Kinder Morgan, Inc (NYSE: KMI) Q4 2025 Earnings Call dated Jan. 21, 2026
Corporate Participants:
Unidentified Speaker
Richard D. Kinder — Executive Chairman
Kimberly Allen Dang — Chief Executive Officer
David Michels — Vice President and Chief Financial Officer
Thomas A. Martin — President
Analysts:
Julian Dumoulin Smith — Analyst
Jackie Koletas — Analyst
Michael Blum — Analyst
Jeremy Tonet — Analyst
Jean Ann Salisbury — Analyst
Keith Stanley — Analyst
Manav Gupta — Analyst
Jason Gabelman — Analyst
Theresa Chen — Analyst
Presentation:
operator
Good afternoon and thank you for standing by and welcome to the fourth quarter 2025 earnings results conference call. Your lines are in a listen only mode until the question and answer session of today’s conference. At that time you may press STAR followed by the number one to ask a question. Please unmute your phones and state your name when prompted. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Mr. Rich kinder, executive Chairman of Kinder Morgan.
Richard D. Kinder — Executive Chairman
Thank you Michelle. Before we begin as usual, I’d like to remind you that KMI’s earnings release today and this call include forward looking statements within the meaning of the Private Securities Litigation Reform act of 1995 and the securities and Exchange act of 1934 as well as certain non GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward looking statements and use of non GAAP financial measures set forth at the end of our earnings release as well as review our latest filings with the SEC for important material assumptions, expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward looking statements.
Statements I have only two comments before turning the call over to our CEO Kim Dang and the team. First, we believe our bullish outlook on natural gas demand remains grounded in reality and we expect to see very strong growth over the rest of this decade and beyond. Now, while there are several important drivers of that growth, the largest and most certain driver remains the need for additional LNG feed gas to service both expansions of existing export facilities and new greenfield projects coming online. We now estimate feed gas demand will average 19.8 BCF per day in 2026, which is an all time record, an increase of 19% from the daily average of 16.6 BCF a day in 2025, and we see that demand increasing to over 34 BCF per day by 2030.
This astounding growth is enormously beneficial to the midstream sector and especially to companies like Kinder Morgan that have extensive pipeline networks along the Texas Louisiana Gulf coast, which is the location of most of the export terminals present and future. Our throughput agreements for delivery of the feed gas are essentially take or pay in nature, which gives us great confidence in the resulting cash flow. My second comment is specific to Kender Morgan. You will hear from Kim and the team that we finished 2025 very strong compared to 2024 and to our budget for 2025 and as you know from our earlier release of our budget for 2026, we expect more good performance this year.
Once again, the chief driver of our success in both years is the extraordinary strength of our natural gas assets. And with that I’ll turn it over to Kim.
Kimberly Allen Dang — Chief Executive Officer
Okay, thanks Rich. As Rich said, we had a fantastic fourth quarter, producing record results for the quarter and the year, much stronger than we anticipated. When we announced our Q3 results for the quarter, adjusted EBITDA was up 10% compared to the fourth quarter of last year and adjusted EPS grew 22%. Those are big numbers for a stable midstream business like ours. The biggest driver of the outperformance was natural gas. It had an outstanding quarter and year. Our project backlog has increased by approximately 650 million to $10 billion. We added a little over 900 million in new projects, which was offset by 265 million of projects placed in service.
The most two significant additions are Florida gas transmission projects, both supported by long term shipper contracts. Our backlog multiple remains below six times, which will drive very nice growth over the next few years. In addition, we’re working on Greater than $10 billion in project opportunities beyond the backlog. While we won’t be successful on all of those, it gives you a sense of the tremendous market opportunity and we believe we will continue to find attractive opportunities for years to come. WoodMac currently projects the US natural gas market will continue to grow over the longer term with an incremental 20 BCF a day of demand growth between 2030 and 2035.
Now quick update on our three largest projects, MSX, Belsystem 4 and Trident. We started construction on Trident last week and for MSX and Cell System 4 we received our FERC scheduling order. The FERC anticipates issuing our final certificate by July 31, which is a schedule we requested but ahead of our original expectation. There’s still a lot of work ahead, but all three projects are on budget and on or ahead of schedule. Another positive. Last week S and P upgraded KMI to bbb. That shows our balance sheet is in great shape. On the management front, I want to take a moment to recognize Tom Martin, who will retire at the end of this month for his wise counsel and the value he has helped deliver to our shareholders over his 23 years with the company.
