Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (March 2022)
56 slides from Kinder Morgan's investor presentation, March 2022
Slide 1: March 2022 Investor Presentation
MARCH 2022 INVESTOR PRESENTATION 1 Altamont gathering right-of-way, Granite Park, Utah
Slide 2: Disclosure
Disclosure Forward-looking statements / non-GAAP financial measures / industry & market data 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 con
Slide 3: Leader in North American Energy Infrastructure
Leader in North American Energy Infrastructure Energy infrastructure, especially natural gas pipelines & storage, has a decades-long time horizon Largest natural gas transmission network Move ~40% of U.S. natural gas consumption & exports — ~71,000 miles of natural gas pipelines Delivering energy to
Slide 4: Strategy
Strategy Maximize the value of our assets on behalf of shareholders Stable, fee-based Invest in a low Financial Disciplined Enhance assets carbon future flexibility capital allocation shareholder value Core energy Newly formed 4.3x 2022B Conservative Maintain strong infrastructure Energy Transition
Slide 5: Toll Road Strategy Insulates Cash Flow from Industry Cycles
Toll Road Strategy Insulates Cash Flow from Industry Cycles Structure long-term contracts that minimize price & volume volatility 69% take- or-pay or 25% fee- hedged based 6% other Avg. remaining 2022B Adjusted Volumes & price are Price is fixed, Commodity- contract life Segment EBDA: contractually
Slide 6: Core Holding in Any Portfolio
Core Holding in Any Portfolio Generating significant cash flow & returning value to shareholders SP500 FREE CASH FLOW YIELDS y-axis represents # of SP500 tickers within >$35 billion market One of the 10 largest energy the free cash flow yield range specified on the x-axis capitalization companies in
Slide 7: Proven History of Cash Flow Generation and Shareholder Returns
Proven History of Cash Flow Generation and Shareholder Returns $ in billions except per share ADJUSTED EBITDA CFFO FREE CASH FLOW NET DEBT DECLARED DIVIDENDS CFFO – Capital Expenditures(a) PER SHARE +9% +11% +82% -18% +122% $1.11 $0.7 $7.2 $5.3 $6.6 $3.4 $38 $4.8 $31 $1.9 $0.50 2016 2022B 2016 2022B
Slide 8: 2022 Budget Summary
2022 Budget Summary $ in billions, except per share 2021 2022 Increase Key metrics 2021 excluding Uri Budget excluding Uri Net income $1.8 $0.9 $2.5 >2.5x Adjusted EBITDA $7.9 $6.9 $7.2 5% Distributable Cash Flow $5.5 $4.4 $4.7 8% (DCF) Discretionary capital(a) $2.3 $1.3 ~$890 million CFFO – capital
Slide 9: $1.4 Billion Committed Capital Project Backlog as of 12/31/2021
$1.4 Billion Committed Capital Project Backlog as of 12/31/2021 Expect 51% of backlog capital in service in 2022 and 43% in 2023 $ million TOTAL LOW-CARBON Natural Gas $ 628 $ 628 56% for end-use utilities, 34% for G&P Products 111 44 RD projects Terminals 164 130 RD & VRU emission reduction project
Slide 10: Market Fundamentals
MARKET FUNDAMENTALS 10 TransColorado Pipeline compressor station, Mancos, Colorado
Slide 11: All Energy Sources Required to Meet Demand Outlook
All Energy Sources Required to Meet Demand Outlook Total energy demand expected to grow >20% 13% GLOBAL TOTAL ENERGY DEMAND BY FUEL Exajoules | 2020, 2030, 2040 28% 2020-2040 growth in Exajoules 17% 200 2040 % mix (10) 10 30 50 70 Asia Pacific 19% 24% 150 Africa Asia Pacific Middle East accounts for
Slide 12: U.S. is a Responsible Producer
U.S. is a Responsible Producer One of the lowest emissions intensity producers in the world & at unmatched scale AVERAGE UPSTREAM METHANE EMISSION INTENSITY 2020 OIL & GAS PRODUCTION mtoe SCALING FACTOR 7 1,600 6 Only 5 countries have 1,200 … & the U.S. produces more 5 lower emission intensity than
