Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Day (January 2016)
132 slides from Kinder Morgan's investor day presentation, Jan 27, 2016
Slide 1: Built for the Long-Term
Built for the Long-Term January 27, 2016
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
Forward-Looking Statements / Non-GAAP Financial Measures This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements are identified a
Slide 3: Kinder Morgan Investor Conference
Kinder Morgan Investor Conference 8:00 - 8:20 Vision – Rich Kinder 8:20 - 9:30 Operational Excellence – Steve Kean 9:30 - 9:45 Break 9:45 - 10:30 Financial Excellence – Kimberly Dang 10:30 - 11:30 Q&A iii
Slide 4: This page intentionally left blank
This page intentionally left blank iv
Slide 5: Vision
Vision Rich Kinder Executive Chairman
Slide 6: Unparalleled Asset Footprint
Unparalleled Asset Footprint Largest Energy Infrastructure Company in North America $18.2 billion of currently identified organic growth projects Largest natural gas network in North America — Own an interest in/ operate ~69,000 miles of natural gas pipeline — Connected to every important natura
Slide 7: KMI Overview
KMI Overview Management Aligned with Investors; 14% Stake in KMI Simple Public Structure Management / Public Original S/H(a) Float Simple Structure: ~317MM (14%) ~1,920MM (86%) One equity base Kinder Morgan, Inc. One dividend policy (C-corp, NYSE: KMI) Market Equity $34.7B(b) One debt rating N
Slide 8: 19 Years of Stable Growth
19 Years of Stable Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP DCF per Unit(a) KMI Annual DCF per Common Share(c) $6 $5.61 $2.50 $5.39 $5.07 $2.14 $2.10 $2.00 $5 $4.43 $4.68 $2.00 $4.15 $4.25 $1.65 $4 $3.65 $1.46 $3.38 $3.29 $3.10 $1.50 $1.22 $3 $2.54 $2.69 $2.18 $1.00 $1.78
Slide 9: Stable Assets, Self-reliant Funding
Stable Assets, Self-reliant Funding Well-Positioned for Challenging 2016 Market Same stable assets: — Cash flow growth in 2015 despite historic fall in oil and gas prices — Stock performance significantly underperformed strong business performance Self-reliant funding: — Given market dislocation
Slide 10: Built for the Long Term
Built for the Long Term Positioned to Succeed in the Future Secure and growing cash flows World class set of midstream assets Reducing growth capex through elimination of less profitable projects and selectively joint venturing projects where appropriate High bar for new investment opportuni
Slide 11: Some Perspective
Some Perspective Dislocation Between Business Performance and Stock Performance Stock Performance Inconsistent with Fundamentals Strong Business Performance Despite challenging backdrop, fundamentals remain KMI Share $50 $5.0 strong Price Tremendous cash flow generation in 2015 and 2016 $42.31 — 2
Slide 12: Some More Perspective
Some More Perspective Correlation to Oil Prices not Warranted Production of crude oil generated only 10% of our 2015 Segment EBDA before certain items(a) However, KMI’s correlation to WTI increased tremendously during 2015 This correlation added to KMI’s 2015 stock market dislocation KMI Price
Slide 13: Compelling Value Prospect
Compelling Value Prospect Attractive Relative Value, Best in Class Coverage and Scale Attractive Relative Value(a) Insulated from Capital Market Risk(b) 21x Peer group median year-end 2014 5x KMI’s 2016 coverage eliminates Price / DCF per share(a) Price / 2015 DCF per share need for external funding
Slide 14: Valuation: DCF/share vs. EPS
Valuation: DCF/share vs. EPS Distributable Cash Flow (DCF) has consistently been an accurate proxy for Kinder Morgan’s sustainable excess cash flow The main differences between KMI’s net income and DCF are non-cash items which impact net income: book vs cash taxes and GAAP depreciation vs sustai
Slide 15: KMI: Attractive Value Proposition
KMI: Attractive Value Proposition Unparalleled asset footprint Diversified energy infrastructure platform with stable, fee-based cash flow Industry leader in all business segments Focus on strong balance sheet and enhanced credit profile Highly visible, attractive growth opportunities Es