As we have previously announced, Tom will continue to serve as an advisor to the OCC and the Board, so we’ll continue to benefit from his perspective. We’re excited to have DAX who many of you know from his long tenure at the company, step into the President’s role. I’m looking forward to working with him closely as we continue to execute on our strategy. To sum it up, we had a great quarter and year. We also strengthened our balance sheet and advanced key projects with a $10 billion backlog and tremendous potential. Beyond that, we’re set up for a very exciting future.
With that, I’ll turn it over to David.
Thomas A. Martin — President
Tom Thanks Kim. I appreciate words Starting with the natural gas business Unit Transport volumes were up 9% in the quarter versus the fourth quarter of 2024, primarily due to increased LNG feed gas deliveries on Tennessee Gas pipeline for the full year, Transport volumes were up 5% over 2024. Natural gas gathering volumes were up 19% in the quarter from the fourth quarter of 2024 across all of our GNP assets, with the largest impact being from our Haynesville system. Sequentially, total gathering volumes were up 9% and the full year 2025 gathering volumes were up 4% versus 2024. We experienced a significant ramp up from our producer customers during the quarter to meet the growing LNG demand.
Our Haynesville gathering system, for example, sent a daily throughput record of 1.97 bcf a day on December 24th. Looking forward, we continue to see significant incremental project opportunities across our natural gas pipeline network. For example, we are in various stages of development to potentially serve more than 10bcf a day of natural gas demand in the power generation sector in our products pipeline segment. Refined products volumes were down 2% in the quarter compared to the fourth quarter of 2024. For the full year 2025, refined products volumes are about equal to 24. Crude and condensate volumes were down 8% in the quarter compared to the 4th quarter of 2024.
More than all of that decline is driven by taking double H out of service for the NGL conversion project early in the third quarter of 2025. Excluding double H volumes in both periods, crude and condensate volumes were up 6% in the quarter compared to 4Q24. On January 16, 2026, KMI and Phillips 66 announced the start of a second open season on their proposed Western Gateway pipeline system. The Western Gateway pipeline will connect Midwest and other refinery supply to Phoenix and to California with connectivity to Las Vegas, Nevada via KMI’s Calnev Pipeline. The second open season, which concludes on March 31, 2026, is for the remaining pipeline capacity and adds new access to the Los Angeles market via a joint tariff supported by the planned reversal of one of KMI’s existing SFTP lines between Watson and Colton, California.
In addition to expanding the offered destinations, the second open season adds additional origin points to enable supply diversification and optionality for our customers. We believe this project provides an attractive supply alternative for markets in Arizona and of California. In our terminals business segment, our liquids lease capacity remains high at 93%, market conditions continue to remain supportive of strong rates and the utilization of tanks available for use is 99% at our key hubs on the Houston Ship Channel and at Carteret, New Jersey. Our Jones act tanker fleet remains exceptionally well contracted assuming likely options are exercised.
Our fleet is 100% leased through 2026, 97% leased through 2027 and 80% leased through 2028. We have opportunistically chartered a significant percentage of our fleet at higher market rates and have an average length of firm contract commitments of more than three years. The CO2 segment experienced 1% lower oil production volumes, 2% lower NGL volumes and 2% lower CO2 volumes in the quarter versus the fourth quarter of 2024. For the full year 2025, oil volumes are about 2% below 24 but finished strong in the quarter to be slightly above our plan for the year. With that, I’ll turn it over to David Thanks Tom.
David Michels — Vice President and Chief Financial Officer
This quarter we’re declaring a quarterly dividend of 29.25 cents per share, which is $1.17 per share, annualized up 2% from 2024. For the fourth quarter we generated net income attributable to KMI of $996 million and EPS of 45 cents, 49% and 50% above the fourth quarter of 2024. This quarter’s results included a gain on an asset sale which we treat as a certain item excluding certain items. Our adjusted net income and adjusted EPS still grew very nicely, both 22% above the fourth quarter of 2024. Our growth was driven by newly placed in service natural gas expansion projects, contributions from our outrigger acquisition and continued strong demand for natural gas transport, storage and related services.
