Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — RBC MLP Conference 2015
32 slides from Kinder Morgan's conference presentation, Nov 18, 2015
Slide 1: Run By Shareholders, For Shareholders
Run By Shareholders, For Shareholders David Michels VP Corporate Finance & Investor Relations November 18, 2015
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 futu
Slide 3: KMI Overview
KMI Overview Management Aligned with Investors; 14% Stake in KMI Simple Public Structure Management / Public Original S/H(a) Float(b) ~317MM (14%) ~1,920MM (86%) Kinder Morgan, Inc. (C-corp, NYSE: KMI) Greatly simplified structure: Market Equity $53.7B(c) One equity base Net Debt 42.5B(d) One di
Slide 4: Unparalleled Asset Footprint
Unparalleled Asset Footprint Largest Energy Infrastructure Company in North America 3rd largest energy company in N. America with an enterprise value of ~$100 billion $21.3 billion of currently identified organic growth projects Largest natural gas network in N. America — Own an interest in/ o
Slide 5: Relative Performance
Relative Performance Well-positioned Assets, Stable Cash Flow Weathering the High Seas(a) Low commodity price sensitivity Oil last closed above $90/Bbl on 10/6/2014 — 2015 budgeted EBDA is ~86% fee-based, ~95% — Oil significantly lower today, down 55% fee-based or hedged Safe harbor: KMI’s div
Slide 6: 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 Maintaining strong balance sheet is paramount — Accessed capital markets for approximately $46 billio
Slide 7: 18 Years of Stable Growth
18 Years of Stable Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP Distribution per Unit(a) KMI Annual Dividend per Share(c) $6.00 $5.58 $2.50 $5.33 $4.98 $2.00 $5.00 $4.61 $2.00 $4.40 $4.20 $1.74 $4.02 $1.60 $4.00 $3.48 $1.40 $3.13 $3.26 $1.50 $2.87 $1.20 $3.00 $2.63 $2.44 $2.1
Slide 8: Capital Invested
Capital Invested ~$48 Billion of Asset Investment & Acquisitions Since Inception(a,b) ($ in billions) Total Invested by Type Total Invested by Year $30 $25.7 $11 $25 $21.8 Expansion $10.2 $20 $10 Acquisition $15 $9 $10 $8 $5 $7 (b) (c) $- $6.5 $6.5 Expansions Acquisitions $6 $5.7 $5 Total Invested b
Slide 9: Returns on Invested Capital
Returns on Invested Capital Consistent Returns Demonstrate Asset Performance, Management Discipline 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Segment ROI(a): Nat. Gas Pipes-KMP 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) 11.
Slide 10: Financial Rigor
Financial Rigor Promises Made, Promises Kept Promises Made Promises Kept KMI Budgeted KMI Actual Dividend: Dividend: 2011: $1.16(a) 2011: $1.20(a) KMI has exceeded 2012: $1.35 2012: $1.40 its dividend target 2013: $1.57 2013: $1.60 in each of past 4 yrs. 2014: $1.72 2014: $1.74 KMP Budgeted KMP Actu
Slide 11: 2015 Budget Guidance
2015 Budget Guidance Supported by Diversified, Fee-based Cash Flow 2015 Budget Current Outlook KMI 2015 budgeted dividend of $2.00 per KMI 2015 dividend of $2.00 per share share — Excess dividend coverage of ~$300 million — 15% growth over 2014 Preliminary 2016 dividend per share growth — Exce
Slide 12: 2015 Budgeted Segment Earnings Profile
2015 Budgeted Segment Earnings Profile Driven by Natural Gas Natural Gas Pipelines 2015 Budgeted Segment 71% interstate pipelines EBDA = $8.2 billion(a) 21% gathering, processing & treating 8% intrastate pipelines & storage CO2 S&T Products Pipelines CO2 Oil 66% refined products Production 5
Slide 13: KMI's High Quality Cash Flow
KMI’s High Quality Cash Flow Not all “fee-based” cash flow is created equal 2015 Budgeted Segment Composition of 86% EBDA = $8.2 billion(a) Fee-based Cash Flow 5% Commodity- CO2 S&T based $0.4 / Other <1% 9% Hedged $0.8 Terminals 5% Cash Flow Products Other 22% Fee- Pipelines 10% based Cash $1.8 Fee
Slide 14: 5-year Project Backlog
5-year Project Backlog(a) $21.3 Billion of Currently Identified Organic Growth Projects Tremendous footprint provides $21.3B of currently identified growth projects over next 5 years 5-year Growth Capex Backlog ($B) 4Q 2015 2016 2017 2018+ Total Natural Gas Pipelines $0.6 $0.8 $2.7 $5.0 $9.1 Product
Slide 15: Natural Gas Megatrend
Natural Gas Megatrend Strong Natural Gas Footprint & Market Opportunity Set U.S. Natural Gas Projected Real- time, Long-term Supply & Demand(a) (Bcf/d) Benefits of Footprint Demand 2015 2020 2025 Natural Gas Segment Asset Footprint KMI owns/ operates ~69,000 LNG net exports -0.2 7.6 10.8 miles of
