 Dividends and Discretionary Capital

We expect to declare dividends of $1.13 per share for 2023, a 2% increase from the 2022 declared dividends of $1.11 per share. We also expect to invest $2.1 billion in expansion projects and contributions to joint ventures, or discretionary capital expenditures during 2023.

The expectations for 2023 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.  Please read our Item 1A. “Risk Factors” and “Information Regarding Forward-Looking Statements” at the beginning of this report for more information.  Furthermore, we plan to provide updates to these 2022 expectations when we believe previously disclosed expectations no longer have a reasonable basis.

Critical Accounting Estimates

Critical accounting estimates and assumptions involve material levels of subjectivity and complex judgement to account for highly uncertain matters or matters with a high susceptibility to change, and could result in a material impact to our financial statements. Examples of certain areas that require more judgment relative to others when preparing our consolidated financial statements and related disclosures include our use of estimates in determining (i) revenue recognition; (ii) income taxes; (iii) the economic useful lives of our assets and related depletion rates; (iv) the fair values used in (a) assignment of the purchase price for a business acquisition, (b) calculations of possible asset and equity investment impairment charges, (c) calculation for the annual goodwill impairment test (or interim tests if triggered), and (d) recording derivative contract assets and liabilities; (v) reserves for environmental claims, legal fees, transportation rate cases and other litigation liabilities; (vi) provisions for credit losses; and (vii) exposures under contractual indemnifications. We routinely evaluate these estimates, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

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For a summary of our significant accounting policies, see Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements and the following discussion for further information regarding critical estimates and assumptions used in the preparation of our financial statements. For discussion on our hedging activities and related

sensitivities to our estimates, see Note 14 “Risk Management” to our consolidated financial statements and Item 7A.

“Quantitative and Qualitative Disclosures About Market Risk,” respectively.

Impairments

In addition to our annual testing of impairment for goodwill, we evaluate impairment of our long-lived assets when a triggering event occurs. Management applies judgment in determining whether there is an impairment indicator. Fair value calculated for the purpose of testing our long-lived assets, including intangible assets, goodwill and equity method investments, for impairment involves the use of significant estimates and assumptions regarding the timing and amounts of future cash inflows and outflows, discount rates, market prices and asset lives, among other items. The estimates and assumptions can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. An estimate of the sensitivity to changes in underlying assumptions of a fair value calculation is not practicable, given the numerous assumptions that can materially affect our estimates.

For more information on our impairments and significant estimates and assumptions used in our impairment evaluations, see Note 4 “Gains and Losses on Divestitures, Impairments and Other Write-downs.”

Environmental Matters

With respect to our environmental exposure, we utilize both internal staff and external experts to assist us in identifying environmental issues and in estimating the costs and timing of remediation efforts. Our accrual of environmental liabilities often coincides either with our completion of a feasibility study or our commitment to a formal plan of action, but generally, we recognize and/or adjust our probable environmental liabilities, if necessary or appropriate, following quarterly reviews of potential environmental issues and claims that could impact our assets or operations. In recording and adjusting environmental liabilities, we consider the effect of environmental compliance, pending legal actions against us, and potential third-party liability claims. For more information on environmental matters, see Part I, Items 1 and 2. “Business and Properties—Narrative Description of Business—Environmental Matters.” For more information on our environmental disclosures, see Note 18 “Litigation and Environmental” to our consolidated financial statements.

Legal and Regulatory Matters

Many of our operations are regulated by various U.S. regulatory bodies, and we are subject to legal and regulatory matters as a result of our business operations and transactions. We utilize both internal and external counsel in evaluating our potential exposure to adverse outcomes from orders, judgments or settlements. Any such liability recorded is revised as better information becomes available. Accordingly, to the extent that actual outcomes differ from our estimates, or additional facts and circumstances cause us to revise our estimates, our earnings will be affected. For more information on regulatory matters, see Part I, Items 1 and 2. “Business and Properties—Narrative Description of Business—Industry Regulation.” For more information on legal proceedings, see Note 18 “Litigation and Environmental” to our consolidated financial statements. 

Employee Benefit Plans

Our pension and OPEB obligations and net benefit costs are primarily based on actuarial calculations. A significant assumption we utilize is the discount rate used in calculating our benefit obligations. The selection of assumptions used in the actuarial calculations of our pension and OPEB plans is further discussed in Note 10 “Share-based Compensation and Employee Benefits” to our consolidated financial statements.

Actual results may differ from the assumptions included in these calculations, and as a result, our estimates associated with our pension and OPEB can be, and have been revised in subsequent periods. The income statement impact of the changes in the assumptions on our related benefit obligations are deferred and amortized into income over either the period of expected future service of active participants, or over the expected future lives of inactive plan participants.

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The following sensitivity analysis shows the estimated impact of a 1% change in the primary assumptions used in our actuarial calculations associated with our pension and OPEB plans for the year ended December 31, 2022:

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[[/GREPCENT_TABLE]]

(a)Includes amounts deferred as either accumulated other comprehensive income (loss) or as a regulatory asset or liability for certain of our regulated operations.

Income Taxes

We make significant judgments and estimates in determining our provision for income taxes, including our assessment of our income tax positions given the uncertainties involved in the interpretation and application of complex tax laws and regulations in various taxing jurisdictions. Numerous and complex judgments and assumptions are inherent in the estimation of future taxable income when determining a valuation allowance, including factors such as future operating conditions and the apportionment of income by state. For more information, see Note 5 “Income Taxes” to our consolidated financial statements.

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 16, “Reportable Segments”) and Net income 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 years ended December 31, 2022 and 2021 present Segment EBDA and Net income 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 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.

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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 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 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 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 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 per share. See “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted Earnings to DCF” below.

DCF

DCF is calculated by adjusting Net income 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 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. (GAAP) to Adjusted Earnings to DCF” and “—Non-GAAP Financial Measures—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 our leverage. Therefore, we believe Adjusted EBITDA is useful to investors. We believe the GAAP measure most directly comparable to Adjusted EBITDA is Net income attributable to Kinder Morgan, Inc. See “—Adjusted Segment EBDA to Adjusted EBITDA to DCF” and “—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted EBITDA” below.

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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 December 31, 2022, by subtracting the following amounts from our total debt balance of $31,788 million: (i) cash and cash equivalents of $745 million; and (ii) debt fair value adjustments of $115 million; and excluding the foreign exchange impact on Euro-denominated bonds of $(8) million for which we have entered into currency swaps to convert that debt to U.S. dollars. Net Debt is a non-GAAP financial measure that management believes 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 total debt.