For the full year 2025. We beat our budget by more than the contributions from our Outriver acquisition. Outperformance came from our natural gas business, driven by greater value on transport capacity and ancillary services. Our terminals segment also generated better than budgeted contributions. We budgeted to grow adjusted EBITDA by 4% and adjusted EPS by 10%. From 2024. We actually grew adjusted EBITDA by 6% and adjusted EPS by 13%. Our 2025 EBITDA and net income were all time record levels for Kendra Morgan. Moving on to the balance sheet, as we continue to grow our cash flows and take a disciplined approach to capital allocation, our balance sheet continues to strengthen.
Our net debt to adjusted EBITDA ratio improved to 3.8 times, down from 3.9 times last quarter and down from 4.1 times at the end of the first quarter which was immediately following the acquisition of Outrigger. Since the end of 2024, our net debt has decreased $9 million despite nearly 3 billion of total investments in growth projects and the acquisition. So we’ll go through a high level reconciliation. We generated cash flow from operations of 5.92 billion. We’ve spent 2 point or we spent 2.6 billion in dividends. We invested $3.15 billion in total capex including growth sustaining and contributions to joint ventures.
We spent approximately $650 million on the Outrigger acquisition. We’ve received $380 million on divestitures, primarily the Eagle Hawk sale. And then we had all other items a source of cash of about $100 million. That gets you close to the $9 million decrease in net debt for the year. The rating agencies have recognized our strengthened financial profile. Last week S and P upgraded us to BBB positive. Fitch upgraded us to BBB during the summer of 2025 and we’re on positive outlook by Moody’s. So as has already been mentioned, but I’ll mention it again, 2025 was an exceptionally strong year.
A record setting year in fact. We beat our budget and delivered double digit earnings growth. We grew our backlog from $8.1 billion to $10.0 billion despite placing billion of projects into service. Meaning we added $3.7 billion of projects to the backlog. During the year we improved our balance sheet. We achieved credit rating upgrades and expect meaningful cash flow benefits from tax reform which will generate additional investment capacity. We have very positive momentum heading into 2026. And with that I’ll turn it back to Kim.
Kimberly Allen Dang — Chief Executive Officer
Okay, Michelle, if you’ll come back on and we’ll take questions.
operator
Thank you. At this time, if you would like to ask a question, you may press STAR followed by the number one. To withdraw your question, you may press star two. Please unmute your phones and state your name when prompted. Our first caller is Julian demoulin Smith with Jefferies. Your line is open.
Julian Dumoulin Smith — Analyst
Hey, good afternoon team. Thank you guys very much for the time. Appreciate it. Look, if I can kick it off more on the data center front. You guys talk about the 70% number with respect to where you have exposure and aligned with data center opportunities. Can you talk a little bit about what you’re seeing actively on the front? Obviously, we saw the FTC announcement here, perhaps that speaks that a little bit. But how do you think about that regionally in terms of further data points we should be seeing through the course of the year? And I’ve got a quick follow up.
Kimberly Allen Dang — Chief Executive Officer
Okay, I’m not exactly sure about the 70%, but if you look at our $10 billion backlog, about 60% of our backlog is associated with power projects. That’s not just data center. That’s, you know, anything associated with power. And if you think about the opportunities on the power side, you know, I think a great example is if you look in the state of Georgia, where, you know, Georgia Power recently, I think the end of November filed a revised IRP and they’re projecting 53 gigawatts of power demand between now and the early 2000 and 30s. And so from a gas perspective, if that was 100% gas, you know, that would be like 10 bcf a day, roughly, depending on the conversion metrics you use.
And, you know, we expect that a significant portion of that will be gas, and that’s just one utility in one state. And so, you know, what we’re seeing across our network, whether that’s in Georgia or South Carolina or Louisiana or Arkansas or Texas or New Mexico, Colorado, I mean, we are seeing similar stories just across our network. And, you know, the other thing is, you look at power demand, we’ve got a higher power demand growth between 2025 and 2030. Wood Mac has, in their most recent estimates, increased theirs. And if you look at WOOD Mac between 2030 and 2030, they think the power growth, at least in their projections, is greater between 2030 and 2035 than it is in their projections between 25 and 30.
