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 sales revenues include sales of natural gas (includes natural gas, RNG and RINs) and products (includes NGL, crude oil, CO 2 and transmix). Our consolidated sales revenue will fluctuate with commodity prices and volumes, and the costs of sales associated with purchases 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 and nine-month periods ended September 30, 2024 and 2023:

Revenues

Revenues decreased $208 million and $183 million for the three and nine months ended September 30, 2024, respectively, as compared to the respective prior year periods due to a combination of factors. Product sales decreased $262 million and $290 million, respectively, driven by lower volumes and, for the three-month period, by lower commodity prices. Natural gas sales decreased $110 million and $288 million, respectively, due to lower commodity prices partially offset by higher volumes and higher RIN sales. Services revenues increased $123 million and $407 million, respectively, driven by (i) higher volumes, including expansion projects; (ii) our acquisition of the STX Midstream assets partially offset by a reduction in revenues related to divested assets; and (iii) in the nine-month period, higher rate escalations. Revenues were further increased by $28 million and reduced by $102 million, respectively, for the impacts of derivative contracts used to hedge commodity sales which includes both realized and unrealized gains and losses from derivatives. The decreases in sales revenues, which include the impact of our divested assets, had corresponding decreases 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$381 million and $493 million for the three and nine months ended September 30, 2024, respectively, as compared to the respective prior year periods. The decreases, which include the impact of our divested assets, were primarily due to (a) lower costs of sales for (i) natural gas of $225 million and $391 million, respectively, primarily due to lower commodity prices partially offset by higher volumes; and (ii) lower costs of sales for products of $135 million and $208 million, respectively, which were driven primarily by lower volumes and for the three-month period lower commodity prices, and (b) a decrease in costs of sales of $16 million and an increase of $118 million, respectively, related to 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$52 million and $149 million for the three and nine months ended September 30, 2024, respectively, as compared to the respective prior year periods. The increases were primarily driven by other expenses, including integrity and service costs, higher labor 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 $9 million and $57 million for the three and nine months ended September 30, 2024, respectively, as compared to the respective prior year periods. The increases were primarily due to (i) higher interest rates associated with our fixed-to-variable interest rate swap agreements and our long-term debt; (ii) higher average short-term debt balances; and (iii) for the three-month period, higher average long-term debt balances; partially offset by a reduction in the notional balances associated with our fixed-to-variable interest rate swap agreements.