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Consolidated Earnings Results (GAAP)

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021","","Earnings increase/(decrease)"],["","(In millions, except percentages)"],["Segment EBDA(a)"],["Natural Gas Pipelines","$","4,801","","","$","3,815","","","$","986","","","26","%"],["Products Pipelines","1,107","","","1,064","","","43","","","4","%"],["Terminals","975","","","908","","","67","","","7","%"],["CO2","819","","","760","","","59","","","8","%"],["Total segment EBDA","7,702","","","6,547","","","1,155","","","18","%"],["DD&A","(2,186)","","","(2,135)","","","(51)","","","(2)","%"],["Amortization of excess cost of equity investments","(75)","","","(78)","","","3","","","4","%"],["General and administrative and corporate charges","(593)","","","(623)","","","30","","","5","%"],["Interest, net","(1,513)","","","(1,492)","","","(21)","","","(1)","%"],["Income before income taxes","3,335","","","2,219","","","1,116","","","50","%"],["Income tax expense","(710)","","","(369)","","","(341)","","","(92)","%"],["Net income","2,625","","","1,850","","","775","","","42","%"],["Net income attributable to noncontrolling interests","(77)","","","(66)","","","(11)","","","(17)","%"],["Net income attributable to Kinder Morgan, Inc.","$","2,548","","","$","1,784","","","$","764","","","43","%"]]
[[/GREPCENT_TABLE]]

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

Year Ended December 31, 2022 vs. 2021

Net income attributable to Kinder Morgan, Inc. increased $764 million in 2022 compared to 2021. The increase was primarily due to the $1,600 million non-cash impairment loss and associated income tax benefit in 2021 related to South Texas gathering and processing assets within our Natural Gas Pipeline segment and higher earnings across all of our business segments partially offset by the benefit in the 2021 period of $1,092 million for largely nonrecurring pre-tax earnings related to the February 2021 winter storm, mostly impacting the earnings from our Natural Gas Pipelines and CO2 business segments.

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Certain Items Affecting Consolidated Earnings Results

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","GAAP","","Certain Items","","Adjusted","","GAAP","","Certain Items","","Adjusted","","Adjusted amounts increase/(decrease) to earnings"],["","(In millions)"],["Segment EBDA"],["Natural Gas Pipelines","$","4,801","","","$","141","","","$","4,942","","","$","3,815","","","$","1,648","","","$","5,463","","","$","(521)"],["Products Pipelines","1,107","","","\u2014","","","1,107","","","1,064","","","53","","","1,117","","","(10)"],["Terminals","975","","","\u2014","","","975","","","908","","","42","","","950","","","25"],["CO2","819","","","(11)","","","808","","","760","","","(6)","","","754","","","54"],["Total Segment EBDA(a)","7,702","","","130","","","7,832","","","6,547","","","1,737","","","8,284","","","(452)"],["DD&A and amortization of excess cost of equity investments","(2,261)","","","\u2014","","","(2,261)","","","(2,213)","","","\u2014","","","(2,213)","","","(48)"],["General and administrative and corporate charges(a)","(593)","","","6","","","(587)","","","(623)","","","\u2014","","","(623)","","","36"],["Interest, net(a)","(1,513)","","","(11)","","","(1,524)","","","(1,492)","","","(26)","","","(1,518)","","","(6)"],["Income before income taxes","3,335","","","125","","","3,460","","","2,219","","","1,711","","","3,930","","","(470)"],["Income tax expense(b)","(710)","","","(37)","","","(747)","","","(369)","","","(491)","","","(860)","","","113"],["Net income","2,625","","","88","","","2,713","","","1,850","","","1,220","","","3,070","","","(357)"],["Net income attributable to noncontrolling interests(a)","(77)","","","\u2014","","","(77)","","","(66)","","","\u2014","","","(66)","","","(11)"],["Net income attributable to Kinder Morgan, Inc.","$","2,548","","","$","88","","","$","2,636","","","$","1,784","","","$","1,220","","","$","3,004","","","$","(368)"]]
[[/GREPCENT_TABLE]]

(a)For a more detailed discussion of these 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) decreased by $368 million from the prior year. The decrease was primarily due to lower Adjusted Segment EBDA contributions of $668 million from our Natural Gas Pipelines business segment’s Midstream region (see “—Segment Earnings Results—Natural Gas Pipelines” further below) which was impacted by the February 2021 winter storm (and therefore largely nonrecurring) partially offset by lower income tax expense related to the reduction in earnings.

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Non-GAAP Financial Measures

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions)"],["Net income attributable to Kinder Morgan Inc. (GAAP)","$","2,548","","","$","1,784"],["Total Certain Items","88","","","1,220"],["Adjusted Earnings(a)","2,636","","","3,004"],["DD&A and amortization of excess cost of equity investments for DCF(b)","2,534","","","2,481"],["Income tax expense for DCF(a)(b)","822","","","943"],["Cash taxes(b)","(83)","","","(69)"],["Sustaining capital expenditures(b)","(901)","","","(864)"],["Other items(c)","(38)","","","(35)"],["DCF","$","4,970","","","$","5,460"]]
[[/GREPCENT_TABLE]]

Adjusted Segment EBDA to Adjusted EBITDA to DCF

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions, except per share amounts)"],["Natural Gas Pipelines","$","4,942","","","$","5,463"],["Products Pipelines","1,107","","","1,117"],["Terminals","975","","","950"],["CO2","808","","","754"],["Adjusted Segment EBDA(a)","7,832","","","8,284"],["General and administrative and corporate charges(a)","(587)","","","(623)"],["Joint venture DD&A and income tax expense(a)(b)","348","","","351"],["Net income attributable to noncontrolling interests(a)","(77)","","","(66)"],["Adjusted EBITDA","7,516","","","7,946"],["Interest, net(a)","(1,524)","","","(1,518)"],["Cash taxes(b)","(83)","","","(69)"],["Sustaining capital expenditures(b)","(901)","","","(864)"],["Other items(c)","(38)","","","(35)"],["DCF","$","4,970","","","$","5,460"],["Adjusted Earnings per share","$","1.16","","","$","1.32"],["Weighted average shares outstanding for dividends(d)","2,271","","","2,278"],["DCF per share","$","2.19","","","$","2.40"],["Declared dividends per share","$","1.11","","","$","1.08"]]
[[/GREPCENT_TABLE]]

(a)Amounts are adjusted for Certain Items. See tables included in “—Reconciliation of Net Income 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.

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

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

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

(b)2021 amount primarily 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 reported within “(Gain) loss on divestitures and impairments, net” and a pre-tax gain of $206 million associated with the sale of a partial interest in our equity investment in NGPL Holdings LLC, offset partially by a write-down of $117 million on a long-term subordinated note receivable from an equity investee, Ruby, reported within “Other, net” and “Earnings from equity investments,” respectively, on the accompanying consolidated statement of income.

