Kinder Morgan's $14.4B Backlog: The Hidden Growth Driver

Kinder Morgan reported third-quarter earnings that initially pleased investors: EPS rose 21% year over year to $0.34, adjusted EBITDA climbed 9%, and the company raised its dividend by 2%. The stock jumped 1.6% on the day of the announcement. But beneath these headline numbers, a more significant development was unfolding.

The company's project backlog—the value of expansion projects under development—soared to a record $14.4 billion, up from $9.6 billion in the prior quarter. This $5.4 billion increase was driven by new natural gas pipeline projects, including the Southern Natural Gas Company's Southeast Connector and the Permian Link for the Natural Gas Company of America. These two projects alone are designed to transport over 2.5 billion cubic feet per day of natural gas, making them two of the largest natural gas pipelines in decades.

What makes this backlog particularly noteworthy is its composition: a company-record $13.2 billion is allocated to natural gas projects. This aligns with the surging demand for natural gas from AI data centers, hyperscalers, and LNG exporters. The backlog is not just a number—it represents secured, long-term revenue.

Most of these projects are supported by take-or-pay contracts spanning up to 20 years with creditworthy counterparties. Under these agreements, customers are legally obligated to pay for pipeline capacity regardless of whether they actually use it. This structure insulates Kinder Morgan from commodity price fluctuations and throughput volatility, providing highly predictable cash flows.

Management indicated that once completed, the backlog will generate roughly $2.5 billion in additional adjusted EBITDA, lifting the company's base adjusted EBITDA to $11.5–$12 billion—a 37% increase over 2025 levels. With projects coming online in phases from late 2026 through 2030, the growth trajectory is clear and well-funded.

For investors, the backlog is the most critical metric because it provides multi-year visibility into future cash flows. Unlike earnings that can fluctuate with market conditions, the backlog represents contracted revenue that is largely locked in. This predictability is especially valuable in the energy sector, where commodity prices can be volatile.

The take-or-pay structure means Kinder Morgan's cash flows are insulated from short-term demand swings. Even if natural gas throughput declines, customers must still pay for capacity. This reduces risk and supports the company's ability to maintain and grow its dividend, which currently yields 3.47%.

Moreover, the backlog is self-funded. Kinder Morgan plans to invest about $4 billion annually in capital expenditures over the next few years while maintaining a healthy leverage ratio of around 4.5x debt-to-EBITDA. This means the company can grow without taking on excessive debt or issuing dilutive equity, preserving shareholder value.

The growth in natural gas projects is a direct response to structural tailwinds: the electrification of AI data centers, the expansion of LNG exports, and the ongoing transition to cleaner energy sources. Kinder Morgan already transports 40% of U.S. natural gas, and these new projects solidify its role as a critical infrastructure provider.

From a valuation perspective, the stock trades at a reasonable multiple given its growth outlook. The projected EBITDA increase of at least 37% by 2025 (from 2025 levels) implies significant earnings growth, which should support dividend increases and potentially drive stock appreciation. The dividend has already grown 138% over the past decade, and the backlog ensures this trend can continue.