Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Day (January 2020)
134 slides from Kinder Morgan's investor day presentation, Jan 29, 2020
Slide 1: 2020 Investor Day
2020 Investor Day January 29, 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: Agenda and presenters
Kinder Morgan 2020 Investor Day Agenda and presenters TIME DISCUSSION PRESENTER 8:00 – 8:20 Our Vision Rich Kinder Executive Chairman 8:20 – 9:00 Strategy Steve Kean CEO 9:00 – 9:40 Business Review Kim Dang President 9:40 – 9:50 BREAK 9:50 – 10:35 Panel with Business Unit Presidents Tom Martin, Pres
Slide 4: Our Vision
Our Vision Delivering energy to improve lives & create a better world Rich Kinder Executive Chairman 4
Slide 5: Hydrocarbons Required to Meet Long-Term Global Demand
Hydrocarbons Required to Meet Long-Term Global 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 6: World is Expected to Grow by Nearly 1 Billion People by 2030
World is Expected to Grow by Nearly 1 Billion People by 2030 Over 90% of population growth occurs in developing economies 2018 billions of people 2030 billions of people Non-OECD: ~6.3 BILLION Over 80% of people Over 850 million more people live in developing economies such as India, China, Sub-Saha
Slide 7: Many People Still Lack Basic Needs & Technologies
Many People Still Lack Basic Needs & Technologies Developing countries, led by Asia, are the main engines of global growth SAFE AIR QUALITY(a) CLEAN COOKING(b) GDP PER CAPITA ENERGY DEMAND PER CAPITA % of population (2017) % of population with access (2016) thousands of US$ (2018) tons of oil equiva
Slide 8: U.S. Expected to Produce More Energy than it Needs
U.S. Expected to Produce More Energy than it Needs Surplus of affordable energy to meet demand abroad U.S. OIL & LIQUIDS U.S. NATURAL GAS million barrels per day billion cubic feet per day 25 120 supply supply net exports 20 net exports 2030: 16 bcfd 2030: 4 mmbbld 90 demand demand 15 60 10 30 5 ($
Slide 9: Developing Economies Drive Energy Demand Growth
Developing Economies Drive Energy Demand Growth Energy consumption much more than just power & electric vehicles rest of world non-OECD other industry only 2% of expected growth such as India, China, Sub- agricultural, asphalt, lubricants manufacturing & construction, Saharan Africa, Indonesia, & ot
Slide 10: Hydrocarbons Are Essential to Our Quality of Life
Hydrocarbons Are Essential to Our Quality of Life Fueling our modern materials & conveniences Natural gas & petroleum heat our homes & water, generate much of our electricity & are inputs to products we use every day: Note: Text size not indicative of relative demand. 10
Slide 11: Significant Environmental Concern in Developing Economies
Significant Environmental Concern in Developing Economies Ambient air pollution accounts for an estimated 4.2 million deaths per year ENERGY-RELATED CO2 EMISSIONS DELHI, INDIA billion metric tons 26 million people | Air quality statistic: 143 PM2.5 35 33 30 rest of world up 17% up 11% rest of world
Slide 12: U.S. Greenhouse Gas Emissions are Declining
U.S. Greenhouse Gas Emissions are Declining Meaningful progress led by natural gas replacing coal-fired power generation U.S. GREENHOUSE GAS EMISSIONS BY ECONOMIC SECTOR billion metric tons of CO2 equivalent Since 1990: 2007 peak 8 Total U.S. emissions are about flat U.S. territories – despite 16%
Slide 13: Natural Gas is a Critical Partner to Renewable Energy
Natural Gas is a Critical Partner to Renewable Energy Evidence shows natural gas is preferred backup for renewables 7 DAYS OF ELECTRICITY GENERATION IN TEXAS (megawatt-hours by source) Natural gas works hand-in-hand with 30,000 nuclear coal natural gas wind solar hydro other renewables like wind &
Slide 14: Conclusions
Conclusions Developing economies will drive energy demand growth U.S. excess supply will serve (population growth & global demand growth satisfaction of basic needs) U.S. greenhouse gas Long runway for hydrocarbon emissions are declining use, especially natural gas 14
Slide 15: Strategy
KINDER/MORGAN Strategy Steve Kean CEO 15
Slide 16: 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% 4% pipelines ~70,000 miles of natural gas pipelines Terminals 13% 659
Slide 17: A Core Energy Infrastructure Holding
A Core Energy Infrastructure Holding Generating significant cash flow & returning significant value to shareholders >$40 billion market capitalization One of the 10 largest energy companies in the S&P 500 15% owned by management Highly aligned management with significant equity interest ~5% current
Slide 18: Key Milestones Reached in 2019
Key Milestones Reached in 2019 Sold KML & U.S. Cochin pipeline for ~$2.5 billion Created ~$1.2 billion balance sheet flexibility by beating leverage target Placed major projects in service – GCX & Elba(a) Demonstrated capital discipline by eliminating 1/3 of budgeted CO segment investments with 2 up
Slide 19: Our Strategy
