Kinder Morgan : Fourth Quarter 2024 2024 EPNG Third Quarter
KMI
CONSOLIDATED FINANCIAL STATEMENTS
With Report of Independent Auditors
EL PASO NATURAL GAS COMPANY, L.L.C.
As of December 31, 2024 and 2023 and
For the Years Ended December 31, 2024 and 2023
EL PASO NATURAL GAS COMPANY, L.L.C. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
Number
Report of Independent Auditors
1
Consolidated Financial Statements
Consolidated Statements of Income and Comprehensive Income
3
Consolidated Balance Sheets
4
Consolidated Statements of Cash Flows
5
Consolidated Statements of Member's Equity
6
Notes to Consolidated Financial Statements
7
Report of Independent Auditors
To the Management of El Paso Natural Gas Company, L.L.C.
Opinion
We have audited the accompanying consolidated financial statements of El Paso Natural Gas Company, L.L.C. and its subsidiaries (the "Company"), which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of income and comprehensive income, of member's equity and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements").
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date the consolidated financial statements are available to be issued.
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.
PricewaterhouseCoopers LLP, 1000 Louisiana Street, Suite 5800, Houston, Texas 77002 T: (713) 356 4000, www.pwc.com/us
In performing an audit in accordance with US GAAS, we:
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Houston, Texas
April 16, 2025
EL PASO NATURAL GAS COMPANY, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In millions)
Year Ended December 31,
2024
2023
Revenues
$
841
$
881
Operating Costs and Expenses
Operations and maintenance
254
258
Depreciation and amortization
103
101
General and administrative
53
49
Taxes, other than income taxes
32
34
Other income, net
(8)
(5)
Total Operating Costs and Expenses
434
437
Operating Income
407
444
Other Income (Expense)
Interest, net
(47)
(47)
Other, net
1
8
Total Other Expense
(46)
(39)
Income Before Income Taxes
361
405
Income Tax Expense
(1)
-
Net Income
360
405
Other Comprehensive Income
Adjustments to postretirement benefit plan
10
16
Comprehensive Income
$
370
$
421
The accompanying notes are an integral part of these consolidated financial statements.
3
EL PASO NATURAL GAS COMPANY, L.L.C. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions)
December 31,
2024
2023
ASSETS
Current assets
Cash and cash equivalents
$
-
$
-
Accounts receivable
90
79
Inventories
47
48
Prepayments
25
23
Other current assets
11
10
Total current assets
173
160
Property, plant and equipment, net
2,271
2,202
Goodwill
565
565
Notes receivable from affiliate
25
26
Postretirement benefits assets
169
163
Deferred charges and other assets
133
135
Total Assets
$
3,336
$
3,251
LIABILITIES AND MEMBER'S EQUITY
Current liabilities
Accounts payable
$
68
$
69
Accrued taxes
21
22
Contractual deposits
20
21
Contractual liabilities
13
17
Regulatory liabilities
10
8
Natural gas imbalance payable
11
4
Other current liabilities
12
12
Total current liabilities
155
153
Long-term liabilities and deferred credits
Long-term debt
800
800
Debt fair value adjustments
52
60
Regulatory liabilities
65
54
Other long-term liabilities and deferred credits
35
36
Total long-term liabilities and deferred credits
952
950
Total Liabilities
1,107
1,103
Commitments and contingencies (Note 9)
Member's Equity
Member's equity
2,196
2,125
Accumulated other comprehensive income
33
23
Total Member's Equity
2,229
2,148
Total Liabilities and Member's Equity
$
3,336
$
3,251
The accompanying notes are an integral part of these consolidated financial statements.
