Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (May 2014)
36 slides from Kinder Morgan's investor presentation, May 1, 2014
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Rich Kinder Chief Executive Officer May 1, 2014
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 fut
Slide 3: Kinder Morgan: Four Ways to Invest: KMI, KMP, KMR & EPB
Kinder Morgan Four Ways to Invest: KMI, KMP, KMR & EPB 666 MM Public Kinder Morgan, Inc. (64%) Float Market Equity $34.8B (a) Cash Debt 9.1B (b,g) dividends to KMI 300 MM (d) Management/ shareholders (C-corp) (29%) Original S/H Enterprise Value $43.9B 1,035 MM shares (a) 2014E Dividend per Share $1.
Slide 4: 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 Control costs — It’s the investors’ money, not management’s – treat it that way Leverage asset foot
Slide 5: Unparalleled Asset Footprint
Kinder Morgan Unparalleled Asset Footprint 4th largest energy company in North America with combined enterprise value of approximately $105 billion (a) Largest natural gas network in North America — Own an interest in / operate ~68,000 miles of natural gas pipeline — Connected to every important
Slide 6: 18 Years of Consistent Growth at KMP
18 Years of Consistent Growth at KMP KMP Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (c) $5.58 (a) $5,000 $6.00 $5.33 (a) $4,499 $4,500 GP LP $4.98 $4,017 $5.00 $4.61 $4,000 $4.40 $4.20 $3,500 $3,230 $4.02 $4.00 $3.48 $3,000 $2,737 $3.13$3.26 $2,450 $2.87 (b) $2,500 $2,17
Slide 7: Significant Historical Returns
Significant Historical Returns (a) KMP: 23% CATR Since ‘96 (b) KMI: 7% CATR Since Inception (e) $4,000 ━ KMP = $3,451 $175 Dollars Dollars $3,500 $150 $3,000 $125 $2,500 ━ S&P 500 = $152 $100 ━ UTY = $147 $2,000 ━ RMZ = $141 ━ AMZ (d) = $1,404 $75 $1,500 ━ KMI = $125 $50 $1,000 $500 $25 ⇐ IPO 2/10/2
Slide 8: Guidance: Promises Made, Promises Kept
Guidance Promises Made, Promises Kept Promises Made Promises Kept KMI Budgeted KMI Actual Dividend: Dividend: KMI has exceeded 2011: $1.16 (a) 2011: $1.20 (a) its dividend target 2012: $1.35 2012: $1.40 in each of past 3 yrs. 2013: $1.57 2013: $1.60 KMP Budgeted KMP Actual LP Distribution: LP Distri
Slide 9: 2014 Guidance Supported by Diversified Cash Flow
2014 Guidance Supported by Diversified Cash Flow CO2 S&T CO2 Oil Production 6% KMI Budget: Natural Gas 14% Pipelines KMI 2014 dividend: $1.72/sh (8% growth over 2013) Terminals 12% 54% Fully-consolidated year-end 2014 debt / EBITDA = 4.9x B KM Canada 2% 12% Products U Pipelines S CO2 S&T I 7% KM
Slide 10: Tremendous Natural Gas Market Opportunities…
Tremendous Natural Gas Market Opportunities… U.S. Natural Gas Projected Supply & Demand (a) (Bcf/d) KM Natural Gas Footprint Demand 2014 2019 2024 LNG exports - 4.8 7.9 Mexican net exports 2.3 3.7 4.5 Power 21.0 24.6 29.8 Industrial 21.2 23.9 25.0 Other 29.3 29.9 31.8 Total U.S. demand 73.8 86.9 99.