Slide 13: U.S. Helps Meet Increasing Global Demand
U.S. Helps Meet Increasing Global Demand Reliable trade partner with price-competitive & responsible production U.S. OIL & LIQUIDS mmbbld U.S. Natural Gas Production Demand bcfd US EU China Japan Production Demand 25 125 $25.00 20 103 103 100 20 20 19 100 92 $20.00 Implied exports 17 81 Implied expo
Slide 14: Our Infrastructure is Important to Fueling the Future
Our Infrastructure is Important to Fueling the Future BENEFITS OF NATURAL GAS LOW EMISSIONS ABUNDANT & LOW COST Natural gas is the cleanest burning fossil fuel with Abundant resources are geographically significantly lower emissions than coal or fuel oil dispersed, creating a competitive market Swit
Slide 15: U.S. CO2 Emissions Declined Since 2007 while GDP grew ~45%
U.S. CO2 Emissions Declined Since 2007 while GDP grew ~45% Primarily due to converting coal power generation to natural gas generation U.S. ELECTRICITY GENERATION MIX U.S. CO2 EMISSIONS FROM ENERGY CONSUMPTION % of total generation billion metric tons 7 -24%, -1.4 billion metric tons 6.0 6.0 6.0 5.9
Slide 16: Replacing Coal Could Accelerate Emissions Reductions Goals
Replacing Coal Could Accelerate Emissions Reductions Goals POTENTIAL FOR LOWER GLOBAL EMISSIONS Mt CO2 2,005 Potential Net 6% of 2020 CO2 6,217 Reduction of 24% 18% of 2020 CO2 34,156 25,934 2020 CO2 2020-2050 net change between natural gas potential for additional reduction from potential global CO
Slide 17: Reliable, Long-Duration Storage is Critical in Peak Demand Periods
Reliable, Long-Duration Storage is Critical in Peak Demand Periods DAILY AVERAGE OF WEEK-OVER-WEEK DAILY POWER EQUIVALENT TWh per day CHANGES IN U.S. WORKING GAS bcfd send-out build 20 0 6 2050 U.S. SDS forecasts only ~1 TWh of daily battery capacity, which would then -20 have to be recharged the -4
Slide 18: Hydrocarbons are Abundant & Geographically Diverse
Hydrocarbons are Abundant & Geographically Diverse Increased demand for geographically concentrated energy transition minerals may put energy security at risk, worsen human rights issues, and lead to other unintended consequences MARKET SIZE & LEVEL OF GEOGRAPHICAL EXTRACTION & PROCESSING OF SELECT
Slide 19: Scenarios that Solve for an End-Result Fail to Consider Feasibility
Scenarios that Solve for an End-Result Fail to Consider Feasibility more spend to achieve the same growth substantial mineral requirements 2021-2050 GLOBAL INVESTMENT $ trillions MINERAL REQUIREMENTS FOR CLEAN ENERGY TECHNOLOGIES million tons Solar PV Wind Other ren. And nuclear EVs and storage Elec
Slide 20: Positioned for the Future of Energy
Positioned for the Future of Energy Our vast network of strategically-located energy infrastructure will continue delivering energy for decades to come Moving fuels of today & the future U.S. is the world’s most responsible producer Many emerging renewable fuels can be moved on our of scale assets t
Slide 21: Valuable Networks
VALUABLE NETWORKS 21 Pipe storage yard at the KM Fairless Hills Terminal, Pennsylvania
Slide 22: Provide High-Value Natural Gas Takeaway in all Major Basins
Provide High-Value Natural Gas Takeaway in all Major Basins U.S. NATURAL GAS PRODUCTION TGP provides valuable egress for NE producers RELEVANT TO OUR FOOTPRINT bcfd & may soon offer RSG pooling service 39 Northeast +5 bcfd 34 23 Permian +9 bcfd SNG Haynesville 18 Haynesville +7 bcfd takeaway fully c
Slide 23: Strong Gulf Coast Footprint Positioned to serve Demand Growth
