Slide 1: Investor Presentation April 2019
Investor Presentation April 2019
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: Globally, the Need for Energy is Growing
Globally, the Need for Energy is Growing Natural gas and petroleum demand expected to grow for decades to come STEADY GROWTH IN GLOBAL ENERGY DEMAND DEMAND GROWTH DRIVEN BY DEVELOPING ECONOMIES Billion tons of oil equivalent % of incremental demand from 2017 to 2040 18 Latin Rest of World Projection
Slide 4: U.S. is the Largest Oil and Gas Producer in the World
U.S. is the Largest Oil and Gas Producer in the World Abundant supply enables growing U.S. role as exporter OIL AND GAS PRODUCTION Long runway of expected growth in U.S. oil and gas production Million barrels of oil equivalent per day Current estimates for U.S. proved reserves of oil and natural g
Slide 5: Kinder Morgan: Leader in Energy Infrastructure
Kinder Morgan: Leader in Energy Infrastructure Unparalleled and irreplaceable asset footprint built over decades CO2 S&T Natural Gas Largest natural gas transmission network CO2 oil production 6%4% Pipelines ~70,000 miles of natural gas pipelines Terminals 14% Connected to every important U.S. n
Slide 6: Our Strategy
Our Strategy Stable, fee-based assets Financial flexibility Disciplined capital allocation Enhancing shareholder value Core energy Low cost of capital Conservative Attractive projects infrastructure assumptions Recent credit rating Dividend growth Safe & efficient operator upgrades to
Slide 7: A Core Energy Infrastructure Holding
A Core Energy Infrastructure Holding Significant cash flow generation, returning significant value to shareholders >$40 billion market capitalization One of the 10 largest energy companies in the S&P 500 Investment grade rated debt Recent upgrades to BBB / Baa2 by S&P and Moody’s reflect balance she
Slide 8: Cash Flow Generation Machine
Cash Flow Generation Machine ~$5 billion of 2019B distributable cash flow (DCF) = ~$2 billion for dividends + ~$3 billion to enhance shareholder value $ billions Common Dividends Declared DCF After Dividends 2019B dividend coverage of 2.2x(a) $2.7 $2.9 $3.4 $3.4 $2.3 $1.8 $1.1 $1.1 2016 2017 2018 20
Slide 9: Stable, Multi-Year Fee-Based Cash Flow
Stable, Multi-Year Fee-Based Cash Flow ~96% of 2019B segment cash flow is from take-or-pay and other fee-based contracts or hedged(a) 66% Fee-Based Take-or-Pay: highly dependable cash flow under multi-year contracts Entitled to payment regardless of throughput for periods of up to 20+ years 25% Ot
Slide 10: Capital Allocation Priorities
Capital Allocation Priorities Right-sized balance sheet and set dividend target through 2020; continually assessing best use of available capital Balance Capital Share Dividend Sheet Projects Repurchase Return threshold for new projects well in Repurchased ~$4.3bn of excess of cost of $525mm of $2bn
Slide 11: Significant Growth Projected for U.S. Natural Gas
Significant Growth Projected for U.S. Natural Gas Kinder Morgan transports ~40% of all natural gas consumed in the U.S. U.S. NATURAL GAS PRODUCTION U.S. NATURAL GAS DEMAND Bcfd Bcfd Growth Sector 2018 2030E Bcfd % Marc./Utica, 26 Net LNG exports 3 17 14 496% Permian, 8 2018 Haynesville, 8 Power 29 3
Slide 12: U.S. Natural Gas Demand is Concentrated in Gulf Coast
U.S. Natural Gas Demand is Concentrated in Gulf Coast >70% of forecasted 2018-2030 growth transits Texas and Louisiana, where we have significant assets in place Forecasted Texas and Louisiana demand and export growth between 2018 and 2030: Industrial LNG Export Demand +24% Demand +2 Bcfd +404% +13
Slide 13: $6.1bn of Commercially Secured Capital Projects Underway
$6.1bn of Commercially Secured Capital Projects Underway Significant opportunities primarily resulting from expansive natural gas footprint Demand Pull / KMI Capital Estimated Commercially Secured Capital Projects Supply Push ($ billion) In-Service Date Capacity Natural Gas Permian takeaway projects
Slide 14: Successfully Achieving Attractive Build Multiples
Successfully Achieving Attractive Build Multiples Disciplined steward of capital Competitive advantages: INVESTMENT MULTIPLES: PROJECTS COMPLETED 2015-2018 Capital invested / year 2 Project EBITDA(a) Expansive asset base ― ability to leverage or repurpose steel already in the ground Natural gas se
Slide 15: Project Highlights: Gulf Coast Express and Permian Highway
Project Highlights: Gulf Coast Express and Permian Highway Providing Permian natural gas production with broad U.S. Gulf Coast market optionality Gulf Coast Express (GCX) Permian Highway Pipeline (PHP) Mainline: 448 miles of 42” pipeline ~430 miles of 42” pipeline 50 miles of 36” lateral Origination
