Kinder Morgan (KMI) delivered a record second quarter in 2026, posting financial results that once again exceeded internal budgets and prompted an upward revision to its full-year guidance. The midstream company continues to benefit from a robust energy infrastructure landscape, driven by surging U.S. natural gas demand, newly expanded pipeline infrastructure, and elevated liquefied natural gas (LNG) exports.
Key Takeaways
- Kinder Morgan delivered a record second quarter in 2026, reporting an adjusted EBITDA of $2.199 billion, representing a 12% year-over-year increase that beat consensus estimates and led to an upward revision of full-year guidance.
- The official project backlog stands at $9.6 billion, with 92% of that growth linked to the natural gas projects. Over 60% of these projects are specifically targeted at power generation and distribution demand, fueled in part by AI and data center energy requirements.
- The company maintained a strong balance sheet with a net debt-to-adjusted EBITDA ratio of 3.6x and declared a 2% year-over-year dividend increase.
The midstream company reported an adjusted EBITDA of $2.199 billion, beating the consensus estimate of $2.081 billion and representing a 12% increase year-over-year. Following a strong first half of the year, management now projects full-year adjusted EBITDA to beat original 2026 budgets by more than 5%, or approximately $430 million.
Surging Natural Gas Demand Driving Backlog
The company provided updates on its project backlog, now sitting at $9.6 billion. Kinder Morgan added $200 million in new project additions during the quarter. It placed approximately $660 million in expansion projects into services. The backlog, excluding $1.1 billion from CO2 enhanced oil recovery projects and gathering & processing projects, maintains a favorable project EBITDA multiple of 5.6x. Management noted that while the official backlog has hovered around $10 billion, there is still capacity to grow.
This growth is linked almost exclusively to the natural gas sector; such projects make up 92% of the current backlog. Moreover, more than 60% of the backlog is specifically geared toward supporting local distribution company demand and power generation, a segment increasingly driven by the energy requirements of AI and data centers. Management highlighted continued interest from customers in developing additional natural gas infrastructure.
The board provided contingent approval for almost $400 million in new projects that are not yet in the backlog. Kinder Morgan’s shadow backlog currently stands at over $10 billion. The company sanctioned around $2 billion in projects over the past 12 months, with management looking to add at least $1 billion in the back half of the year.
Update on Expansion Projects
Kinder Morgan’s three largest natural gas expansion projects underway remain both on schedule and budget. The Mississippi Crossing and South System Expansion 4 received final FERC Environmental Impact statements in June. They are expected to receive FERC certificates by the end of the month. Additionally, Trident is now approximately 60% complete.
The company anticipates reaching a final investment decision (FID) on the Western Gateway system with Phillips 66 (PSX) in the next two months. The project aims to decrease dependence on global oil markets by providing a domestic supply of refined products to California and Arizona.
Disciplined Debt Management and Dividends
Kinder Morgan declared a cash dividend of $0.2975 per share, representing a 2% increase from the same period last year. The company achieved a record second quarter net income of $867 million. This strong financial execution generated $2 billion in cash flow from operations and $1 billion in free cash flow after capital expenditures.
Despite continued growth in capital expenditures and the successful closing of the $500 million Monument pipeline acquisition during the quarter, management expects to hold net debt-to-adjusted EBITDA at 3.6x through the end of the year, sitting at the low end of its targeted range.
Investors can gain exposure to KMI in the Alerian Energy Infrastructure ETF (ENFR), weighted 5.0% as of July 21. ENFR tracks the Alerian Midstream Energy Select Index, a composite of North American midstream energy infrastructure companies. The fund recently crossed $500 million in assets on July 17, garnering $170 million in net assets from flows and price appreciation since January 1.
For more news, information, and analysis, visit the Energy Infrastructure Channel.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for ENFR, for which it receives an index licensing fee. However, ENFR is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of ENFR.