Our Strategy Stable, fee-based assets Financial flexibility Disciplined capital allocation Enhancing shareholder value Core energy 4.3x 2020B Net Debt / Conservative Attractive projects infrastructure Adjusted EBITDA(a) assumptions Dividend growth Safe & efficient operator Low cost of
Slide 20: Substantial Growth Projected for U.S. Natural Gas Supply
Substantial Growth Projected for U.S. Natural Gas Supply Our network connects key supply basins to multiple demand points along the Gulf Coast KEY BASINS DRIVING U.S. GROWTH 2019 to 2030 growth in bcfd 12 Additional 32 bcfd expected from four areas 10 Northeast 7 Permian Haynesville 3 Eagle Ford Per
Slide 21: Our Unmatched Natural Gas Network & Deliverability
Our Unmatched Natural Gas Network & Deliverability Strong fundamentals drive value on existing assets & create investment opportunities U.S. NATURAL GAS DEMAND = Growing supply area bcfd = Key areas of demand growth 103 Bakken 101 Powder River 96 Power Power DJ 91 Marcellus / Utica Power Permian LNG
Slide 22: U.S. Natural Gas Demand is Concentrated in Gulf Coast
U.S. Natural Gas Demand is Concentrated in Gulf Coast 84% of forecasted 2019 – 2030 growth is in the Gulf Coast, where we have significant assets in place Other regions Gulf Coast 16% 84% 28 bcfd demand growth GULF COAST DEMAND GROWTH bcfd, 2019 – 2030 +15.9 LNG exports +2.7 Net Mexico exports +2.4
Slide 23: U.S. LNG Exports are Growing
U.S. LNG Exports are Growing Expected to more than triple by 2025 GLOBAL NATURAL GAS DEMAND PROJECTED U.S. LNG EXPORTS bcfd bcfd 54 457 21 6 7 ~13.5 bcfd of capacity already 8 operating, commissioning or 382 under construction U.S. LNG export capacity projected to supply ~4.5% of 13 global gas marke
Slide 24: Full Cycle Emissions in Electric Power Generation
Full Cycle Emissions in Electric Power Generation U.S. LNG is one of the lowest emissions fuels for electricity in Asia & Europe ESTIMATED GREENHOUSE GAS EMISSIONS kg of CO2-equivalent emissions per megawatt-hour based on 100-year global warming potential low to high estimate 1,500 1,250 1,000 U.S.
Slide 25: Replacing Coal is Critical to Global Emission Reductions
Replacing Coal is Critical to Global Emission Reductions Power sector contributes ~40% of energy-related CO2 emissions globally Natural gas is a more efficient & lower carbon ELECTRIC POWER SECTOR GENERATION MIX % based on terawatt-hours (2018) fuel for power generation 4% 4% Burning natural gas i
Slide 26: $3.6bn of Commercially-Secured Capital Projects Underway
$3.6bn of Commercially-Secured Capital Projects Underway ~$1.3 billion added in 2019 Demand Pull / KMI Capital Estimated (as of 12/31/2019) Supply Push ($ billion) In-Service Date Capacity Natural Gas Permian takeaway projects (PHP, TX Intrastates, EPNG, NGPL) $ 0.9 2020 – Q1 2021 4.4 bcfd Supply fo
Slide 27: 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 demand Under Construction markets Our adva
Slide 28: 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 29: Beyond the Backlog
Beyond the Backlog Strong long-term fundamentals to drive additional opportunities Northeast natural Storage to support Infrastructure to gas demand & renewable power Natural gas for Organic growth support U.S. long-term supply generation & LNG power generation in G&P energy exports needs exports Ma
Slide 30: Prioritizing Environmental, Social & Governance (ESG)
Prioritizing Environmental, Social & Governance (ESG) Protecting the public, our employees & the environment Invest millions of dollars each year on integrity SUSTAINALYTICS ESG RISK RATING(a) management & maintenance programs to operate our assets safely #2 out of 184 Refiners & Pipelines (Indust
Slide 31: Contributing to a Lower-Carbon Future with Natural Gas
Contributing to a Lower-Carbon Future with Natural Gas Long-standing commitment to reducing methane emissions | Ongoing enhancements to ESG disclosures 25+ years of commitment to reducing methane emissions, SUCCESSFUL METHANE EMISSIONS REDUCTIONS(a) including ONE Future & EPA’s Natural Gas STAR pr
Slide 32: Business Review
Business Review Kimberly Dang President 32
Slide 33: 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: ~1,200 miles Natural gas transported ~40% (U.S. consumption & exports) Working gas storage capacity: 659 bcf 2020B EBDA(a): $4.7 billion Proje
Slide 34: Long-Term Growth Drivers: Natural Gas Segment
Long-Term Growth Drivers: Natural Gas Segment Capitalizing on industry trends LNG exports: pipeline infrastructure & liquefaction facilities Exports Exports to Mexico: additional volume with ramp up of in-country infrastructure Outlets for growing Permian supply from GCX & PHP Shale-driven exp
Slide 35: Products Segment Overview
Products Segment Overview Strategic footprint with significant cash flow generation Asset Summary Pipelines(a): ~9,500 miles 2019 throughput(a) ~2.4 mmbbld Terminals: 65 terminals Terminals tank capacity ~39 mmbbls Pipeline tank capacity ~16 mmbbls Condensate processing capacity 100 mbbld Transmix 5
Slide 36: Products Segment Overview: Diverse Product Mix
