Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (December 2022)
56 slides from Kinder Morgan's investor presentation, Dec 7, 2022
Slide 1: December 2022 Investor Presentation
DECEMBER 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 moving and storing the energy of today and tomorrow Largest natural gas transmission network Delivering energy to improve lives & create a better world —
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 Established Energy 4.3x 2022B Conservative Maintain strong infrastructure Transition V
Slide 5: 2023 Guidance
2023 Guidance Performance driven by strong market fundamentals and robust demand growth for our existing & expanded services Variance to Key metrics 2023 Budget 2022 Forecast Net income $2.5 billion - Growth offset by higher interest expense Segment EBDA $8.2 billion +5% + Growth projects in-service
Slide 6: Highly-Contracted Cash Flows
Highly-Contracted Cash Flows Generally structure long-term contracts that minimize price & volume volatility CONTRACT MIX OF 2022B ADJUSTED SEGMENT EBDA Entitled to payment regardless of throughput Fixed fee collected regardless of commodity price Reservation fee for capacity Volumetric-based revenu
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(a) NET DEBT DECLARED DIVIDENDS 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 2016 2022B 2016 2022B 2016
Slide 8: Value Opportunity to Invest in Defensive Cash Flows & Healthy Dividend
Value Opportunity to Invest in Defensive Cash Flows & Healthy Dividend SP500 FREE CASH FLOW YIELDS y-axis represents # of S&P500 tickers SP500 CURRENT DIVIDEND YIELDS y-axis represents # of within the free cash flow yield range specified on the x-axis S&P500 tickers within the dividend yield range s
Slide 9: All-of-the-Above Energy Solution
ALL-OF-THE-ABOVE ENERGY SOLUTION 9 TransColorado Pipeline compressor station, Mancos, Colorado
Slide 10: All Energy Sources Required to Meet Demand Outlook
All Energy Sources Required to Meet Demand Outlook Total energy demand expected to grow >20% GLOBAL TOTAL ENERGY DEMAND BY FUEL Exajoules | 2020, 2030, 2040 13% 200 28% 17% 2040 % mix 150 19% 24% 100 Energy diversity is critical Diverse energy Diverse power Strengthens mix reduces mix ensures geopol
Slide 11: 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 12: 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 13: Energy Production = Security
Energy Production = Security Diversified global production of commodities, like natural gas, is key to strengthening geopolitical stability NATURAL GAS PRODUCTION bcm 2010 2020 2030 1,200 U.S. surpassed Russia as world’s largest natural gas producer 1,000 800 600 Once a significant producer, Europe
Slide 14: Geographic Diversity is a Key Consideration in the Energy Transition
Geographic Diversity is a Key Consideration in the Energy Transition MARKET SIZE & LEVEL OF GEOGRAPHICAL PROCESSING OF SELECT MINERALS & FOSSIL FUELS BY TOP 3 CONCENTRATION 2019 COUNTRIES IN EACH CATEGORY 2019 10 000 Hydrocarbons are abundant Market size (USD billion) and geographically diverse Chin
Slide 15: Electricity Prices are Frequently Higher in Countries with Aggressive Energy Transition Policies
Electricity Prices are Frequently Higher in Countries with Aggressive Energy Transition Policies Cost by Country $/MWh WHOLESALE SPOT ELECTRICTY PRICES $/MWh U.S. $60.40 $60.00 $300.00 Germany $229.66 U.K. $254.85 France $276.02 Italy $299.37 Balanced, diversified energy policies help maintain affor
Slide 16: Valuable Networks
VALUABLE NETWORKS 16 Pipe storage yard at the KM Fairless Hills Terminal, Pennsylvania
Slide 17: $2.7 Billion Committed Capital Project Backlog as of 9/30/2022
$2.7 Billion Committed Capital Project Backlog as of 9/30/2022 Expect ~15% of backlog capital in service in Q4’22, ~60% in 2023, and ~25% beyond LOWER $ million TOTAL CARBON Natural Gas $ 1,577 $ 1,577 44% for end use, 56% for G&P & other Products 163 55 Renewable diesel projects Terminals 223 143 R
Slide 18: 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 RELEVANT TO OUR FOOTPRINT bcfd producers & offers PCG pooling service 40 Northeast +5 bcfd 35 26 Permian +11 bcfd SNG 21 Haynesville +10 bcfd Haynesville takeaway fully contrac
Slide 19: Continue to Serve the Permian's Growing Gas Takeaway Needs
Continue to Serve the Permian’s Growing Gas Takeaway Needs Own interest in >7 bcfd of existing Permian takeaway capacity Highly utilized capacity with long-term contracts Recently built GCX and PHP to address growing gas supply Advantaged Intrastates network, downstream of GCX and PHP, provides ship
Slide 20: Strong Gulf Coast Footprint Positioned to serve Demand Growth
Strong Gulf Coast Footprint Positioned to serve Demand Growth ~90% 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 125 & industrial facilities all along the TX Gulf Coast LNG expor
Slide 21: Transporter of Choice for LNG Facilities
Transporter of Choice for LNG Facilities due to Supply Diversity, Network Connectivity, & 700 bcf of Total Working Gas Storage U.S. LNG FEEDGAS & KM TRANSPORT POTENTIAL bcfd Previous WM forecast Uplift from October WM forecast KM transport Addtl contracted volumes, subject to facility FID Potential
Slide 22: 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 23: 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 24: 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 25: 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 48 79 Products segment 65 55 Total Terminals 141 134 Jo
Slide 26: 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 27: 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 billion FLOW(a) $ millions barrels of Original Oil FCF $907 Uri Benefit Capex Acquisitions Adj. Seg
Slide 28: RNG Market Opportunity