Slide 16: Strong Liquids Fundamentals
Strong Liquids Fundamentals Attractive opportunities to supply U.S. products to consumers here and abroad GLOBAL LIQUIDS CONSUMPTION EXPECTED TO EXCEED GROWTH LED BY CHINA AND INDIA (2018 – 2020) 100 MILLION BARRELS PER DAY BY 2019 World consumption of petroleum and other liquids (mmbbld) +2.3 101 1
Slide 17: Leading Refined Products Terminal Hub on U.S. Gulf Coast
Leading Refined Products Terminal Hub on U.S. Gulf Coast Our premier refined products aggregation and market-clearing terminaling hub on the Houston Ship Channel Largest independent refined products terminal hub in U.S. Our Integrated Houston Ship Channel Terminal Footprint 43 million barrels of t
Slide 18: Beyond the Backlog
Beyond the Backlog Strong long-term fundamentals to drive additional opportunities Takeaway for Storage to support Grow crude and significant renewable power Infrastructure to NGL footprint out Marcellus / Utica generation and support U.S. of Bakken and Haynesville 2.0 natural gas growth LNG exports
Slide 19: Compelling Investment Opportunity
Compelling Investment Opportunity Returning value to shareholders via significant dividend growth | Attractive valuation DRILL-DOWN OF S&P 500 COMPANIES ENTERPRISE VALUE / 2019E EBITDA Attractive valuation provides upside potential 12.2x 407 2019E Net Debt / 2019E EBITDA <5.0x 10.6x 295 Investment g
Slide 20: KMI: A Compelling Investment Opportunity
KMI: A Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with significant long-term growth opportunities ► ~90% take-or-pay or fee-based earnings (a) ► ~$8 billion 2019B Adjusted EBITDA(b) ► 25% dividend increase in 2019 and 2020 ► Funding capital pro
Slide 21: Appendix
KINDER/MORGAN Appendix
Slide 22: KMI: 2019 Guidance – Published Budget
KMI: 2019 Guidance – Published Budget Strong fundamentals and strategic footprint support steady growth in our diversified, fee-based cash flow Key Metrics 2019 Budget ∆ from 2018 Notes SIGNIFICANT CASH GENERATION $ billions Expect to be slightly below budget, Adjusted EBITDA $7.8 billion 3% $7.8 pr
Slide 23: Energy Toll Road
Energy Toll Road Cash flow security with ~90% from take-or-pay and other fee-based contracts Natural Gas Pipelines Products Pipelines Terminals CO2 2019B EBDA %(a) 61% 15% 14% 10% 72% interstate pipelines (f) 78% liquids Asset Mix 60% refined products 61% terminals 62% oil production related 9% intr
Slide 24: Stable Foundation of Cash Flows through Commodity Cycles
Stable Foundation of Cash Flows through Commodity Cycles 5-year change in Adjusted EBITDA $ billions $1.7 $7.8 $7.4 $(0.6) $(0.5) $0.2 $(0.3) $(0.1) Helped to fund $8.3 billion Adjusted Net Debt reduction(b) 2014 Adjusted EBITDA 2014-2017 Asset Divestitures 2014-2017 2015-2016 Other EBITDA from 2019
Slide 25: Averaged $2.5 Billion of Discretionary Capital since 2008
Averaged $2.5 Billion of Discretionary Capital since 2008 ANNUAL GROWTH CAPITAL & CONTRIBUTIONS TO JVs(a,b) $ billions Expansion Average $3.4 $3.3 $3.2 $3.2 $3.1 $3.0 $2.5 $2.7 $2.3 $2.3 $1.7 $1.4 $1.1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019B (c) Established track record of inves
Slide 26: High-Quality, Diversified Customer Base
High-Quality, Diversified Customer Base Strong customer credit, valuable services limit KMI’s risk TOP 25 CUSTOMERS Diverse, primarily investment grade customers limit counterparty risk BB+ to BB B- or Below Our average customer represents less than 0.1% of 2019 budgeted net 4% 5% revenue Top 25
Slide 27: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) ENVIRONMENTAL & SAFETY CORPORATE GOVERNANCE ESG RESOURCES Leader in methane emission reductions 13 independent board members out Disclosure: of 16 - 2017 ESG Report – SASB and TCFD - 20+ years in EPA’s voluntary Natural Gas STAR program - Founding Member of
Slide 28: KMI Business Risks
KMI Business Risks Summary Regulatory – FERC rate cases (Products Pipelines and Natural Gas Pipelines) – Provincial, state, and local permitting issues CO2 crude oil production volumes Throughput on our volume-based assets Commodity prices – 2019 budget average strip price assumptions: $60.0
Slide 29: Joint Venture Treatment in Key Metrics
Joint Venture Treatment in Key Metrics KM controls and fully consolidates KM does not control or consolidate (third party portion referred to as noncontrolling interests in financial statements) (KM portion referred to as equity investments in financial statements) NGPL (50%), SNG (50%), FGT (50%),
Slide 30: Natural Gas Segment Overview
