Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Mitsubishi UFJ Corporate Access Day 2014
32 slides from Kinder Morgan's conference presentation, May 14, 2014
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Anthony Ashley VP Finance & Treasurer May 14, 2014
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: Four Ways to Invest: KMI, KMP, KMR & EPB
Kinder Morgan Four Ways to Invest: KMI, KMP, KMR & EPB Kinder Morgan, Inc. Public 666 MM Market Equity $33.9B (a) (64%) Float Debt 9.1B (b,i) Cash Enterprise Value $43.0B KMI dividends to 300 MM (f) Management/ 2014E Dividend per Share $1.72 (c) shareholders (C-corp) (29%) Original S/H 1,035 MM shar
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: Unparalleled Asset Footprint
Kinder Morgan Unparalleled Asset Footprint 4th largest energy company in North America with combined enterprise value of approximately $105 billion (a) Largest natural gas network in North America — Own an interest in / operate ~68,000 miles of natural gas pipeline — Connected to every important
Slide 6: 18 Years of Consistent Growth at KMP
18 Years of Consistent Growth at KMP KMP Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (c) (a) $5,000 (a) $6.00 $5.58 $4,499 $5.33 $4,500 GP LP $4.98 $4,017 $5.00 $4.61 $4,000 $4.40 $4.20 $3,500 $3,230 $4.02 $4.00 $3.48 $3,000 $2,737 (b) $3.13$3.26 $2,450 $2.87 $2,500 $2,17
Slide 7: Promises Made, Promises Kept
Guidance Promises Made, Promises Kept Promises Made Promises Kept KMI Budgeted KMI Actual Dividend: Dividend: KMI has exceeded 2011: $1.16 (a) 2011: $1.20 (a) its dividend target 2012: $1.35 2012: $1.40 in each of past 3 yrs. 2013: $1.57 2013: $1.60 KMP Budgeted KMP Actual LP Distribution: LP Distri
Slide 8: 2014 Guidance
2014 Guidance Supported by Diversified Cash Flow CO2 S&T CO2 Oil Production 6% KMI Budget: Natural Gas 14% Pipelines KMI 2014 dividend: $1.72/sh (8% growth over 2013) Terminals 12% 54% Fully-consolidated year-end 2014 debt / EBITDA = 4.9x B KM Canada 2% 12% Products U Pipelines S CO2 S&T I 7% KM
Slide 9: Tremendous Natural Gas Market Opportunities…
Tremendous Natural Gas Market Opportunities… U.S. Natural Gas Projected Supply & Demand (a) (Bcf/d) KM Natural Gas Footprint Demand 2014 2019 2024 LNG exports - 4.8 7.9 Mexican net exports 2.3 3.7 4.5 Power 21.0 24.6 29.8 Industrial 21.2 23.9 25.0 Other 29.3 29.9 31.8 Total U.S. demand 73.8 86.9 99.
Slide 10: … Generating Real-time, Long-term Benefits
… Generating Real-time, Long-term Benefits $641B of investment in midstream energy infrastructure needed through 2035, implying $29B per year annual spend (a) compared to $18B annual spend by MLPs (b) over past five years Kinder Morgan’s unparalleled natural gas footprint is well-positioned to add
Slide 11: 5-year Project Backlog
5-year Project Backlog (a) ~$16.4 Billion of Currently Identified Organic Growth Projects Tremendous footprint provides ~$16.4B of currently identified growth projects over next 5 years 5-year Growth Capex Backlog ($B) 9M 2014 2015 2016 2017+ Total Natural Gas Pipelines $0.9 $0.4 $0.8 $2.0 $4.1 Prod
Slide 12: KMP's Diversified Cash Flow
KMP’s Diversified Cash Flow Natural Gas Pipelines 2014E KMP Segment 53% interstate pipelines Earnings before DD&A 34% gathering, processing & treating = $6.4 billion (a) 13% intrastate pipelines & storage Products Pipelines CO2 S&T 58% pipelines 42% associated terminals & transmix Natural
Slide 13: ~$46B of Growth Capital Invested at KMP
~$46B of Growth Capital Invested at KMP (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year $25 $11 $20 Expansion $10.0 $10 $15 Acquisition $21.9 $24.5 $9 $10 $8 $5 $7 $6.6 (b) $- Expansions Acquisitions $6 $5 $4.8 Total Invested by Segment (a,b) $4 $3.3 $2.9 $24 $3 $2.4 $2.5 $
Slide 14: 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 2013 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% 11.6% (b) Products Pipelines 11.9 11.8 12.8 12.9 12.4 11.6 11.8 13.2 12.