4
EL PASO NATURAL GAS COMPANY, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Year Ended December 31,
2024
2023
Cash Flows From Operating Activities
Net income
$
360
$
405
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
103
101
Other non-cash items
(3)
(2)
Changes in components of working capital:
Accounts receivable
(11)
9
Regulatory assets
-
28
Accounts payable
(5)
5
Litigation reserve
-
(22)
Other current assets and liabilities
(3)
(11)
Other long-term assets and liabilities
(1)
(12)
Net Cash Provided by Operating Activities
440
501
Cash Flows From Investing Activities
Capital expenditures
(147)
(95)
Net change in notes receivable from affiliate
1
-
Other, net
(5)
(10)
Net Cash Used in Investing Activities
(151)
(105)
Cash Flows From Financing Activities
Contributions from Member
22
8
Distributions to Member
(311)
(404)
Net Cash Used in Financing Activities
(289)
(396)
Net Change in Cash and Cash Equivalents
-
-
Cash and Cash Equivalents, beginning of period
-
-
Cash and Cash Equivalents, end of period
$
-
$
-
Non-cash Investing and Financing Activities
Net increase in property, plant and equipment accruals
$
4
$
9
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest (net of capitalized interest)
51
51
The accompanying notes are an integral part of these consolidated financial statements.
5
EL PASO NATURAL GAS COMPANY, L.L.C. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBER'S EQUITY
(In millions)
Year Ended December 31,
2024
2023
Beginning Balance
$
2,148
$
2,123
Net income
360
405
Contributions
22
8
Distributions
(311)
(404)
Other comprehensive income
10
16
Ending Balance
$
2,229
$
2,148
The accompanying notes are an integral part of these consolidated financial statements.
6
EL PASO NATURAL GAS COMPANY, L.L.C. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
We are a Delaware limited liability company, originally formed in 1928 as a corporation. When we refer to "us," "we," "our," "the Company," or "EPNG" we are describing El Paso Natural Gas Company, L.L.C. and its consolidated subsidiaries. We are an indirect wholly owned subsidiary of Kinder Morgan, Inc. (KMI).
Our operations are regulated by the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 and the Energy Policy Act of 2005. The FERC approves tariffs that establish rates, cost recovery mechanisms and other terms and conditions of service to our customers.
Our primary business consists of the interstate transportation and storage of natural gas. We are the sole owner of the EPNG natural gas pipeline system and Mojave Pipeline Company, L.L.C., the sole owner of the Mojave natural gas pipeline system. The EPNG system consists of approximately 10,250 miles of transmission pipeline with a design capacity of approximately 6.41 billion cubic feet per day (Bcf/d). The EPNG system extends from the San Juan, Permian and Anadarko basins to California, its single largest market, as well as markets in Arizona, Nevada, New Mexico, Oklahoma, Texas and northern Mexico. The design capacity for natural gas reflects winter sustainable west-flow capacity of approximately 4.90 Bcf/d and approximately 1.51 Bcf/d of non-mainline capacity.
The Mojave natural gas pipeline system consists of approximately 470 miles of pipeline with a design capacity of approximately 0.4 Bcf/d. The Mojave system connects with other pipeline systems including (i) the EPNG natural gas pipeline system near Cadiz, California; (ii) the EPNG and Transwestern Pipeline Company, LLC systems at Topock, Arizona; and (iii) the Kern River Gas Transmission Company system in California. The Mojave natural gas pipeline system also extends to customers in the vicinity of Bakersfield, California.
In addition to our two pipeline systems, we utilize our Washington Ranch underground natural gas storage facility located in New Mexico to manage our transportation needs. This storage facility has up to approximately 44 Bcf of underground working natural gas storage capacity.
2. Summary of Significant Accounting Policies Basis of Presentation
We have prepared our accompanying consolidated financial statements in accordance with the accounting principles contained in the Financial Accounting Standards Board's Accounting Standards Codification (ASC), the single source of United States (U.S.) Generally Accepted Accounting Principles. Additionally, certain amounts from the prior year have been reclassified to conform to the current presentation.
Management has evaluated subsequent events through April 16, 2025, the date the financial statements were available to be issued.
Principles of Consolidation
We consolidate entities when we have the ability to control or direct the operating and financial decisions of the entity or when we have a significant interest in the entity that gives us the ability to direct the activities that are significant to that entity. The determination of our ability to control, direct or exert significant influence over an entity involves the use of judgment. All significant intercompany items have been eliminated in consolidation.