Slide 16: KINDER/MORGAN
KINDER/MORGAN
Slide 17: Operational Excellence
Operational Excellence Steve Kean President and Chief Executive Officer
Slide 18: Our Strategy
Our Strategy Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments Maintaining a strong balance sheet is paramount — Our primary investing entity has been investment grade since inception — Reduced dividend demonst
Slide 19: Asset Integrity and Safety are Top Priorities
Asset Integrity and Safety are Top Priorities Consistent, Better-than-industry Performance Across our Businesses Safe operation of our assets is mission critical to our long-term success Continuous reduction in risk to the public, employees, contractors, assets and the environment We strive fo
Slide 20: Segment Overview
Segment Overview The Markets that Actually Drive our Business Natural Gas Pipelines 2016 Budgeted Segment 72% interstate pipelines EBDA = $8.0 billion(a) 20% gathering, processing & treating — 87% fixed-fee(b) — 13% other CO2 S&T KM Canada 8% intrastate pipelines & storage CO2 Oil Production 4
Slide 21: KMI's High Quality Cash Flow
KMI’s High Quality Cash Flow Not all “fee-based” cash flow is created equal 2016 Budgeted Segment Composition of 91% EBDA = $8.0 billion(a) Fee-based Cash Flow 3% Commodity- based CO2 S&T $0.3 / Other 6% Hedged $0.5 <1% Terminals Cash Flow 5% 24% Fee- Products 9% Other based Cash $1.9 Pipelines 74%
Slide 22: Natural Gas Transportation & Storage
Natural Gas Transportation & Storage 57% of 2016 Budgeted Total Segment EBDA before Certain Items Natural gas transport & storage is KMI’s largest business U.S. Natural Gas Supply & Demand(a) (Bcf/d) U.S. natural gas demand expected to rise 27% through 2020(a) Increase KM moves about 38% of natu
Slide 23: Liquids Transportation, Storage & Handling
Liquids Transportation, Storage & Handling 33% of 2016 Budgeted Total Segment EBDA before Certain Items(a) Strong Fundamentals & Demand Drivers Highlighting Asset Utilization Stable refined products demand: vital pipeline network connecting Location matters, contracts matter refinery/ port hubs
Slide 24: Energy Toll Road
Energy Toll Road Security of Cash Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada – Interstate & LNG: take or pay – Liquids & Jones Act: – Refined products: – S&T: primarily – Intrastate: ~73% take or pay(a,b) primarily take or pay primarily volume-based minimum volume –
Slide 25: Business Risks
Business Risks Regulatory — Products Pipeline FERC rate cases — Natural Gas FERC rate cases — Legislative and regulatory changes CO2 crude oil production volumes Commodity prices — 2016 budget price assumptions: $38/Bbl for crude, and $2.50/MMBtu for natural gas — Price sensitivities (full-yea
Slide 26: Overview of Business Segments
Overview of Business Segments
Slide 27: Natural Gas Pipelines Segment Outlook
Natural Gas Pipelines Segment Outlook Long-term Growth Drivers: Shale-driven expansions / extensions LNG exports — Liquefaction facilities — Pipeline infrastructure Gas demand for power generation — Coal plant retirements — Regional gas-fired power demand growth — Backstop for wind and solar
Slide 28: Contracted Capacity and Term by Region
Natural Gas Pipelines Contracted Capacity and Term by Region Contracted Average Term Region Capacity Remaining Storage 130 Bcf 3 yr, 4 mo East Transport 21.5 Bcf/d 7 yr, 8 mo LNG 18 Bcf 16 yr, 5 mo Interstate Storage 45 Bcf 6 yr, 3 mo Transport Contracts West Transport 17.9 Bcf/d 5 yr, 11 mo Avg. =
Slide 29: Liquefaction at Elba Island
Natural Gas Pipelines Liquefaction at Elba Island Elba Liquefaction Company (ELC) / SLNG Capacity: — LNG output capacity equivalent to 350 MMcf/d Capital (100%): $2 Billion Estimated In-service: 2018 Project Scope: — Facilities for liquefaction (10 modular units) — Ship loading facilities; b