Products Segment Overview Supplying a diverse mix of feedstock & finished products critical to refining & transportation sectors 2019 DELIVERY VOLUMES(a) Robust economy & consumer preference supports demand growth partially offset by improving fuel efficiency Gasoline EIA projecting 0.2% growth
Slide 37: Consumer Preferences Suggest Product Demand Growth
Consumer Preferences Suggest Product Demand Growth Both U.S & global demand trending higher EV MARKET SHARE SUV MARKET SHARE U.S. TRANSPORTATION DEMAND GLOBAL AIR TRAVEL 2018 global car sales by manufacturer % of sales in key car markets million barrels per day trillion revenue-passenger-miles EVs a
Slide 38: Terminals Segment Overview
Terminals Segment Overview Diversified terminaling network connected to key refining centers & market hubs # of capacity Asset Summary terminals (mmbbls) Terminals Segment – Bulk 32 Terminals Segment – Liquids 50 79 Products Pipelines Segment 65 55 Total 147 134 Jones Act: 16 tankers 2020B EBDA(a):
Slide 39: Integrated Terminaling Network Focused on Refined Products
Integrated Terminaling Network Focused on Refined Products Irreplaceable collection of assets, capabilities & market-making connectivity Our unmatched scale & flexibility on the Houston Ship Channel: KM terminals & assets refined products terminals Colonial local refineries & processing Explorer 43
Slide 40: Leading Exporter of U.S. Gasoline & Distillates
Leading Exporter of U.S. Gasoline & Distillates Our Houston Ship Channel exports have grown faster than the broader U.S. market over the last several years U.S. EXPORTS KM EXPORTS FROM HOUSTON SHIP CHANNEL Millions of barrels per day Thousands of barrels per day 3.5 400 3.0 350 300 2.5 250 2.0 200 1
Slide 41: CO2 Segment Overview
CO2 Segment Overview World class, fully-integrated assets | CO2 source to crude oil production & takeaway in the Permian Basin KMI Est. OGIP CO2 Reserves Interest NRI Location (tcf) McElmo Dome 45% 37% SW Colorado 22.0 Doe Canyon 87% 68% SW Colorado 3.0 Bravo Dome(a) 11% 8% NE New Mexico 12.0 KMI Es
Slide 42: CO2 Free Cash Flow & Attractive Returns
CO2 Free Cash Flow & Attractive Returns Long history of generating high returns & significant CO2 free cash flow with minimal acquisitions CO2 IRR% 2000-2019 SIGNIFICANT CO2 FREE CASH FLOW $ millions $1,458 Oil & Gas 18% $1,326 $1,432 $286 $1,141 $1,094 Total CO2 Segment (incl. CO2 & transport) 28%
Slide 43: Significant & Stable Cash Flow Generation
Significant & Stable Cash Flow Generation Opportunistic asset monetization enabled meaningful debt reduction Self-funded all capex & all dividends with >$19 billion of cash flow from operations since 2016 Borrowing, net Cash from BS Debt repayment Cash from BS Share buybacks Asset sales, Cash to BS
Slide 44: Incremental 2020B Cash Flow Returned to Shareholders
Incremental 2020B Cash Flow Returned to Shareholders Multiple attractive capital allocation opportunities $2.7 billion excess cash flow $5.1 billion of DCF less $2.4 billion of discretionary capital less 25% increase planned for 2020 $2.7 billion dividend paid dividend paid entirely out of cas
Slide 45: Stable, Fee-Based Cash Flow from High Quality Customers
Stable, Fee-Based Cash Flow from High Quality Customers Underpinned by multi-year contracts with diversified customer base STABLE CASH FLOWS(a) HIGH QUALITY CUSTOMERS(b) Not rated 4% 5% 12% 3% B- or below BB+ to B 27% 78% Customers 7% $7.8bn investment grade rated or >$5mm substantial credit support
Slide 46: Secure Cash Flows Across Our Segments
Secure Cash Flows Across Our Segments 2020 budgeted segment cash flows by contract type NATURAL GAS SEGMENT: 97% take-or-pay or fee-based PRODUCTS SEGMENT: 93% fee-based or take-or-pay Unhedged, 2% Hedged, 1% Unhedged, 7% Stable fee-based refined Other Fee-Based, 17% products volumes with 1.7% CAGR
Slide 47: Historical Discretionary Capital Spending Levels
Historical Discretionary Capital Spending Levels Averaged $2.7 billion per year since 2010 $ billions Discretionary Capital Average $3.6 $3.6 $3.5 $2.7 $3.0 $2.8 $2.8 $2.4 $2.4 $2.1 $1.7 $1.6 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020B We will retain our capital discipline − if projects
Slide 48: 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 49: Stable Foundation of Cash Flows through Commodity Cycles
Stable Foundation of Cash Flows through Commodity Cycles 6-year change in Adjusted EBITDA $ billions $0.6 $1.8 $7.6 $7.4 $0.6 $0.3 $0.1 $0.1 $0.1 Helped achieve $9.4 billion Net Debt reduction(a) 4.3x YE Net Debt / Adj. EBITDA, down from 5.8x at 9/30/15 2014 Adjusted 2014-2017 Asset divestitures 201
Slide 50: Compelling Investment Opportunity
Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with attractive investment opportunities ► >90% take-or-pay or fee-based earnings(a) ► ~$7.6 billion 2020B Adjusted EBITDA(b) ► ~5% current dividend yield ► 25% budgeted dividend increase in 2020 ► Hig
Slide 51: Panel with Business Unit Presidents