So, you know, this is something that, you know is driving significant amount of projects. It’s also, you know, a significant driver of the potential opportunities that we have and we think will last, you know, for a decade.
Julian Dumoulin Smith — Analyst
Excellent. If I can just firm up a little bit more on the SSE 5 setup and timing, what are you looking to move forward on that? How are you thinking about timing? And then even more specifically, if you could speak to, are you thinking about this as being a compression first or looping kind of project initially? And what level of sign utility load would unlock a more formal filing?
Unidentified Speaker
Yeah, Julian, this is sepal. So look in terms of timing, we, we see strong interest in the Southeast and we continue to work with the customer base in terms of what the final scope looks like. That all depends on final subscription. I do see it more than just compression. I think there could be some more brownfield looping. But once again it’s early. We’re working through the demand dynamics with our customer base. We do see opportunity there and it is competitive. So we will continue to report as we go along. But ultimately the signed deal is what drives the announcement.
Julian Dumoulin Smith — Analyst
Excellent. Thank you guys. Stay warm this weekend. Thank you.
operator
Thank you. Our next caller is Jackie Coletis with Goldman Sachs. Your line is open.
Jackie Koletas — Analyst
Hi, thank you so much for the time this evening. First just wanted to start on the next steps on the Western Gateway following the second open season launch last week. How do you think about allocating capital towards this project versus natural gas opportunity set and how do those returns compare?
Kimberly Allen Dang — Chief Executive Officer
Yeah, I mean on every project we look at based on risk and return. And so, you know, I think we have a middle of the road return that we expect and then we vary off that based on the stability, the duration and the credit worthiness of the cash flows. And so, you know, if you’ve got stronger credit worthy parties and longer cash flows and take or pay, then you come, you know, off that return down from that return a little bit. And if you have, you know, those things are less then you go above that return.
All these returns are significantly above our cost of capital. And so I think, you know, if we proceed on Western Gateway, we will have long term shipper contracts there. And I expect those shipper contracts will be largely from creditworthy counterparties and if not, we would have some credit support. So we don’t at this point have limited capital. I think we can easily fund this project and do all the natural gas projects that we’re talking about. Another point I’d point out on Western Gateway, which is we are contributing assets to that and so our cash contribution, you know, will be less than, you know, we’re going to.
We’re setting up a 50:50 joint venture with P66. It would be less than half of the cost of the overall project because we’re contributing value for contributing assets for part of our contribution.
Jackie Koletas — Analyst
Got it. That’s helpful. And then just as a follow up, leverage ended around 3.8 times in the quarter. How do you think about maintaining leverage levels towards the midpoint of your long term guy of 3.5 to 4.5 range versus leveraging up towards that high end? If there are multiple CapEx opportunities.
Kimberly Allen Dang — Chief Executive Officer
Well, I’d say this right now what we’ve said is we’re going to spend about $3 billion per year in CapEx. Now that won’t be a perfect round, $3 billion because you just have timing of spend, but roughly $3 billion a year and we have the ability to fund that, you know, 100% out of cash flow. The other thing I’d point out is that as our $10 billion backlog of projects come online that our debt to EBITDA actually declines over time and so that creates more balance sheet capacity. So for every 0.1 times of, of leverage, that’s $850 million of capacity.
So I think we’ve got a ton of capacity even without leveraging up closer to the four and a half times. And I don’t think, you know, I don’t think we have intention of getting close to that level. So I think we’ve got plenty of capacities to accommodate the opportunities that we see out there.
Jackie Koletas — Analyst
Great. Thank you so much for the time.
operator
Thank you. Our next caller is Theresa Chen with Barclays. Your line is open.
Theresa Chen — Analyst
Good afternoon, Kim. Hear you loud and clear on the less than 50% of capital contribution on Western Gateway because you’re contributing SFPP. When we think about the net EBITDA impact to kinder, assuming this project moves forward, how should we quantify the, the displacement of existing SFP ebitda? How much is that contributing currently?
Kimberly Allen Dang — Chief Executive Officer
Well, I think two things. One, Teresa, I think we’re really early and so, you know, we’ve got to get through the open season. We’ve got negotiations to do with our partner on the, on the specifics. So I think, and so I think it, you know, we’ve got to finalize cost, etc. So I think it’s, I think it’s too early to go through that at this point.