Slide 16: Business Risks
Business Risks Regulatory — Products Pipeline FERC rate cases — Natural Gas FERC rate cases — Legislative and regulatory changes CO2 crude oil production volumes Commodity prices — 2015 budget price assumptions: $70/Bbl for crude, and $3.80/MMBtu for natural gas — CO2 oil production price sens
Slide 17: Summary
Summary Largest energy infrastructure company in North America with unparalleled asset footprint Diversified and stable, fee-based cash flow Industry leader in all business segments Insulated from commodity price changes Highly visible, attractive growth project backlog Attractive divide
Slide 18: Appendix
KINDERMORGAN Appendix
Slide 19: Energy Toll Road
Energy Toll Road Diversified, Fee-based Business Model Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada – Interstate & LNG: take or pay – Liquids & Jones Act: – Refined products: – S&T: primarily – Intrastate: ~75% take or pay(a) primarily take or pay primarily volume-base
Slide 20: 2015 Growth Capital Expenditure Forecast
2015 Growth Capital Expenditure Forecast ($ in millions) 2015 2015 Growth capital Forecast Budget Natural Gas Pipelines $ 1,390 $ 2,002 CO2 - S&T 175 713 CO2 - EOR 459 524 Products Pipelines 454 327 Terminals 880 731 KM Canada 117 84 (a) Subtotal - growth capital excl. large acq. 3,474 4,381 Hiland
Slide 21: Natural Gas Pipelines Segment Outlook
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $9.1 billion of identified growth projects over next five years(a), including: — TGP Northeast market-area expansion (NED) — LNG liquefaction (Elba Island) — T
Slide 22: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $1.7 billion of identified growth projects over next four years(a), including: — UTOPIA — KMCC extensions — Palmetto — Double H expansion Long-term Growth Drivers: Extension of refined
Slide 23: Terminals Segment Outlook
Terminals Segment Outlook Well-located in refinery/ port hubs and inland waterways Project Backlog: $2.7 billion of identified growth projects over next four years(a), including: — Terminals network expansion in Houston Ship Channel — Jones Act tanker builds — Canadian crude oil merchant tankage (
Slide 24: CO2 Segment Outlook
CO2 Segment Outlook Own and operate best source of CO2 for EOR(a) Project Backlog: Identified growth projects totaling $0.6 billion and $1.8 billion in S&T and EOR, respectively, over next five years(b), including: — S&T • Southwest Colorado CO2 production • Cortez pipeline — EOR • SACROC/ Yates/
Slide 25: Kinder Morgan Canada Segment Outlook
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast/ export markets Project Backlog: $5.4B Trans Mountain Pipeline expansion (TMEP) Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia TMEP $5.4 Billion Expansion — Near tripling of pipel
Slide 26: Credit Ratios and Liquidity
Credit Ratios and Liquidity(a) ($ in millions) Credit Ratios 2015 2011 2012 2013 2014 Budget Net debt(b) to EBITDA 4.5x 5.4x 5.0x 5.5x 5.6x EBITDA to interest 5.0x 4.0x 3.9x 4.1x 3.6x Revolver Capacity(c,d) Long-term Debt Maturities(c,e) Committed revolving credit facility $ 4,000 2015(f) $ 715 Less
Slide 27: Cost of Capital
Cost of Capital A whole new ballgame No more incentive distribution rights Prior long-term hurdle rate for accretion (at KMP) = ~9% pre-tax New long-term hurdle rate for accretion = ~4% after-tax — 50% equity(a) x 4.1% yield(b) Analyst Day Hurdle Rate: + 50% debt(a) x 2.4%(c) cost of debt = 3.
Slide 28: Incidents & Releases: Liquids Pipeline
Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipeline Incidents per 1,000 Miles(a) Liquids Pipeline Release Rate(a) 0.8 50 Barrels per billion barrel miles Incidents per 1,000 Miles 40 0.6 30 0.4 20 0.6 0.5 0.2 0.4 0.3 10 0.3 18.0 0.2 15.5 0.2 13.1 11.5 - 0.1 0.1 6.0 - 0.01 0.1 0.7 - -
Slide 29: Incidents & Releases: Natural Gas Pipeline
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) 0.8 0.20 Incidents per 1,000 Miles Incidents per 1,000 Miles 0.6 0.15 (d) 0.4 0.10 (d) 0.16 0.2 0.4 0.05 0.4 0.3 0.3 0.3
Slide 30: Employee Safety Statistics
Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate Lost-time injuries per 200k hours worked 5 7 4.9 6.4 6 OSHA Recordable Incidents per 4 5.2 5 200k Hours Worked 3 4 2 3 2.5 2.6 2.5 2.5 1.0 2 1.6 1.5 0.9 0.8 0.8 1.2 1.2 1 1 1.4 1.4 1.6 1.4 0.6 0.8 0.5 0.2 0
Slide 31: Notes
Notes KINDERMORGAN 31
Slide 32: Kinder Morgan
KINDER/MORGAN