Slide 11: … Generating Real-time, Long-term Benefits
… Generating Real-time, Long-term Benefits $641B of investment in midstream energy infrastructure needed through 2035, implying $29B per year annual spend (a) compared to $18B annual spend by MLPs (b) over past five years Kinder Morgan’s unparalleled natural gas footprint is well-positioned to add
Slide 12: 5-year Project Backlog
5-year Project Backlog (a) ~$16.4 Billion of Currently Identified Organic Growth Projects Tremendous footprint provides ~$16.4B of currently identified growth projects over next 5 years 5-year Growth Capex Backlog ($B) 9M 2014 2015 2016 2017+ Total Natural Gas Pipelines $0.9 $0.4 $0.8 $2.0 $4.1 Prod
Slide 13: KMP’s Diversified Cash Flow
KMP’s Diversified Cash Flow Natural Gas Pipelines 2014E KMP Segment 53% interstate pipelines Earnings before DD&A 34% gathering, processing & treating = $6.4 billion (a) 13% intrastate pipelines & storage Products Pipelines CO2 S&T 58% pipelines 42% associated terminals & transmix Natural
Slide 14: ~$46B of Growth Capital Invested at KMP
~$46B of Growth Capital Invested at KMP (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year $25 $11 $20 Expansion $10.0 $10 $15 Acquisition $21.9 $24.5 $9 $10 $8 $5 $7 $6.6 (b) $- Expansions Acquisitions $6 $5 $4.8 Total Invested by Segment (a,b) $4 $3.3 $2.9 $24 $3 $2.4 $2.5 $
Slide 15: How We Have Done: KMP Returns on Capital
How We Have Done: KMP Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Segment ROI (a): Natural Gas Pipelines 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) Products Pipelines 11.9 11.8 12.8 12.9 12.4 11.6 11.8 13.2 12.
Slide 16: EPB Focused on Natural Gas Pipelines
EPB Focused on Natural Gas Pipelines 2014E EPB Segment Natural Gas Earnings before DD&A Highly stable cash flow stream = $1.3 billion (a) — 85% interstate pipelines • Average contract life = ~8 years (b) — 15% LNG • Average contract life = ~18 years (b) Natural Gas — Minimal throughput and commodi
Slide 17: KMI Overview
KMI Overview KMI pays a regular c-corp dividend with attractive combination of yield plus growth KMI Investments / Assets: — Investment in MLPs • KMP: – General Partner (GP) interest receives incentive distributions from KMP – KMI owns ~10% of total limited partner (LP) interests • EPB: – GP int
Slide 18: Risks
Risks Regulatory (KMP/EPB/KMI) — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Legislative and regulatory changes Crude oil production volumes (KMP) Commodity prices (KMP) — CO2 oil production • 2014 budget assumes $96.15/Bbl realized price on unhedged barrels • 2014 co
Slide 19: Summary: Attractive Value Proposition
Summary KMI, KMP, KMR & EPB: Attractive Value Proposition Unparalleled asset footprint Long-term Growth Targets Diversified midstream energy KMI – 3-year targeted dividend / platform provides stable, fee-based share CAGR of about 8% (2013- cash flow 2016) Continued focus on strong balance
Slide 20: Appendix
KINDER/MORGAN Appendix
Slide 21: KMP 2014 Growth Capital Budget
KMP 2014 Growth Capital Budget ($ in millions) 2014 2014 Forecast Budget Expansion capital Natural Gas Pipelines $797 $687 CO2 (forecast split S&T $481 / EOR $549) 1,030 1,076 Products Pipelines 766 712 Terminals 644 562 Kinder Morgan Canada 58 58 Total expansion capital 3,295 3,095 Contributions to
Slide 22: EPB 2014 Growth Capital Budget
EPB 2014 Growth Capital Budget ($ in millions) 2014 Budget Growth capital Expansion $103 Contributions to JVs 66 Subtotal 169 Acquisitions 972 Total growth capital $1,141 22
Slide 23: KMR Discount Has Narrowed (Again), But Still Wide
KMR 101 Discount Has Narrowed (Again), But Still Wide KMR is KMP KMR Discount to KMP — KMR shares are pari passu with KMP units 10% — KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment 5% program (a) 0% — Like KMP units, KMR shares are t
Slide 24: Toll Road-like, Fee-based Business Model