Theresa Chen — Analyst
Understood. Maybe turning to a different portion of your liquids business, could you provide an update on the progress of the double H conversion? And in light of recent upstream developments in the Bakken and the increasingly challenged near term outlook for the basin, how are you thinking about the expected NGL throughput and EBITDA contribution from this project?
Kimberly Allen Dang — Chief Executive Officer
Sure. I mean the project’s going to come on probably late first quarter, early second quarter and that’s phase one. And then, you know, with respect to the future phases, you know, that’s something we continue to work on.
Thomas A. Martin — President
Yeah, Theresa, Broadly though, I mean we still, you know, given, given the recent pullback, you know, it’s just a matter of time. I think our initial phase is well contracted. We see the volumes behind it. You know, these are coming from our plants and so we have visibility there. So I don’t think, you know, as far as phase one is concerned, and that is probably on the earlier side of the timeframe that Kim gave you in terms of where we’ve come in. I think as we look to look to the next phase, you know, we continue to have discussions, positive discussions with our customers.
We’ll monitor the overall macro situation and we’ll make the investment decision accordingly. That being said, we still have that in front of us.
Kimberly Allen Dang — Chief Executive Officer
All right. And I think the other thing is gors are growing in the Bakken.
Theresa Chen — Analyst
Fair enough. Thank you.
operator
Thank you. Our next caller is Michael Bloom with Wells Fargo. Your line is open.
Michael Blum — Analyst
Thanks. Good afternoon, everyone. Yeah, maybe if I could just ask maybe a different, at the same question to some degree with Continental Resources effectively saying they’re going to stop drilling in the box. And if one of you can talk about, at least for now, can you talk about how meaningful a customer they are, either your current business or where they were contemplated to be for Double H, and if that has an impact on the further expansion, thanks.
Kimberly Allen Dang — Chief Executive Officer
So, yeah, if you look at the EBITDA that we get From Bakken or EBDA, it’s about 3% of Kinder Morgan overall. Obviously Continental makes up a piece of that. We don’t think that there’s going to be any material impact from the Continental news. We think that the impact is very manageable. You know, that’s one, because it’s 3% of our EBITDA. But it’s also because volumes came into the year a little stronger than we were expecting. And it’s also because they’re going to continue to complete, well, you know, through August and because they are just one of a number of customers we have up there.
Michael Blum — Analyst
Okay, great. That makes sense. Thanks for that. And then just wanted to ask, in light of the asset sale that you did here in late 2025, are there more non core assets that you’re actively looking to sell? And strategically, are there segments or areas of the business that you’re more inclined to reduce your exposure to? Thanks.
Kimberly Allen Dang — Chief Executive Officer
Okay. Yeah. Let me talk about the Eagle Hawk sale first. You know, first of all on that, you know, that’s not an asset that we were looking or planning to sell. You know, our partner approached us because they were selling at least a portion of their interest and you know, based on the price that we could achieve, it made sense to sell. You know, it’s an eight and a half times multiple on a non operated minority interest and a GMP asset. And when we looked at the reinvestment opportunity, meaning if we you know, were buying at the price that we proposed to sell and we look at the cash flows, you know those were going to be below our cost of capital.
So you know, and that included taking into account any tax impact for the so we thought it made sense, it was a good economic decision to sell that asset and recycle that capital. And so you know, that’s generally, you know, the way that we have been approaching sales of assets which has been more opportunistic. As we say, you know, our assets are for sale every day at the right price and so we want to make good economic decisions about that. We like the portfolio of assets that we have Today, you know 60, it’s 2/3 natural gas and 26% is products, pipelines and terminals, very similar, you know, pipeline and storage business, so similar.
And then you know, 7% is CO2, which is a little bit different. But we great returns in that business and we have an expertise that a lot of people don’t have. So I think we’re very comfortable with the suite of assets that we have. And this was just an opportunistic sale that made sense.
Theresa Chen — Analyst
Thank you Kim.
operator
Thank you. Our next caller is Jeremy Tennet with JP Morgan. Your line is open.
