Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Wachovia 2006 Pipeline / MLP Conference
30 slides from Kinder Morgan's conference presentation, September 2002
Slide 1: Real Assets, Real Earnings, Real Cash
Real Assets, Real Earnings, Real Cash September 2002
Slide 2: Forward Looking Statements
Forward Looking Statements Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc., Kinder Morgan Energy Partners, L.P. and Kinder Morgan Management, LLC (collectively known as “Ki
Slide 3: Kinder Morgan: Two Companies, Three Securities
Kinder Morgan: Two Companies, Three Securities Kinder Morgan Energy Partners Kinder Morgan, Inc Market Equity (a) $5.8 Incentive Market Equity (b) $5.2 Debt 3.5 Distribution Debt 3.3 Enterprise Value $9.3 Enterprise Value $8.5 2002E EBITDA $960 mm 2002E EBITDA $850 mm 2002E Dist. CF $710 mm 2002E Di
Slide 4: Kinder Morgan System Map
Kinder Morgan System Map 2 PACIFIC COCHIN 2 KMIGT 2 PACIFIC 2 3 NORTH CALNEV 3 KMP 4 PACIFIC NGPL KMCO 2 CO2 Pipelines Terminals KM TEJAS PLANTATION (2,3,10) Indicates # of Facilities in area 10 Products Pipelines KMI 2 Products Pipeline Terminals KMTP 2 CFPL Transmix Facilities Gas-Fired Power Plan
Slide 5: Solid Asset Base Generates Stable Cash Flows
Solid Asset Base Generates Stable Cash Flows(a) Terminals Products Pipelines KMP Largest independent terminal Largest independent refined operator in U.S. products pipeline system in U.S. 64% Liquids, 36% Bulk Refinery hub to population Geographic and product center strategy Terminals diversity 18%
Slide 6: Solid Asset Base Generates Stable Earnings
Solid Asset Base Generates Stable Earnings (a) Retail KMI Power and Other Natural gas distribution service Preferred interest in two 550 Serve Colorado, Wyoming and megawatt plants Power Nebraska Retail 6% Common equity interest in three 240,000 customers 7% small Colorado plants (380 megawatts tota
Slide 7: The Kinder Morgan Strategy
The Kinder Morgan Strategy Same Strategy Since Inception Focus on stable, fee-based assets which are core to the energy infrastructure of growing markets Increase utilization of assets while controlling costs Classic fixed cost businesses with little variable costs Improve productivity to drop a
Slide 8: Management Philosophy
Management Philosophy Low Cost Asset Operator Senior management limited to $200,000 per year in salary No planes, sports tickets, etc. Attention to Detail Weekly operations and financial assessment Monthly earnings and accounts receivable review Quarterly strategic review Risk Management
Slide 9: Consistent Track Record
Consistent Track Record KMP Distribution / Unit (a) Total Distributions (GP + LP) ($mm) $2.50 Expected $800 $711 2.50 $2.20 700 6% Current CAG R=2 $1.90 $2.44 600 % $546 2.00 86 Net Income $1.45 = $1.30 500 A GR $/LP Unit 1.50 C $1.13 400 $333 1.00 $0.63 300 $198 200 $153 0.50 100 $30 $17 0.00 0 199
Slide 10: Stability Results in Strong Credit and Liquidity
Stability Results in Strong Credit and Liquidity Seven Largest MLPs Credit Statistics: KMP KMI A1/A+ A2/A Ratings: BBB+ BBB Baa1 Baa2 A3/A- Baa1/BBB+ Net Debt / Total Capital 50% 49% Baa2/BBB Debt / 2002E EBITDA 3.6x 3.9X 2002E EBITDA / Interest 5.3x 5.2X Baa3/BBB- Ba1/BB+ Ba2/BB Ba3/BB- EEP (a) KMP
Slide 11: Good Market Access and Strong Liquidity
Good Market Access and Strong Liquidity $343 million in KMR equity in July KMP KMI Completed in very difficult market CP Capacity: Roughly 15% return since pricing Total Revolver $1,050 $900 $1.5 billion in long term debt in August Outstanding CP 100 0 KMP $500 million, 31 year @ 7.3% Excess C
Slide 12: Stable Platform, Exceptional Growth Potential
Stable Platform, Exceptional Growth Potential KMP KMI (a) Stable Cash Flow 7.5% yield 1% yield Strong Balance Sheet 40% debt/cap target Excess cash used for share buyback, dividends and debt repayment 50% debt/cap target Add: Internal Growth 8-10% 18-20% - Organic growth on existing assets - Approxi
Slide 13: Natural Gas Infrastructure Development
Natural Gas Infrastructure Development
Slide 14: Need for Natural Gas Infrastructure
Need for Natural Gas Infrastructure EIA predicts demand for natural gas to grow at 2% per year from 23 Tcf currently to 34 Tcf by 2020. Foster Associates indicates peak day requirements will grow from approximately 131 Bcf/d currently to over 170 Bcf/d in 2020. National Petroleum Council predicts th
Slide 15: Challenges for Infrastructure Development
