Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — 2005 Analyst Conference
30 slides from Kinder Morgan's conference presentation, Jan 25, 2005
Slide 1: Tim Bradley – CO2
KINDER’ MORGAN CO, Tim Bradley
Slide 2: CO2 Pipelines Segment Overview
CO2 Pipelines Segment Overview (a) CO2 Contribution to 2005 KMP Segment DCF (a) Estimated breakout of CO2 DCF (b) Natural Oil Pipelines Gas 4% Pipelines 26% CO2 CO2 Sales/PL 21% Pipelines 28% Products SACROC Pipelines 63% Yates 30% 11% Terminals Other CO2 16% Flood Properties 1% (a) 2005 budgeted di
Slide 3: Kinder Morgan CO2 Operations
Kinder Morgan CO2 Operations CO2 Company Remaining Reserves Ownership Location Deliverability Operator McElmo Dome 45% SW Colorado 35+ years KM Utah Colorado Bravo Dome 11% NE New Mexico 14 years Oxy Kansas Company Capacity McElmo Dome Pipelines Ownership Location (MMcf/d) Operator Cortez 50% McElmo
Slide 4: CO2 Business – View from the top
CO2 Business – View from the top Excited about this business! We operate and own significant interests in two oil fields with over 5 Billion barrels remaining in place We operate the premier CO2 Source and Transportation assets in the industry We have the capability and resources to develop an
Slide 5: Distributable Cash Flow 2001-2005
Comparison of 2001, 2002, 2003, 2004, 2005 – Distributable Cash CO2 Sales and Transportation - steady historical growth CO2 Flood Development Opportunities - growing faster CO2 S&T CO2 Flood Properties $500 $400 DCF- MM$ $300 Plan for each Year $200 $100 $0 2001 2002 2003 2004 2005 Actual Actual Act
Slide 6: 2004 High Level Results
2004 High Level Results Target: Result: Total Distributable Cash: $317 MM 2004 Actual: $350 MM S&T : $ 88 $122 MM O&G: $229 $228 CO2 Sales/Transport business flat 2003 Deliveries: 192 BCF 2004 Deliveries: 215 BCF Oil Production SACROC 30,000 BOPD 2004 average: 28,300 BOPD Yates 20,000 BOPD 2004
Slide 7: U.S. CO2 Enhanced Oil Recovery Actual vs Prediction
U.S. CO2 Enhanced Oil Recovery Actual vs Prediction Actual CO2 Flood Oil Production vs. 1984 NPC Study MBbl/d NYMEX WTI Midland Oil Prices, $/Bbl 600 $60.00 $30/BO $50.00 500 $40.00 $30.00 400 $20.00 $10.00 300 $- Jan-87 Jan-92 Jan-97 Jan-02 $20/BO 200 100 Actual Average $/BBL 1987 – 2000: $19.28 0
Slide 8: Permian Basin CO2 Purchases and Oil Production
Permian Basin CO2 Purchases and Oil Production Oil Production - MBOPD CO2 Deliveries – BCFD 200 150 100 MMcf/d 1600 50 Cum: 847 MMB 1400 0 Val Verde 1980 1985 1990 1995 2000 1200 1000 Sheep Mtn CO2 Flood Production % of Permian 800 BravoDome 25 600 400 20 McElmo Dome 200 15 0 1984 1988 1992 1996 200
Slide 9: Permian Basin '03, '04, '05 CO2 Consumption
Permian Basin ’03, ’04, ’05 CO2 Consumption 2003 2004 2005 Others 21% KM 17% Others 16% Others 18% KM 23% KM 26% XOM 16% XOM 17% XOM 16% Oxy 45% Oxy 41% Oxy 43% Total 2003 Supply: Total 2004 Supply: Total 2005 Supply: 1,142 MMcf/d 1,309 MMcf/d 1,164 MMcf/d Estimates by Kinder Morgan CO2 Company base
Slide 10: SACROC Long Term Potential
SACROC Long Term Potential Daily Oil Production 1980-2010 Pre-2000 - Cumulative oil production 1.25 Billion barrels, 100,000 44.5 % OOIP, Production 8500 BOPD 75,000 2002 - Average oil production 13,052 BOPD - Average CO2 injection 212 MMCF/D - SACROC EBITDA* 31.3 MM$ (EOR Operations) 50,000 2003 -
