Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Barclays CEO Energy-Power Conference 2013
39 slides from Kinder Morgan's conference presentation, Sep 12, 2013
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Steve Kean President & Chief Operating Officer September 12, 2013
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
Forward-Looking Statements / Non-GAAP Financial Measures This presentation contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning fut
Slide 3: Kinder Morgan: Four Ways to Invest: KMI, KMP, KMR & EPB
Kinder Morgan Four Ways to Invest: KMI, KMP, KMR & EPB 671MM Public Kinder Morgan, Inc. (65%) Float Market Equity $38.6B (a) Cash Debt 9.5B (b) dividends to KMI 296MM (d) Management/ shareholders (C-corp) (28%) Original S/H Enterprise Value $48.1B 1,036 MM shares (a) 2013E Dividend per Share $1.60 (
Slide 4: Our Strategy
Our Strategy Stay the Course Same Strategy Since Inception Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments Control costs — It’s the investors’ money, not management’s – treat it that way Leverage asset foot
Slide 5: Kinder Morgan: Unparalleled Asset Footprint
Kinder Morgan Unparalleled Asset Footprint 3rd largest energy company in North America with combined enterprise value of approximately $105 billion (a) Largest natural gas network in U.S. — Own an interest in / operate almost 70,000 miles of natural gas pipeline — Connected to every important U.
Slide 6: 17 Years of Consistent Growth at KMP
17 Years of Consistent Growth at KMP KMP Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (c) $3,997(a) $6.00 $4,000 $5.33 (a) GP LP $4.98 $3,500 $3,230 $5.00 $4.61 $4.40 $3,000 $2,737 $4.20 $4.02 $2,450 (b) $4.00 $3.48 $2,171 $3.13 $3.26 $2,500 $1,877 $2.87 $2,000 $3.00 $2.63
Slide 7: Budget Guidance: Promises Made, Promises Kept
Budget Guidance Promises Made, Promises Kept Promises Made Promises Kept KMI Budgeted KMI Actual Dividend: Dividend: 2011: $1.16 (a) 2011: $1.20 (a) 2012: $1.35 2012: $1.40 KMP Budgeted KMP Actual LP Distribution: LP Distribution: 2000: $1.60 2000: $1.71 KMP achieved 2001: $1.95 2001: $2.15 LP distr
Slide 8: 2013 Guidance
2013 Guidance Supported by Diversified Cash Flow CO2 S&T CO2 Oil Production 5% KMI Forecast: Natural Gas 14% Pipelines KMI 2013 dividend: $1.60/sh (14.3% growth over 2012) Terminals 11% 56% — Original budgeted 2013 dividend was $1.57 B 3% 11% Fully-consolidated year-end 2013 debt / EBITDA = 5.0x
Slide 9: Toll Road-like Assets: Predominantly Fee-based
Toll Road-like Assets: Predominantly Fee-based with Limited Commodity Exposure Significantly stable cash flow Over 80% of 2013 cash flow is fee-based (a) Almost 93% of 2013 cash flow is fee-based or hedged (a) Modest sensitivity to commodity prices and interest rates Commodity prices — CO2 EOR
Slide 10: 5-year Project Backlog
5-year Project Backlog (a) $14 Billion of Currently Identified Organic Growth Projects Tremendous footprint provides $14B of currently identified growth opportunities over next 5 years 5-year Growth Capex Backlog ($Bn) (b) 2H 2013 2014 2015 2016+ Total Natural Gas Pipelines $0.9 $0.6 $0.1 $1.2 $2.8
Slide 11: Vast Opportunity Set
Vast Opportunity Set Leverages Diverse Energy Themes Pipeline / terminal expansions for Oilsands export to Asia Canadian natural Cochin conversion/ gas demand reversal for leading to expansion Oilsands diluent opportunities Northeast power demand growth to be fueled by natural gas Pipeline Terminals
Slide 12: KMP / KMR
KINDER/MORGAN KINDER MORGAN ENERGY PARTNERS, L.P. KMP /KMR
Slide 13: KMP's Diversified Cash Flow