Strong Gulf Coast Footprint Positioned to serve Demand Growth ~95% of demand growth is expected to occur in Texas & Louisiana, driven by exports & industrial U.S. NATURAL GAS DEMAND bcfd Intrastates system directly connects to petchem & industrial facilities all along the Gulf Coast 114 100 LNG expo
Slide 24: Extensive Storage Capabilities & Premium Service Offerings
Extensive Storage Capabilities & Premium Service Offerings Provide Valuable Solutions for Variable Demand from Utilities & Exports 700 bcf of storage across NGPL, Highly utilized NGPL serves Acquired Stagecoach to more Intrastates, TGP, Stagecoach, EPNG, Midwest LDC & power demand flexibly serve NE
Slide 25: Our Storage was Integral During Winter Storm Uri
Our Storage was Integral During Winter Storm Uri February 14 was one of the highest demand KM STORAGE WITHDRAWALS Feb 2021, bcfd days over the past decade; likely would have 8 been higher had freeze-offs and power curtailments not occurred 7 Weekly storage withdrawals were second highest on record 6
Slide 26: Products Segment Overview
Products Segment Overview Refined products pipes deliver transportation fuels from refining centers to key demand markets; crude assets in major basins PRODUCTS SEGMENT Crude G&P and transport (mbbld) Refined Products (mbbld) Adjusted Segment EBDA ($mm) 2,000 $1,400 1,800 $1,200 1,600 1,400 $1,000 C
Slide 27: Long Runway for U.S. Refined Products
Long Runway for U.S. Refined Products U.S. TOTAL FINAL CONSUMPTION OF LIQUID FUELS IN TRANSPORT SECTOR mmbbld oil implied biofuels 10.7 9.9 9.8 9.1 Even in a lower domestic demand scenario, our refined products pipelines remain valuable ‒ Can accommodate biofuels ‒ Per regulations, able to recover r
Slide 28: Terminals Segment Overview
Terminals Segment Overview Refined products focused; Providing customers with unmatched scale, service-offerings & market-making connectivity # of capacity ASSET SUMMARY terminals (mmbbls) Terminals segment – Bulk 28 Terminals segment – Liquids 50 80 Products segment 65 55 Total Terminals 143 135 Jo
Slide 29: Our Integrated Terminal Network on the Houston Ship Channel
Our Integrated Terminal Network on the Houston Ship Channel Critical assets serving Gulf Coast refining center with significant dock capacity available to meet growing export market Providing customers with flexibility & optionality KM terminals & assets refined products terminals Colonial million b
Slide 30: CO2 EOR & Transport Consistently Generate Free Cash Flow
CO2 EOR & Transport Consistently Generate Free Cash Flow Low cash cost structure yields healthy margins through commodity price cycles Interest in 5 crude CO2 EOR & TRANSPORT FREE CASH fields with 9.2 FLOW $ millions billion barrels of FCF $907 Uri Benefit Capex Acquisitions Adj. Segment EBDA … Orig
Slide 31: 2021 Acquisition of Kinetrex Energy Provides Multi-Year Head Start in RNG
2021 Acquisition of Kinetrex Energy Provides Multi-Year Head Start to Participate in Emerging RNG Market ASSETS & VALUATION Michigan U.S. RNG PRODUCTION bcfd — 2 small-scale LNG facilities - 2 MMdth capacity 2.0 — 1 operational landfill-RNG facility with ~0.4 bcf(a) Volumes are expected to capacity
Slide 32: ESG Leader
ESG LEADER Kinder Morgan Building, Houston, Texas
Slide 33: ESG Strategy
ESG Strategy Provide energy services in a safe, efficient, and environmentally responsible manner for the benefit of people, communities, and businesses environmental social governance Invest in low carbon future Build & maintain relationships with Risks & opportunities are continually ‒ Grow natura
