Kinder Morgan, Inc. · NYSE:KMI

Kinder Morgan — Salient Partners MLP Investor Conference 2012

38 slides from Kinder Morgan's conference presentation, Apr 12, 2012

  1. Slide 1: Companies Run By Shareholders, For Shareholders

    Companies Run By Shareholders, For Shareholders C. Park Shaper President April 12, 2012

  2. Slide 2: Important Additional Information Will Be Filed With the SEC

    IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC Kinder Morgan, Inc. (“KMI”) has filed with the SEC a Registration Statement on Form S-4 in connection with the proposed transaction including a definitive Information Statement/Prospectus of KMI and a definitive Proxy Statement of El Paso C

  3. Slide 3: Use of Non-GAAP Financial Measures

    Use of Non-GAAP Financial Measures KMP The non-generally accepted accounting principles ("non-GAAP") financial measures of distributable cash flow before certain items (both in the aggregate and per unit), segment earnings before depreciation, depletion, amortization and amortization of excess cost

  4. Slide 4: Use of Non-GAAP Financial Measures – Cont’d

    Use of Non-GAAP Financial Measures – Cont’d "Certain items" are items that are required by GAAP to be reflected in net income, but typically either (1) do not have a cash impact, for example, goodwill impairments, allocated compensation for which we will never be responsible, and results from assets

  5. Slide 5: Use of Non-GAAP Financial Measures – Cont’d

    Use of Non-GAAP Financial Measures – Cont’d KMI The non-generally accepted accounting principles, or non-GAAP, financial measure of cash available to pay dividends is presented in this news release. This non-GAAP financial measure should not be considered as an alternative to a GAAP measure such as

  6. Slide 6: Kinder Morgan: Three Ways to Invest

    Kinder Morgan: Three Ways to Invest Kinder Morgan Energy Partners, L.P. Kinder Morgan, Inc. Market Equity $27.1B (a) LP & GP Market Equity $28.2B (d) Debt 12.4B (b) Distributions Debt 3.2B (e) Enterprise Value $39.5B $1.6B (c) Enterprise Value $31.4B 2012E LP Distribution per Unit $4.98 (c) 2012E Di

  7. Slide 7: KMR 101

    KMR 101 (a) 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 (b)  Like KMP units, KMR shares are tax efficient — but with 0% simplified tax repor

  8. Slide 8: Our Strategy: Stay the Course

    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 foo

  9. Slide 9: Asset Footprint

    Asset Footprint  Largest independent transporter of petroleum products in the U.S. — Transport ~1.9 MMBbl/d (a)  2nd largest transporter of natural gas in the U.S. — Own an interest in / operate over 25,000 miles of natural gas pipeline — Connected to many important natural gas shale plays includi

  10. Slide 10: 16 Years of Consistent Growth

    16 Years of Consistent Growth Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (b) $4.98 $3,500 $5.00 $4.61 $3,118 $4.40 GP LP $4.50 $4.20 $3,000 $2,737 $4.02 $4.00 $2,450(a) $3.48 $2,500 $2,171 $3.50 $3.13 $3.26 $2.87 $1,877 $3.00 $2.63 $2,000 $2.44 $1,469 $2.50 $2.15 $1,500

  11. Slide 11: Significant Historical Returns

    Significant Historical Returns (a) KMP: 26% CAGR Since ‘96 (b) KMI: 38% CAGR Since ‘11 IPO (e) $4,000 $140 Dollars KMP = $3,309 Dollars KMI = $138 $3,500 UTY = $114 $120 $3,000 $100 $2,500 MSCI = $113 $80 S&P 500 = $108 $2,000 $60 $1,500 AMZ (d) = $1,022 $40 $1,000 $500 $20 ⇐ IPO 2/10/2011 S&P 500 =

  12. Slide 12: Promises Made, Promises Kept

    Promises Made, Promises Kept Promises Made Promises Kept KMP Budgeted KMP Actual LP Distribution: LP Distribution: 2000: $1.60 2000: $1.71 2001: $1.95 2001: $2.15 2002: $2.40 2002: $2.435 2003: $2.63 2003: $2.63 KMP achieved 2004: $2.84 2004: $2.87 LP distribution 2005: $3.13 2005: $3.13 target in 1