Toll Road-like, Fee-based Business Model Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada (KMP) (KMP) (KMP/EPB/KMI) (KMP) (KMP) – Interstate & LNG: take or pay – Take or pay, minimum – S&T: primarily minimum – Intrastate: ~75% take or pay (a) – Essentially no Volume Secu
Slide 25: EPB Contract Expirations
EPB Contract Expirations Strong Contracted Cash Flow Profile Contract Expiration Volume (MDth/d) (a) 2019 and 2014 2015 2016 2017 2018 Beyond Total CIG 270 428 1,689 191 178 1,855 4,611 WIC 265 589 121 225 528 1,925 3,653 Cheyenne Plains 7 465 58 - 8 340 878 SNG 24 52 1,536 417 679 1,426 4,134 Elba
Slide 26: KMP Acquires Jones Act Tankers for ~$960 Million
KMP Acquires Jones Act Tankers for ~$960 Million Transaction Overview On 1/17/2014, KMP closed its acquisition of American Petroleum Tankers (APT) and State Class Tankers (SCT) ~$960 million in cash Immediate and long-term accretion to cash available to KMP unitholders KMI intends to forego
Slide 27: The Value of the Platform
The Value of the Platform Original Asset Kinder Morgan Crude & Condensate Pipeline (KMCC) May 2011 – Kinder Morgan announced a $220 million investment to convert 113 miles of an existing under-utilized natural gas pipeline and build 65 miles of new pipe to move Eagle Ford product to the KMTP (a) H
Slide 28: Natural Gas Pipelines Segment Outlook
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $4.1 billion of identified growth projects over next seven years (a), including: — LNG liquefaction (FTA @ Elba Island) — Pipe projects supporting LNG liquefac
Slide 29: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $1.0 billion of identified growth projects over next two years (a), including: — Cochin reversal / conversion — Eagle Ford condensate processing — KMCC extensions — KMCC-Double Eagle inte
Slide 30: Terminals Segment Outlook
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Project Backlog: $2.0 billion of identified growth projects over next five years (a), including: — Liquids • BOSTCO Phases 1, 2, & 3 • Alberta crude by rail projects • Chemical terminal development • SCT Jones Act
Slide 31: CO2 Segment Outlook
CO2 Segment Outlook Own and operate best source of CO2 for EOR (a) Project Backlog: Identified growth projects totaling $1.8 billion and $2.1 billion in S&T and EOR (a), respectively, over next five years (b), including: — S&T • Southwest Colorado CO2 production • St. Johns build-out • Cortez and
Slide 32: Historical Long-term Outlook
Historical Long-term Outlook The best is yet to come Historical DCF Projections ($MM) CO2 segment outlook has $2,000 continued to grow over past 5 2014 $1,800 2013 2012 years 2011 $1,600 2010 2009 $1,400 2008 2007 Higher CO2 volumes and prices $1,200 — Increased demand, improved $1,000 contract te
Slide 33: Kinder Morgan Canada Segment Outlook
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Project Backlog: $5.4 billion expansion of Trans Mountain Pipeline Long-term Growth Drivers: Expand Oilsands export capacity to West Coast TMEP $5.4 Billion Expansion and Asia — Following successf
Slide 34: Incidents & Releases: Liquids Pipeline
Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipeline Incidents per 1,000 Miles (a) Liquids Pipeline Release Rate (a) 1.0 50 Barrels per billion barrel miles 0.8 40 Incidents per 1,000 Miles 0.6 30 0.4 0.45 0.39 20 0.29 15.5 0.24 0.24 13.1 0.21 0.2 10 6.0 0.08 0.08 2.5 - - 0.01 0.11 0.
Slide 35: Incidents & Releases: Natural Gas Pipeline
Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipeline Incidents Rate (a) 1.0 Incidents per 1,000 Miles 0.8 0.6 0.4 0.37 0.33 0.32 0.30 0.27 0.27 0.2 0.13 0.13 0.04 - 2006 2007 2008 2009 2010 2011 2012 2013 12-mo 3/31/14 (b) KM Incidents Industry 3-yr Avg 2005 Industry Avg _____
Slide 36: Employee Safety Statistics
Employee Safety Statistics (a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate 6 7 Lost-time injuries per 200k hours worked 5.20 6.35 6 OSHA Recordable Incidents per 5 5.70 5 200k Hours Worked 4 4 3 3 2.50 2.60 2.50 2.50 2 2 2.10 2.10 2.10 1 0.70 0.88 0.80 0.70 1.70 1 1.88 1.65 0.70