Slide 34: As Founding ONE Future Member, Encourage Industry Participation
As Founding ONE Future Member, Encourage Industry Participation due to Proven Results ONE FUTURE METHANE EMISSION INTENSITY — ONE Future uses science-based Transmission & storage Remaining natural gas supply chain technology and methods to 1.44% reduce emissions across the In 2014 ONE Future set a g
Slide 35: Reducing CO2 Emissions on Houston Ship Channel
Reducing CO2 Emissions on Houston Ship Channel Adding 5 Vapor Recovery Units at Galena Park & Pasadena terminals — $64 million — 3Q 2023 in-service Expect project to reduce Scope 1 & 2 emissions by ~34,000 metric tonnes CO2e per year, or ~38% from 2019(a) — Equivalent to CO2 emissions from: 3,860,54
Slide 36: Recognized as an ESG Leader
Recognized as an ESG Leader Highly rated by multiple agencies improved MSCI rating to A from BBB & Moody’s ranking to #2 from #14 due to enhanced disclosure Sustainalytics #3 MSCI A FTSE #3 of 203 Refiners & Pipelines Oil & Gas Refining, tied for #3 in of 114 Oil & Gas Storage & Marketing, Transport
Slide 37: Appendix
APPENDIX Tall Cotton compressor station, Seminole, Texas
Slide 38: New RSG Pooling Service on TGP
New RSG Pooling Service on TGP RSG may trade at a premium due to low emissions production certification — New RSG pooling service encourages certified producers to move their gas on TGP — Working with ICE to establish trading hubs at 5 pooling points — Only gas meeting certain criteria can be aggreg
Slide 39: U.S. Production Continues to Recover from Pandemic
U.S. Production Continues to Recover from Pandemic U.S. NATURAL GAS PRODUCTION bcfd U.S. CRUDE PRODUCTION mmbbld 108 14 Recovers to pre-pandemic levels during 2023 102 13 96 12 90 11 2022 production above 84 pre-pandemic level 10 78 9 72 8 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 2022
Slide 40: Natural Gas Gathering & Processing Assets Across Key Basins
Natural Gas Gathering & Processing Assets Across Key Basins Volume recovery ongoing G&P BUSINESS AS % OF 2022B NATURAL GAS SEGMENT G&P VOLUMES SHORT-TERM PRODUCTION OUTLOOK KMI ADJUSTED SEGMENT EBDA bbtud dry gas, bcfd, 2019 – 2023 4,000 15 2023 +40% over 2% Eagle Ford pre-COVID levels Copano South
Slide 41: Refined Products Volumes Recovering to Pre-Pandemic Levels
Refined Products Volumes Recovering to Pre-Pandemic Levels GASOLINE(a) mbbld DIESEL(a) mbbld JET FUEL(a) mbbld 2019 2022B 2019 2022B 2019 2022B 1,200 1,200 1,200 1,000 1,000 1,000 800 800 800 600 600 600 400 400 400 200 200 200 - - - 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2022B: 1,037 mbbld 392 mbbld 2
Slide 42: Products Segment Crude Volume Update
Products Segment Crude Volume Update Business as % of 2022B KMI Adjusted Segment EBDA: 2% Crude G&P; 3% Crude Transport CRUDE TRANSPORT & G&P VOLUMES mbbld SHORT-TERM PRODUCTION OUTLOOK 2019 – 2023 crude, mmbld 900 1.5 2023 +15% from 2021 trough 2023 +14% from 2021 trough 600 1.0 300 0.5 - - 1Q19 2Q
Slide 43: Products Segment's West Coast Renewable Fuels Projects
Products Segment’s West Coast Renewable Fuels Projects Subsidies & state goals for emissions reductions are driving increased RD volumes Particularly in California where stacked subsidies currently average >$4.00/gal Products Pipelines (RIN+LCFS+BTC) Refined Product Terminals Proposed Renewable Dies
Slide 44: Terminals Partnering with NESTE on Renewable Fuels Logistics
Terminals Partnering with NESTE on Renewable Fuels Logistics Leading position in fast growing market Modifying 30 tanks & enhancing rail, truck, and marine HARVEY TERMINAL UTILIZATION capabilities at Harvey for renewable feedstock movements 99% 89% 1Q 2023 657 mbbl capacity $65 million capex operati