Slide 11: SACROC Injection and Production Performance
SACROC Injection and Production Performance Injectivity: water lower than CO2 in certain areas 2004 – Recap CO2 Water The Challenge: injection rates in mature patterns exceeded expectations. Positive: Results in accelerated cash flows Negative: Production outruns facilities capacities Our Reaction:
Slide 12: SACROC CO2 Flood – Opex Cost Performance
SACROC CO2 Flood – Opex Cost Performance Purchased Power CO2 Removal Labor All else 12 Unit Operating Costs up in ’04 due to 10 higher power costs (volumes, $/kw), 8 $/BOE 6 and reducing repair well backlog 4 from 2003. Expect improvement in 2 both categories in 2005. 0 2000 2001 2002 2003 2004 2005
Slide 13: SACROC Development Activities
SACROC Development Activities Platform 2004 Accomplishments 1. Added 225 MMCF/D Gas Handling Capacity 2. Drilled/re-activated 84 wells 3. Added 23 patterns in the Bullseye project CR-II and 38 patterns in CR I Project 2005 Plans CR-I 1. Add 225 MMCF/D Gas Handling Capacity GI 2. Activate 42 patterns
Slide 14: SACROC CO2 Project Oil Production and Injection
SACROC CO2 Project Oil Production and Injection Oil Production 2002-2005 Total Injection 2004-2005 800 40,000 700 Actual 35,000 Actual 600 Budget 30,000 Budget 25,000 500 bopd 20,000 400 15,000 300 10,000 200 5,000 100 0 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 0 Jan-04 Jul-04 Jan-05
Slide 15: Future Development Planning
Future Development Planning Platform Bullseye Centerline Net Pay Thickness Platform area 3D Seismic Cross Section North Platform reservoir is substantially thicker and more prolific than the Centerline area. Oil recoveries may be a lower % of targeted oil in place due to geologic complexity. 15
Slide 16: SACROC CO2 Flood – Long Term outlook
SACROC CO2 Flood – Long Term outlook Platform Development Planning 2002-2003 3D Seismic, Geologic Modeling SACROC 60,000 2004-2005 Core analysis, evaluate smart 50,000 40,000 well technology, initiate reservoir simulation of various BOPD 30,000 20,000 development schemes. 10,000 Re-pressure with wat
Slide 17: Future SACROC Development Economics
Future SACROC Development Economics Projects following Center Ring II are resilient to much lower oil prices and diverse Geologic settings Unlevered IRR % 100% 80% Good 60% Most Likely 40% Poor 20% 0% $10 $15 $20 $25 $30 $35 $40 $45 Flat Oil Price Note: Good = Low Gas, High Oil, 1.00 Inj, Most Likel
Slide 18: Yates Field Historical Overview
Yates Field Historical Overview Daily Oil Production 1976 to Present (BOPD) Pre-2000 - Field discovery 1926; unitized 1976 150,000 - CO2 injection 1988-93; N2 injection 1993-2004 125,000 2001 - Kinder Morgan acquires 7.49% interest - Cum. oil production 1.4 billion barrels, 27.4% of OOIP 100,000 75,
Slide 19: Yates Field - 2005 Production Forecast
Yates Field - 2005 Production Forecast Actual Forecast 25,000 20,000 CO2 Other zones 15,000 Horizontal Drain Holes BOEPD 10,000 Base 5,000 0 2003 2004 2005 19
Slide 20: Yates Field - Base + HDH Production