Slide 30: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Miles of Pipe: ~9,900 Transmix: 6 facilities with process capability of Long-term Growth Drivers: Terminals: 69 32.5 MBbl/d Increased demand for refined product volumes Tank Capacity: Condensate Processin
Slide 31: Products Pipelines Volumes/Markets
Products Pipelines Volumes/ Markets(a) Refined Products: Refined Product Pipelines Volume Summary, 2015 vs. 2014 2015: Total refined product volumes 1,679 MBbl/d, up 3.1% West Coast: vs. 2014 Pacific: +3.8% − Arizona +4.8% − N. Cal. +5.7% − S. Cal. +6.4% − Military -14.7% — Gasoline up 3.6%, diese
Slide 32: Historical Demand and 2016 EIA Outlook
Products Pipelines Historical Demand and 2016 EIA Outlook(a) U.S. Refined Product Consumption (MMBbl/d) U.S. Refined Product Demand Outlook 2014 2015E 2016E 10 Mogas 0.9% 2.6% 1.1% 9 Distillate 5.5% -1.9% 2.1% 8 Jet Fuel 2.5% 4.8% -0.5% 7 Total 2.3% 1.6% 1.2% 6 5 4 FERC Tariff Index 3 Jul‘14–Jun‘15
Slide 33: KMCC/Double Eagle
Products Pipelines KMCC/ Double Eagle Location, Contracts, Connectivity Kinder Morgan Crude & Condensate (KMCC) 2015 Milestones Capacity 300 MBbl/d, expandable to 360 MBbl/d; 90% of current capacity committed KMCC/ Double Eagle volumes grew 146% year Provides Eagle Ford producers access to Hou
Slide 34: Terminals Segment Outlook
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways KM Terminal Facilities* Long-term Growth Drivers: Bulk 59 Terminals Refined product supply and demand growth Liquids 52 Terminals Gulf Coast liquids exports Total KMT 111 Terminals Chemical infrastructure and b
Slide 35: Contract Diversification
Terminals Contract Diversification Liquids Revenue Breakout (a) Bulk Revenue Breakout (a) Fertilizer 6% Soda Ash 5% Other Liquids 2% Salt 4% Veg Oils 1% Cement 3% Fuel Grade Chemicals Ethanol 8% Aggregate 2% 14% Other Bulk 10% Petroleum Crude 22% Coke 20% Ores/Metals Refined Bulk & Break Petroleum B
Slide 36: Liquids Terminals
Terminals Liquids Terminals 76% of Segment EBDA before certain items is based on our liquids business segments 100% Liquids Revenue 90% Volume- based 20% Other 80% Liquids 1% 70% Bulk Take-or-Pay 79% 60% 50% 40% 79% of liquids revenues secured by take-or-pay contracts 30% − Fixed monthly advance
Slide 37: Houston Ship Channel
Terminals Houston Ship Channel Market: World’s largest integrated refined product terminaling system Infrastructure: 43 million barrels of capacity connected to 10 refineries Customers: Refiners, integrated majors, international traders, chemical producers, wholesale marketers Greensport Crude by Ra
Slide 38: Houston Ship Channel Connectivity
Terminals Houston Ship Channel Connectivity Irreplicable integrated assets offering unparalleled optionality and market access 20 inbound pipelines – 10 Houston area refineries and local chemical plants 15 outbound pipelines – Texas, mid-continent and east coast markets 14 cross-channel pipeli
Slide 39: Tanker Contracts
Terminals Tanker Contracts Average Remaining Contracted Charter: 3.6 years(a) 5.8 years with renewals 2 vessels being marketed for time-charter fixture – Q3/Q4 2017 delivery Golden State Current Fleet: Vessel Delivery 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Golden State Jan-09 Pelica
Slide 40: Bulk Terminals
Terminals Bulk Terminals 24% of Segment EBDA before certain items is based on our bulk business segments 100% 38% of revenues supported by Take-or-Pay contracts − Minimum throughput commitments 90% 19% are supported by requirements contracts 80% Liquids − Tied to either petroleum coke manufact
Slide 41: CO2 Segment Outlook
CO2 Segment Outlook(a) Own and operate best source of CO2 for EOR Long-term Growth Drivers: Demand for scarce supply of CO2 drives volume and price Expect to maintain current CO2 production levels with minimal incremental investment Billions of barrels of domestic oil still in place to be reco
Slide 42: 2016 Projects – Price Sensitivity
