Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (May 2020)
32 slides from Kinder Morgan's investor presentation, May 19, 2020
Slide 1: Investor Presentation May 2020
Investor Presentation May 2020
Slide 2: Disclosure
Disclosure Forward looking statements / non-GAAP financial measures General – The information contained in this presentation does not purport to be all‐inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to conduct their own analysis a
Slide 3: Kinder Morgan: Leader in North American Energy Infrastructure
Kinder Morgan: Leader in North American Energy Infrastructure Unparalleled & irreplaceable asset footprint built over decades CO2 & transport Largest natural gas transmission network CO2 EOR oil & gas production Natural gas 6% 3% pipelines ~70,000 miles of natural gas pipelines Terminals 14% 659
Slide 4: A Core Energy Infrastructure Holding
A Core Energy Infrastructure Holding Generating significant cash flow & returning significant value to shareholders ~$35 billion market capitalization One of the 10 largest energy companies in the S&P 500 ~14% owned by management Highly aligned management with significant equity interests $1.05 per
Slide 5: Our Response to COVID-19
Our Response to COVID-19 Prioritizing the health of our co-workers & their families while maintaining safe & reliable operations of our assets Leveraging well-established and previously utilized business continuity & pandemic response plans Kinder Morgan’s Pandemic Preparedness Committee activel
Slide 6: Resilient through Prior Cycles
Resilient through Prior Cycles Conservative business strategy built to withstand commodity price dislocations Quarterly Adjusted EBITDA (left, in $mm) WTI Crude Oil (right, $ / bbl) $2,100 $100 $1,900 $90 $1,700 $80 $1,500 $70 $1,300 $60 $1,100 >$25 / bbl ~$25 / bbl $50 decline decline $900 $40 $700
Slide 7: Prepared to Weather the Storm
Prepared to Weather the Storm Disciplined management of the balance sheet improves financial position relative to prior downturns NET DEBT / ADJUSTED EBITDA CFFO – CAPITAL EXPENDITURES – DIVIDENDS PAID(c) $ in millions Significantly lower leverage with ~$10 billion Self funding all dividends & capex
Slide 8: 2020 Updated Guidance
2020 Updated Guidance Revised to incorporate estimated impact of COVID-19 & oil price decline Change from Change from Key metrics 2020 Forecast 2020 Budget 2019 Adjusted EBITDA $7.0 billion (8)% (8)% Distributable cash flow $4.6 billion (10)% (8)% Expected reduction in DCF to be more than offset wit
Slide 9: Customers Are Primarily End-Users of the Products We Handle
Customers Are Primarily End-Users of the Products We Handle Net revenues underpinned by investment grade counterparties & credit support | Ratings as of 5/15/2020 Marketer Midstream Not rated 6% 2% 11% Producer – non-IG or not rated ~70% B- or below 3% 13% End-users such as large integrated energy,
Slide 10: Highly-Contracted Cash Flows
Highly-Contracted Cash Flows Stable cash flows with ~74% take-or-pay or hedged earnings(a) CONTRACT MIX(a) Contract type: Payment feature: Example assets: Natural gas interstates / LNG (>90%) Natural gas intrastates (~75%b) 6% 2% Entitled to payment regardless of throughput Liquids terminals (>75%)
Slide 11: U.S. Natural Gas Demand Expected to Remain Intact
U.S. Natural Gas Demand Expected to Remain Intact Increases in LNG & Mexico exports expected to offset modest declines in other sectors SHORT-TERM DEMAND TRENDS Bcfd, 2019 – 2021 +4.5 LNG exports +0.8 Mexico exports, net +0.4 Industrial +0.1 Transport -0.1 Other -0.2 Commercial LNG -0.5 Residential
Slide 12: Hydrocarbons Required to Meet Long-Term Energy Demand
Hydrocarbons Required to Meet Long-Term Energy Demand U.S. energy infrastructure will be critical for decades GLOBAL PRIMARY ENERGY DEMAND BY FUEL Broad-based natural gas demand growth across all billion tons oil equivalent sectors leads to growing share of total energy demand 18 forecast Led by g
Slide 13: $3.3bn of Commercially-Secured Capital Projects Underway
$3.3bn of Commercially-Secured Capital Projects Underway Our project backlog as of 3/31/2020 Demand Pull / KMI Capital Estimated Supply Push ($ billion) In-Service Date Capacity Permian takeaway projects (PHP, TX Intrastates, NGPL) • • $ 0.9 Q4 2020 – Q1 2021 4.0 bcfd Supply for U.S. power & LDC dem
Slide 14: Successfully Achieving Attractive Build Multiples
Successfully Achieving Attractive Build Multiples Established track record of leveraging our footprint & project management expertise Competitive advantages: INVESTMENT MULTIPLES: PROJECTS COMPLETED 2015-2019 Capital invested / year 2 Project EBITDA(a) Expansive asset base ― ability to leverage or
Slide 15: Prioritizing Environmental, Social & Governance (ESG)
Prioritizing Environmental, Social & Governance (ESG) Ongoing enhancements to ESG disclosures | Long-standing commitment to reducing methane emissions SUSTAINALYTICS ESG RISK RATING(a) SUCCESSFUL METHANE EMISSIONS REDUCTIONS(a) bcf, cumulative across KM operations Top 10 out of 183 Refiners & Pipeli