Natural Gas Segment Overview Connecting key natural gas resources with major demand centers Asset Summary Natural Gas Pipelines: ~70,000 Miles NGL Pipelines: ~2,700 Miles U.S. Natural Gas Consumption Moved: ~40% Working Gas Storage Capacity: 657 Bcf 2019B EBDA(a): ~$5.1 billion Project Backlog: $4.3
Slide 31: Growth Driver: Buildout of U.S. LNG Exports
Growth Driver: Buildout of U.S. LNG Exports Our natural gas network serves significant LNG export capacity and is well-positioned to capture more GLOBAL DEMAND DRIVING SIGNIFICANT BUILDOUT OF U.S. LNG OUR NETWORK REACHES MULTIPLE EXPORT FACILITIES EXPORT CAPABILITIES Forecasted U.S. liquefaction cap
Slide 32: Growth Driver: Surging Permian Production
Growth Driver: Surging Permian Production Building 4 Bcfd of new natural gas takeaway capacity | Ability to leverage our assets to competitively serve future growth Our existing footprint reaches across Texas and connects into all major OUR ASSETS ARE POSITIONED TO SERVE PERMIAN PRODUCTION demand ma
Slide 33: Highly-Contracted Natural Gas Pipelines
Highly-Contracted Natural Gas Pipelines Contracted capacity and term by region NET ANNUAL INCREMENTAL RE-CONTRACTING EXPOSURE (KM SHARE): Assumptions % of $8.4bn 2019B Total Segment EBDA(a) Negative figures represent unfavorable re-contracting exposure based on November 2018 market assumptions 202
Slide 34: FERC-Regulated Interstate Natural Gas Assets
FERC-Regulated Interstate Natural Gas Assets Summary statistics, including remaining contract term and rate moratorium dates (where applicable) Transport Storage Avg. Remaining % of 2017 Revenues KM Capacity Capacity Contract Term from Negotiated or Rate Moratorium # Asset Name (Nickname) Ownership
Slide 35: Products Segment Overview
Products Segment Overview Strategic footprint with significant cash flow generation Asset Summary Pipelines (a): ~9,500 Miles 2018 Throughput(a) ~2.3 mmbbld Condensate Processing Capacity 100 mbbld Transmix 5 facilities Terminals: 67 Terminals Terminals Tank Capacity ~39 mmbbls Pipeline Tank Capacit
Slide 36: Terminals Segment Overview
Terminals Segment Overview Diversified terminaling network connected to key refining centers and market hubs Asset Summary Total Kinder Morgan Terminals: 157 Terminals Terminals Segment – Bulk 34 Terminals Terminals Segment – Liquids 56 Terminals Products Pipelines Segment Terminals 67 Terminals Jon
Slide 37: CO2 Segment Overview
CO2 Segment Overview World class, fully integrated assets ― CO2 source to crude oil production and takeaway in the Permian Basin KMI Remaining OGIP CO2 Reserves Interest NRI Location Deliverability (tcf) McElmo Dome 45% 37% SW Colorado 20+ years 22.0 Doe Canyon 87% 68% SW Colorado 10+ years 3.0 CO2
Slide 38: CO2 Segment's Significant Returns and CO2 Free Cash Flow
CO2 Segment’s Significant Returns and CO2 Free Cash Flow Long history of generating high returns and significant CO 2 free cash flow with minimal acquisitions CO2 IRR% 2000-2018 SIGNIFICANT CO2 FREE CASH FLOW $ millions $1,432 $1,458 Oil & Gas 18% $1,326 $1,141 $1,094 $286 Total CO2 $960 Segment (in
Slide 39: Non-GAAP Financial Measures and Reconciliations
Non-GAAP Financial Measures and Reconciliations Defined Terms Reconciliations for the historical period 39
Slide 40: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The non-GAAP financial measures of distributable cash flow (DCF), both in the aggregate and per share, Segment EBDA before Certain Items, Adjusted EBITDA, Adjusted Earnings, both in the aggregate and per share, and Net Debt and Adjusted Net Debt, and CO 2 Free Cash
Slide 41: Use of Non-GAAP Financial Measures (Cont'd)
Use of Non-GAAP Financial Measures (Cont’d) Adjusted Earnings – Adjusted Earnings are calculated by adjusting net income available to common stockholders for Certain Items, and Adjusted Earnings per share is Adjusted Earnings divided by average adjusted common shares which include KMI’s weighted ave
Slide 42: KMI GAAP Reconciliation
KMI GAAP Reconciliation $ in millions Yr. Ended Yr. Ended Reconciliation of DCF 12/31/18 Reconciliation of Adjusted EBITDA 12/31/18 Net Income $ 1,919 Net Income $ 1,919 Noncontrolling interests (a) (310) Total Certain Items 501 Preferred stock dividends (128) Noncontrolling interests (h) (252) Net
Slide 43: Reconciliation of CO2 Free Cash Flow
Reconciliation of CO2 Free Cash Flow $ in millions Year Ended December 31, Reconciliation of CO2 Free Cash Flow 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Segment EBDA $ 783 $ 965 $ 1,099 $ 1,322 $ 1,435 $ 1,240 $ 657 $ 827 $ 847 $ 759 Certain items: Non-cash impairments and project write-off
Slide 44: Kinder Morgan
KINDER/MORGAN