CO2 2016 Projects – Price Sensitivity IRR % vs Oil Price $/Bbl $30 $40 $50 Forward flat flat flat Curve(a) SACROC Infill 0% 9% 53% 31% SACROC-Bypass 11% 30% 54% 52% SACROC P5 0% 2% 19% 19% Yates HDH 34% 66% 100% 100% GLSAU 4a 0% 0% 7% 10% Tall Cotton Ph 2 0% 8% 21% 27% Forecasted operating costs d
Slide 43: KM CO2 Current Outlook
CO2 KM CO2 Current Outlook Development Plans 2016-2025 SACROC Group Forecast 10 Year KM Share Cap CO 2 & — Continue platform development plan; production Net BOE(a) CapEx Overhead forecast is based on existing recovery expectations (MMBoe) (MM) (d) (MM) — Continue Bypass Pay development — Exploit
Slide 44: Kinder Morgan Canada Segment Outlook
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Long-term Growth Drivers: Expand oilsands export capacity to West Coast and Asia — Following successful open season, major TMEP $5.4 Billion Expansion expansion plans under way — The Trans Mountain
Slide 45: Trans Mountain Expansion Project
Kinder Morgan Canada Trans Mountain Expansion Project Expansion to 890 MBbl/d — Continue to serve local markets — 630 MBbl/d tanker export capacity 13 Companies, 708 MBbl/d — Take-or–pay contracts, 15 & 20 years — Commercial Terms NEB approved May, 2013 Projected Cost USD $5.4B — Some cost pas
Slide 46: KINDER/MORGAN
KINDER/MORGAN
Slide 47: Financial Excellence
Financial Excellence Kimberly Dang Chief Financial Officer
Slide 48: Budget: Reconciliation of Original to Revised
Budget: Reconciliation of Original to Revised (millions) On December 8, 2015, KMI announced a summary 2016 budget including DCF available to equity of slightly over $5 billion In light of continued commodity price declines and our efforts to continue high-grading our investment opportunities, we
Slide 49: KMI Counterparty Exposure
KMI Counterparty Exposure Strong Customer Credit Profiles Limit KMI’s Risk Top 25 Customers(a) Insulated from Market Headwinds Top 25 Customers Represent Over 45% of KMI’s Scale and Diversification Protect Cash Flows Revenues — Best-in-class scale with $8.0 billion in Segment EBDA before certain
Slide 50: Self-Reliant Funding
Self-Reliant Funding No Need to Access Capital Markets During 2016 (millions) Free cash flow and revolver can fully cover funding needs Recently completed $1 billion term loan and $1 billion upsize to our credit facility (now $5 billion facility) add liquidity and flexibility 2016 2016 (a) (a) S
Slide 51: 5-year Growth Capex Program
5-year Growth Capex Program(a) ~$18.2B of Attractive, Fee-based Projects World class asset footprint has helped secure growth projects with attractive returns, secured by long-term, fee-based contracts with creditworthy counterparties — ~90% of backlog is for fee-based pipelines, terminals and ass
Slide 52: Capital Invested
Capital Invested ~$54 Billion of Asset Investment & Acquisitions Since Inception(a,c,d) ($ in billions) Total Invested by Type(a) Total Invested by Year(b) $28.8 (c,d) $30 $25.0 $11 $25 Expansion $9.8 (d) $20 $10 Acquisition $15 $9 $10 $8 $5 $7 (c) $6.6 $- $6.5 $5.8 Expansions Acquisitions $6 $5 Tot
Slide 53: Returns on Invested Capital
Returns on Invested Capital Consistent Returns Demonstrate Asset Performance, Management Discipline Segment ROI(a): 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Natural Gas Pipes 13.3% 15.5% 12.9% 13.5% 14.0% 15.5% 16.7% 17.5% 16.9% 14.0% 11.9% 11.9% 11.9% 10.9%(b)
Slide 54: Cost & Allocation of Capital
Cost & Allocation of Capital Disciplined Capital Allocation Our historical targeted minimum after-tax, unlevered project return was 8-12% for pipelines and terminals and higher for CO2 — Assumed unlimited capital for returns that met thresholds — Targeted highest available return However, in the
Slide 55: 2016 Budget Guidance
2016 Budget Guidance Supported by Diversified, Fee-based Cash Flow 2016 Budget Commodity Price Sensitivity KMI 2016 budgeted distributable cash flow available 2016 budgeted coverage of $3.6 billion to common shareholders of $4.7 billion over declared dividends — 2016 declared dividend of $0.50 p