KMP’s Diversified Cash Flow Natural Gas Pipelines 2013E KMP Segment 55% interstate pipelines Earnings before DD&A 31% gathering, processing & treating = $5.7 billion (a) 14% intrastate pipelines & storage Products Pipelines CO2 S&T 56% pipelines 44% associated terminals & transmix Natural
Slide 14: KMP 2013 Growth Expenditure Forecast
KMP 2013 Growth Expenditure Forecast Without dropdown & CPNO With acquisitions acquisition = $4.0 billion (a) = $10.6 billion CO2 CO2 S&T S&T 3% Natural Gas Oil Natural Gas CO2 Oil Pipelines Terminals 7% Pipelines Production 8% 17% 30% Products 9% Pipelines (b) 8% 25% 20% Terminals 73% Products Pipe
Slide 15: Over $40B of Growth Capital Invested at KMP
Over $40B of Growth Capital Invested at KMP (a,b,c) ($ in billions) Total Invested by Type Total Invested by Year $24 $11.0 $10.6 $20 JV Contributions $3.6 $16 $10.0 Expansion $12 $22.0 $9.0 Acquisition $8 $15.1 $8.0 $4 $7.0 $- Expansions Acquisitions $6.0 (c) $5.1 $5.0 Total Invested by Segment $4.
Slide 16: How We Have Done: KMP Returns on Capital
How We Have Done: KMP Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Segment ROI (a): Natural Gas Pipelines 13.3% 15.5% 12.9% 13.5% 14.0% 15.5% 16.7% 17.5% 16.9% 14.0% 11.9% 11.9% 11.9% Products Pipelines 11.9 11.8 12.8 12.9 12.4 11.6 11.8 13.2 12.5 13.4 13.7 12.
Slide 17: EPB
KINDER/MORGAN EL PASO PIPELINE PARTNERS j EPB
Slide 18: EPB System Map
EPB System Map Pipelines: 100% Wyoming Interstate Co. (WIC) 100% Colorado Interstate Gas (CIG) 100% Cheyenne Plains (CP) 100% Southern Natural Gas (SNG) 100% Elba Express (EEC) LNG: 100% Southern LNG (SLNG) 18
Slide 19: EPB Focused on Natural Gas Pipelines
EPB Focused on Natural Gas Pipelines 2013E EPB Segment Natural Gas Earnings before DD&A Highly stable cash flow stream = $1.2 billion (a) — 89% interstate pipelines • Average contract life = ~7 years — 11% LNG • Average contract life = ~19 years (b) — Minimal throughput and commodity Natural Gas e
Slide 20: KMI
KINDER/MORGAN INC. KINDER MORGAN KMI
Slide 21: KMI Remaining Assets
KMI Remaining Assets Plan to Complete Dropdown Program by End of 2014 21
Slide 22: KMI Overview
KMI Overview KMI pays regular c-corp dividend with attractive combination of yield plus growth KMI Investments / Assets: — Investment in MLPs • KMP: – General Partner (GP) interest receives incentive distributions from KMP – KMI owns ~10% of total limited partner (LP) interests • EPB: – GP inter
Slide 23: Risks
Risks Regulatory (KMP/EPB/KMI) — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Legislative and regulatory changes Crude oil production volumes (KMP) Commodity prices (KMP) — CO2 oil production • 2013 budget assumes $91.68/Bbl realized price on unhedged barrels • 2013 bu
Slide 24: Summary: Attractive Value Proposition
Summary KMI, KMP, KMR & EPB: Attractive Value Proposition Unparalleled asset footprint Attractive dropdown inventory Long-term Growth Targets (a) Significant, identified growth Next 3 to 5 Years (2012+) opportunities KMP = ~5-6% Established track record EPB = ~5-6% KMI = ~9-10% Indus
Slide 25: Appendix
KINDER/MORGAN Appendix
Slide 26: Operations Goals
Operations Goals: Safe, Reliable, Efficient Operations Continuous reduction in risk to the public, employees, contractors, assets and the environment Continuous improvement in the efficiency and productivity of existing operations Well-executed expansions and effective integration of acquired
Slide 27: Efficiency
Efficiency Part of weekly asset review — Throughput — Operating costs (including energy use and L&U) — Sustaining capex updates Detailed, “bottoms up” budget process for operating expenses and sustaining capex — Separately identify safety and compliance needs; separately track spending on those
