Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan 2015 Analyst Conference
37 slides from Kinder Morgan's conference presentation, Jan 28, 2015
Slide 1: CO2 – Jesse Arenivas, President CO2 Group
CO2 Jesse Arenivas President CO2 Group
Slide 2: Kinder Morgan CO2 Asset Map
KINDERMORGAN Kinder Morgan CO, Asset Map rrr CO2 PIPELINE = PROPOSED LOBOS CO? PIPELINE == CRUDE PIPELINE © C02 SOURCE FIELD ; A OIL PRODUCTION FIELD i * KM HEADQUARTERS SACROC YATES:
Slide 3: History of CO2 Group and Looking Forward
History of CO2 Group and Looking Forward Track Record – Consistently very close to budget despite inherent volatility Shell CO2 formed in 1998, KM share 20% Acquired remaining 80% in April 2000 DCF ($MM)(a) Acquired SACROC interests June 2000 $1,600 Acquired Yates interests in 2001 and 2003
Slide 4: Historical Growth
Historical Growth 2012 2013 2014 2015 Gross volumes Actual Actual Actual Budget Oil Production (Bbl/d) SACROC 28,968 30,655 33,155 33,005 YATES 20,839 20,360 19,531 19,216 KATZ 1,722 2,691 3,641 5,025 GOLDSMITH (a) N/A 1,278 1,257 2,408 SGP NGLs (Bbl/d) 18,900 19,520 19,835 19,815 CO2 (MMCF/d) 1,212
Slide 5: 2015 DCF by Asset Group
2015 DCF by Asset Group(a) 2015 DCF = $1,327 MM GLSAU Katz Tall Cotton 4% 1% 1% S&T 33% Sacroc Complex 48% Yates 13% __________________________ (a) Segments shown without elimination. 5
Slide 6: 2015 Expansion Capital Budget
2015 Expansion Capital Budget - $1,237MM REVISED - $978MM 2015 Budget – 2015 Budget REVISED – $1,237 Expansion Capital $978MM Expansion Capital ROZ Katz Katz 4% ROZ 5% GLSAU 4% 5% 7% Yates GLSAU 3% 9% Yates 3% S&T 47% SACROC S&T 24% 58% SACROC 31% __________________________ Note: CO2 purchases and s
Slide 7: 2015 Expansion Program Summary
2015 Expansion Program Summary REVISED Capex Program $978MM(a) S&T – $454MM Capex (includes $36MM Cap OH & Cap CO2) $454MM 47% Continue Cow Canyon Development Wink to Colorado City pipeline Hovenweep Cooling St Johns unit and Lobos pipeline development CO2 Production 1,421 MMCF/d SACROC Co
Slide 8: Impact of Oil Price / Volume Variance on 2015 DCF
Impact of Oil Price / Volume Variance on 2015 DCF ($ in millions) 2015 Budget: $1,327MM Volume +/- 1,000 Bbl/d SACROC / Katz / GLSAU $20.0MM Yates $10.6MM CO2 Volume +/- 50 MMcf/d $8.8MM Oil Price +/- $1/Bbl WTI NGL $2.1MM CO2 $1.7MM Crude $3.2MM TOTAL: $7.0MM Mid/Cush Diff +/- $1/Bbl $4.7MM _______
Slide 9: Actions Taken/Budget Upsides
Actions Taken/Budget Upsides Projected oil production increase 1,500 Bbl/d at SACROC $30MM Targeted OPEX Savings $30MM Potential DCF Impact $60MM Targeted CAPEX Savings $113MM 9
Slide 10: CO2 Source & Transportation
CO2 Source & Transportation Continuing Business Opportunities – Record Year for SW Colorado Production Permian Basin CO2 Deliveries MMcf/d 1800 Other 1600 1400 1200 1000 Sheep Mtn. 800 Bravo Dome 600 400 McElmo Dome & Doe Canyon 200 0 1986 1993 2000 2007 2014 Permian Basin Domestic EOR Permian Bas
Slide 11: CO2 Entitlement Volumes
CO2 Entitlement Volumes Produced and Sold to our Customers CO2 KM-share MMcf/d Significant growth since 2005: CAGR: volumes +5.57% 800 No decline in CO2 demand in 2009 2015 vs 2014: volumes +9.05% 700 600 As a reminder: 500 Sales revenues are based on our working 400 interest entitlement and n
Slide 12: Demand Growth and Regeneration
Demand Growth and Regeneration 5-year Contracted CO2 Volumes CO2 Daily Contract Quantities MMcf/d 2006 2015 1,200 1,000 Previously higher oil prices increased long-term demand for CO2 800 Weighted average contract life with 600 3rd parties is 10 years 400 200 - 1 2 3 4 5 Year 12
Slide 13: Southwest Colorado CO2 Production
Serving the Market Timely Supply Expansions… Southwest Colorado CO2 Production Volumes as of: Actual Actual Actual Budget 2012 2013 2014 2015 Future MMcfd MMcfd MMcfd MMcfd Potential SWC Actual Average Daily Volumes 1,212 1,218 1,282 1,421 Projects Year-end System Capacity 1,264 1,358 1,371 1,568 Ca