Slide 56: 2016 Budgeted Distributable Cash Flow (DCF)
2016 Budgeted Distributable Cash Flow (DCF) (millions, except per share) 2016 2015 Change Distributable cash flow Budget Actual $ % Net Income before certain items (a) $ 1,752 $ 1,649 $ 103 6% (b) DD&A, including KMI share of JV DD&A 2,620 2,683 (63) -2% (c) Book taxes 1,100 976 124 13% (d) Cash tax
Slide 57: 2016 Budgeted Adjusted Income
2016 Budgeted Adjusted Income (millions, except per share) 2016 2015 Change Earnings Budget Actual $ % Natural Gas Pipelines $ 4,220 $ 4,125 $ 95 2% CO 2 916 1,141 (225) -20% Products Pipelines 1,232 1,096 136 12% Terminals 1,195 1,055 140 13% Kinder Morgan Canada 156 163 (7) -4% Corporate / Other (
Slide 58: 2016 Budgeted Adjusted EBITDA
2016 Budgeted Adjusted EBITDA (millions) 2016 2015 Change Adjusted EBITDA Budget Actual $ % Segment EBDA before certain items $ 7,689 $ 7,562 $ 127 2% Natural Gas Pipelines JV DD&A 331 310 21 7% Products Pipelines JV DD&A 7 7 - 0% Terminals JV DD&A 13 6 7 117% Segment EBDA before certain items plus
Slide 59: 2016 Budgeted Quarterly Profile
2016 Budgeted Quarterly Profile (millions, except per share) (a) Segment EBDA before certain items plus JV DD&A Q1 Q2 Q3 Q4 Total 2016 Budget 26% 23% 24% 27% $ 8,040 2015 26% 24% 24% 26% $ 7,885 (b) Distributable cash flow 2016 Budget 26% 22% 23% 29% $ 4,690 2015 26% 24% 24% 26% $ 4,699 Fully-dilute
Slide 60: 2016 Budget Assumptions/Highlights
2016 Budget Assumptions/ Highlights Business segments(a) Natural Gas Pipelines +3%: — Growth driven by TGP expansion projects, full year of Hiland Midstream acquisition, Elba Express expansions and additional interest in NGPL — Growth partially offset by expiring contracts (KinderHawk, Cheyenne Pl
Slide 61: 2016 Cash Tax Budget Calculation Detail
2016 Cash Tax Budget Calculation Detail (millions) 2016 Budget Segment EBDA before certain items $ 7,689 Noncontrolling interest (22) JV earnings from c-corps (161) JV distributions from c-corps (net of 80% DRD) 30 JV Book DD&A (pass-thru entities) 227 G&A expense (640) Interest expense (2,079) Segm
Slide 62: 2016 Budgeted Sustaining Capital
2016 Budgeted Sustaining Capital (millions) 2016 2015 Sustaining capital expenditures(a) Budget Actual Change Natural Gas Pipelines $ 309 $ 283 $ 26 CO2 12 10 2 Products Pipelines 48 57 (9) Terminals 163 159 4 Kinder Morgan Canada 28 42 (14) Corporate / Other 14 14 (0) Total sustaining capital $ 574
Slide 63: 2016 Budgeted Growth Capital
2016 Budgeted Growth Capital (millions) 2016 2015 (a) Growth capital Budget Actual Natural Gas Pipelines $ 1,565 $ 1,528 CO2 - S&T 9 163 CO2 - EOR 213 449 Products Pipelines 344 431 Terminals 935 854 Kinder Morgan Canada 215 105 Corporate/Other - 2 Subtotal - growth capital excl. large acquisitions(
Slide 64: Credit Ratios and Liquidity
Credit Ratios and Liquidity(a) ($ in millions) 2016 Leverage metrics 2012 2013 2014 2015 Budget (b) Net debt to Adjusted EBITDA 5.4x 5.0x 5.5x 5.6x 5.5x Adjusted EBITDA to interest 4.0x 3.9x 4.1x 3.5x 3.6x (c) (d) Revolver capacity Long-term debt maturities Committed revolving credit facility $ 4,00
Slide 65: Financial Excellence
Financial Excellence Disciplined capital allocation Strong return on investments Hedge direct commodity exposure Maintain strong balance sheet Transparency to investors 19
Slide 66: KINDER/MORGAN
KINDER/MORGAN
Slide 67: Appendix
KINDERMORGAN Appendix
Slide 68: Incidents & Releases: Liquids Pipeline
Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipelines Liquids Pipelines Incidents per 1,000 Miles(a) Release Rate(a) 1.0 50 Barrels per billion barrel miles 0.8 40 Incidents per 1,000 Miles 0.6 0.57 30 0.45 0.39 0.4 20 17.96 0.33 15.50 0.29 0.24 13.05 0.21 10.94 0.2 10 6.00 0.08 0.08
Slide 69: Incidents & Releases: Natural Gas Pipeline
Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipelines Natural Gas Pipelines Incidents Rate All Reportable Incidents(a) Incidents Rate Onshore Ruptures-only(c) 1.0 0.5 0.8 0.4 Incidents per 1,000 Miles Incidents per 1,000 Miles 0.6 0.3 0.45 0.4 0.37 0.2 (d) 0.30 0.16 0.32 0.27