Challenges for Infrastructure Development FERC’s review of its Negotiated Rate Policy Has allowed sponsors/shippers to negotiate project benefits/risks Majority of new projects have been done with Negotiated Rates Provides long-term certainty for sponsors and shippers. Turmoil in the “Merchant
Slide 16: Success to Date
Success to Date Internal growth projects at Kinder Morgan both at KMI and KMP $125 million completed in 2002, 3 projects $210 million contracted/in process, 5 projects $430 million proposed/open season, 2 projects Existing asset base provides platform for growth Expansions and new projects sup
Slide 17: Trailblazer Pipeline
Trailblazer Pipeline 50,000 HP compression at 3 stations 324,000 Dth/day capacity $50 MM capex 10 year average contract life Casper April, 2002 in-service WYOMING NEBRASKA Cheyenne Omaha Cheyenne 196 NNG Hub WNG 601 602 CIG 603 106 Denver NGPL COLORADO 195 Trailblazer Pipeline Compressor Station NGP
Slide 18: Horizon Pipeline
Horizon Pipeline Joint venture with Nicor 28 miles of 36” pipe 42 miles of NGPL leased capacity 116 8,900 HP compression 380,000 Dth/day capacity 10 year average contract life Chicago $80 MM capex Horizon May, 2002 in-service Pipeline 113 110 202 201 ILLINOIS Herscher Storage 18
Slide 19: St. Louis Lateral
50 miles of 24” pipe St. Louis Lateral 300,000 Dth/day capacity $37 MM capex 10 year contract life September, 2002 in-service Loudon Storage 206 St. Louis Lateral NGPL St. Louis 310 MISSOURI ILLINOIS 19
Slide 20: North Texas Pipeline
82 miles of 30” pipe North Texas Pipeline 325,000 Dth/day capacity 30 year contract life $70 MM capex September, 2002 in-service Station North Texas 802 Pipeline NGPL Dallas North Lansing Storage 388 304 20
Slide 21: NGPL Permian Expansion
NGPL Permian Expansion 7,000 HP compression TW 60,500 Dth/day capacity 144 Eddy 167 $1.2 MM capex $1.5 MM annual lease payment January, 2002 in-service Indian NGPL Basin Plant TW NEW MEXICO Permian 139 TEXAS Expansion El El Paso Paso TW Winkler Waha Hub 21
Slide 22: Areas of Focus Going Forward
Areas of Focus Going Forward Rocky Mountain/San Juan supply bottlenecks Mexico’s growing needs to import U.S. production Southwest/California need for interstate/intrastate capacity 22
Slide 23: Cheyenne Prices Remain Depressed
Cheyenne Prices Remain Depressed Average basis differential between Cheyenne and NGPL mid-continent: 3.000 $1.60/Dth from 4/1/02 to Trailblazer startup Trailblazer 2.500 Expansion $1.45/Dth since Trailblazer expansion in early May 2.000 1.500 1.000 0.500 0.000 4/1/02 4/15/02 4/29/02 5/13/02 5/27/02
Slide 24: Proposed Advantage Pipeline
Proposed Non-binding open season closed 9/6/02 Received 22 bids for 482,000 Dth/day Advantage Pipeline Pursuing binding agreements 411 miles of 24” pipe 26,700 HP compression 330,000 Dth/day capacity $287 MM capex Cheyenne Nebraska Projected October, 2005 in-service Omaha Cheyenne Hub Denver NGPL NN
Slide 25: Cheyenne Market Center
11,300 HP compression 10 new wells Cheyenne Market Center 6.0 Bcf additional capacity $30 MM capex Fully contracted for 10 years Filing FERC application Projected Summer, 2004 in-service Nebraska Wyoming Huntsman Storage CIG Cheyenne Cheyenne Hub Proposed Advantage Pipeline KMIGT Pipeline Trailblaze
Slide 26: Monterrey Pipeline
Monterrey Pipeline Mexico Texas Corpus Christi Laredo U.S. scope-9 miles of 30” pipe Mexico scope-137.5 km of 30” pipe 375,000 Dth/day capacity $80 MM capex Monterrey Fully contracted for 15 years Pipeline Awaiting reg. & environ. permits Projected April, 2003 in-service McAllen Iberdrola Power Plan
Slide 27: Proposed West Texas Pipeline
Proposed West Texas Pipeline Proposed Texas Hinshaw pipeline Contracts under negotiation 144 167 178 miles of 24” pipe 12,400 HP compression NGPL 300,000 Dth/day capacity TW NNG $145 MM capex Projected January, 2004 in-service NEW MEXICO EPNG 139 EPNG TEXAS El El Paso Hueco C.S. Paso NNG Proposed Pi
Slide 28: North Lansing Storage Expansion
North Lansing Storage Expansion 6,000 HP compression 17 new wells 10.7 Bcf additional capacity $31 MM capex 802 Fully contracted Awaiting FERC approval Projected Spring, 2003 in-service Dallas North Lansing NGPL Storage 388 Marshall Longview 304 28
Slide 29: Kinder Morgan Advantages
Kinder Morgan Advantages Opportunity Large existing asset base leads to significant expansion and extension opportunities Access to Capital Best in class balance sheet ensures access to capital Efficient Structure MLP efficiently capitalizes long-lived pre-tax assets Low cost discipline 29
Slide 30: Real Assets, Real Earnings, Real Cash
Real Assets, Real Earnings, Real Cash
Kinder Morgan — Wachovia 2006 Pipeline / MLP Conference on 6ix