KINDER MORGAN INC

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

Our consolidated revenues primarily consist of services and sales revenue. Our services revenues include fees for transportation and other midstream services that we perform. Fluctuations in our consolidated services revenue largely reflect changes in volumes and/or in the rates we charge. Our consolidated costs of sales and sales revenues also include purchases and sales of natural gas and products (which means, collectively, NGL, crude oil, CO 2 and transmix) and related derivative activity. Our consolidated sales revenue will fluctuate with commodity prices and volumes, and the associated costs of sales will usually have a commensurate and offsetting impact, except for the CO 2 segment, which produces, instead of purchases, the crude oil and CO 2 it sells. Additionally, fluctuations in revenues and costs of sales may be further impacted by gains or losses from derivative contracts that we use to manage our commodity price risk.

Below is a discussion of significant changes in our Consolidated Earnings Results for the comparable three-month periods ended March 31, 2024 and 2023:

Revenues

Revenues decreased $46 million in 2024 compared to 2023. The decrease was primarily due to lower natural gas sales of $173 million and lower product sales of $15 million driven primarily by lower commodity prices partially offset by higher volumes. Revenues were further reduced by $77 million for the impacts of derivative contracts used to hedge commodity sales which includes both realized and unrealized gains and losses from derivatives. The decrease in revenues was partially offset by an increase in services revenues of $153 million driven by our acquisition of the STX Midstream assets, expansion projects, rate escalations and higher volumes, The decrease in sales revenues was offset by a corresponding decrease in our costs of sales as described below under “Operating Costs, Expenses and Other—Costs of sales.”

Operating Costs, Expenses and Other

Costs of sales

Costs of sales decreased $108 million in 2024 compared to 2023. The decrease was primarily due to lower costs of sales for natural gas of $168 million and for products of $11 million, which were driven primarily by lower commodity prices partially offset by higher volumes, and unfavorably impacted by an increase to costs of sales of $83 million for the impacts of derivative contracts used to hedge commodity purchases which includes both realized and unrealized gains and losses from derivatives.

Operations and Maintenance

Operations and maintenance increased $41 million in 2024 compared to 2023. The increase was primarily driven by higher labor and other expenses, including integrity costs and services and fuel costs, related to greater activity levels and inflation.

Other Income (Expense)

Interest, net

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 interest expense, net increased $27 million in 2024 compared to 2023. The increase was primarily due to higher average short-term debt balances and higher interest rates associated with our fixed-to-floating interest rate swaps and long-term debt partially offset by lower average long-term debt and fixed-to-floating hedged debt balances.