Slide 70: Employee Safety Statistics
Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate 6 7 6.4 Lost-time injuries per 200k hours OSHA Recordable Incidents per 5 4.9 6 5.2 200k Hours Worked 5 4 4 worked 3 3 2.5 2.6 2.5 2.5 2 2 1.6 1.5 1.0 0.9 1.2 1.2 1 0.8 0.8 1 1.6 1.6 0.9 0.2 0.6 0.6 0.9 0.8
Slide 71: Business Segments Supporting Slides
Business Segments Supporting Slides
Slide 72: Natural Gas Segment Projects Placed Into Service - 2015
Natural Gas Pipelines Natural Gas Segment Projects Placed Into Service - 2015 6
Slide 73: East Region Assets
Natural Gas Pipelines East Region Assets Growth Drivers: Marcellus/Utica: TGP provides access for Marcellus and Utica shale plays to Gulf Coast and Northeast markets NE/Canada Demand: New gas service and conversions in New England and Canada Power Demand: New infrastructure required for growin
Slide 74: West Region Assets
Natural Gas Pipelines West Region Assets Growth Drivers: Supply Access: Access to all Rockies basins with diverse geology and hydrocarbon mix; opportunities for new builds and conversions Mexico Exports: Leading connectivity for incremental supply to Mexico — 5.2 Bcf/d of exports to Mexico forec
Slide 75: Central Region Assets
Natural Gas Pipelines Central Region Assets Growth Drivers: Supply Access: Large, strategic footprint connected to major shale plays and supply basins — Opportunities to attach new supply — NGPL Gulf Coast and Chicago Market expansions provide outlets for growing NE production LNG Exports: 8 Bcf
Slide 76: Midstream Assets
Natural Gas Pipelines Midstream Assets Growth Drivers: Mexico Exports: Leading connectivity for increased deliveries into Mexico (Texas Intrastate) Storage Demand: Significant storage capacity and connectivity enable premium services, including load balancing to power and end use markets (Texas
Slide 77: New Firm Transport Capacity
Natural Gas Pipelines New Firm Transport Capacity 11
Slide 78: East Region Project Backlog
Natural Gas Pipelines East Region Project Backlog 12
Slide 79: West Region Project Backlog
Natural Gas Pipelines West Region Project Backlog 13
Slide 80: Central Region Project Backlog
Natural Gas Pipelines Central Region Project Backlog 14
Slide 81: Midstream Project Backlog
Natural Gas Pipelines Midstream Project Backlog 15
Slide 82: Projects Supporting LNG Exports
Natural Gas Pipelines Projects Supporting LNG Exports Transport for LNG — 4.8 MMDth/d of contracted transport capacity — Total capital of $1.1B — Avg. contract term: 18 years — Eight projects on five KM pipelines, including: 1. EEC for Elba/Shell Capacity: 436 MDth/d, phased Capital: $110.4 MM
Slide 83: Projects Supporting Mexico Growth
Natural Gas Pipelines Projects Supporting Mexico Growth KM deliveries to Mexico ~2.36 MMDth/d(a) through 13 interconnects Upstream — Up 22% from 2014 Sierrita — 82% of U.S. total (EPNG) Sierrita Gas Projects placed in service for export to Mexico Pipeline since 2013: Expansion — Capacity: 1.5 MM
Slide 84: TGP Northeast Energy Direct (NED) Project
Natural Gas Pipelines TGP Northeast Energy Direct (NED) Project Market Path - Wright, NY to Dracut, MA Capacity: — 718 MDth/d, scalable up to 1,300 MDth/d Capital (KM 95% Share): $3.1- 3.6 Billion, depending upon capacity Estimated In-service: November, 2018 Project Scope: — 188 Miles of 30”
Slide 85: NGPL Overview
Natural Gas Pipelines NGPL Overview Extensive, Strategically Located Footprint NGPL Provides a Critical Link Between: ― Large Existing and New Demand Markets ― Traditional and Newly Developed Supply Regions Large and Stable LDC Market ― > 60% Market Share in Chicago-area markets ― 10-year contra
Slide 86: Products Segment Projects Placed Into Service – 2015