Panel with Business Unit Presidents Tom Martin President of Natural Gas James Holland President of Products John Schlosser President of Terminals Jesse Arenivas President of CO2 51
Slide 52: 2020 Budget
2020 Budget David Michels Vice President & CFO 52
Slide 53: 2020 Guidance
2020 Guidance Published budget change ADJUSTED EBITDA $ billions Key Metrics 2020 Budget over 2019 $7.6 $7.6 $7.6 After normalizing for sold assets, Adjusted EBITDA $7.6 billion 0% Adjusted EBITDA has grown Distributable Cash Flow $5.1 billion 2% Growth from 2019 despite sale of U.S. Cochin & KML DC
Slide 54: 2020B Assumptions & Highlights
2020B Assumptions & Highlights YoY EBDA(a) KEY DEVELOPMENTS FROM 2019 — Full year contribution from Elba Liquefaction, GCX & Bakken G&P expansions — TX Intrastates growth projects & increased margin — Sale of Cochin Natural Gas Pipelines +2% — Unfavorable recontracting impacts (MEP, Ruby) — Lower dr
Slide 55: 2020B Adjusted EBITDA
2020B Adjusted EBITDA $ in millions 2020 2019 Change Budget Actual $ % Natural Gas Pipelines $ 4,707 $ 4,610 $ 97 2% Products Pipelines 1,254 1,258 (4) 0% Terminals 1,051 1,174 (123) -10% CO2 763 707 56 8% Adjusted Segment EBDA(a) 7,775 7,749 26 0% General and administrative and corporate charges (a
Slide 56: 2020B Distributable Cash Flow (DCF)
2020B Distributable Cash Flow (DCF) in millions, except per share 2020 2019 Change Budget Actual $ % Adjusted EBITDA $ 7,582 $ 7,618 $ (36) 0% Interest, net (a) (1,690) (1,816) 126 -7% Cash taxes (b) (71) (90) 19 -21% Sustaining capital expenditures (c) (716) (688) (28) 4% KML NCI DCF adjustments (d
Slide 57: 2020B Adjusted Earnings
2020B Adjusted Earnings in millions, except per share 2020 2019 Change Budget Actual $ % DCF $ 5,099 $ 4,993 $ 106 2% (a) Cash taxes 71 90 (19) -21% (b) Sustaining capital expenditures 716 688 28 4% Income tax expense for DCF(c,d) (745) (714) (31) 4% DD&A and amortization of excess cost of equity in
Slide 58: 2020B Capital Expenditures
2020B Capital Expenditures $ in millions 2020 2019 Sustaining Capital Budget Actual Change Natural Gas Pipelines (a) $ 363 $ 339 $ 24 Products Pipelines (a) 81 87 (6) Terminals (a) 230 222 8 CO2 16 17 (1) Corporate / other 26 23 3 Total sustaining capital expenditures(b) $ 716 $ 688 $ 28 2020 2019 D
Slide 59: 2020B Sources & Uses
2020B Sources & Uses $ in millions 2020 Sources Budget SOURCES & USES ($ in billions) DCF $ 5,099 9 Revolver Borrowing/Debt Issuances (a) 1,778 8 Taxes on After-tax proceeds from Pembina stock sale 764 PPL stock sale TMPL sale 7 Total sources $ 7,641 Debt 6 Borrowings, net maturities 5 2020 Discreti
Slide 60: Leverage & Liquidity
Leverage & Liquidity(a) $ in millions 2020 Budget Net Debt (Year End) $ 32,964 Adjusted EBITDA $ 7,582 Financial flexibility with ~$4 billion of capacity on our Net Debt(b) to Adjusted EBITDA 4.3x credit facility & manageable future debt maturities KMI revolver capacity 12/31/2019 KMI long-term debt
Slide 61: 2020B Quarterly Profile
2020B Quarterly Profile $ in millions, except per share Adjusted Segment EBDA Q1 Q2 Q3 Q4 Total 2020 Budget 26% 24% 24% 26% $ 7,775 2019 Actual 26% 24% 24% 26% $ 7,749 Adjusted EBITDA 2020 Budget 26% 24% 24% 26% $ 7,582 2019 Actual 26% 24% 24% 26% $ 7,618 Distributable Cash Flow (DCF) 2020 Budget 28
Slide 62: 2020B Cash Tax Calculation Detail
2020B Cash Tax Calculation Detail $ in millions 2020 Budget Adjusted Segment EBDA 7,775 Net income attributable to NCI (67) JV earnings from C corps (325) JV distributions from C corps (net of 65% dividend received deduction) 88 JV book DD&A (pass-through entities) 142 General and administrative and
Slide 63: 2020 Budget Sensitivities
2020 Budget Sensitivities Limited overall commodity exposure 2020B assumptions Change 2020B DCF impact (full year) CO2 Natural Gas Products Total company $55/bbl WTI $1/bbl WTI $0.8 million NGL $0.8 million $1.2 million ~$5 million $0.6 million CO2 $1.3 million crude $2.7 million total $2.50/mmbtu $
Slide 64: KMI: Then & Now
KMI: Then & Now Celebrating our 20th investor day 2001 2020 Key metrics Investor Day Investor Day Increase Market capitalization $6 billion $49 billion Over 700% Enterprise value $9 billion $84 billion Over 800% Miles of pipeline ~33,000 ~83,000 ~150% # of employees ~3,800 ~11,900 Over 200% Net inco
Slide 65: Natural Gas Segment Presentation
Natural Gas Segment Presentation 65
Slide 66: 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: ~1,200 miles Natural gas transported ~40% (U.S. consumption & exports) Working gas storage capacity: 659 bcf 2020B EBDA(a): $4.7 billion Proje
Slide 67: Long-Term Growth Drivers: Natural Gas Segment
Long-Term Growth Drivers: Natural Gas Segment Capitalizing on industry trends LNG exports: pipeline infrastructure & liquefaction facilities Exports Exports to Mexico: additional volume with ramp up of in-country infrastructure Outlets for growing Permian supply from GCX & PHP Shale-driven exp
Slide 68: U.S. LNG Exports are Growing
