Reportable Segments

3 Months Ended

Mar. 31, 2013

Segment Reporting [Abstract]

Reportable Segments

Reportable Segments

We divide our operations into five reportable business segments. These segments and their principal sources of revenues are as follows:

▪ Natural Gas Pipelines—the sale, transport, processing, treating, storage and gathering of natural gas;

▪ CO₂—the production and sale of crude oil from fields in the Permian Basin of West Texas and the transportation and marketing of carbon dioxide used as a flooding medium for recovering crude oil from mature oil fields;

▪ Products Pipelines— the transportation and terminaling of refined petroleum products, including gasoline, diesel fuel, jet fuel, natural gas liquids, crude and condensate, and bio-fuels;

▪ Terminals—the transloading and storing of refined petroleum products and dry and liquid bulk products, including coal, petroleum coke, cement, alumina, salt and other bulk chemicals; and

▪ Kinder Morgan Canada—the transportation of crude oil and refined products from Alberta, Canada to marketing terminals and refineries in British Columbia, the State of Washington and the Rocky Mountains and Central regions of the United States. As further described in Note 2, Kinder Morgan Canada divested its interest in the Express pipeline system effective March 14, 2013.

We evaluate performance principally based on each segment’s earnings before depreciation, depletion and amortization expenses (including amortization of excess cost of equity investments), which excludes general and administrative expenses, third party debt costs and interest expense, unallocable interest income, and unallocable income tax expense. Our reportable segments are strategic business units that offer different products and services, and they are structured based on how our chief operating decision maker organizes their operations for optimal performance and resource allocation. Each segment is managed separately because each segment involves different products and marketing strategies.

Financial information by segment follows (in millions):

	Three Months Ended March 31,
	2013		2012
Revenues
Natural Gas Pipelines(a)	$	1,369	$	794
CO2	429		417
Products Pipelines	454		223
Terminals	337		341
Kinder Morgan Canada	72		73
Total consolidated revenues	$	2,661	1,848

	Three Months Ended March 31,
	2013			2012
Segment earnings before depreciation, depletion, amortization     and amortization of excess cost of equity investments(b)
Natural Gas Pipelines(a)	$	557		$	222
CO2	342			334
Products Pipelines	185			176
Terminals	186			187
Kinder Morgan Canada(c)	193			50
Total segment earnings before DD&A	1,463			969
Total segment depreciation, depletion and amortization	(328		)	(239		)
Total segment amortization of excess cost of investments	(2		)	(2		)
General and administrative expenses	(134		)	(107		)
Interest expense, net of unallocable interest income	(202		)	(139		)
Unallocable income tax expense	(3		)	(2		)
Loss from discontinued operations	(2		)	(272		)
Total consolidated net income	$	792		$	208

	March 31, 2013		December 31, 2012
Assets
Natural Gas Pipelines	$	19,375	$	19,403
CO2	2,376		2,337
Products Pipelines	4,965		4,921
Terminals	5,350		5,123
Kinder Morgan Canada	1,688		1,903
Total segment assets	33,754		33,687
Corporate assets(d)	1,398		1,289
Total consolidated assets	$	35,152	$	34,976

____________

(a) The increase in the 2013 amount versus the 2012 amount reflects our acquisition of the drop-down asset group from KMI effective March 1, 2013 (discussed further in Note 2 “Acquisitions and Discontinued Operations”).

(b) Includes revenues, earnings from equity investments, allocable interest income, and other, net, less operating expenses, allocable income taxes, and other expense (income).

(c) 2013 amount includes a $141 million increase in earnings from the after-tax gain on the sale of our investments in the Express pipeline system.

(d) Includes cash and cash equivalents; margin and restricted deposits; unallocable interest receivable, prepaid assets and deferred charges; and risk management assets related to debt fair value adjustments.