Products Pipelines Products Segment Projects Placed Into Service – 2015 Project Description In-Service Cost ($MM) West Various Terminal Projects Includes tank upgrades, jet filtration systems, Air Force Throughout 2015 6.3 modifications and additive systems East Central Florida Tank conversions and
Slide 87: Products Segment Project Backlog
Products Pipelines Products Segment Project Backlog Project Description In-Service Cost ($MM) West Various Terminal Projects Includes various Air Force base upgrades, tank expansions, Varies 15.8 filtration systems and biodiesel blending infrastructure East KMST Projects Construction of new Savannah
Slide 88: Kinder Morgan Condensate Processing Facility
Products Pipelines Kinder Morgan Condensate Processing Facility Facility Specifications Strategic Value 100 MBbl/d of Processing Capacity Engineered for Eagle Ford 1.9 MMBbls of new tankage on 60 acres within KM’s Galena Park Terminal production Project supported by 10 year, 84MBbl/d minimum
Slide 89: Utopia East Pipeline
Products Pipelines Utopia East Pipeline Project Scope New 240-mile, 12-inch pipeline originating in Harrison County, OH and connecting with Kinder Morgan’s existing pipeline in Fulton County, OH to transport ethane and ethane- propane mixtures eastward to Windsor, Ontario, Canada Initial pipelin
Slide 90: Palmetto Pipeline
Products Pipelines Palmetto Pipeline Project Scope Total project cost = $1.1 billion Palmetto Pipeline – construction of new 360 mile pipeline with 167 MBbl/d capacity delivering to N Augusta, SC; Savannah, GA; Jacksonville FL Plantation Expansion – modification of existing facilities and cons
Slide 91: Terminals Projects Placed In-Service in 2015
Terminals Terminals Projects Placed In-Service in 2015 Modeled Capital First Full Year Expected Avg. Contract (a) (b) (c) (c) (d) Project Name Product Capacity (MM) EBITDA In Service Length BULK Grain System Upgrades (Vancouver) Grain 0.5MM TPY Q1/15 3 Deer Park Rail Terminal Crude 24K bpd Q2/15 3 (
Slide 92: Terminals Backlog
Terminals Terminals Backlog Modeled Capital First Full Year Expected Avg. Contract Project Name Product Capacity (a) (MM) (b) (c) EBITDA (c) In Service Length (d) South Hill Tankage Methanol 0.1MM Bbls $6 Q1/16 7 Greensport Ship Dock 1 Refined Petroleum 99K bpd $39 Q2/16 10 Galena Park Infrastructur
Slide 93: Liquids Throughput
Terminals Liquids Throughput Variance to Budget Actual Budget Amt % 2015 2016 Gasoline 352,595,615 487,843,244 135,247,629 38.4% Petroleum Feedstocks* 200,330,534 289,137,294 88,806,760 44.3% Distillate 129,602,361 140,587,300 10,984,939 8.5% Fuel Grade Ethanol / Bio-diesel 63,102,538 67,621,098 4,5
Slide 94: Bulk Tonnage
Terminals Bulk Tonnage Variance to Budget Actual Budget Amt % 2015 2016 Coal 15,099,038 15,835,043 736,005 4.9% Ores/Metals (Bulk & Break-Bulk) 17,147,271 17,225,294 78,023 0.5% Petcoke 12,443,913 13,044,241 600,328 4.8% Soda Ash 4,455,822 4,579,136 123,314 2.8% KMBT Tonnage Fertilizers 2,821,378 2,
Slide 95: Industry-Critical Liquids Hubs
Terminals Industry-Critical Liquids Hubs North 40 Edmonton South Alberta Rail Edmonton Rail Van Wharves Edmonton Carteret Cateret Truck Rack Linden Spring Valley Staten Island New Argo Perth Amboy Argo Harlem Brooklyn York Rochelle Chicago O’Hare Harbor Muskatine Baltimore Philadelphia Fairless Hill
Slide 96: Downstream Market Target
Terminals Downstream Market Target Liquids business is core to North American downstream Commodities: crude, refined products, chemicals and renewables Infrastructure: hub terminals, rail terminals, tankers and market terminals Terminals offers unequalled, full-service, operations critical to
Slide 97: Houston Ship Channel – Projects
Terminals Houston Ship Channel – Projects Market-driven customer-committed intrinsic growth Increasing demand for access to export markets Constructing 3 new ship docks and 1 new barge dock with associated tankage Reduces customer demurrage BOSTCO inbound pipeline connectivity to allow for S
Slide 98: KM and BP Joint Venture