RNG Market Opportunity U.S. RNG PRODUCTION bcfd RNG DEMAND MARKETS transportation market voluntary market 3.2 RNG-based CNG & If RNG volumes are Parties interested in expect landfills to drive growth LNG emit 50-75% consumed by fleets in voluntarily 2.8 less than diesel the transportation decarboniz
Slide 29: RNG Portfolio Grows with Recent Acquisitions
RNG Portfolio Grows with Recent Acquisitions LANDFILL-RNG ANNUAL PRODUCTION PRIMARILY CONTRACTED IN CAPACITY net to KM TRANSPORTATION MARKET TODAY Potential to grow +0.6 bcf over next decade Long-term contracts in transportation/RIN 1.8 bcf operational (2.2 bcf gross) without much capex market Long-
Slide 30: Minimum Book Tax
Minimum Book Tax High-level example of calculation Net income Add back: Book depreciation Add back: Book federal income tax Subtract: Tax depreciation 2022 budgeted tax depreciation of ~$5.2 billion Adjusted Financial Statement Income (AFSI) x 15% Minimum Book Tax (MBT) value: MBT Pay the greater va
Slide 31: ESG Leader
ESG LEADER Kinder Morgan Building, Houston, Texas
Slide 32: ESG Strategy
ESG Strategy Provide energy transportation & storage 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 Safety-focused culture Risks & opportunities are monitored and
Slide 33: As Founding ONE Future Member, Encourage Industry Participation due to Proven Results
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 34: Responsibly Sourced Natural Gas
Responsibly Sourced Natural Gas Conventional natural gas produced by companies whose operations meet certain ESG standards ‒ Standards focus on management practices TOTAL NATURAL GAS PRODUCTION REPRESENTED BY for methane emissions, water usage, & RSG-COMMITTED PRODUCERS, INCLUDES NON-RSG- community
Slide 35: New PCG Pooling Service on TGP
New PCG Pooling Service on TGP May attract additional volumes to our system ‒ New PCG pooling service encourages certified producers to move their gas on TGP ‒ Pooling service is now available at all pooling points across the pipeline ‒ PCG must meet ESG standards that focus on management practices
Slide 36: 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 37: 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 #4 MSCI A FTSE #3 of 197 Refiners & Pipelines; Oil & Gas Refining, of Oil & Gas #4 of 110 Oil & Gas Storage Marketing, Transport
Slide 38: Appendix
APPENDIX Tall Cotton compressor station, Seminole, Texas
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 15 14 Recovers to pre-pandemic levels during 2023 102 13 96 12 90 2022 production above 11 pre-pandemic level 84 10 78 9 72 8 2018 2019 2020 2021 2022 2023 2024 2018 2019 2020 2021 20
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 – 2024 4,000 2% Eagle Ford 2024 +61% over pre-COVID levels Copano South Tex
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 2022 2019 2022B 2022 2019 2022B 2022 1,200 1,200 1,200 1,000 1,000 1,000 800 800 800 600 600 600 400 400 400 200 200 200 0 - - 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 0 0 0 0 2022 YTD: 982 mbbld
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 – 2024 crude, mmbld 900 2024 +36% from 2021 trough 2024 +35% from 2021 trough 1.5 600 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 (RIN+LCFS+BTC) Products Pipelines Expanding our renewable fuel handling capabilitie
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% 87% 1Q 2023 657 mbbl capacity $80 million capex operati
Slide 45: Energy Transition Ventures (ETV) Group
Energy Transition Ventures (ETV) Group The group is evaluating commercial opportunities Opportunities for ETV group are outside emerging from the low-carbon energy transition of our existing asset base Business segments will continue to pursue their own energy transition opportunities on existing as
Slide 46: Opportunity to Capture Carbon from Stationary Sources
Opportunity to Capture Carbon from Stationary Sources CCUS economics are improving but remain challenged U.S. CO2 EMISSIONS FROM POINT SOURCES CURRENT ESTIMATED U.S. CARBON CAPTURE COST $/tonne $140 Other facilities - lower 449 MMTPA, 23 bcfd potential for carbon capture $120 coal 794 MMTPA, 41 bcfd
Slide 47: Contract Strategy Insulates Cash Flow Through Commodity Cycles
Contract Strategy Insulates Cash Flow Through Commodity 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: contractual
Slide 48: Outperforming 2022 Financial Guidance
Outperforming 2022 Financial Guidance 2022 Variance to Key metrics Forecast 2022 Budget Net income $2.5 billion +2% Stronger than expected commodity prices Favorable renewals in Natural Gas (Intrastates, NGPL, MEP, TGP) Adjusted EBITDA $7.5 billion +4% Favorable natural gas G&P volumes Partially off
Slide 49: Non-GAAP Financial Measures & Reconciliations
NON-GAAP FINANCIAL MEASURES & RECONCILIATIONS Gulf Coast Express
Slide 50: 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 51: 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 52: GAAP Reconciliations
GAAP Reconciliations $ in millions 2023 2022 2023 2022 Projected Projected 2021 Projected Projected 2021 Guidance Guidance Actual Guidance Guidance Actual Net income attributable to Kinder Morgan, Inc. (GAAP) $ 2,500 $ 2,500 $ 1,784 Net income attributable to Kinder Morgan, Inc. (GAAP) $ 2,500 $ 2,5
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: 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 55: Reconciliation of Adjusted EBITDA, Normalized for Divestitures
Reconciliation of Adjusted EBITDA, Normalized for Divestitures $ in millions Reconciliation of Adjusted EBITDA, Normalized for Divestitures 2016 2017 2018 2019 2020 2021 Net income attributable to Kinder Morgan, Inc. (GAAP) $ 708 $ 183 $ 1,609 $ 2,190 $ 119 $ 1,784 Noncontrolling interests certain i
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
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