(c)2022 and 2021 amounts include $1 million and $124 million, respectively, reported within “Earnings from equity investments” on our accompanying consolidated statements of income.

(d)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.

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

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Supplemental Information

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions)"],["DD&A (GAAP)","$","2,186","","","$","2,135"],["Amortization of excess cost of equity investments (GAAP)","75","","","78"],["DD&A and amortization of excess cost of equity investments","2,261","","","2,213"],["Joint venture DD&A","273","","","268"],["DD&A and amortization of excess cost of equity investments for DCF","$","2,534","","","$","2,481"],["Income tax expense (GAAP)","$","710","","","$","369"],["Certain Items","37","","","491"],["Income tax expense(a)","747","","","860"],["Unconsolidated joint venture income tax expense(a)(b)","75","","","83"],["Income tax expense for DCF(a)","$","822","","","$","943"],["Additional joint venture information"],["Unconsolidated joint venture DD&A","$","323","","","$","312"],["Less: Consolidated joint venture partners\u2019 DD&A","50","","","44"],["Joint venture DD&A","273","","","268"],["Unconsolidated joint venture income tax expense(a)(b)","75","","","83"],["Joint venture DD&A and income tax expense(a)","$","348","","","$","351"],["Unconsolidated joint venture cash taxes(b)","$","(70)","","","$","(60)"],["Unconsolidated joint venture sustaining capital expenditures","$","(148)","","","$","(116)"],["Less: Consolidated joint venture partners\u2019 sustaining capital expenditures","(8)","","","(9)"],["Joint venture sustaining capital expenditures","$","(140)","","","$","(107)"]]
[[/GREPCENT_TABLE]]

(a)Amounts are adjusted for Certain Items.

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

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Segment Earnings Results

Natural Gas Pipelines 

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions, except operating statistics)"],["Revenues","$","12,686","","","$","11,709"],["Operating expenses","(8,562)","","","(7,000)"],["Gain (loss) on divestitures and impairments, net","10","","","(1,599)"],["Other income","3","","","2"],["Earnings from equity investments","683","","","487"],["Other, net","(19)","","","216"],["Segment EBDA","4,801","","","3,815"],["Certain Items(a)","141","","","1,648"],["Adjusted Segment EBDA","$","4,942","","","$","5,463"],["Change from prior period","Increase/(Decrease)"],["Segment EBDA","$","986"],["Adjusted Segment EBDA","$","(521)"],["Volumetric data(b)"],["Transport volumes (BBtu/d)","39,064","","","38,577"],["Sales volumes (BBtu/d)","2,482","","","2,473"],["Gathering volumes (BBtu/d)","3,046","","","2,749"],["NGLs (MBbl/d)","30","","","29"]]
[[/GREPCENT_TABLE]]

(a)For more detail of these Certain Items, see the discussion of changes in Segment EBDA below.

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

Below are the changes in Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","Segment EBDA"],["","2022","","2021","","increase/(decrease)"],["","(In millions)"],["Midstream","$","1,441","","","$","442","","","$","999"],["East","2,502","","","2,510","","","(8)"],["West","858","","","863","","","(5)"],["Total Natural Gas Pipelines","$","4,801","","","$","3,815","","","$","986"]]
[[/GREPCENT_TABLE]]

The changes in Segment EBDA for our Natural Gas Pipelines business segment in the comparable years of 2022 and 2021 are explained by the following discussion:

•A $999 million (226%) increase in Midstream was affected by the following items for 2022 and 2021: (i) a pre-tax non-cash asset impairment loss of $1,600 million in the 2021 period related to our South Texas gathering and processing assets; (ii) an increase in expense in the 2021 period related to a certain litigation matter; and (iii) an increase in revenues

47

and costs of sales period over period related to the impacts of non-cash mark-to-market derivative contracts used to hedge forecasted commodity sales and purchases, all of which we treated as Certain Items.

In addition, Midstream’s Segment EBDA was unfavorably impacted by lower realized gas sales margins of $781 million on our Texas intrastate natural gas pipeline operations and $77 million on our South Texas assets largely driven by higher commodity prices related to the February 2021 winter storm partially offset by (i) higher volumes on our KinderHawk assets; (ii) higher commodity sales margins driven by higher prices on our Altamont asset; and (iii) higher earnings on our Oklahoma assets from lower costs of sales due to higher commodity prices in 2021 on certain purchase contracts as a result of the February 2021 winter storm. Overall, Midstream’s revenue changes are partially offset by corresponding changes in costs of sales.

• An $8 million (—%) decrease in the East Region was affected by a pre-tax gain in the 2021 period associated with the sale of a partial interest in our equity investment in NGPL Holdings which we treated as a Certain Item.

In addition, East Region’s Segment EBDA was favorably impacted by (i) our July 2021 acquisition of the Stagecoach assets; (ii) higher equity earnings from MEP driven by new customer contracts in 2022; (iii) increased earnings from KMLP reflecting a new LNG customer contract; and (iv) higher equity earnings from SNG as a result of increased demand for services; partially offset by decreased earnings on TGP driven by higher operating expenses due in part to higher pipeline integrity costs partially offset by higher park and loan revenues.

•A $5 million (1%) decrease in the West Region was primarily impacted by lower earnings from CIG driven by lower revenues resulting from a rate case settlement and from EPNG driven by increased operating expenses and decreased revenues due to lower commodity and park and loan volumes which resulted from a partial pipeline outage, partially offset by an increase in gas sales margin.

In addition, the West Region’s Segment EBDA was affected by the following items for 2022 and 2021: (i) a write-down on a long-term subordinated note receivable from our equity investee, Ruby, in 2021; (ii) an increase in operating expenses in the 2022 period related to litigation reserves and other costs associated with the EPNG pipeline rupture; and (iii) an increase in expense in the 2022 period resulting from a payment associated with the bankruptcy settlement involving our equity investee, Ruby, all of which we treated as Certain Items.