U.S. LNG Exports are Growing Expected to more than triple by 2025 GLOBAL NATURAL GAS DEMAND PROJECTED U.S. LNG EXPORTS bcfd bcfd 54 457 21 6 7 ~13.5 bcfd of capacity already 8 operating, commissioning or 382 under construction U.S. LNG export capacity projected to supply ~4.5% of 13 global gas marke
Slide 69: 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 70: Project Highlight: Elba Island LNG Export Terminal
Project Highlight: Elba Island LNG Export Terminal Elba Liquefaction Company (ELC)(a) / Southern LNG Company (SLNG) Project Scope Liquefaction facilities (10 small-scale modular units) Ship loading facilities; boil-off gas compression Located on Elba Island near Savannah, Georgia Project Stati
Slide 71: Key Market: Exports to Mexico
Key Market: Exports to Mexico Expect to maintain market share of growing Mexico market | ~55%(a) in 2019 Extensive footprint offers diverse supply options to multiple Mexico interconnections Including 12 direct & 4 indirect U.S. natural gas exports to Mexico are expected to grow by 33% − or ~1.7 b
Slide 72: 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 demand Under Construction markets Our adva
Slide 73: Growth Driver: Supporting Increasing Variable Demand
Growth Driver: Supporting Increasing Variable Demand Opportunities for increased throughput, short notice high deliverability services & gas storage PERCENTAGE LOAD FACTOR GAS VS. WIND(a) Market dynamics & KM response daily ERCOT generation (July 2018-December 2019) natural gas (% of demand) Renewab
Slide 74: Natural Gas: Interstate Pipelines
Natural Gas: Interstate Pipelines Key statistics Capacity Storage Avg. Remaining Effective Date of Rate Moratorium Ownership Miles (bcfd) (bcf) Contract Term (yrs) Next Rate Case Through Date 100% KMI-owned: TGP Tennessee Gas Pipeline 100% 11,800 12.1 80 8.8 / 3.9(a) NA 10/31/2022 EPNG El Paso Natur
Slide 75: Natural Gas: Intrastate, G&P and NGL Assets
Natural Gas: Intrastate, G&P and NGL Assets Key statistics Capacity Avg. Remaining Storage Treating Processing Ownership Miles (bcfd) Contract Term (yrs) (bcf) (GPM) (bcfd) 100% KMI-owned natural gas pipelines: KMTP / Tejas 100% 5,850 7.8 6.0 132 1,680 0.5 Copano – gas 100% 6,620 4.8 2.7 4,100 1.2 K
Slide 76: Manageable Natural Gas Re-Contracting Exposure
Manageable Natural Gas Re-Contracting Exposure Analysis of existing contracts that renew during next two years EXPECTED ANNUAL NET RE-CONTRACTING EXPOSURE (KM SHARE): % of $7.8bn 2020B KMI Total Segment EBDA(a) Expiring contracts are assessed for volumetric & rate 2021 2022 risk based on November
Slide 77: Projects Placed Into Service During 2019
Projects Placed Into Service During 2019 New natural gas projects expected to generate $431 million of annual EBITDA Capital, EBITDA, In-service Capacity KM Share KM Share Asset Project Date (mDthd) ($mm) ($mm) ELC Elba Liquefaction - 3 units and ancillary facilities Sep - Dec 2019 107 $543 67.3 SLN
Slide 78: Project Backlog: Interstate Pipelines
Project Backlog: Interstate Pipelines Natural Gas Capital, KM Share Capacity In-service Asset Project ($mm) (mDthd) Date Project Status East 300 Upgrade $246 110 11/2022 FERC filing expected 6/2020 TGP Line 261 Upgrade 58 128 12/2020 FERC Certificate received 12/19/2019 South Mainline Expansion 141
Slide 79: Project Backlog: Intrastates and G&P
Project Backlog: Intrastates and G&P Natural Gas Capital, KM Share Capacity In-service Asset Project ($mm) (mDthd) Date Project Status Permian Highway $600 2,100 1Q 2021 Under construction Intrastate Network Expansions * 326 1,675 1Q - 4Q 2020 Under construction / development Texas Intrastate Intras
Slide 80: LNG Contract Overview
LNG Contract Overview Contracted capacity (online / to come) & Elba Liquefaction Remaining Contract KM Asset Contracted Capacity (mDthd) KM Capital ($mm) Term (yrs) TGP 1,250 $281 KMLP 1,545 $278 NGPL 1,975 $236 Intrastate 740 $114 Elba Express 436 $84 Transport subtotal: 5,946 $992 17 Elba liquefac
Slide 81: Products Segment Presentation
Products Segment Presentation 81
Slide 82: Products Segment Overview
Products Segment Overview Strategic footprint with significant cash flow generation Asset Summary Pipelines(a): ~9,500 miles 2019 throughput(a) ~2.4 mmbbld Terminals: 65 terminals Terminals tank capacity ~39 mmbbls Pipeline tank capacity ~16 mmbbls Condensate processing capacity 100 mbbld Transmix 5
Slide 83: Products Segment Overview: Diverse Product Mix
Products Segment Overview Supplying a diverse mix of feedstock & finished products critical to refining & transportation sectors 2019 DELIVERY VOLUMES(a) Robust economy & consumer preference supports demand growth partially offset by improving fuel efficiency Gasoline EIA projecting 0.2% growth
Slide 84: Stable U.S. Market Demand for Refined Products
Stable U.S. Market Demand for Refined Products Volume growth on strategic assets consistently outpaces national average REFINED PRODUCTS VOLUMES(a) mmbbld Unmatched connectivity between major refining centers & key demand markets 1.8 17.0 West Coast: delivers product from major refining centers in