Jeremy Tonet — Analyst
Hi, good afternoon Jeremy. I was just curious for your thoughts. I guess you know, industry at large and you know, what opportunities it could present to you down the road. Just if we think about WAHA Egress 1 we have some pretty cold weather coming up and you know during Yuri that presented opportunities for kinder last, you know, last go around. So just wondering if you could share any thoughts there.
Thomas A. Martin — President
Well look we you know as always here when we look at the footprint, you know, given our footprint we’re able to leverage, you know, basis dislocations that occurred. You know, first and foremost we want to serve our customers and then to the extent that these opportunities present themselves, we’ve been taking a little more of a, you know, proprietary view on certain things in certain areas, strategically small amounts. And so to the extent that that presents itself, we’ll be able to leverage that.
Kimberly Allen Dang — Chief Executive Officer
But I don’t think this storm is.
Thomas A. Martin — President
Not a Yuri, it’s not a uri.
Kimberly Allen Dang — Chief Executive Officer
I mean it’s much shorter in duration and you know it’s not going to be as significant so.
Jeremy Tonet — Analyst
Understood. Seems like there might be another one on a teal so we’ll see what happens. This winter, I guess.
Kimberly Allen Dang — Chief Executive Officer
Yeah. But you know, generally what I would say is that the gas transition transportation market is very tight. And so whenever you see dislocations in supply or demand in and around our assets, that is going to present opportunities for us. And that’s part of what you saw in the fourth quarter of this year.
David Michels — Vice President and Chief Financial Officer
Yeah. And a key component of that is storage for us and we have a significant storage portfolio that will allow us to leverage some of that to the extent that it’s a, it presents itself.
Jeremy Tonet — Analyst
Got it. Thank you for that. And then just wanted to dial in on NGPL a little bit here hearing, you know, more data center driven opportunities in the Midwest, you know, coal to gas switching as well. You know, some of the other NAT gas pipeline operators seeing a lot of activity there. Just wondering if you could talk about what that could mean for kinder for ngpl.
David Michels — Vice President and Chief Financial Officer
Yeah, so look, we’ve, you know, we’re, we’re, there’s quite a bit of, you know, there’s significant discussions you’ve been seeing, some of the EBV postings we’ve been making out there. We’ve got interest along the pipeline in terms of, you know, not only just from power customers but also from, you know, organic markets that are, that are trying to grow, you know, still early on some of these projects, you know, we’ve got some binding commitments that we’re looking to convert into full fledged FID projects. As these develop, we’ll bring them. But I mean when you think about the corridor itself, we see a concentration up in the market area.
We have some in the producing regions where folks are looking to site themselves. And so I think the opportunity sets there. It’s just once again we’re in this mode where folks are looking. It’s a competitive landscape and so we want to make sure we secure the returns that we need to progress the projects to fid.
Jeremy Tonet — Analyst
Got it. Understood. Thank you.
David Michels — Vice President and Chief Financial Officer
Thank you.
operator
Our next. Thank you. Our next caller is Jean Ann Salisbury with Bank of America. Your line is open.
Jean Ann Salisbury — Analyst
Hi. You said in the prepared comments that MSX could be in service a couple quarters early, I think. Is there any read across to a faster permitting process across the board or was that project specific?
Kimberly Allen Dang — Chief Executive Officer
No, I mean, I think a couple of things on these projects. One is 871 is gone and that happened, I don’t know, six or nine months ago. And that, you know, basically required us to wait five months between when we got our FERC certificate so when we could start construction. So that’s gone and then you Know the FERC has acted within, is going to act within roughly one year on our filing. And so previously we’ve been seeing that take a little bit longer than that on big projects. And so the fact that you know, the FERC process only took 12 months and we don’t have 871 is speeding up our in service on MSX from you know, called 4Q28 to 2Q28.
Jean Ann Salisbury — Analyst
Great, that’s very clear. Thank you. And then one of your peers took an equity stake in a US LNG terminal a few months ago. Is that something that KMI is actively looking at or would have interest in especially I guess if you could back to back it with another counterparty to make it take or pay equivalent to make it.