  13. Slide 13: Kinder Morgan 2012 Goals (Excludes El Paso)

    Kinder Morgan 2012 Goals (Excludes El Paso) KMP (a) KMI (a,b)  Distribution Target  Dividend Target (declared) — $4.98 per unit (8.0% growth) — $1.35 per share (12.5% growth) — Excess coverage of $71MM — $985MM in cash available for dividends  Maintain Solid Balance Sheet  Maintain Solid Balance

  14. Slide 14: KMP

    KINDER/MORGAN KMP

  15. Slide 15: Diversified Cash Flow

    (KMP) Diversified Cash Flow 2012E KMP Segment Earnings before DD&A CO2 = $4.4 billion (a,d) Natural Gas Pipelines  $1,381MM segment EBDA  $1,303MM segment EBDA (d) — 26% CO2 transport and sales — 41% Interstate — 74% oil production related — 59% Intrastate (e) — Production hedged (b): 31% 30% 2012

  16. Slide 16: 2012 Growth Expenditure Budget

    (KMP) 2012 Growth Expenditure Budget 2012E Total KMP Growth Expenditures = $1.7 billion (a,b,c) Natural Gas CO2 Oil Pipelines (a) Production 17% 15% CO2 S&T 9% Products 19% Pipelines (a,b) 40% Terminals (a,b,c) __________________________ Note: excludes any impact from the proposed acquisition of El

  17. Slide 17: Natural Gas Pipelines Segment

    (KMP) Natural Gas Pipelines Segment Well-positioned in the Rockies, shales and in Texas 2012 Growth Drivers:  Growth and full year contribution on Kinder Hawk  Full year contribution from Eagle Hawk and SouthTex Trailblazer  Eagle Ford shale development (on REX standalone basis, and under JVs wit

  18. Slide 18: Products Pipelines Segment

    (KMP) Products Pipelines Segment Well-located with origin in refinery / port hubs and terminus in population centers 2012 Growth Drivers:  PPI tariff escalator  Modest organic volume growth Cochin  Initial year of Crude and Condensate operations, Cochin E/P project, and terminal projects includin

  19. Slide 19: Terminals Segment

    (KMP) Terminals Segment Well-located in refinery / port hubs and inland waterways 2012 Growth Drivers:  Increase in rates on existing contracts  Higher coal throughput  Full year of 2011 acquisitions (Cushing, Total, Watco) and expansion projects (Carteret, Cushing, Deer Park, Port of Houston) 

  20. Slide 20: CO2 Segment

    (KMP) CO2 Segment Own and operate best source of CO2 for EOR 2012 Growth Drivers:  Higher overall oil / NGL prices  CO2 S&T price increases  Relatively flat oil production Longer-term Growth Drivers:  Strong demand for CO2 KMCO2 Katz — Expansion of CO2 source fields SACROC and pipelines ESPL Cla

  21. Slide 21: Kinder Morgan Canada Segment

    (KMP) Kinder Morgan Canada Segment Sole oil pipeline from Oilsands to West Coast / export markets 2012: Trans Mountain  Extending new toll settlement on Trans Mountain pipeline (TMPL); results in relatively flat financial performance 2 between 2011 and 2012 Puget Longer-term Growth Drivers: Express

  22. Slide 22: ~$25B of Growth Capital Invested

    (KMP) ~$25B of Growth Capital Invested (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year (a) $15 $12 $3.1 $3.5 $3.3 JV Contributions $9 Expansion $3.0 $6 $11.7 Acquisition $2.8 $10.2 $2.6 $3 $2.5 $2.5 $2.4 $- Expansions Acquisitions $2.0 $2.0 $1.7 $1.6 $1.5 Total Invested by

  23. Slide 23: Returns on Capital

    (KMP) Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% 13.4% 13.7% 12.9% 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 CO2 27.5 24.6 22.0 21.9 2

  24. Slide 24: KMI

    KINDER/MORGAN KMI

  25. Slide 25: Overview – 99% of Cash Comes from KMP

    (KMI) Overview – 99% of Cash Comes from KMP 2012E KMI Total Cash Receipts  Limited capital expenditures at KMI = $1.6 billion (a)  Stock ownership: — Public – 16% GP Interest — Rich Kinder, other management 88% and original stockholders – 39% — Sponsors – 45% LP  In 2012: Interest — KMI expects t

  26. Slide 26: Growth in KMP Distributions Leads to KMI Growth

    (KMI) Growth in KMP Distributions Leads to KMI Growth Growth in KMP Distributions Received by KMI $1,585 $1,600 $64 $1,380 Total Distributions to KMI ($MM) $1,400 LP Interests $1,200 GP Interest $1,000 GP Distribution on $1,340 Additional 16MM KMP Units $800 $1,217 $600 $400 $200 $163 $181 Budgeted