Below are the changes in Adjusted Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","2022","","2021"],["","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Adjusted Segment EBDA increase/(decrease)"],["","(In millions)"],["Midstream","$","1,441","","","$","62","","","$","1,503","","","$","442","","","$","1,729","","","$","2,171","","","$","(668)"],["East","2,502","","","1","","","2,503","","","2,510","","","(199)","","","2,311","","","192"],["West","858","","","78","","","936","","","863","","","118","","","981","","","(45)"],["Total Natural Gas Pipelines","$","4,801","","","$","141","","","$","4,942","","","$","3,815","","","$","1,648","","","$","5,463","","","$","(521)"]]
[[/GREPCENT_TABLE]]

48

Products Pipelines

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions, except operating statistics)"],["Revenues","$","3,418","","","$","2,245"],["Operating expenses","(2,391)","","","(1,239)"],["Gain on divestitures and impairments, net","12","","","\u2014"],["Earnings from equity investments","68","","","57"],["Other, net","\u2014","","","1"],["Segment EBDA","1,107","","","1,064"],["Certain Items(a)","\u2014","","","53"],["Adjusted Segment EBDA","$","1,107","","","$","1,117"],["Change from prior period","Increase/(Decrease)"],["Segment EBDA","$","43"],["Adjusted Segment EBDA","$","(10)"],["Volumetric data(b)"],["Gasoline(c)","978","","","987"],["Diesel fuel","367","","","390"],["Jet fuel","264","","","223"],["Total refined product volumes","1,609","","","1,600"],["Crude and condensate","471","","","498"],["Total delivery volumes (MBbl/d)","2,080","","","2,098"]]
[[/GREPCENT_TABLE]]

(a)For more detail of these 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 Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","Segment EBDA"],["","2022","","2021","","increase/(decrease)"],["","(In millions)"],["West Coast Refined Products","$","511","","","$","448","","","$","63"],["Southeast Refined Products","265","","","258","","","7"],["Crude and Condensate","331","","","358","","","(27)"],["Total Products Pipelines","$","1,107","","","$","1,064","","","$","43"]]
[[/GREPCENT_TABLE]]

The changes in Segment EBDA for our Products Pipelines business segment in the comparable years of 2022 and 2021 are explained by the following discussion:

•A $63 million (14%) increase in West Coast Refined Products was affected by increased expenses in the 2021 period related to litigation and environmental reserve adjustments which we treated as Certain Items.

In addition, West Coast Refined Products Segment EBDA was further impacted by a gain on sale of land at Calnev and increased earnings driven by higher revenues on our West Coast terminals from higher volumes and rates, partially offset

49

by lower earnings on our Pacific operations resulting from higher integrity management expenses partially offset by higher revenues driven by increased transportation rates.

•A $7 million (3%) increase in Southeast Refined Products was primarily due to an increase in equity earnings from Products (SE) Pipe Line primarily due to higher revenues as a result of increased volumes partially offset by higher pipeline integrity costs. Overall, revenues from our Transmix processing operations were largely offset by corresponding costs of sales.

•A $27 million (8%) decrease in Crude and Condensate was primarily due to lower earnings from our Bakken Crude assets due to lower volumes on our Double H pipeline and from our Kinder Morgan Crude & Condensate pipeline driven primarily by lower deficiency revenues, partially offset by higher earnings from our KM Condensate Processing facility reflecting increased revenues due to higher volumes and rate escalations. Our Crude and Condensate business also had higher revenues of $974 million with a corresponding increase in cost of sales, resulting from increased marketing activities.

Below are the changes in Adjusted Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","2022","","2021"],["","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Adjusted Segment EBDA increase/(decrease)"],["","(In millions)"],["West Coast Refined Products","$","511","","","$","\u2014","","","$","511","","","$","448","","","$","53","","","$","501","","","$","10"],["Southeast Refined Products","265","","","\u2014","","","265","","","258","","","\u2014","","","258","","","7"],["Crude and Condensate","331","","","\u2014","","","331","","","358","","","\u2014","","","358","","","(27)"],["Total Products Pipelines","$","1,107","","","$","\u2014","","","$","1,107","","","$","1,064","","","$","53","","","$","1,117","","","$","(10)"]]
[[/GREPCENT_TABLE]]

50

Terminals

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions, except operating statistics)"],["Revenues","$","1,792","","","$","1,715"],["Operating expenses","(853)","","","(793)"],["Gain (loss) on divestitures and impairments, net","9","","","(36)"],["Other income","5","","","4"],["Earnings from equity investments","14","","","15"],["Other, net","8","","","3"],["Segment EBDA","975","","","908"],["Certain Items(a)","\u2014","","","42"],["Adjusted Segment EBDA","$","975","","","$","950"],["Change from prior period","Increase/(Decrease)"],["Segment EBDA","$","67"],["Adjusted Segment EBDA","$","25"],["Volumetric data(b)"],["Liquids leasable capacity (MMBbl)","77.8","","","77.8"],["Liquids utilization %(c)","93.3","%","","94.8","%"],["Bulk transload tonnage (MMtons)","53.2","","","51.3"]]
[[/GREPCENT_TABLE]]

(a)For more detail of these Certain Items, see the discussion of changes in Segment EBDA below.

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

(c)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 region and included within the All others group.

51

Below are the changes in Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","Segment EBDA"],["","2022","","2021","","increase/(decrease)"],["","(In millions)"],["Mid Atlantic","$","101","","","$","63","","","$","38"],["Lower River","74","","","51","","","23"],["Gulf Central","134","","","122","","","12"],["Gulf Liquids","285","","","300","","","(15)"],["Northeast","92","","","107","","","(15)"],["Marine operations","146","","","151","","","(5)"],["All others (including intrasegment eliminations)","143","","","114","","","29"],["Total Terminals","$","975","","","$","908","","","$","67"]]
[[/GREPCENT_TABLE]]

The changes in Segment EBDA for our Terminals business segment in the comparable years of 2022 and 2021 are explained by the following discussion:

•A $38 million (60%) increase in the Mid Atlantic terminals was primarily due to higher handling rates and coal volumes at our Pier IX facility.

•A $23 million (45%) increase in the Lower River terminals was primarily due to higher deficiency revenues from a coal customer and the non-recurring impact associated with 2021’s Hurricane Ida, including lower revenues and higher operating expenses recognized in the 2021 period. The non-recurring impact on 2021 operating expenses associated with Hurricane Ida was treated by us as a Certain Item.

•A $12 million (10%) increase in the Gulf Central terminals was primarily due to higher volumes for petroleum coke handling activities, owing largely to refinery outages in the 2021 period associated with the February 2021 winter storm and lower property tax expense at Battleground Oil Specialty Terminal Company LLC.

•A $15 million (5%) decrease in the Gulf Liquids region was primarily due to re-contracting at lower rates and higher property tax expense partially offset by contractual rate escalations.

•A $15 million (14%) decrease in the Northeast terminals was primarily driven by decreased revenues associated with lower utilization and lower rates on re-contracted tank positions at our Carteret and Perth Amboy facilities.

•A $5 million (3%) decrease in Marine operations was primarily due to lower average charter rates partially offset by higher fleet utilization.

•In addition, other Terminals Segment EBDA was further affected in the 2021 period by pre-tax non-cash impairment losses related to the planned divestiture of our Wilmington terminal and the sale of our interest in Kinder Morgan Resources LLC, both of which we treated as Certain Items.