Kimberly Allen Dang — Chief Executive Officer
Well, I’ll say a couple of things on that. Generally what we’ve seen on the LNG front is the returns haven’t been where we needed them to be to make those, to make those investments. And you know, it’s not something that we are accustomed to building. We did a small one obviously at Elba, but that was a relatively small facility. And so you know, I think in general what you should expect from us is that we are kind of sticking to our knitting. We’re staying in our lane. You know, we are serving those LNG that LNG demand through our pipelines and you know, right now we serve 40% of that demand.
As Rich said that, you know, demand is expected to grow significantly and we expect to get our fair share of that future and of that future demand. And that’s driving, you know, very nice project opportunities for us. So I’m not saying we would never step out. It’s just, you know, there hasn’t been the opportunity where we thought the risk return profile was, was appropriate and you know, we haven’t wanted to build these on our own.
Thomas A. Martin — President
I think another thing we like on a risk return basis is the fact that both on the LNG terminal side for feed gas and on the service to, for electric generation purposes, we have in general take or pay contracts with utility grade, investment grade utilities. And that we think is a very good way to look at the risk that we are taking. And we think that minimizes any risk that we have as opposed to contracting directly with AI developers for example.
Jean Ann Salisbury — Analyst
That makes sense. Thank you.
operator
Thank you. Our next caller is Keith Stanley with Wolf Research. Your line is open sir.
Keith Stanley — Analyst
Hi, good afternoon. You updated the messaging on capex to at least 3 billion a year of growth. Capex for the next few years up from 2 and a half. Wanted to clarify, is that solely based on the sanctioned project backlog today? So if you keep fiding new projects and the backlog grows, capex could be above 3 billion a year for the next few years. Or is that already reflecting your best estimate over the next few years?
Kimberly Allen Dang — Chief Executive Officer
I’d say it’s largely based on the $10 billion approved project backlog. But there is some view there is a small portion or that is based on, you know, getting some of the $10 billion in the opportunity set. So, and look, I think that, you know, we updated it from two and a half to three billion, you know, given the $10 billion given, we continue to add to the backlog even after putting projects in service. So, you know, this year when we were putting all those projects in service, you know, at the beginning of the year, we thought it might come down.
It’s continued to increase, you know, natural gas demand. You know, we continue to see it grow between 25 and 30, but also, you know, beyond that. And so, you know, there may be the opportunity to extend that further, but you know, we’re not ready to do that or make it higher, but we’re not ready to do that at this point in time.
Keith Stanley — Analyst
Got it. Second question. Just wanted to follow up on the earlier one on Mississippi Crossing. So if you’re six months early on that project and on, you know, potentially on some of the other bigger ones, given the regulatory environment, would your contracts kick in and you’d have pretty close to a full financial contribution right away at that earlier date or is that not the case?
Kimberly Allen Dang — Chief Executive Officer
It’s a project by project analysis. In this case, the answer is no. The customers don’t have to take it at that point in time. They can, I mean, they can elect to take it, but they don’t have to. And I would say that, you know, being early on the regulatory front does not directly translate into day for day on the in service. You know, it’s going to depend on the project because, you know, once you move back that regulatory, once you get sooner approval from a regulatory perspective, you know, you have to think about when you’re getting pipe and when you’re getting compression.
And so, you know, for example, we haven’t seen that translate into much of an earlier date on SAL System 4 at this point in time. So it’s project by project. But if our customers don’t want that capacity, it will be available for, you know, us to use during that time.
Thomas A. Martin — President
And given the macro environment, Keith, I mean, you just think about, you know, the demand profiles that are coming our way, you know, it’s just, you know, you look at that as an opportunity to sell in the secondary markets. Yeah, right.
Keith Stanley — Analyst
Got it. Thank you.
operator
Thank you. Our next caller is Manav Gupta with ubs. Your line is open, sir.
Manav Gupta — Analyst
Firstly, congrats on all the upgrades from rating agencies. Reflects the strong quality of the management and execution. I wanted to ask you about the Florida gas transmission projects. Both the projects, how did these come about? Can you give us more details? And in the last one year, what we have seen is you announce a project and then end up upsizing it. So if you could talk about the possibility of some upsizing here for these projects.
Unidentified Speaker
So Manav, this is Sethal. So just, you know, in terms of the project itself, you know, as you know, we’re not the operator, you know, energy transfer is the operator. So, you know, we’ll let them talk about how it came about on the call. We’ve been working with them closely thematically. It’s the same themes we’ve been talking about in the Southeast. You know, we see that as a growth area just broadly. And this is just another example of us getting incremental infrastructure to an area where there is significant growth. There’s also a resiliency component there.