Slide 28: Compliance Summary
Compliance Summary Making Compliance a Habit Key elements: — Clear statement of requirement, assignment of responsibility and deadline for completion, and — Exception reporting to management Performance: — OpsInfo expanded to nearly 370,000 compliance actions per year • Timely compliance: 99.6%
Slide 29: Compliance Summary (Continued)
Compliance Summary Making Compliance a Habit - Continued Env. Permits Business Hazardous Waste / DOT & DOT Damage Unit Transport SPCC (a) Safety PSM / RMP (b) Maintenance Security Contractors Prevention OpsInfo, Natural Gas OpsInfo & OpsInfo, INFOR OpsInfo & OpsInfo & INFOR EAM, ISNetworld Petris Pi
Slide 30: Incidents per 1,000 Miles: Liquids Pipeline
Incidents & Releases Liquids Pipeline ROW Liquids Pipeline Incidents per 1,000 Miles (a) Liquids Pipeline Release Rate (a) 1.0 50 Barrels per billion barrel miles 0.8 40 Incidents per 1,000 Miles 0.6 30 0.45 0.39 0.4 20 15.5 0.29 0.21 13.1 0.2 10 6.0 0.08 0.08 2.5 - - 0.01 0.1 - - 2006 2007 2008 200
Slide 31: Incidents per 1,000 Miles: Natural Gas Pipeline
Incidents & Releases Natural Gas Pipeline ROW Natural Gas Pipeline Incidents Rate (a) 1.0 Incidents per 1,000 Miles 0.8 0.6 0.4 0.32 0.30 0.27 0.27 0.2 0.13 0.13 0.04 - 2006 2007 2008 2009 2010 2011 2012 KM Incidents Current Industry Avg 2005 Industry Avg KM/EP Combined 3-yr Avg ____________________
Slide 32: KMR 101
KMR 101 KMR is KMP KMR Discount to KMP — KMR shares are pari passu with KMP units 10% — KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment 5% program (a) 0% — Like KMP units, KMR shares are tax efficient - but with simplified tax reporti
Slide 33: Toll Road-like, Fee-based Business Model
Toll Road-like, Fee-based Business Model Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada (KMP) (KMP) (KMP/EPB/KMI) (KMP) (KMP) – Interstate & LNG: take or pay – Take or pay, minimum – S&T: primarily minimum – Intrastate: ~75% take or pay (a) – Essentially no Volume Secu
Slide 34: Natural Gas Pipelines Segment Outlook
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $2.8 billion of identified growth projects over next five years (a), including: — TGP Northeast upgrade — LNG liquefaction (FTA @ Elba Island) — Eagle Ford gat
Slide 35: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $1.0 billion of identified growth projects over next two years (a), including: — Cochin reversal & diluent conversion — Condensate processing — Sweeney lateral — Parkway — Double Eagle Lo
Slide 36: Terminals Segment Outlook
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Project Backlog: $2.1 billion of identified growth projects over next three years (a), including: — Liquids • Edmonton Phase I / II expansions • BOSTCO project • Houston terminal network expansion — Bulk • Deepwate
Slide 37: CO2 Segment Outlook
CO2 Segment Outlook Own and operate best source of CO2 for EOR (a) Project Backlog: Identified growth projects totaling $1.3 billion and $1.4 billion in S&T and EOR (a), respectively, over next five years (b), including: — S&T • McElmo / Doe Canyon expansion • St. Johns build-out — Oil Production
Slide 38: Kinder Morgan Canada Segment Outlook
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Project Backlog: $5.4 billion expansion of TMPL TMX $5.4 Billion Expansion Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia — Following successful open season, majo
Slide 39: Kinder Morgan
KINDER/MORGAN
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