Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Wachovia 2006 Pipeline / MLP Conference
20 slides from Kinder Morgan's conference presentation, Dec 5, 2006
Slide 1: Kinder Morgan and Terasen
All amounts in U.S. dollars unless otherwise noted. Kinder Morgan and Terasen August 2005 The enclosed materials are provided for information purposes only, and are not intended to be proxy solicitation materials.
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: Overview of Transaction
Overview of Transaction (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: $10.35 (C$12
Slide 4: 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 ─ Represent
Slide 5: Combined Company Operations
Combined Company Operations 5
Slide 6: Segment Overview
Segment Overview Kinder Morgan NGPL 41% KMP 7% Retail Gas Pro Forma of Combined Companies 50% Distribution 2% NGPL Other 2006E EBITDA = $1.3 billion (a) 30% Terasen Retail Gas 23% Distribution Other KMP 36% 6% 65% Retail Gas Distribution 8% 29% 3% Petroleum Petroleum Other Pipelines Pipelines 2006E
Slide 7: The Kinder Morgan Strategy
The Kinder Morgan Strategy The Same Since Inception Focus on stable, fee-based assets which are core to the energy infrastructure of growing markets Increase utilization of assets while controlling costs ─ Classic fixed cost businesses with little variable costs ─ Improve productivity to drop al
Slide 8: Management Philosophy
Management Philosophy Low Cost Asset Operator Attention to Detail Disciplined Capital Allocation Risk Management Transparency Cash is King Alignment of Incentives Business Unit Autonomy 8
Slide 9: Consistent Track Record
Consistent Track Record Total Distributions from KMP ($mm) KMP Distribution / Unit (a) $1,200 $1,139 $3.20 GP $2.96 $1,000 LP $978 $3.00 = 20% $2.50 $2.72 CA GR $800 = 60% $827 $2.20 R $701 $1.90 G $600 CA $548 $2.00 $1.45 $1.30 $1.13 $400 $333 $1.00 $0.63 $198 $153 $200 $17 $30 $0 $0.00 1996 1997 1
Slide 10: Significant Historical Returns
Significant Historical Returns KMI: 40% annualized return (a) KMP: 35% annualized return (a) Total Return (a) Total Return (a) 800 1400 658% 1193% 700 1200 600 1000 KMP 500 KMI 800 400 600 300 377% 400 200 MLP Index UTY Index 69% (6%) 200 83% 100 S&P 500 S&P 500 0 0 Jul-99 Jul-00 Jul-01 Jul-02 Jul-0
Slide 11: Terasen Asset Overview
Terasen Asset Overview Stable, Regulated, Low-Risk Assets ─ Over 95% regulated (a) ─ Stable regulatory environment; focused on expanding infrastructure Strategic Location ─ Utility serves high growth areas in Western Canada ─ Pipelines sourced from the prolific Canadian oilsands One of largest
Slide 12: Terasen Retail Gas Distribution
Terasen Retail Gas Distribution Largest LDC in British Columbia, with 875,000 meters Steady organic growth = ~2% Low risk rate structure ─ 50/50 sharing of certain savings ─ Separate O&M and volume trackers Potential expansion/ growth projects Long history of negotiating/ renewing incentiv
Slide 13: Terasen Petroleum Pipelines
Terasen Petroleum Pipelines Owns and operates several major crude oil and products pipeline systems Assets regulated by National Energy Board (NEB), FERC and the Wyoming Public Service Commission Growing demand for oil pipeline infrastructure due to large amount of Canadian oilsands reserves
Slide 14: Significant Growth Potential in Oilsands
Significant Growth Potential in Oilsands Oil and Bitumen Reserves1 (billions of Bbls, 2003) Oil reserves (billions of barrels) 400 345 315 300 270 Total cost ~ $16-18/Bbl 200 10 oilsands projects now on-stream 130 115 100 100 93 Significant 100 40 32 Growth Current production ~ 1 mm Bbl/d 0
Slide 15: Terasen Pipeline Growth Opportunities
Terasen Pipeline Growth Opportunities Trans Mountain expansions: Phase I: Additional compression ─ Estimated cost: C$210mm ─ Incremental capacity: 35 MBbl/d ─ In-service: late-2006 ─ Status: in discussion with shippers for expedited approval Phase II: Loop existing pipeline ─ Estimated cost: C$365
Slide 16: Terasen Pipeline Growth Opportunities
Terasen Pipeline Growth Opportunities Corridor expansions Phase 1 – additional compression ─ Estimated cost: C$8.4mm ─ Incremental capacity: 35 MBbl/d ─ In-service: Fall-2005 Phase 2 – loop existing pipeline ─ Estimated cost: C$800mm ─ Incremental capacity: 400 MBbl/d ─ In-service: 2009 16
Slide 17: KMI Provides:
KMI Provides: Access to capital Size More than $10 billion in One of the largest integrated pipeline debt/equity capital raised under companies in North America current management Pro forma enterprise value of KMI-TER in combination with KMP is $35 billion Pipeline Experience Kinder Morgan, In
Slide 18: Transaction Timeline
Transaction Timeline Next 4-6 months: Regulatory Approvals ─ British Columbia Utilities Commission ─ Canadian Competition Act ─ Investment Canada ─ Other October 2005: Terasen Shareholder vote Q4 2005: Close transaction 18
Slide 19: Transaction Summary
Transaction Summary Stable, regulated, low-risk assets Solid earnings accretion ─ $5.00/share KMI pro-forma 2006E earnings Strong cash flow generation ─ Annual dividend of $3.50/share expected in 2006 ─ Represents 58% increase in TER dividend, 17% increase in KMI Expansion opportunities from
Slide 20: Kinder Morgan and Terasen
Kinder Morgan and Terasen August 2005
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