52

Below are the changes in Adjusted Segment EBDA between 2022 and 2021: 

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","2022","","2021"],["","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Adjusted Segment EBDA increase/(decrease)"],["","(In millions)"],["Mid Atlantic","$","101","","","$","\u2014","","","$","101","","","$","63","","","$","\u2014","","","$","63","","","$","38"],["Lower River","74","","","\u2014","","","74","","","51","","","8","","","59","","","15"],["Gulf Central","134","","","\u2014","","","134","","","122","","","\u2014","","","122","","","12"],["Gulf Liquids","285","","","\u2014","","","285","","","300","","","\u2014","","","300","","","(15)"],["Northeast","92","","","\u2014","","","92","","","107","","","\u2014","","","107","","","(15)"],["Marine operations","146","","","\u2014","","","146","","","151","","","\u2014","","","151","","","(5)"],["All others (including intrasegment eliminations)","143","","","\u2014","","","143","","","114","","","34","","","148","","","(5)"],["Total Terminals","$","975","","","$","\u2014","","","$","975","","","$","908","","","$","42","","","$","950","","","$","25"]]
[[/GREPCENT_TABLE]]

53

CO2 

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021"],["","(In millions, except operating statistics)"],["Revenues","$","1,334","","","$","1,009"],["Operating expenses","(554)","","","(289)"],["Gain on divestitures and impairments, net","1","","","8"],["Earnings from equity investments","38","","","32"],["Segment EBDA","819","","","760"],["Certain Items(a)","(11)","","","(6)"],["Adjusted Segment EBDA","$","808","","","$","754"],["Change from prior period","Increase/(Decrease)"],["Segment EBDA","$","59"],["Adjusted Segment EBDA","$","54"],["Volumetric data"],["SACROC oil production","19.92","","","19.88"],["Yates oil production","6.52","","","6.57"],["Other","2.75","","","3.25"],["Total oil production, net (MBbl/d)(b)","29.19","","","29.70"],["NGL sales volumes, net (MBbl/d)(b)","9.40","","","9.38"],["CO2 sales volumes, net (Bcf/d)","0.36","","","0.38"],["Realized weighted average oil price ($ per Bbl)(c)","$","66.78","","","$","52.71"],["Realized weighted average NGL price ($ per Bbl)","$","39.59","","","$","25.39"]]
[[/GREPCENT_TABLE]]

(a)For more detail of these Certain Items, see the discussion of changes in Segment EBDA below.

(b)Net of royalties and outside working interests.

(c)Had we not used energy derivative contracts to transfer commodity price risk, our crude oil sales prices would have averaged $96.36 per barrel and $68.47 per barrel in 2022 and 2021, respectively.

Below are the changes in Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","Segment EBDA"],["","2022","","2021","","increase/(decrease)"],["","(In millions)"],["Oil and Gas Producing activities","$","553","","","$","507","","","$","46"],["Source and Transportation activities","247","","","245","","","2"],["Subtotal","800","","","752","","","48"],["Energy Transition Ventures","19","","","8","","","11"],["Total CO2","$","819","","","$","760","","","$","59"]]
[[/GREPCENT_TABLE]]

The changes in Segment EBDA for our CO2 business segment in the comparable years of 2022 and 2021 are explained by the following discussion:

•A $46 million (9%) increase in Oil and Gas Producing activities primarily due to higher realized crude oil and NGL prices which increased revenues by $203 million, a 2021 settlement of $38 million for a terminated affiliate purchase contract with Source and Transportation activities partially offset by higher operating expenses of $186 million mainly

54

driven by the benefit realized in the 2021 period from returning power to the grid by curtailing oil production during the February 2021 winter storm.

In addition, Oil and Gas Producing activities Segment EBDA was favorably affected in 2022 and 2021 by changes in revenues related to non-cash mark-to-market derivative hedge contracts which we treated as Certain Items.

•A $2 million (1%) increase in Source and Transportation activities primarily due to increased revenues of $51 million related to higher CO2 sales prices partially offset by a 2021 settlement of $38 million for a terminated affiliate sales contract with Oil and Gas Producing activities and decreased revenues related to lower CO2 sales volumes.

In addition, Source and Transportation activities was unfavorably impacted by a gain on sale of an asset in 2021 which we treated as a Certain Item.

Below are the changes in Adjusted Segment EBDA between 2022 and 2021:

Year Ended December 31, 2022 versus Year Ended December 31, 2021

[[GREPCENT_TABLE]]
[["","2022","","2021"],["","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Segment EBDA (GAAP)","","Certain Items","","Adjusted Segment EBDA","","Adjusted Segment EBDA increase/(decrease)"],["","(In millions)"],["Oil and Gas Producing activities","$","553","","","$","(11)","","","$","542","","","$","507","","","$","4","","","$","511","","","$","31"],["Source and Transportation activities","247","","","\u2014","","","247","","","245","","","(10)","","","235","","","12"],["Subtotal","800","","","(11)","","","789","","","752","","","(6)","","","746","","","43"],["Energy Transition Ventures","19","","","\u2014","","","19","","","8","","","\u2014","","","8","","","11"],["Total CO2","$","819","","","$","(11)","","","$","808","","","$","760","","","$","(6)","","","$","754","","","$","54"]]
[[/GREPCENT_TABLE]]

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 December 31, 2022.

[[GREPCENT_TABLE]]
[["","2023","","2024","","2025","","2026"],["Crude Oil(a)"],["Price ($ per Bbl)","$","64.19","","","$","61.66","","","$","61.76","","","$","65.72"],["Volume (MBbl/d)","22.30","","","14.14","","","9.72","","","4.10"],["NGLs"],["Price ($ per Bbl)","$","59.13"],["Volume (MBbl/d)","3.08"],["Midland-to-Cushing Basis Spread"],["Price ($ per Bbl)","$","0.97"],["Volume (MBbl/d)","17.96"]]
[[/GREPCENT_TABLE]]

(a)Includes West Texas Intermediate hedges.

55

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

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021","","Earnings increase/(decrease)"],["","(In millions)"],["DD&A (GAAP)","$","(2,186)","","","$","(2,135)","","","$","(51)"],["General and administrative (GAAP)","$","(637)","","","$","(655)","","","$","18"],["Corporate benefit","44","","","32","","","12"],["Certain Items(a)","6","","","\u2014","","","6"],["General and administrative and corporate charges(b)","$","(587)","","","$","(623)","","","$","36"],["Interest, net (GAAP)","$","(1,513)","","","$","(1,492)","","","$","(21)"],["Certain Items(a)","(11)","","","(26)","","","15"],["Interest, net(b)","$","(1,524)","","","$","(1,518)","","","$","(6)"],["Net income attributable to noncontrolling interests (GAAP)","$","(77)","","","$","(66)","","","$","(11)"],["Certain Items(a)","\u2014","","","\u2014","","","\u2014"],["Net income attributable to noncontrolling interests(b)","$","(77)","","","$","(66)","","","$","(11)"]]
[[/GREPCENT_TABLE]]

(a)For more detailed discussions of these Certain Items, see the discussions of changes in DD&A, General and Administrative and Corporate Charges, Interest, net and Noncontrolling Interests below.