Slide 85: Refined Products Assets Generate Stable Cash Flows
Refined Products Assets Generate Stable Cash Flows Steadily growing volumes complemented by indexed tariff structure REFINED PRODUCTS EBDA BY REGION(a) $ millions Volume growth translates to earnings growth $792 $800 $771 $743 Potential for market share gains in key growth areas $710 $723 $690 $70
Slide 86: Project Highlight: Roanoke Expansion
Project Highlight: Roanoke Expansion Securing refined products delivery for the Roanoke / Montvale area Market Drivers Historically, both the Colonial Pipeline Montvale Lateral & Plantation Roanoke Lateral have served the Roanoke, Virginia market Abandonment of the Colonial Montvale Lateral has
Slide 87: Strong Volume Growth Across Crude Pipelines
Strong Volume Growth Across Crude Pipelines 84% of 2020B volumes reflect re-contracted market rates CRUDE OIL PRODUCTION BY BASIN SERVED(a) THROUGHPUT VOLUMES BY CRUDE PIPELINE mmbbld mbbld 3.0 + KMCC recently connected 800 to Permian supply 700 600 2.5 500 400 300 2.0 200 Bakken 100 1.5 0 2015 2016
Slide 88: Texas Crude Oil Assets: KMCC, Double Eagle & Splitter
Texas Crude Oil Assets: KMCC, Double Eagle & Splitter Valuable connectivity to Corpus Christi & the Houston Ship Channel Assets offer connectivity to the Corpus Christi & Houston Ship Channel markets Permian Flexibility to reach domestic refining capacity & export facilities oil production Recent
Slide 89: Bakken Crude Oil Assets: Hiland Gathering & Double H
Bakken Crude Oil Assets: Hiland Gathering & Double H Strong production growth in the Bakken translating into higher transport volumes BAKKEN BASIN PRODUCTION(a) & KM BAKKEN CRUDE VOLUMES(b) mbbld Bakken 1,600 350 oil production 1,400 300 +150 mbbld +12% 1,200 250 in 2019(a) 1,000 200 800 150 600 400
Slide 90: Products Segment Snapshot
Products Segment Snapshot Asset statistics Crude oil assets: Statistics Origin Destination KM Crude & Condensate pipeline (KMCC) 264 miles Eagle Ford Shale Field in South TX (Dewitt, Karnes, Gonzales Houston Ship Channel Refining Complex Counties) Camino Real Gathering 68 miles South Texas, Eagle Fo
Slide 91: Terminals Segment Presentation
Terminals Segment Presentation 91
Slide 92: Terminals Segment Overview
Terminals Segment Overview Diversified terminaling network connected to key refining centers & market hubs # of capacity Asset Summary terminals (mmbbls) Terminals Segment – Bulk 32 Terminals Segment – Liquids 50 79 Products Pipelines Segment 65 55 Total 147 134 Jones Act: 16 tankers 2020B EBDA(a):
Slide 93: Terminals Segment Product Mix
Terminals Segment Product Mix Diverse, liquids-focused product mix other Domestic terminaling in both hub & regional markets coal bulk ‒ Premier refined products terminaling system in the Houston Ship Channel 4% 7% ‒ Complementary chemicals & renewable products metals 7% liquids products Domesti
Slide 94: Terminals Segment Contract Model
Terminals Segment Contract Model Earnings driven by long-term contractual use of our assets Leased tank capacity (pre-paid monthly) take-or-pay Jones Act tanker charters (pre-paid monthly) requirements 11% 70% Minimum volume commitments (per bbl or ton) other fee- Ancillary services (e.g., v
Slide 95: Terminals Segment Services
Terminals Segment Services Providing customers with value-added service solutions & access to markets Concentrated in key markets terminaling Primary Hubs: Houston & New York Harbor Jones Act services Secondary Hubs: New Orleans area & Chicago tankers 20% 69% Regional terminals complement th
Slide 96: Terminals Segment Key Hubs
Terminals Segment Key Hubs Strategically located Houston Ship Channel New – Premier refined product terminaling & blending system York Harbor Chicago – 9 terminals providing ~43 million barrels of capacity(a) – $364 million 2020B EBDA(b) Philadelphia Baltimore Dayton Indianapolis New York Harbor
Slide 97: Integrated Terminaling Network Focused on Refined Products
Integrated Terminaling Network Focused on Refined Products Irreplaceable collection of assets, capabilities & market-making connectivity Our unmatched scale & flexibility on the Houston Ship Channel: KM terminals & assets refined products terminals Colonial local refineries & processing Explorer 43
Slide 98: Full Service Offering in the Houston Ship Channel
Full Service Offering in the Houston Ship Channel Industry clearinghouse for production & markets Unmatched inbound connectivity Value-added services Outbound market access Truck Rack Local truck rack Jefferson Street Refineries Pipeline connectivity Pasadena Aggregation, Gasolines & loadings local
Slide 99: Positioned to Meet Domestic Maritime Demand
Positioned to Meet Domestic Maritime Demand American Petroleum Tankers (APT) fleet of 16 medium-range tankers Improving charter rate environment Favorable supply & demand fundamentals Committed Charters Renewal Options – Refined product & crude oil trade 2020 2021 2022 2023 2024 – Military deman
Slide 100: Bulk Commodities