Use of Estimates
Certain amounts included in or affecting our financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions which cannot be known with certainty at the time our financial statements are prepared. These estimates and assumptions affect the amounts we report for assets and liabilities, our revenues and expenses during the reporting period, and our disclosures, including those related to contingent assets and liabilities at the date of our financial statements. We evaluate these estimates on an ongoing basis, 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. 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.
7
Certain accounting policies are of more significance in our financial statement preparation process than others, and set out below are the principal accounting policies we apply in the preparation of our consolidated financial statements.
Cash Equivalents
We define cash equivalents as all highly liquid short-term investments with original maturities of three months or less.
Allowance for Credit Losses
We evaluate our financial assets measured at amortized cost and off-balance sheet credit exposures for expected credit losses over the contractual term of the asset or exposure. We consider available information relevant to assessing the collectability of cash flows including the expected risk of credit loss even if that risk is remote. We measure expected credit losses on a collective (pool) basis when similar risk characteristics exist and we reflect the expected credit losses on the amortized cost basis of the financial asset as of the reporting date.
Our financial instruments primarily consist of our accounts receivable from customers and notes receivable from affiliate. We utilized historical analysis of credit losses experienced over the previous five years along with current conditions and reasonable and supportable forecasts of future conditions in our evaluation of collectability of our financial assets.
We had no allowance for credit losses recorded as of December 31, 2024 and 2023.
Inventories
Our inventories, which consist of materials and supplies, are valued at weighted-average cost, and we periodically review for physical deterioration and obsolescence.
Natural Gas Imbalances
Natural gas imbalances occur when the amount of natural gas delivered from or received by a pipeline system or storage facility differs from the scheduled amount of gas to be delivered or received. We value these imbalances due to or from shippers and operators at current index prices. Imbalances are settled in cash or made up in-kind, subject to the terms of the applicable FERC tariff. Imbalances due from others are reported on our accompanying Consolidated Balance Sheets in "Other current assets." Imbalances owed to others are reported on our accompanying Consolidated Balance Sheets in "Natural gas imbalance payable." We classify all imbalances due from or owed to others as current as we expect to settle them within a year.
Property, Plant and Equipment, net
Our property, plant and equipment is recorded at its original cost of construction or, upon acquisition, at either the fair value of the assets acquired or the cost to the entity that first placed the asset in utility service. For constructed assets, we capitalize all construction-related direct labor and material costs, as well as indirect construction costs. Our indirect construction costs primarily include an interest and equity return component (as more fully described below) and labor and related costs associated with supporting construction activities. The indirect capitalized labor and related costs are based upon estimates of time spent supporting construction projects. We expense costs for routine maintenance and repairs in the period incurred.
We use the composite method to depreciate property, plant and equipment. Under this method, assets with similar economic characteristics are grouped and depreciated as one asset. The FERC-accepted depreciation rate is applied to the total cost of the group until the net book value equals the salvage value. For certain general plant, the asset is depreciated to zero. As part of periodic filings with the FERC, we also re-evaluate and receive approval for our depreciation rates. When property, plant and equipment is retired, accumulated depreciation and amortization is charged for the original cost of the assets in addition to the cost to remove, sell or dispose of the assets, less salvage value. We do not recognize gains or losses unless we sell land or an entire operating unit (as approved by the FERC).
Included in our property balances are base gas and working gas at our storage facility. We periodically evaluate natural gas volumes at our storage facility for gas losses. When events or circumstances indicate a loss has occurred, we recognize a loss on our accompanying Consolidated Statements of Income and Comprehensive Income or defer the loss as a regulatory asset on our accompanying Consolidated Balance Sheets if deemed probable of recovery through future rates charged to customers.
We capitalize a carrying cost (an allowance for funds used during construction or AFUDC) on debt and equity funds related to the construction of long-lived assets. This carrying cost consists of a return on the investment financed by debt and a return on the investment financed by equity. The debt portion is calculated based on our average cost of debt. Interest costs
8
Disclaimer
Kinder Morgan Inc. published this content on April 18, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 18, 2025 at 12:39 UTC.