(b)Amounts are adjusted for Certain Items.

We had a favorable change of $18 million in general and administrative expenses and a favorable change of $12 million in our corporate benefit in 2022 when compared to 2021. The combined changes were primarily due to higher capitalized costs of $24 million, reflecting higher capital spending, and lower benefit-related and pension costs of $18 million partially offset by $9 million of higher labor, travel and legal costs. In addition, the combined changes included the unfavorable impact of an increase in costs of $6 million associated with the Ruby bankruptcy which we treated as a Certain Item.

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 increased $21 million in 2022 when compared to 2021 primarily due to higher realized LIBOR/SOFR rates associated with interest rate swaps partially offset by lower average long-term debt balances at slightly lower weighted average rates.

The increase in interest expense was further impacted by (i) non-cash differences between the change in fair value of interest rate swaps not designated as accounting hedges and the change in fair value of hedged debt, primarily related to our floating-to-fixed LIBOR/SOFR interest rate swaps, and (ii) non-cash debt fair value adjustments associated with acquisitions, both of which were treated by us as Certain Items

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 December 31, 2022 and 2021, approximately 20% and 21%, 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 December 31, 2022 includes $1,250 million of variable-to-fixed interest rate derivative contracts which expire in December 2023. The percentage at December 31, 2021 excludes $4,860 million of variable-to-fixed interest rate derivative contracts which became effective January 4, 2022 and hedged our exposure through 2022. For more information on our interest rate swaps, see Note 14 “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. 

56

Income Taxes

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021","","Increase"],["","(In millions)"],["Income tax expense","$","710","","","$","369","","","$","341"]]
[[/GREPCENT_TABLE]]

The increase in income tax expense is due primarily to (i) higher pretax book income in 2022; (ii) the release of a valuation allowance related to our investment in NGPL in 2021; (iii) the Enhanced Oil Recovery Credit in 2021; and (iv) lower dividend-received deductions in 2022.

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was enacted into law. The IRA contains significant U.S. federal income tax law changes, including the addition of a corporate alternative minimum tax imposed at a rate of fifteen percent (15%) on our global adjusted financial statement income effective as of January 1, 2023. Based on current guidance, we do not expect the IRA to have a material adverse impact on our business, results of operations or financial position.

Liquidity and Capital Resources

General

As of December 31, 2022, we had $745 million of “Cash and cash equivalents,” a decrease of $395 million from December 31, 2021. Additionally, as of December 31, 2022, we had borrowing capacity of approximately $3.9 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 flow from operations, providing a source of funds of $4,967 million and $5,708 million in 2022 and 2021, respectively. The year-to-year decrease 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 and finance incremental investments, if any.

Our board of directors declared a quarterly dividend of $0.2775 per share for the fourth quarter of 2022, consistent with previous quarters in 2022. The total of the dividends declared for 2022 of $1.11 represents a 3% increase over total dividends declared for 2021.

On February 23, 2022, EPNG issued in a private offering $300 million aggregate principal amount of 3.50% senior notes due 2032 and received net proceeds of $298 million after discount and issuance costs.

On August 3, 2022, we issued in a registered offering two series of senior notes consisting of $750 million aggregate principal amount of 4.80% senior notes due 2033 and $750 million aggregate principal amount of 5.45% senior notes due 2052 and received combined net proceeds of $1,484 million. We used a portion of the proceeds to repay short-term borrowings and for general corporate purposes.

During the first quarter of 2022, upon maturity, we repaid EPNG’s 8.625% senior notes, our 4.15% corporate senior notes, and the 1.50% series of our Euro denominated debt. During the second quarter 2022, we repaid $1 billion of our 3.95% senior notes using short-term borrowings. The short-term borrowings were repaid in the third quarter 2022 with proceeds from the August 2022 senior note issuances.

On January 17, 2023, we repaid $1 billion of our 3.15% and $250 million of our floating rate senior notes using cash on hand and short-term borrowings. On January 31, 2023, we issued in a registered offering $1.5 billion aggregate principal amount of 5.20% senior notes due 2033 for net proceeds of $1,485 million, which were used to repay short-term borrowings, maturing debt and for general corporate purposes.

57

Short-term Liquidity

As of December 31, 2022, our principal sources of short-term liquidity are (i) cash from operations; and (ii) our combined $4.0 billion of credit facilities with an available capacity of approximately $3.9 billion and an associated $3.5 billion 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 $3.5 billion credit facility. On December 15, 2022, we amended our credit facilities to provide for, among other things, the replacement of LIBOR-based provisions with term SOFR provisions, updated related benchmark replacement provisions and the extension of the maturity date on our $3.5 billion credit facility from August 2026 to August 2027. 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.

As of December 31, 2022, our $3,385 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 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, 2021 was $2,646 million.

We had working capital (defined as current assets less current liabilities) deficits of $3,127 million and $1,992 million as of December 31, 2022 and 2021, 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 $1,135 million unfavorable change from year-end 2021 was primarily due to (i) a $739 million increase in current debt, primarily related to senior notes that mature in the next twelve months; (ii) a $395 million decrease in cash and cash equivalents, which was used to repay a portion of senior notes that matured in the first quarter of 2022; and (iii) unfavorable net short-term fair value adjustments of $276 million on derivative contract assets and liabilities in 2022, offset partially by (i) a $156 million decrease in accrued contingencies; (ii) a $72 million increase in inventories, primarily products inventories; (iii) a $44 million net favorable change in our accounts receivables and payables, and (iv) a $42 million increase in restricted deposits. 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 (discussed below in “—Long-term Financing” and “—Capital Expenditures”).

We employ a centralized cash management program for our U.S.-based bank accounts that concentrates the cash assets of our wholly owned subsidiaries in joint accounts for the purpose of providing financial flexibility and lowering the cost of borrowing. These programs provide that funds in excess of the daily needs of our wholly owned subsidiaries are concentrated, consolidated or otherwise made available for use by other entities within the consolidated group. We place no material restrictions on the ability to move cash between entities, payment of intercompany balances or the ability to upstream dividends to KMI other than restrictions that may be contained in agreements governing the indebtedness of those entities.