Bulk Commodities Diversified product & services offerings Handle ~40% of Midcontinent & Gulf Coast production Petroleum Coke 8% In-plant refinery bulk-handling 2020B Segment Revenue One of the nation’s largest handlers Export terminaling services Aggregation & blending at export terminals
Slide 101: Meaningful Growth in Exports of U.S. Petroleum Liquids
Meaningful Growth in Exports of U.S. Petroleum Liquids Competitive & growing U.S. supplies reach a diverse mix of global customers U.S. EXPORTS OF PETROLEUM LIQUIDS DESTINATIONS OF U.S. PETROLEUM LIQUIDS EXPORTS Millions of barrels per day Top 7 of 111 countries reached in January through October 20
Slide 102: Leading Exporter of U.S. Gasoline & Distillates
Leading Exporter of U.S. Gasoline & Distillates Our Houston Ship Channel exports have grown faster than the broader U.S. market over the last several years U.S. EXPORTS KM EXPORTS FROM HOUSTON SHIP CHANNEL Millions of barrels per day Thousands of barrels per day 3.5 400 3.0 350 300 2.5 250 2.0 200 1
Slide 103: Macro Trends Translating to Growth
Macro Trends Translating to Growth Long-term liquids fundamentals drive value on existing assets & present capital-efficient opportunity set Market Growth Terminals Opportunities KM Response Production Houston Ship Channel EXPORTS crude oil, NGLs — Enhancing butane/gasoline blending refined produc
Slide 104: Terminals Throughput & Tonnage Statistics
Terminals Throughput & Tonnage Statistics 2019 vs. 2020B Liquids Throughput Bulk Tonnage Throughput Variance Tonnage Variance MMBbls 2019 2020B MMBbls % tons (millions) 2019 2020B mm tons % Gasoline 512.2 526.0 13.8 3% Ores/Metals (Bulk) 15.6 15.7 0.1 1% Distillate 144.4 135.1 (9.2) -6% Petroleum Co
Slide 105: CO2 Segment Presentation
CO2 Segment Presentation 105
Slide 106: CO2 Segment Overview
CO2 Segment Overview World class, fully-integrated assets | CO2 source to crude oil production & takeaway in the Permian Basin KMI Est. OGIP CO2 Reserves Interest NRI Location (tcf) McElmo Dome 45% 37% SW Colorado 22.0 Doe Canyon 87% 68% SW Colorado 3.0 CO2 & TRANSPORT Bravo Dome(a) 11% 8% NE New Me
Slide 107: Enhanced Oil Recovery Process
Enhanced Oil Recovery Process Specializing in the gas injection method of enhanced oil recovery Three phases of oil & gas production PRIMARY SECONDARY TERTIARY RECOVERY RECOVERY (ENHANCED) RECOVERY Reinject CO2 10% 20-40% 30-60% OOIP recovered OOIP recovered OOIP recovered Natural pressure Gas injec
Slide 108: Key Factors Driving the Success of Our CO2 Segment
Key Factors Driving the Success of Our CO2 Segment Maximizing returns through financial discipline & innovation Highly-Skilled Team Advantaged Assets Profit-Focused • Vertically integrated & • Industry leading experience • High-return asset base Permian focused in highly specialized business • Inves
Slide 109: CO2 Segment Budget & Sensitivities
CO2 Segment Budget & Sensitivities Positive CO2 Free Cash Flow Katz/GLSAU $25 Other $10 Tall Cotton $21 CO2 & Transport $61 CO2 & Transport $276 Yates $30 Yates $90 2020B EBDA: 2020B Capex: $763mm $324mm(a) SACROC $351 SACROC $223 Oil Price & Volume Sensitivity ∆ 2020B DCF impact NGL: $0.8mm CO2: $0
Slide 110: CO2 Segment Budgeted Volumes & Highlights
CO2 Segment Budgeted Volumes & Highlights 2020B NET OIL & NGL PRODUCTION 2020B NET CO2 SALES mbbld mmcfd Katz 2.1 Goldsmith 1.3 Tall Cotton 2.0 SACROC 144 Yates 7.0 SACROC 22.4 45.9 mbbld 589 mmcfd Third parties 333 Yates 80 SACROC NGL 11.1 Tall Cotton 19 Goldsmith 13 OIL & GAS CO2 & TRANSPORT Maj
Slide 111: CO2 Segment 2020 Oil & Gas Major Projects
CO2 Segment 2020 Oil & Gas Major Projects Major projects expected to generate attractive returns in multiple commodity price environments Asset Project 2020B capex Commentary ATIRR% at flat WTI price scenarios Forward Curve $55 $60 Activate 28 of 33 Conventional Project Area Patterns (19% Transiti
Slide 112: Extending Productive Life of Mature Fields
Extending Productive Life of Mature Fields Innovation & team work continue to push SACROC decline curve flatter Significant amounts of recoverable oil in place SACROC NET OIL PRODUCTION FORECASTS SACROC is estimated at 2.8 billion barrels of bopd Actual 2020B 2015B 2014B 2011B original oil in plac
Slide 113: CO2 Segment Long-Term Growth Outlook
CO2 Segment Long-Term Growth Outlook Projected EBDA, net production & development plan EBDA(a) NET PRODUCTION 10 YEAR DEVELOPMENT PLAN: 2020 – 2029 $ millions incl. NGL & residue gas (mboed) $1,000 50 Net KM Share Production CapEx Asset (mmboe) ($mm) Expansion Program Plans $900 45 Develop West Sh
Slide 114: CO2 Free Cash Flow & Attractive Returns
CO2 Free Cash Flow & Attractive Returns Long history of generating high returns & significant CO2 free cash flow with minimal acquisitions CO2 IRR% 2000-2019 SIGNIFICANT CO2 FREE CASH FLOW $ millions $1,432 $1,458 Oil & Gas 18% $1,326 $286 $1,141 $1,094 Total CO2 Segment (incl. CO2 & transport) 28%
Slide 115: Predictable Oil & Gas Volumes & Managed Commodity Price