Slide 16: Compelling Investment Opportunity
Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with attractive investment opportunities Stable cash flows with ~74% take-or-pay or hedged earnings(a) ~$7 billion 2020 Forecast Adjusted EBITDA Assuming return to normal economic activity, Board to re
Slide 17: Appendix
KINDER #MORGAN / Appendix
Slide 18: 2020 Updated Guidance Assumptions
2020 Updated Guidance Assumptions Change from 2020 Budget Adjusted Segment EBDA Discretionary capital Key developments — Reduced upstream customer activity impacting contributions from gathering & processing (G&P) assets, particularly in the Bakken Natural Gas (4)% ($457 million) — Nearly $250 milli
Slide 19: 2020 Updated Guidance Sensitivities
2020 Updated Guidance Sensitivities Limited remaining commodity exposure for remaining 9 months Assumptions (last 9 mos) Change Potential Impact to Adjusted EBITDA & DCF (balance of year) Natural Gas Products Terminals CO2 Total Natural gas G&P volumes +/- 5% $23 million ~$23 million 3.325 bcfd Refi
Slide 20: Refined Products Pipes Historically A Steady Contributor
Refined Products Pipes Historically A Steady Contributor Fee-based with stable volumes over time, including through prior crude oil price downturns | ~9% of total KMI EBDA REFINED PRODUCTS VOLUMES(a) mmbbld 2.0 17.0 HISTORICAL VOLUME GROWTH CAGR 2015-2019 1.8 16.0 COVID-19 1.6 impact 15.0 1.1% > 0.7
Slide 21: Gathering & Processing Assets Across Multiple Key Basins
Gathering & Processing Assets Across Multiple Key Basins Represents ~10% of total KMI EBDA with ~8% in Natural Gas & ~2% in Products (primarily Bakken) ~14% Other ~43% Eagle Ford SHORT-TERM DRY GAS PRODUCTION OUTLOOK Copano South Texas & Bcfd, 2019 – 2021 Multiple systems in Uinta, Oklahoma, San Jua
Slide 22: Leading the Way Out of the Permian
Leading the Way Out of the Permian Successfully completed GCX on time & budget | PHP well underway Leveraging existing footprint into new takeaway capacity that reaches Natural Gas Pipelines across Texas & the Desert/Southwest (DSW), connecting into major Under Construction demand markets Our adva
Slide 23: Supporting the Buildout of U.S. LNG Exports
Supporting the Buildout of U.S. LNG Exports Serving significant liquefaction capacity & well-positioned to capture more Kinder Morgan network advantages: Natural gas transportation leader ~70,000 miles of natural gas pipelines Move ~40% of U.S. natural gas consumption & exports Supply diversity Conn
Slide 24: CO2 Segment Predictable Volumes & Hedged Commodity Price
CO2 Segment Predictable Volumes & Hedged Commodity Price Mitigating uncertainties where possible | EOR oil & gas production represents ~6% of KMI business mix NET OIL PRODUCTION: ACTUALS VS. BUDGET HEDGED VOLUMES mbbld as of 4/7/2020 Actual Budget 45 Apr - Dec 40 2020 2021 2022 2023 Oil - WTI hedges
Slide 25: CO2 Segment Consistently Generates Free Cash Flow
CO2 Segment Consistently Generates Free Cash Flow Low cash cost structure yields healthy margins through multiple commodity price cycles EOR OIL & GAS CASH OPERATING COSTS CO2 SEGMENT FREE CASH FLOW $ per net barrel $ millions Cash costs Avg. realized oil price FCF Capex Acquisitions Adj. Segment EB
Slide 26: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 26
Slide 27: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The non-GAAP financial measures of Adjusted Earnings and distributable cash flow (DCF), each in the aggregate and per share; segment earnings before depreciation, depletion, amortization (DD&A) and amortization of excess cost of equity investments and Certain Items
Slide 28: Use of Non-GAAP Financial Measures (Continued)
Use of Non-GAAP Financial Measures (Continued) Adjusted Segment EBDA is calculated by adjusting segment earnings before DD&A and amortization of excess cost of equity investments (Segment EBDA) for Certain Items attributable to the segment. Adjusted Segment EBDA is used by management in its analysis
Slide 29: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of DCF 2019 Reconciliation of Adjusted EBITDA 2019 Net income available to common stockholders (GAAP) $ 2,190 Net income (GAAP) $ 2,239 Total Certain Items (29) Total Certain Items (29) Adjusted Earnings (a) 2,161 DD&A and amortization of excess cost
Slide 30: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of Adjusted Segment EBDA 2019 Reconciliation of interest, net 2019 Natural Gas Pipelines (GAAP) $ 4,661 Interest, net (GAAP) $ (1,801) Certain Items (51) Certain Items (15) Natural Gas Pipelines Adjusted Segment EBDA 4,610 Interest, net (a) $ (1,816)
Slide 31: Reconciliation of CO2 Free Cash Flow
Reconciliation of CO2 Free Cash Flow $ in millions Reconciliation of CO2 Free Cash Flow 2015 2016 2017 2018 2019 Segment EBDA $ 657 $ 827 $ 847 $ 759 $ 681 Certain items: Non-cash impairments and project write-offs 622 29 - 79 75 Derivatives and other (138) 63 40 90 (49) Severance tax refund - - - (
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