  27. Slide 27: KMP Risks

    KMP Risks  Regulatory — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes  Crude Oil Production Volumes  Crude Oil Prices — 2012 budget assumes $93.75/Bbl realized price on unhedged barrels — 2012 sensitivity is ~$5.8 million DCF per $1/Bbl change in

  28. Slide 28: KMI, KMP & KMR: Attractive Value Proposition

    KMI, KMP & KMR: Attractive Value Proposition  Unparalleled asset footprint  Established track record  Industry leader in all business segments  Experienced management team  Supportive general partner  Transparency to investors  Attractive returns driven by combination of yield plus growth 28

  29. Slide 29: El Paso Update

    KINDER/MORGAN El] Paso Update

  30. Slide 30: El Paso Transaction Timeline

    El Paso Transaction Timeline  El Paso announced E&P sale — Definitive agreement to sell entire E&P business for $7.15 billion — Expect to close about the same time as close of El Paso acquisition  Integration plan being developed – targeting $350 million of synergies  Shareholder meetings were he

  31. Slide 31: Dividend and Distribution Growth Targets

    Dividend and Distribution Growth Targets KMI KMP Current targets excluding El Paso Current targets excluding El Paso  Declare budgeted 2012 dividends of $1.35  Declare budgeted 2012 LP distributions of per share (12.5% growth) $4.98 per unit (8.0% growth)  Targeted 10% long-term dividend growth 

  32. Slide 32: Appendix

    KINDER/MORGAN Appendix

  33. Slide 33: Stable Asset Base

    (KMP) Stable Asset Base Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada – Interstate: virtually all – Take or pay, – S&T: primarily take or pay minimum volume – Essentially no  Volume Security – Volume based minimum volume – Intrastate: ~75% guarantees, or volume risk gu

  34. Slide 34: KMP 2012 DCF Budget

    (KMP) KMP 2012 DCF Budget (a) (millions, except per unit) 2011 2012 Change Actual Budget $ % Distributable cash flow Net income $1,742 $2,148 $406 23% DD&A (b) 1,133 1,206 73 6 Book / cash tax difference 27 26 (1) (4) Eagle Ford / Express / Endeavor (c) 15 7 (8) (53) Sustaining capex (d) (212) (249)

  35. Slide 35: KMP 2012 Income Budget

    (KMP) KMP 2012 Income Budget (a) (millions, except per unit) 2011 2012 Change Actual Budget $ % Segment earnings before DD&A (EBDA) Products Pipelines $694 $734 $40 6% Natural Gas Pipelines 951 1,133 182 19 CO2 1,094 1,381 287 26 Terminals 701 757 56 8 Kinder Morgan Canada 199 201 2 1 Total segment

  36. Slide 36: KMP 2012 Budgeted Quarterly Profile

    (KMP) KMP 2012 Budgeted Quarterly Profile (a) ($ in millions, except per unit) 1Q 2Q 3Q 4Q Year Total Segment EBDA w/JV DD&A (b) 2012B 25% 24% 24% 27% $4,377 2011 24% 23% 26% 27% $3,810 DCF/unit (c) 2012B 27% 22% 23% 28% $5.19/unit 2011 26% 22% 25% 27% $4.68/unit Earnings/unit 2012B 27% 20% 22% 31%

  37. Slide 37: KMI 2012 Budget for Cash Available to Pay Dividends

    (KMI) KMI 2012 Budget for Cash Available to Pay Dividends ($ in millions) Declared Basis 2011 2012 Change Actual Budget $ % Distributions KMP distributions To general partner $1,217 $1,404 $187 15% On KMP units owned by KMI 100 108 8 8 On KMR shares owned by KMI 63 73 10 16 Total KMP distributions t

  38. Slide 38: KMI 2012 Budgeted Quarterly Profile

    (KMI) KMI 2012 Budgeted Quarterly Profile ($ in millions, except per share)  KMI – yield-oriented investment valued on a cash flow basis 1Q 2Q 3Q 4Q Year Cash available to pay dividends 2012B 31% 18% 21% 30% $985 2011 (a) 30% 19% 22% 29% $866 Earnings per share 2012B 24% 24% 25% 27% $1.03/sh 2011 n

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