Slide 14: McElmo Dome Field Expansion
McElmo Dome Field Expansion Cow Canyon Development Projected Production Forecast (MMcf/d) Additional 200 MMcf/d Opportunity 1.6 — 1.3 TCF reserves potential 1.4 Cow Canyon — Known area from past drilling 1.2 1.0 Project Costs $344MM Gas Rate (BCFD) 0.8 Base Decline — 14 development wells 0.6 0.4
Slide 15: St. Johns Development
St. Johns Development Project Update Develops additional 300 MMcf/d AZ Cortez CO2 Pipeline — 1.3 TCF reserves potential — 450 sq. mi Unit, 300 sq. mi developed NM — 216-mile Lobos PL w/interconnect to Cortez 216 mi Lobos CO2 Pipeline Successful 2014 Appraisal Program Pump Stations — 8 Wells, Gra
Slide 16: Cortez Pipeline Expansion Project
Cortez Pipeline Expansion Project Expansion enables significant growth in CO2 supply to the Permian HW/CC Cow Booster Station Increases current capacity from 1.3 Canyon Bcf/d to nearly 2.0 Bcf/d Cortez Station La Plata Station $330 MM (100%) planned investment CO2 Recapture — Phase I - $233 MM P
Slide 17: Oil and Gas Segment
Oil and Gas Segment Production and DCF Net Hydrocarbon Production (Mboe/d) Original oil in place (Billion Bbls) SACROC Yates Katz GLSAU Gas Processing SACROC 2.8 60.0 50.0 Yates 5.0 40.0 Katz 0.23 30.0 GLSAU 0.48 20.0 Gross production (Bbl/d)(a) 2014 2015 10.0 SACROC oil 33,155 33,005 0.0
Slide 18: Oil & Gas Margins and Cost Structure
Oil & Gas Margins and Cost Structure Oil & Gas Cash Cost Structure(a) ($/Net Boe) $100 O&G cost structure has strong $90 $80 correlation to energy prices $70 $60 Power is tied to gas prices $50 $40 High activity levels have increased $30 $20 staffing and other service costs – expect change $10 $
Slide 19: Oil and Gas Segment
Oil and Gas Segment Over past 7 years capex 0.5% above plan, oil production 0.1% below plan Capex ($MM) Net Oil Production (MBbl/d) $600 45 40 $500 35 $400 30 25 $300 20 $200 15 10 $100 5 $- - 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 Budget Actual Budget Actual _________
Slide 20: SACROC Production & Operations Highlights
SACROC Production & Operations Highlights Oil Production 2003-2015 (MBbl/d) 2014 – Review 40 Actual Budget Oil production 7.1% above plan 35 — Harvest better than expected 30 — Infill results significantly better than plan 25 — Platform 2 and 3 meeting oil expectations 20 — GOR under control 15 10
Slide 21: SACROC Unit Harvest Project
SACROC Unit Harvest Project: 2,200 Bbl/d of incremental oil & ~45 MMcf of additional recycled CO2 to inject Harvest Production – 2012 and 2013 projects 3-5 2-2 3-6 2-1 3-7 2-6 2-4 3-8 4-3 4-1 3-3 3-2 3-1 — Pump upsizes and reactivations 3-4 8-8 8-6 8-2 8-4 10-7 10-8 12-5 10-6 10-3 12-12 8-9 10-14
Slide 22: SACROC Unit – Bypassed Pay Project
SACROC Unit – Bypassed Pay Project Middle Canyon re-development (CR 1 and 2) S Platform — Injection began on 8/5/14 – current 30 MMcf/d — 78% of injection going into 2 heel patterns — Production exceeding expectations — Injection sleeves can be closed to divert injection into remaining patterns —
Slide 23: SACROC Unit – Infill Drilling Project
SACROC Unit – Infill Drilling Project Denser-spaced Platform Drilling Project — 26 GZ PO wells currently producing 3,600 Bbl/d — 3 Conventional Infill wells producing 712 Bbl/d — Results indicate that 104 solid prospects exist — Defers pattern activations and extends field life — Success could lea
Slide 24: SACROC Unit – Long Range Plan
SACROC Unit – Long Range Plan SACROC Oil Production LRP Changes from 2014 plan 40,000 — 104 Well Platform Infill 35,000 Program identified 30,000 — Chiquita Expansion projects added 25,000 — Platform 4, Platform 5 and BOPD_Actual West Shore pushed back with 20,000 slower activation pace BOPD_2015P
Slide 25: Yates Production