Credit Ratings and Capital Market Liquidity

We believe that our capital structure will continue to allow us to achieve our business objectives. We expect that our short-term liquidity needs will be met primarily through retained cash from operations or short-term borrowings. Generally, we anticipate re-financing maturing long-term debt obligations in the debt capital markets and are therefore subject to certain market conditions which could result in higher costs or negatively affect our and/or our subsidiaries’ credit ratings. A decrease in our credit ratings could negatively impact our borrowing costs and could limit our access to capital.

As of December 31, 2022, our short-term corporate debt ratings were A-2, Prime-2 and F2 at Standard and Poor’s, Moody’s Investor Services and Fitch Ratings, Inc., respectively.

The following table represents KMI’s and KMP’s senior unsecured debt ratings as of December 31, 2022.

[[GREPCENT_TABLE]]
[["Rating agency","","Senior debt rating","","Outlook"],["Standard and Poor\u2019s","","BBB","","Stable"],["Moody\u2019s Investor Services","","Baa2","","Stable"],["Fitch Ratings, Inc.","","BBB","","Stable"]]
[[/GREPCENT_TABLE]]

58

Long-term Financing

Our equity consists of Class P common stock with a par value of $0.01 per share. We do not expect to need to access the equity capital markets to fund our discretionary capital investments for the foreseeable future. See also “—Dividends and Stock Buy-back Program” below for additional discussion related to our dividends and stock buy-back program.

From time to time, we issue long-term debt securities, often referred to as senior notes.  All of our senior notes issued to date, other than those issued by certain of our subsidiaries, generally have very similar terms, except for interest rates, maturity dates and prepayment premiums. All of our fixed rate senior notes provide that the notes may be redeemed at any time at a price equal to 100% of the principal amount of the notes plus accrued interest to the redemption date, and, in most cases, plus a make-whole premium.  In addition, from time to time, our subsidiaries issue long-term debt securities. Furthermore, we and almost all of our direct and indirect wholly owned domestic subsidiaries are parties to a cross guaranty wherein each party guarantees each other party’s debt. See “—Summarized Combined Financial Information for Guarantee of Securities of Subsidiaries. As of December 31, 2022 and 2021, the aggregate principal amount outstanding of our various long-term debt obligations (excluding current maturities) was $28,288 million and $29,772 million, respectively.

We achieve our variable rate exposure primarily by issuing long-term fixed rate debt and then swapping a portion of the fixed rate interest payments for variable rate interest payments and through the issuance of commercial paper or credit facility borrowings.

For additional information about our outstanding senior notes and debt-related transactions in 2022, see Note 9 “Debt” to our consolidated financial statements.  For information about our interest rate risk, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”

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 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. The balance of our allowance for credit losses as of both December 31, 2022 and 2021, was $1 million, reflected in “Other current assets” on our consolidated balance sheets.

Capital Expenditures

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

[[GREPCENT_TABLE]]
[["Type of Expenditure","","Physical Determination of Expenditure"],["Sustaining capital expenditures","","\u2022Maintain throughput or capacity"],["Expansion capital expenditures (discretionary capital expenditures)(a)","","\u2022Increase throughput or capacity (i.e., production capacity) from that which existed immediately prior to the making or acquisition of additions or improvements"]]
[[/GREPCENT_TABLE]]

(a)Not included in calculating DCF (see “—Results of Operations—Non-GAAP Financial Measures—Reconciliation of Net Income Attributable to Kinder Morgan, Inc. (GAAP) to Adjusted Earnings to DCF”).

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 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 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

59

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 sustaining capital expenditures are.

Our capital expenditures for the year ended December 31, 2022, and the amount we expect to spend for 2023 to sustain our assets and grow our business are as follows:

[[GREPCENT_TABLE]]
[["","","2022","","Expected 2023"],["","","(In millions)"],["Sustaining capital expenditures(a)(b)","","$","901","","","$","1,002"],["Discretionary capital investments(b)(c)(d)","","1,709","","","2,138"]]
[[/GREPCENT_TABLE]]

(a)2022 and Expected 2023 amounts include $140 million and $145 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)2022 combined sustaining and discretionary amounts include $96 million due to increases in accrued capital expenditures and contractor retainage and net changes in other.

(c)2022 amount includes $264 million of our contributions to certain unconsolidated joint ventures for capital investments and $489 million for our acquisitions of Mas Ranger and NANR.

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

Off Balance Sheet Arrangements

We have invested in entities that are not consolidated in our financial statements. For information on our obligations with respect to these investments, as well as our obligations with respect to related letters of credit, see Note 13 “Commitments and Contingent Liabilities” to our consolidated financial statements. Additional information regarding the nature and business purpose of our investments is included in Note 7 “Investments” to our consolidated financial statements.

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Contractual Obligations and Commercial Commitments

The table below provides a summary of our material cash requirements.

[[GREPCENT_TABLE]]
[["","Payments due by period"],["","Total","","Less than 1 year","","1-3 years","","3-5 years","","More than 5 years"],["","(In millions)"],["Contractual obligations:"],["Debt borrowings-principal payments(a)","$","31,673","","","$","3,385","","","$","3,491","","","$","1,992","","","$","22,805"],["Interest payments(b)","21,234","","","1,616","","","2,900","","","2,689","","","14,029"],["Lease obligations(c)","375","","","58","","","90","","","61","","","166"],["Pension and OPEB plans(d)","469","","","50","","","31","","","32","","","356"],["Transportation, volume and storage agreements(e)","661","","","157","","","267","","","131","","","106"],["Other obligations(f)","341","","","90","","","105","","","38","","","108"],["Total","$","54,753","","","$","5,356","","","$","6,884","","","$","4,943","","","$","37,570"],["Other commercial commitments:"],["Standby letters of credit(g)","$","153","","","$","81","","","$","72"],["Capital expenditures(h)","$","527","","","$","527"]]
[[/GREPCENT_TABLE]]

(a)See Note 9 “Debt” to our consolidated financial statements.

(b)Interest payment obligations exclude adjustments for interest rate swap agreements and assume no change in variable interest rates from those in effect at December 31, 2022.  

(c)Represents commitments pursuant to the terms of operating lease agreements as of December 31, 2022.

(d)Represents the amount by which the benefit obligations exceeded the fair value of plan assets at year-end for pension and OPEB plans whose accumulated postretirement benefit obligations exceeded the fair value of plan assets. The payments by period include expected contributions in 2023 and estimated benefit payments for underfunded plans in the other years. 

(e)Primarily represents transportation agreements of $298 million, storage agreements for capacity of $159 million and NGL volume agreements of $155 million.