With the two projects. We think it makes sense in terms of whether or not the project gets upsized. We’re in the process of having an open season right now. That open season closes here, I think February 5th, if I’m not mistaken. And you know, based on the interest there, is it possible to upsize? Yes, if there’s, if there’s a demand for it.
Kimberly Allen Dang — Chief Executive Officer
Yeah. I’d say both those projects are backed by long term contracts with credit worthy counterparties. And so, I mean they are right down the middle.
Manav Gupta — Analyst
Perfect. My quick follow up here is at the start of the call you mentioned that the 4Q turned out to be stronger than what you thought when you announced your 3Q results. So help us understand some of those tailings which help you drive the beat and 4Q. And are those still persistent out there? So should 1Q also turn out pretty strong? If you could talk about that.
Kimberly Allen Dang — Chief Executive Officer
Sure. So I mean, it was across the gas network. So it was our, it was our interstate pipes and our gathering assets. And so as we said before, when you and discuss.
operator
This is the operator. Please stand by. This is the operator. Please stand by. It. And speakers. Please go ahead. Parties. Please continue to stand by. This is the operator. We’re resuming the conference. The next question comes from Jason Gable. Your line is open.
Jason Gabelman — Analyst
Yeah, hey, it’s Jason Gableman from TD Cowan. Hopefully the storm isn’t hitting you too hard down there. Maybe to start and to help everyone out. Maybe we could just replay Manob’s question because I was interested in the answer to it. I didn’t quite hear. So just wondering what drove the earnings upside on the natural gas segment in 4Q. Sounded like some of it was driven by pull from LNG plants. So did some of these plants start up earlier than you had expected in the plan or were there other factors at play? Thanks.
Kimberly Allen Dang — Chief Executive Officer
I mean it was, look, it was across the entire gas business. So it was a lot in our Texas interest state market. It was in the Eagle Ford and the Haynesville on our gathering assets. And then it was also on the interstate markets, more so in the northeast than other areas. And so, you know, it’s a function of having a very tight pipeline and storage network. And you know, and that’s going to create opportunities when you have supply or demand dislocations. That could be weather, that could be LNG coming on or off, you know, could be a variety of factors, but that leads to volatility and upside for us and there is the potential for that to happen again in 2026.
Jason Gabelman — Analyst
Great, thanks. And my follow up, maybe staying on the topic of lng, you know, it seems like the market is facing this upcoming global supply glut and maybe you get a bit of a slowdown in the pace of new liquefaction project sanctions here in the US Gulf Coast. So just wondering how much of that project backlog, if any, is tied to servicing incremental projects. And I guess it’s not the project backlog, it is the shadow project backlog and projects LNG projects that are associated with that shadow backlog. Thanks.
Kimberly Allen Dang — Chief Executive Officer
Yeah. So a couple of things, you know, I’d reiterate the point Rich made a minute ago, which is, you know, the, you know, we have long term take or pay contracts with these LNG facilities. And so Those typically are 20 to 25 year contracts and they pay whether they use that capacity or not. You know, in our current backlog, about 12% of the $10 billion actual approved backlog is 12% of the shadow backlog is associated with LNG. So it’s not a huge percentage. You know, I think a lot of the shadow backlog again is going to be more on the power front.
But the other thing I’d say is that when you look at these LNG projects, it’s not always about adding a new facility. You know, a lot of times it’s about an existing facility has, you know, some capacity and they want to reach further back to get more competitive supply. So you don’t, you know, to have incremental projects. You don’t have to have a new facility come online. It could be a need from an existing facility to try to get more competitive supply.
Jason Gabelman — Analyst
Great. Thanks for those answers.
Kimberly Allen Dang — Chief Executive Officer
Michelle. Is that it?
operator
And at this time, we are showing no further questions.
Kimberly Allen Dang — Chief Executive Officer
Okay. Thank you, everybody.
Thomas A. Martin — President
Thank you. Have a good day.
operator
Thank you. This concludes today’s conference call. You may go ahead and disconnect at this time.