Yates Production Steady 2014 Oil Production (Bbl/d) Oil Production 1.7% below plan 25,000 Oil column is stable Continued success in targeted East Side drilling 20,000 — Focus deeper completions to minimize gas 15,000 West Side water-flood success 10,000 — Phase I & II above budgeted volumes 5,
Slide 26: Katz CO2 Project
Katz CO2 Project Production Building on Slower Trend Investment $258MM project total, $225MM through 2014 Bbl/d Continued expectation of 16% recovery and 7000 25.1 MMBbls reserves 6000 Oil Response Oil rate improved 3,605 to 3,910 Bbl/d (Dec to Dec) 2014 Plan 4,646 vs. Actual 3,643 Bbl/d 500
Slide 27: GLSAU Production
GLSAU Production 2014 Results: - Oil Production below plan - Opex over plan 2013-14 Oil Production (Bbl/d) 3,000 Operational and Reservoir challenges: 2,500 Oil Processing rate slower than expected 2,000 2014 Budget — Conformance issues — Severe scale and asphaltenes BOEPD 1,500 — High CO2 product
Slide 28: GLSAU Production
GLSAU Production Strategies to address the challenges: 2015 Oil Plan (Bbl/d) • Improve Response 3,000 ― Execute wellwork for the impaired wells Oil ― Improve processing rates 2,500 2015 Budget • Infill drill 2,000 BOPD • Stimulate existing wells (larger frac’s) 1,500 ― Conformance work 1,000 • Impro
Slide 29: KM ROZ Phase I Project
KM ROZ Phase I Project San Andres ROZ oil saturation similar to water-flooded main pay San Andres KM ROZ Phase I Production Forecast Several significant San Andres ROZ projects underway in San Andres Phase 1 — $88.3 MM CAPEX — Nine 20-acre 5 spots — 4.7 MMBO recoverable reserves — Phi-H better t
Slide 30: KM ROZ Future Development
KM ROZ Future Development 6 Section Development Based On 3D Seismic, Cores, Well Logs 194 Patterns 194 WAG Injectors 233 Producers Peak Oil Rate: 25,000 Bbl/d (2021) ~ 93.5MM STBO Reserves 12% Recovery Factor 647 BCF CO2 Purchases 30
Slide 31: Oil and Gas Segment Production Forecasts
Oil and Gas Segment Production Forecasts Production expectations tend to grow over time Evolution of Forecasted 2015 Production(a) over Time (MBbl/d, 8/8ths) We expect production to exceed our reserve report over the long-term 60 50 Higher recoveries and additional targets added 40 to inventory at
Slide 32: P2's, Development Costs
Oil & Gas, and Business Unit IRR 30% All-in O&G IRR (2000-2024) ~22.5% 10-K + Reserve Report Required disclosures in 10-K plus Gas Processing proved reserves cash flows: 16.9% Total 25% Adding in Gas Processing excluded from disclosures increases IRR to 17.9% S&T 20% Adding in reserves discoun
Slide 33: Response to Current Oil Price Environment
Response to Current Oil Price Environment Focus on Costs SACROC, Yates and S&T have low cost structures GLSAU Katz Tall Cotton 1% 1% Cash lifting cost per BOE 4% SACROC $11.62 Yates $7.90 S&T Projects profitable at current prices 37% Sacroc Complex 45% Other EOR Higher OPEX per barrel Mo
Slide 34: 2015 Projects – Price Sensitivity
2015 Projects – Price Sensitivity IRR % at Variable Oil Price $ / BO 40 50 60 70 SACROC Infill 35% 68% 100% 100% SACROC- Bypass 35% 65% 100% 100% SACROC P4 -- 8% 11% 21% Yates HDH 23% 40% 57% 74% GLSAU 4a 3% 8% 12% 16% Tall Cotton Ph 2 -- 12% 20% 28% Cow Canyon(a) 21% 21% 21% 29% ___________________
Slide 35: 2015 Projects – Price Sensitivity, 15% Cost Reduction
2015 Projects – Price Sensitivity 15% Cost Reduction IRR % at Variable Oil Price $ / BO 40 50 60 70 SACROC Infill 70% 82% 98% 100% SACROC- Bypass 50% 79% 98% 100% SACROC P4 -- 10% 20% 30% Yates HDH 34% 58% 76% 87% GLSAU 4a 7% 11% 20% 30% Tall Cotton Ph 2 6% 16% 26% 32% Cow Canyon(a) 27% 27% 27% 38%
Slide 36: KM CO2 Current Outlook
KM CO2 Current Outlook Development Plans 2015-2023 10 Year SACROC Group Forecast KM Share Cap CO2 & — Continue platform development plan; production forecast is based on Net BOE (a) Capex Overhead existing recovery expectations (MMBoe) (MM) (d) (MM) — Initiate Bypass Pay development in South Platf
Slide 37: Kinder Morgan
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