Slide 45: CO2 EOR: Extending Productive Life of Mature Fields
CO2 EOR: 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 2010B 2012B 2014B 2018B 2022B origi
Slide 46: RNG Demand Markets Provide Diversification
RNG Demand Markets Provide Diversification Plan to mitigate exposure to RIN volatility through fixed price contracts in the voluntary market REVENUE EXAMPLE $ per mmbtu D3 RINs can also satisfy D5 & D6 obligations RIN value $38.82 (a) revenues must meet or exceed traditional hurdle rates $13 – $17 H
Slide 47: Opportunity to Capture Carbon from Stationary Sources
Opportunity to Capture Carbon from Stationary Sources U.S. CO2 EMISSIONS FROM POINT SOURCES million metric tons capture opportunity… ‒ ~1,900 mmtpa, or ~100 bcfd, CO2 emissions landfills associated with facilities that could be candidates for carbon capture LNG storage & import / export equipment ‒
Slide 48: Net-Zero Scenarios Require Carbon Capture Infrastructure Buildout
Net-Zero Scenarios Require Carbon Capture Infrastructure Buildout U.S. CUMULATIVE CO2 STORAGE CAPACITY MMT CO2 POINT SOURCES & PIPELINE INFRASTRUCTURE IN 2050 5000 FIND 4000 3000 2000 1000 0 2020 2025 2030 2035 2040 2045 2050 Princeton’s Net-Zero America Report estimates that CO2 CO2 pipeline estima
Slide 49: CCUS Economics are Improving but Remain Challenged
CCUS Economics are Improving but Remain Challenged CURRENT ESTIMATED U.S. CARBON CAPTURE COST $/tonne 45Q TAX CREDITS $140 ‒ Capturer controls the tax credit Additional technological advancements ‒ Industry still contemplating economics across the value $120 & government policy could advance chain C
Slide 50: Non-GAAP Financial Measures & Reconciliations
NON-GAAP FINANCIAL MEASURES & RECONCILIATIONS 50 Pipe storage yard at the KM Fairless Hills Terminal, Pennsylvania
Slide 51: 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), both in the aggregate and per share for each; segment earnings before depreciation, depletion, amortization (DD&A), amortization of excess cost of equity investments and Certain
Slide 52: 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 53: GAAP Reconciliations
GAAP Reconciliations $ in millions 2021 Certain Items in Segment Adjusted Adjusted EBDA Segment Segment Reconciliation of Adjusted Segment EBDA (GAAP) EBDA EBDA Certain Items 2021 Natural Gas Pipelines $3,815 $1,648 $5,463 Fair value amortization $ (19) Products Pipelines 1,064 53 1,117 Legal, envir
Slide 54: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of DD&A and amortization of excess cost of equity investments for DCF 2021 Reconciliation of income tax expense for DCF 2021 Depreciation, depletion and amortization (GAAP) $ (2,135) Income tax expense (GAAP) $ (369) Amortization of excess cost of eq
Slide 55: Reconciliations of KMI FCF & CO2 Segment FCF
Reconciliations of KMI FCF & CO2 Segment FCF $ in millions Reconciliation of KMI FCF 2017 2018 2019 2020 2021 CFFO (GAAP) $ 4,601 $ 5,043 $ 4,748 $ 4,550 $ 5,708 Capital expenditures (GAAP)(a) (3,188) (2,904) (2,270) (1,707) (1,281) FCF 1,413 2,139 2,478 2,843 4,427 Dividends paid (GAAP)(b) (1,276)
Slide 56: Reconciliation of DCF and Adjusted EBITDA Excluding Uri
Reconciliation of DCF and Adjusted EBITDA Excluding Uri $ in millions 2021 2021 Actual Reconciliation of KMI DCF Excluding Uri Actual Excluding Uri Net income attributable to Kinder Morgan, Inc. $ 1,784 $ 932 Total Certain Items 1,220 1,220 Adjusted Earnings(a) 3,004 2,152 DD&A and amortization of e