Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan Energy Partners — 2009 KMP Analyst Conference
24 slides from Kinder Morgan's conference presentation, Jan 29, 2009
Slide 1: CO2 – Tim Bradley, President CO2 Group
ENERGY PARTNERS, L.P. CO2 Tim Bradley President CO2 Group
Slide 2: Distributable Cash Track Record
ENERGY PARTNERS, L.P. Distributable Cash Track Record CO2 Sales and Transportation - historical growth CO2 Flood Development - growing faster $800 $600 DCF - MM$ $400 $200 $0 '01 '02 '03 '04 '05 '06 '07 '08 '09 @ '09 @ $68/b $50/b CO2 S&T CO2 Flood Properties Plan for Each Year _____________________
Slide 3: 2008 Performance Recap
ENERGY PARTNERS, L.P. 2008 Performance Recap Overall, slightly ahead despite huge price swings and Hurricane Ike CO2 Source and Transportation Outperformed $298 MM vs $233 MM Yates Outperformed $252 MM vs $238 MM 27,631 B/d vs 27,500 B/d SACROC* Underperformed $203 MM vs $265 MM Oil: 27,99
Slide 4: Response to current oil price environment
ENERGY PARTNERS, L.P. Response to current oil price environment Focus on costs Yates and S&T have low cost structures 2009 DCF by Asset Group Opex per unit ~25% of unit revenue at Other O&G current prices Modest Capex needs, and very profitable at current prices SACROC S&T Complex SACROC Complex
Slide 5: Oil and Gas Margins Remain Strong
ENERGY PARTNERS, L.P. Oil and Gas Margins Remain Strong Net of Hedged Prices SACROC Cost Structure Yates Cost Structure 80 80 Net Realized Price 60 60 Net Realized Price $/BOE 40 $/BOE 40 20 20 0 0 2004 2005 2006 2007 2008 2009 2004 2005 2006 2007 2008 2009 Actual Actual Actual Actual Actual Budget
Slide 6: SACROC and Yates Oil Production DCF
ENERGY PARTNERS, L.P. SACROC and Yates Oil Production DCF Oil Production 80,000 Historical Summary SACROC Yates 60,000 40,000 Significant Development Events SACROC: Acquisition June 2000 20,000 CLPL May 2003 BE, CR, SWCL, Platform 2003- 2003-present 0 Yates: 2002 2003 2004 2005 2006 2007 2008 2009 A
Slide 7: SACROC Production and Operations Highlights
ENERGY PARTNERS, L.P. SACROC Production and Operations Highlights BOPD Oil Production 2001-2008 2007 – Review 40,000 35,000 Actual Challenge 1: Reservoir responding differently 30,000 Budget Lower recoveries and injectivities in post Center- 25,000 Line Projects 20,000 Development pace slowed
Slide 8: 2009 SACROC Opex Budget - $176 Million
ENERGY PARTNERS, L.P. 2009 SACROC Opex Budget - $176 Million* Well work (35%) 38% of wellwork under sub-pump contract Other reductions achieved to date •Rig 10% Labor •Wireline 25% •Slickline 10% •Frac tanks 25% •Coiled Tubing 25% Wellwork Surface Expense (29%) Power 43% of Surface under CO2 Removal
Slide 9: 2009 SACROC Expansion Capital Budget - $246 Million
ENERGY PARTNERS, L.P. 2009 SACROC Expansion Capital Budget - $246 Million Well work (49%) SACROC Gas 10-40% reductions achieved to date Handling •Rig 10% •Casing 12% •Cement 29% •Directional Drilling 25% •Logging 43% •Wellhead 33% SACROC Wells Field Facilities (35%) Recent projects 21% below AFE •Cr
Slide 10: SACROC Expansion Projects
ENERGY PARTNERS, L.P. SACROC Expansion Projects Platform 2009+ South Platform 2008 Gilligan’s Island 2008 Southwest Center Line 2007 Southwest Center Line (Stage 3) 2008 10
Slide 11: SACROC Development: Response to changing oil price
ENERGY PARTNERS, L.P. SACROC Development: Response to changing oil price Focus on costs Different strategies are being developed depending on both oil price levels and achieved cost REEF_OWC_CHEVRON - HCFT [RMR] - Hydrocarbon Ft = based on Porosity (PHIH) x 0.80 0.439 0 30.0 29.0 28.0 27.0 26.0 25.0
Slide 12: New Project Economics – Platform 1B
ENERGY PARTNERS, L.P. New Project Economics –Platform 1B New Projects remain economic at lower recoveries and lower oil prices P1B Expansion Economic Sensitivity 35% Injectivity Growth 100 $30 Flat 90 $35 Flat $40 Flat $50 Flat 80 $70 Flat 20% IRR 70 60 IRR, % 50 40 30 20 10 0 3.0 4.0 5.0 6.0 7.0 8.