Predictable Oil & Gas Volumes & Managed Commodity Price Mitigating uncertainties where possible NET OIL PRODUCTION: ACTUALS VS. BUDGET HEDGED VOLUMES mbbld as of 01/06/2020 45 40 2020 2021 2022 2023 35 Oil - WTI hedges 30 $/bbl $56.58 $54.21 $54.60 $52.81 25 bbl/d 29,900 16,100 7,700 4,000 NGLs 20 $
Slide 116: Consistently Profitable Operating Margin
Consistently Profitable Operating Margin Low cash cost structure yields healthy margins despite commodity price cycles $/net bbl $80 $73.11 $70 $61.52 $58.40 $57.83 $60 $55.29 $49.49 $50 $40 $30 $20 $10 $- 2015 2016 2017 2018 2019 2020 Plan Power Labor Workover Exp Other CO2 Expense Taxes other than
Slide 117: Appendix
KINDER/MORGAN Appendix 117
Slide 118: Realistic Scenarios Exist
Realistic Scenarios Exist Achieving cost, reliability & emissions objectives “Wind & solar resources are not consistently available & controllable to serve the energy needs of all customers all the time…the cost of integrating renewable energy is manageable up to ~50 to 60% renewable penetration. At
Slide 119: Committed to Protecting the Environment
Committed to Protecting the Environment Case studies | Videos available on our website Maintaining our pipelines’ Doing business the right way, every day is paramount at Kinder Morgan. We invest millions of dollars each year on integrity management & maintenance integrity through in-line programs to
Slide 120: Prioritizing ESG
Prioritizing ESG Multi-faceted approach to good corporate governance | Ongoing enhancements to disclosures ESG RESOURCES CORPORATE GOVERNANCE Disclosure: 13 independent out of 16 board members - 2018 ESG Report - 2⁰C scenario analysis included in report 2 female board members - Annual Meeting Proxy
Slide 121: Energy Toll Road
Energy Toll Road Cash flow security with >90% from take-or-pay & other fee-based contracts Natural Gas Pipelines Products Pipelines Terminals CO2 2020B EBDA %(a) 61% 16% 13% 10% Refined Liquids Jones Act CO2 & Interstate / LNG Intrastate G&P products Crude terminals tankers Bulk terminals O&G Transp
Slide 122: Joint Venture Treatment in Key Metrics
Joint Venture Treatment in Key Metrics KM controls & 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 Example JVs Elba Liquefaction (51%), BOS
Slide 123: Returns on Invested Capital
Returns on Invested Capital Targeted returns for new capital investment are substantially above cost of capital SEGMENT ROI(a,b) CO2 Terminals Products Nat Gas 30% 25% 20% 15% 10% 5% Commodity price change 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 KINDER MORGAN RETURNS ROI ROE 3
Slide 124: Distributable Cash Flow (DCF) versus Net Income
Distributable Cash Flow (DCF) versus Net Income Largest differences easily explainable & reflective of cash earnings DEPRECIATION EXPENSE VS. SUSTAINING CAPEX(a) BOOK TAX EXPENSE VS. CASH TAXES $ billions $ billions $2.8 $2.7 $2.7 $2.6 $2.5 $1.0 $1.0 $2.4 $2.4 $1.0 $0.9 $2.2 $0.8 $0.7 $0.7 $1.7 $0.7
Slide 125: Incidents & Releases: Liquids Pipelines
Incidents & Releases: Liquids Pipelines Liquids pipeline right-of-way INCIDENTS PER 1,000 MILES(a,b) RELEASE RATE(a,b) Barrels per billion barrel miles 0.57 17.96 15.5 0.45 0.38 11.67 13.05 0.39 12.86 0.33 0.29 0.27 0.24 0.21 6.00 0.16 2.50 0.14 0.67 0.24 0.11 0.05 0.04 0.01 0.01 0.08 0.08 0.08 0 –
Slide 126: Incidents & Releases: Natural Gas Pipelines
Incidents & Releases: Natural Gas Pipelines Natural gas pipeline right-of-way INCIDENTS RATE ALL REPORTABLE INCIDENTS(a,b) INCIDENTS RATE ONSHORE RUPTURES ONLY(b,c,d) Incidents per 1,000 miles Incidents per 1,000 miles 0.16 0.52 0.52 0.45 0.38 0.37 0.37 0.33 0.32 0.30 0.27 0.27 0.26 0.04 0.02 0.02 0
Slide 127: Employee Safety Statistics
Employee Safety Statistics 12-month performance summary as of 12/31/2019 DAYS AWAY, RESTRICTED, OR TRANSFERRED (DART) RATE OSHA TOTAL RECORDABLE INCIDENT RATE (TRIR) Days Away, Restricted or Transferred incidents per 200,000 hours worked OSHA recordable incidents per 200,000 hours worked 5.7 3.9 2.1
Slide 128: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 128
Slide 129: 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 130: 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 131: 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 132: 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 133: Explanation of Return Calculations
Explanation of Return Calculations Formula Notes Formula Notes Gross PP&E Equity Investments (JVs) (f) Segment Adjusted Segment EBDA less sustaining capex (a) Goodwill Return on Gross intangibles (excluding amortization) Investment Average Total Investment (b) Plus: Asset write-offs / retirements Cu
Slide 134: Reconciliation of CO2 Free Cash Flow
Reconciliation of CO2 Free Cash Flow $ in millions Reconciliation of CO2 Free Cash Flow 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Segment EBDA $ 965 $ 1,099 $ 1,322 $ 1,435 $ 1,240 $ 657 $ 827 $ 847 $ 759 $ 681 Certain items: Non-cash impairments and project write-offs - - - - 243 622 29 - 7