(f)Primarily includes (i) rights-of-way obligations; and (ii) environmental liabilities related to sites that we own or have a contractual or legal obligation with a regulatory agency or property owner upon which we will perform remediation activities. These environmental liabilities are included within “Other current liabilities” and “Other long-term liabilities and deferred credits” in our consolidated balance sheet as of December 31, 2022.

(g)The $153 million in letters of credit outstanding as of December 31, 2022 consisted of the following (i) $54 million under six letters of credit for insurance purposes; (ii) a $46 million letter of credit supporting our International Marine Terminals Partnership Plaquemines Bond; (iii) a $24 million letter of credit supporting our Kinder Morgan Operating LLC “B” tax-exempt bonds; and (iv) a combined $30 million in twenty-nine letters of credit supporting environmental and other obligations of us and our subsidiaries.

(h)Represents commitments for the purchase of plant, property and equipment as of December 31, 2022.

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Cash Flows

The following table summarizes our net cash flows provided by (used in) operating, investing and financing activities between 2022 and 2021.

[[GREPCENT_TABLE]]
[["","Year Ended December 31,"],["","2022","","2021","","Changes"],["","(In millions)"],["Net Cash Provided by (Used in)"],["Operating activities","$","4,967","","","$","5,708","","","$","(741)"],["Investing activities","(2,175)","","","(2,305)","","","130"],["Financing activities","(3,145)","","","(3,465)","","","320"],["Net Decrease in Cash, Cash Equivalents and Restricted Deposits","$","(353)","","","$","(62)","","","$","(291)"]]
[[/GREPCENT_TABLE]]

Operating Activities

$741 million less cash provided by operating activities in the comparable years of 2022 and 2021 is explained by the following discussion.

•a $502 million decrease in cash after adjusting the $775 million increase in net income by $1,277 million for the combined effects of the period-to-period net changes in non-cash items. This overall cash decrease primarily resulted from the benefit recognized in 2021 for largely nonrecurring earnings related to the February 2021 winter storm (see discussion above in “—Results of Operations”); and

•a $239 million decrease in cash associated with net changes in working capital items and other non-current assets and liabilities. The decrease was primarily driven by unfavorable changes due to the timing of trade payments in accounts payable and payments from reserves in 2022 compared with 2021 associated with litigation matters.

Investing Activities

$130 million less cash used in investing activities in the comparable years of 2022 and 2021 is explained by the following discussion.

•a $1,060 million decrease in expenditures for the acquisition of assets and investments, net of cash acquired, primarily driven by a combined $487 million of net cash used for our acquisitions of Mas Ranger, LLC and NANR in 2022, compared with a combined $1,538 million of net cash used for the acquisitions of Stagecoach and Kinetrex in 2021; See Note 3 “Acquisitions and Divestitures” to our consolidated financial statements for further information regarding these two acquisitions; partially offset by,

•a $400 million decrease in proceeds from sales of property, plant and equipment, investments, and other assets, net of removal costs primarily due to $412 million received from the sale of a partial interest in our equity investment in NGPL Holdings in 2021;

•a $340 million increase in capital expenditures reflecting an overall increase of expansion capital projects for most of our business segments in 2022 over the comparative 2021 period; and

•a $191 million increase in cash used for contributions to equity investees driven primarily by higher contributions in 2022 compared with 2021 to SNG associated with a debt payment.

Financing Activities

$320 million less cash used in financing activities in the comparable years of 2022 and 2021 is explained by the following discussion.

•$557 million of net proceeds received from the sale of a 25.5% ownership interest in ELC in 2022; and

•a $197 million net decrease in cash used related to debt activity as a result of lower net debt payments in 2022 compared to 2021; partially offset by,

•$368 million of cash used in 2022 for share repurchases under our share buy-back program.

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Dividends and Stock Buy-back Program

The table below reflects the declaration of dividends of $1.11 per share for 2022:

[[GREPCENT_TABLE]]
[["Three months ended","","Total quarterly dividend per share for the period","","Date of declaration","","Date of record","","Date of dividend"],["March 31, 2022","","$0.2775","","April 20, 2022","","May 2, 2022","","May 16, 2022"],["June 30, 2022","","0.2775","","July 20, 2022","","August 1, 2022","","August 15, 2022"],["September 30, 2022","","0.2775","","October 19, 2022","","October 31, 2022","","November 15, 2022"],["December 31, 2022","","0.2775","","January 18, 2023","","January 31, 2023","","February 15, 2023"]]
[[/GREPCENT_TABLE]]

We expect to continue to return additional value to our shareholders in 2023 through our previously announced dividend increase. We plan to increase our dividend by 2% to $1.13 per common share in 2023. On January 18, 2023, our board of directors approved an increase to our stock buy-back program from $2 billion to $3 billion. Since December 2017, in total, we have repurchased approximately 54 million shares of our Class P common stock under the program at an average price of approximately $17.40 per share for approximately $943 million, leaving a remaining capacity of $2.1 billion. For information on our equity buy-back program, see Note 11 “Stockholders’ Equity” to our consolidated financial statements.

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.” 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.

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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 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 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 10.14 to this Report “Cross Guarantee Agreement, dated as of November 26, 2014, among KMI and certain of its subsidiaries, with schedules updated as of December 31, 2022.”

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 December 31, 2022 and 2021, the Obligated Group had $30,886 million and $31,608 million, respectively, of Guaranteed Notes outstanding.  

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

[[GREPCENT_TABLE]]
[["","December 31,"],["Summarized Combined Balance Sheet Information","2022","","2021"],["","(In millions)"],["Current assets","$","3,514","","","$","3,556"],["Current assets - affiliates","618","","","1,233"],["Noncurrent assets","61,523","","","61,754"],["Noncurrent assets - affiliates","516","","","508"],["Total Assets","$","66,171","","","$","67,051"],["Current liabilities","$","6,612","","","$","5,413"],["Current liabilities - affiliates","707","","","1,332"],["Noncurrent liabilities","30,668","","","32,310"],["Noncurrent liabilities - affiliates","1,096","","","1,047"],["Total Liabilities","39,083","","","40,102"],["Kinder Morgan, Inc.\u2019s stockholders\u2019 equity","27,088","","","26,949"],["Total Liabilities and Stockholders\u2019 Equity","$","66,171","","","$","67,051"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["Summarized Combined Income Statement Information","","Year Ended December 31, 2022"],["","(In millions)"],["Revenues","","$","17,778"],["Operating income","","3,611"],["Net income","","2,175"]]
[[/GREPCENT_TABLE]]

64

Recent Accounting Pronouncements

Please refer to Note 19 “Recent Accounting Pronouncements” to our consolidated financial statements for information concerning recent accounting pronouncements.