Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — RBC 2005 MLP/Trust Conference
24 slides from Kinder Morgan's conference presentation, Nov 17, 2005
Slide 1: RBC 2005 MLP/Trust Conference
RBC 2005 MLP/Trust Conference November 17, 2005 All amounts in U.S. dollars unless otherwise noted.
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward looking statements, including these, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act of 1934, as amended. Forward looking statements are not guarantees of performance. They i
Slide 3: Kinder Morgan & Terasen Assets
Kinder Morgan & Terasen Assets NGPL (KMI) NGPL GAS STORAGE (KMI) RETAIL GAS DISTRIBUTION (KMI) Trans Corridor Mountain GAS-FIRED POWER PLANTS (KMI) PRODUCTS PIPELINES (KMP) PRODUCTS PIPELINES TERMINALS (KMP) 2 TRANSMIX FACILITIES (KMP) Express Cochin NATURAL GAS PIPELINES Pacific (KMI-KMP) NATURAL G
Slide 4: KMI-TER Transaction Overview
KMI-TER Transaction Overview (a) $5.6 billion total purchase price $3.1 billion in equity $2.5 billion in assumed debt KMI will purchase all of TER’s outstanding stock Equity consideration will be financed ~ 65% in cash and ~ 35% in stock (b) 0.1165 KMI shares for each TER share: $10.37 (C$12.
Slide 5: Strategic Rationale
Strategic Rationale Stable, regulated, low risk assets Solid earnings accretion ~ $5.00/share KMI pro-forma 2006E earnings ~ 6-8% accretion to KMI 2006E stand alone EPS Strong cash flow generation Almost $800 million in 2006E cash flow (a) $3.50/share 2006 expected dividend Represents 58% in
Slide 6: Transaction Timeline
Transaction Timeline Sign/announce definitive agreement Aug 1 Canadian Competition Act Aug 25 HSR September Comptroller of Water Rights (BC) Oct 11 Terasen Shareholder vote Oct 18 Alaska Utilities Commission Nov 8 British Columbia Utilities Commission Nov 10 Investment Canada Nov 16 TER election dea
Slide 7: Kinder Morgan: Three Securities
Kinder Morgan: Three Securities Kinder Morgan Energy Partners Kinder Morgan, Inc. Market Equity (a) $10.6 Incentive Market Equity (b) $11.3 Debt (a) 5.1 Distribution Debt (b) 2.8 Enterprise Value $15.7B Enterprise Value $14.1B 2005E EBITDA $1,581mm 2005E EBITDA $1,142mm 2005E Dist. CF $1,178mm 2005E
Slide 8: Consistent Track Record
Consistent Track Record Total Distributions (GP + LP) ($mm) KMP Distribution / Unit (a) $1,200 $1,139 $3.20 GP % $2.96 $1,000 $978 $3.00 R = 20 $2.50 $2.72 CAG LP 0% $827 $800 =6 $701 $2.20 GR $1.90 $600 CA $548 $2.00 $1.45 $1.30 $1.13 $400 $333 $1.00 $0.63 $198 $200 $153 $17 $30 $0 $0.00 1996 1997
Slide 9: Overview
Overview Vision Find tsunamis Create opportunities Operational Excellence Safety Environmental Efficiency Financial Excellence Cost control Disciplined capital allocation Bottom line performance Transparency 9
Slide 10: The Kinder Morgan Strategy
The Kinder Morgan Strategy Same Strategy Since Inception Focus on stable, fee-based assets which are core to the energy infrastructure of growing markets Increase utilization of assets while controlling costs Classic fixed cost businesses with little variable costs Improve productivity to drop a
Slide 11: Management Philosophy
Management Philosophy Low Cost Asset Operator Attention to Detail Disciplined Capital Allocation Risk Management Transparency Cash is King Alignment of Incentives Business Unit Autonomy 11
Slide 12: Kinder Morgan Energy Partners (KMP and KMR)
Kinder Morgan Energy Partners (KMP and KMR)
Slide 13: Solid Asset Base Generates Stable Fee Income
Solid Asset Base Generates Stable Fee Income Terminals Products Pipelines KMP 55% Liquids, 45% Bulk 2005 DCF (a) Refinery hub to population Geographic and product center strategy diversity 64% Pipelines 3-4 year average contract life 31% Associated Terminals (b) Terminals 16% Product 5% Transmix Pip