Yates Field - Base + HDH Production Base Production 18,000 25,000 16,000 14,000 12,000 20,000 10,000 BOPD 8,000 6,000 4,000 15,000 BOEPD 2,000 Actual Forecast Acq 2004 Budget 0 2003 2004 2005 10,000 5,000 Base Base HDH HDH HDH Production CO2 CO2 Misc Misc 12,000 0 2003 2004 2005 10,000 8,000 BOPD 6,
Slide 21: Yates Field - CO2 Injection Results
Yates Field - CO2 Injection Results Areas of Response •Started CO2 Injection March 2004 •Responding Well Count Continues to Increase • Oil Rate Increase appears Sustainable, originally expected response in 2006 CO2 Inj. Well • Oil Column not yet Thickening Gas Inj. Well Early CO2 Response Response A
Slide 22: Yates Field - Feeling After 1 Year
Yates Field - Feeling After 1 Year All Indications Point to a Very Successful Acquisition: Production – 2004 Oil Production Within 2.6% of Forecast Despite Slow Start (HDH Interference) – Experiencing CO2 Response Earlier Than Forecasted – Identified and Implementing Numerous Un-Forecasted Opportuni
Slide 23: Comparison of SACROC and Yates Operating Cost Structure
Comparison of SACROC and Yates Operating Cost Structure 2005 Plan 14 Toti 12 Other 10 8 CO2 Purchase $/BOE Capitalized 6 CO2 Purchase 4 Expense 2 Gas Handling 0 Labor SACROC Yates 23
Slide 24: 2005 Expansion Capital Budget
2005 Expansion Capital Budget – 232 MM$ Gas Plants Source/Trans. Staff OVHD Yates N2 Rej Yates Field SACROC Facilities Wells Yates HDH SACROC Power Gen. SACROC CO2 Inj SACROC Field Fac. SACROC Gas 24
Slide 25: Comparison of SACROC and Yates Gross CAPEX
Comparison of SACROC and Yates Gross CAPEX* 300 250 200 SACROC 150 Yates 100 50 0 2004 2005 2006 *Note: Represents 8/8, Yates CO2 injection expensed, excl cap staff staff 25
Slide 26: SACROC and Yates – Hedge Position
SACROC and Yates – Hedge Position Approved Plus Identified Potential Projects Average Hedge WTI&WTS $28.11 $27.77 $27.75 $28.89 $32.36 $34.61 Price 50,000 45,000 40,000 95% 35,000 Net Equity Production* 30,000 72% (BOPD) BOPD 25,000 58% 20,000 15,000 35% 10,000 22% 5,000 5% - 2005 2006 2007 2008 200
Slide 27: Impact of Oil Price/Volume Variance on 2005 DCF
Impact of Oil Price/Volume Variance on 2005 DCF 2005 Budget: 464.0 MM$ +/- 1000 BOPD SACROC 12.8 MM$ Yates 6.1 MM$ +/- 1 $/B WTI 4.8 MM$ 3rd Party CO2 Deliveries + 50 MMCF/D 2.4 MM$ Unhedged WTI price presumed to average $43.15/b, WTI-WTS spread = $5 27
Slide 28: SACROC plus Yates Long Term Potential
SACROC plus Yates Long Term Potential Oil Production, B/D Current Status Yates SACROC (ML Case) + Yates SACROC Producing ~34,000 BOPD 70 60 Yates Producing ~23,000 BOPD 50 40 30 Development Plans 20 1. SACROC Full Field, Most Likely Development 10 0 - 237 MMBOE Gross*, ~20,200 Acres, 592 MM$* 03 04
Slide 29: 2004 Achievements, 2005 Goals
2004 Achievements, 2005 Goals 2004 Exceeded plan CO2 Volumes up, Oil Volumes just under, costs mixed, price helped Continued aggressive development plans SACROC reservoir performance tracks close to expectations Yates – CO2 injection response and HDH programs performing well Closed Kaston (Win
Slide 30: Long-Term Outlook / Goals
Long-Term Outlook / Goals Domestic oil reserve replacement costs are increasing CO2 flooding provides an attractive cost structure and a proven track record to add new reserves Kinder Morgan will leverage infrastructure in Permian Basin Lowest cost CO2 supply combined with largest reserves, infr