When energy midstream giant Kinder Morgan Inc. (NYSE: KMI) reported fourth-quarter 2015 earnings Wednesday night, the per-share loss of $0.29 and 8% revenue drop-off took center stage. Shares closed down more than 4% for the day and didn’t move much in the after-hours session.

The story changed Thursday morning though after investors had a chance to absorb the details of the company’s report. Shares were up about 5% in the first half hour of trading, and were destined to rise further.

The 75% dividend cut Kinder Morgan announced in early December was affirmed Wednesday, and the company said it expects to pay an annual dividend of $0.50 this year and “use cash in excess of dividend payments to fully fund growth investments.”

The company also cut its projected capital spending for 2016 by $900 million to a total of $3.3 billion, while cash flow in excess of dividends is expected to reach $3.6 billion.

In its preliminary 2016 plan, the company said it expected to spend $4.2 billion on new investments. The cut is almost certainly the result of expected lower revenues due to lower prices for crude oil and natural gas.

Investors understand that midstream companies, whether master limited partnerships (MLPs) or C-corporations like Kinder Morgan, either must grow or die. Regulated fees account for about 87% of Kinder Morgan’s revenues and about all the company can do to ensure maximum revenue is to keep the pipelines full.

When energy prices are this low, however, some producers throttle production and some even go out of business. Take-or-pay contracts help, but holding a producer’s feet to the fire is not always in a pipeline operator’s best interest. The object at some point becomes mutual survival.

Kinder Morgan took a $1.15 billion non-cash write-down on midstream natural gas assets and a $285 million non-cash write-down on its CO2 segment assets. The company’s chief financial officer told analysts on the conference call that “if commodity and equity prices continue to fall, then we may have impairments in future quarters.”

Analysts at Bank of America Merrill Lynch actually liked what it heard from the company:

We view the announcement positively as it could modestly accelerate KMI’s delevering schedule, strengthen KMI’s independence from the public capital markets, and is an appropriate measure given KMI’s now higher cost of capital. … The growth capex reduction likely reduces these metrics modestly. … We do not expect the impairment to have a meaningful impact on KMI’s cash flow as the majority of the goodwill is likely not tax-deductible. The impairment is also unlikely to impact KMI’s credit metrics/covenants.

Merrill Lynch maintained its $16 price target and Neutral rating on Kinder Morgan stock, with a note that the firm will review its estimates following Kinder Morgan’s analysts’ day presentation on January 27.

Credit Suisse took a similar position, holding its price target of $18, which it said “derived from a blend of our dividend discount model, price/DCF [distributable cash flow], target yield, EV/EBITDA and P/E.” The analysts’ price target implies a total return of 53%, but they’ve given the stock a Neutral rating.

S&P Capital IQ cut its 2016 EPS estimate by $0.11 to $0.71 and set a 12-month price target of $17. The analyst wrote:

We think KMI’s decision to prioritize higher quality projects makes sense, given weak energy prices. We see the previously lowered dividend (by 75%) as sustainable.

Kinder Morgan’s conservative outlook has boosted shares by nearly 20% as Thursday’s lunch hour approaches. Shares traded at $14.27, after closing Wednesday at $12.01. The stock’s 52-week range is $11.20 to $44.71, and the consensus price target is $20.73.

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