Slide 14: Long-Term Growth Drivers
Long-Term Growth Drivers Business Segment Growth Drivers Products Pipelines Gasoline demand tracks demographic growth Serve 8 of 10 fastest growing metropolitan areas Price escalator = PPI Advantage to existing assets Natural Gas Pipelines US is infrastructure constrained LNG requires new infrastruc
Slide 15: Over $9 Billion in Capital Invested at KMP
Over $9 Billion in Capital Invested at KMP ($ millions) Total Invested by Type $8,000 Total Invested by Year $6,000 Expansion $2,000 $1,893 Acquisition $4,000 $7,348 $1,618 $1,600 $2,000 $2,250 $1,261 $1,232 $1,065 $0 $1,200 $1,020 Acquisitions Expansions $873 $800 $636 Total Invested by Segment $4,
Slide 16: Leads to Attractive Return on Capital
Leads to Attractive Return on Capital Return on Investment: 2000 2001 2002 2003 2004 Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.6% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 CO2 27.5 24.6 22.0 21.9 23.8 Terminals 19.1 18.2 17.7 18.4 18.0 KMP Return on Investment (a) 12.3% 12.7% 12.6% 13.1% 13
Slide 17: KMP is Conservatively Capitalized
KMP is Conservatively Capitalized ($ millions) Credit Summary Long-term Debt Rating Baa1/BBB+ (a) 2005 Budget Estimates Debt / EBITDA 3.0x EBITDA / Interest Exp. 6.3x Net Debt / Total Cap (b) 51% CP Capacity (c) Long-term Debt Maturities (d) Total Revolver $1,600 2005 (e) --- Outstanding CP 539 2006
Slide 18: Kinder Morgan, Inc. (KMI)
Kinder Morgan, Inc. (KMI)
Slide 19: Solid Asset Base Generates Stable Fee Income
Solid Asset Base Generates Stable Fee Income Investment in KMP (a) NGPL KMI General partner interest earns 2005 Segment Income (b) FERC regulated with 3 year incentive distributions average contract life Owns 17% of total limited Primary customers are Chicago partner units local distribution compani
Slide 20: KMI is Conservatively Capitalized
KMI is Conservatively Capitalized ($ millions) Credit Summary Long-term Debt Rating Baa2/BBB (a) 2005 Budget Estimates Debt / EBITDA 2.4x EBITDA / Interest Exp. 7.5x Net Debt / Total Cap (b) 39% CP Capacity (c) Long-term Debt Maturities (c) Total Revolver $800 2005 (d) --- Outstanding CP 269 2006 $5
Slide 21: Tremendous Historical Incremental Returns
Tremendous Historical Incremental Returns Return on Investment: 2000 2001 2002 2003 2004 Investment in KMP 11.2% 16.9% 21.4% 25.0% 29.6% NGPL 11.4 11.1 10.9 11.4 12.1 Retail 13.0 11.7 15.0 14.5 13.1 Power 14.3 20.2 9.7 5.6 4.7 KMI Return on Investment (a,b) 10.5% 11.7% 12.4% 13.3% 14.8% KMI Return o
Slide 22: Over $2.7 billion returned to investors 2000-2005
Over $2.7 billion returned to investors 2000-2005 $2,766 $2,800 $565 $2,300 2000-2004 2005E (a) $1,800 $1,300 $1,149 $839 $778 $2,201 $800 $343 $222 $300 $496 $556 -$200 Dividends Share Change in Net Total Repurchase Debt Note: All amounts in U.S. dollars unless otherwise noted. (a) 2005E numbers in
Slide 23: Risks
Risks Regulatory Pacific Products Pipeline FERC/CPUC case Periodic rate reviews Unexpected FERC policy changes Environmental Terrorism Interest Rates 50% of debt is floating rate Budget assumes approximately 100 bps increase in floating rates over the year The full-year impact of a 100-b
Slide 24: Summary
Summary Stable Cash Flow Own assets core to energy infrastructure KMP/KMR: Internal Growth Opportunities 6-7% Yield and Critical Mass 8-10% Well-located assets/favorable demographics Long-Term Fixed Cost Business Growth Drop growth to bottom line Unique Structure Tax Efficient KMI: 3.4% Yi