Slide 15: EPB Focused on Natural Gas Pipelines
EPB Focused on Natural Gas Pipelines 2014E EPB Segment Natural Gas Earnings before DD&A Highly stable cash flow stream = $1.3 billion (a) — 85% interstate pipelines • Average contract life = ~8 years (b) — 15% LNG • Average contract life = ~18 years (b) Natural Gas — Minimal throughput and commodi
Slide 16: KMI Overview
KMI Overview KMI pays a 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 int
Slide 17: 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 • 2014 budget assumes $96.15/Bbl realized price on unhedged barrels • 2014 co
Slide 18: Summary: Attractive Value Proposition
Summary KMI, KMP, KMR & EPB: Attractive Value Proposition Unparalleled asset footprint Long-term Growth Targets Diversified midstream energy KMI – 3-year targeted dividend / platform provides stable, fee-based share CAGR of about 8% (2013- cash flow 2016) Continued focus on strong balance
Slide 19: Appendix
KINDER/MORGAN Appendix
Slide 20: KMP 2014 Growth Capital Budget
KMP 2014 Growth Capital Budget ($ in millions) 2014 2014 Forecast Budget Expansion capital Natural Gas Pipelines $797 $687 CO2 (forecast split S&T $481 / EOR $549) 1,030 1,076 Products Pipelines 766 712 Terminals 644 562 Kinder Morgan Canada 58 58 Total expansion capital 3,295 3,095 Contributions to
Slide 21: EPB 2014 Growth Capital Budget
EPB 2014 Growth Capital Budget ($ in millions) 2014 Budget Growth capital Expansion $103 Contributions to JVs 66 Subtotal 169 Acquisitions 972 Total growth capital $1,141 21
Slide 22: KMR Discount Has Narrowed (Again), But Still Wide
KMR 101 Discount Has Narrowed (Again), But Still Wide 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 t
Slide 23: 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 24: Significant Historical Returns
Significant Historical Returns (a) KMP: 23% CATR Since ‘96 (b) KMI: 6% CATR Since Inception (e) $4,000 ━ KMP = $3,393 $175 Dollars Dollars $3,500 $150 $3,000 $125 $2,500 ━ S&P 500 = $152 $100 ━ UTY = $144 $2,000 ━ RMZ = $144 ━ AMZ (d) = $1,417 $75 $1,500 ━ KMI = $122 $50 $1,000 $500 $25 IPO 2/10/2
Slide 25: The Value of the Platform
The Value of the Platform Original Asset Kinder Morgan Crude & Condensate Pipeline (KMCC) May 2011 – Kinder Morgan announced a $220 million investment to convert 113 miles of an existing under-utilized natural gas pipeline and build 65 miles of new pipe to move Eagle Ford product to the KMTP (a) H
Slide 26: KMP Acquires Jones Act Tankers for ~$960 Million
KMP Acquires Jones Act Tankers for ~$960 Million Transaction Overview On 1/17/2014, KMP closed its acquisition of American Petroleum Tankers (APT) and State Class Tankers (SCT) ~$960 million in cash Immediate and long-term accretion to cash available to KMP unitholders KMI intends to forego
Slide 27: EPB Contract Expirations
EPB Contract Expirations Strong Contracted Cash Flow Profile Contract Expiration Volume (MDth/d) (a) 2019 and 2014 2015 2016 2017 2018 Beyond Total CIG 270 428 1,689 191 178 1,855 4,611 WIC 265 589 121 225 528 1,925 3,653 Cheyenne Plains 7 465 58 - 8 340 878 SNG 24 52 1,536 417 679 1,426 4,134 Elba
Slide 28: Kinder Morgan Canada: Trans Mountain Pipeline Expansion Project
Kinder Morgan Canada Trans Mountain Pipeline Expansion Project Sole oil pipeline from Oilsands to West Coast / export markets Project Backlog: $5.4 billion expansion of Trans Mountain Pipeline Long-term Growth Drivers: Expand Oilsands export capacity to West Coast TMEP $5.4 Billion Expansion and
Slide 29: Liquids Pipeline Incidents & Releases
Incidents & Releases Liquids Pipeline Right-of-way 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 0.4 0.45 0.39 20 0.29 15.5 0.24 0.24 13.1 0.21 0.2 10 6.0 0.08 0.08 2.5 - - 0.01 0.11 0.
Slide 30: Natural Gas Pipeline Incidents
Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipeline Incidents Rate Natural Gas Pipeline Incidents Rate All Reportable Incidents (a) Onshore Ruptures-only (c) 1.0 1.0 0.8 0.8 Incidents per 1,000 Miles Incidents per 1,000 Miles 0.6 0.6 0.37 0.4 0.33 0.4 0.32 0.27 0.27 0.30 (d)
Slide 31: Employee Safety Statistics
Employee Safety Statistics (a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate 6 7 Lost-time injuries per 200k hours worked 5.20 6.35 6 OSHA Recordable Incidents per 5 5.70 5 200k Hours Worked 4 4 3 3 2.50 2.60 2.50 2.50 2 2 2.10 2.10 2.10 1 0.70 0.88 0.80 0.70 1.70 1 1.88 1.65 0.70
Slide 32: KINDERZMORGAN
KINDERZMORGAN
Kinder Morgan — Mitsubishi UFJ Corporate Access Day 2014 on 6ix