Slide 13: Yates Oil Column – Assessment
ENERGY PARTNERS, L.P. Yates Oil Column – Assessment 35 •Oil column has thinned relative to 2007, but remains stable 30 •Expect slightly lower oil production in 2009 25 •Continue Horizontal drilling program to capture draining oil 20 15 •Oil production responds when CO2 injection 2003 2004 2005 2006
Slide 14: Yates HDH Production Performance
ENERGY PARTNERS, L.P. Yates HDH Production Performance Continued Good Results 275 250 225 200 175 BOPD 150 2008 Program 125 100 75 50 25 0 0 50 100 150 200 250 300 2003 Avg. 2004 Avg 2005 Avg 2006 Avg 2007 Avg 2008 Avg 14
Slide 15: CO2 Source and Transportation
ENERGY PARTNERS, L.P. CO2 Source and Transportation Growing Business Opportunities Permian Basin CO2 Deliveries 1500 Permian Basin 1200 Other Supplies pro-rated on occasion Sheep Mtn Permian Basin Demand expected to (MMcf/d) 900 continue to remain stable or grow given 600 Bravo Dome existing pro
Slide 16: Southwest Colorado Expansion
ENERGY PARTNERS, L.P. Southwest Colorado Expansion + 300 MMCFD Utah Colorado Kansas McElmo Dome Doe Canyon Unlevered IRR vs Oil Price Bravo Dome C or te z Oklahoma PL Arizona New Mexico Bravo PL Centerline PL Central Bas in PL SACROC Wink Crude PL Texas Yates 622912 Ft/In Increased Capacities 0% McE
Slide 17: CO2 Delivered Volumes
ENERGY PARTNERS, L.P. CO2 Delivered Volumes KM Share MMCFD 800 700 600 500 400 300 Significant growth over past 5 years 200 100 0 CAGR: 2004 2005 2006 2007 2008 2009 Volumes + 11%, Price + 18% Budg % KM Share Under Contract 2009 vs 2008 Volumes + 15%, Price - 29% % Entitlement Contracted Sacroc and
Slide 18: 3rd Party Sales Portfolio
ENERGY PARTNERS, L.P. 3rd Party Sales Portfolio Growth in Sales and Greater Diversity 2006 Actual Deliveries 219 MMCF/D Percent 3rd Party Sales 70 60 50 2008 Actual Deliveries 40 332 MMCF/D 30 20 10 0 2006 2007 2008 2009 2010 2011 18
Slide 19: Strong Long Term Demand for CO2
ENERGY PARTNERS, L.P. Strong Long Term Demand for CO2 Potential Sources Serving The Region* Purchased CO2 Demand vs Oil Price* Natural: • 37.3 TCF R/P~30 years 120 • Various stages of development 100 80 TCF 60 Oklahoma Other TX Industrial: Permian Basin • High Purity: 38.7 TCF 40 • Low Concentration
Slide 20: 2009 Expansion Capital Budget - $449 Million
ENERGY PARTNERS, L.P. 2009 Expansion Capital Budget - $449 Million Other Staff OVHD Eastern Shelf Source/Trans. SACROC Wells Yates CO2 Injection Yates Gas Handling Yates Field Facilities Yates HDH SACROC CO2 Inj SACROC Field Fac. SACROC Gas Handling __________________________ Note: Cost Metrics base
Slide 21: Impact of Oil Price/Volume Variance on 2009 DCF
ENERGY PARTNERS, L.P. Impact of Oil Price/Volume Variance on 2009 DCF 2009 Budget: 790 MM$ +/- 1000 BOPD SACROC 27.5 MM$ Yates 14.3 MM$ +/- 1 $/B WTI 5.9 MM$ 3rd Party CO2 Deliveries +/- 50 MMCF/D 8MM$ __________________________ Note: Unhedged WTI price presumed to average $68.00/b, WTI-WTS spread =
Slide 22: KM CO2 Long-term Potential
ENERGY PARTNERS, L.P. KM CO2 Long-term Potential Development Plans 2009- 2009-2018 Current plan, likely to change as price/cost trends become more stable 1. SACROC Base Case Forecast 104 MMBOE Gross (a), 1.3 B$ Capital required includes 347 MM$ cap. CO2 DCF, $MM/Yr Includes Eastern Shelf Development
Slide 23: And Down the Road …
ENERGY PARTNERS, L.P. And Down the Road… SACROC and Yates have and will continue to provide oil production opportunities: Big Fields get Bigger… Better conformance at SACROC is a big opportunity Using latest technology to find residual oil and better target CO2 injection Yates expansion pilo
Slide 24: ENERGY PARTNERS, L.P.
KINDER/MORGAN ENERGY PARTNERS, L.P.
Kinder Morgan Energy Partners — 2009 KMP Analyst Conference on 6ix