Terminals KM and BP Joint Venture Transaction Overview: JV Partnership Overview: KM acquires 15 refined products terminals from BP KM and BP (75:25) — 9.5 million Bbls total capacity KM will operate and market terminals on behalf of the JV — $350 million transaction value BP will secure thro
Slide 99: New York Harbor
Terminals New York Harbor Market: A New York Harbor trading hub for refined products, renewables, chemicals and veg-oils Tank Infrastructure: 15.5 million barrels of capacity Capacity Customers: Refiners, integrated majors, international traders, chemical companies Carteret (KM:BP Joint Ventur
Slide 100: Edmonton
Terminals Edmonton Market: Largest merchant crude terminaling system in Edmonton Infrastructure: 7.2 million barrels of connected capacity with 2 rail facilities Base Line Terminal will add 4.8 million barrels 50:50 JV with Keyera with fully contracted customers Customers: Refiners, integrated m
Slide 101: Edmonton – Base Line Terminal
Terminals Edmonton – Base Line Terminal North 40 Market-driven, customer-committed, intrinsic growth Market-driven, customer-committed, intrinsic growth Edmonton South 50:50 JV with Keyera for merchant crude terminals ` Phase 1: 4.8 million Bbls (12-tanks) — 100% contracted with long-term take
Slide 102: Tankers – Jones Act Trade
Terminals Tankers – Jones Act Trade Market: Refined product and crude oil and shipments in U.S. Jones Act trade Infrastructure: All modern and fuel efficient vessels (8 in service and 8 under construction) Customers: Major integrated oils, independent refiners and Department of Defense Fee-based rev
Slide 103: Chemicals
Terminals Chemicals Market: U.S. petrochemical production (including liquid fertilizers and vegetable oils) Infrastructure: Dedicated facilities and integrated chemicals services alongside petroleum facilities Customers: Major chemical producers, biofuels producers, international traders Completed
Slide 104: Renewables
Terminals Renewables 33% Market: Biofuels to meet U.S. RFS mandates including ethanol and biodiesel Kinder Morgan Infrastructure: Unit-train rail terminals and local storage and blending Customers: Renewable producers, refiners, wholesale marketers, global traders Kinder Morgan 2016 budgeted volumes
Slide 105: Distribution Terminals
Terminals Distribution Terminals Markets: Local truck rack market deliveries to meet growing domestic demand Infrastructure: A national footprint of distribution terminals Customers: Refiners, integrated majors, retail and wholesale marketers Kinder Morgan Network KM Terminals − Market distributio
Slide 106: Bulk Market Hubs
Terminals Bulk Market Hubs Van Wharves Portland (2) Longview Vancouver Dakota Milwaukee Milwaukee Bagging Perth Amboy Pinney Dock Blackhawk Whiting Fairless Hills Chicago Ferro River T Money Point Gateway Elizabeth River Cahokia Owensburo East Pier IX Cora Grand Rivers Hertford Chesapeake Hickman We
Slide 107: Vancouver Wharves
Terminals Vancouver Wharves Market: Primary export point for multiple commodities to Pacific markets Infrastructure: One of the largest bulk terminals in the Port of Vancouver, B.C. Customers: Long-term contracts with Western Canadian mining, grain and sulfur companies Value in Connectivity Handle
Slide 108: Petroleum Coke
Terminals Petroleum Coke Market: U.S. heavy oil petroleum refineries with petroleum coke production Infrastructure: In-plant bulk handling services and rail loading facilities and unit-train export bulk terminals Customers: Independent refiners, integrated majors Refinery coking tied to refining e
Slide 109: History of CO2 Group and Looking Forward
CO2 History of CO2 Group and Looking Forward Track Record – Consistently very close to budget despite inherent volatility Shell CO2 formed in 1998, KM share 20% Acquired remaining 80% in April 2000 DCF ($MM)(a) Acquired SACROC interests June 2000 Acquired Yates interests in 2001 and 2003 $1,
Slide 110: 2016 DCF and Capex by Asset Group
CO2 2016 DCF and Capex by Asset Group(a) 2016 DCF = $904 MM 2016 Budget – $218 MM Expansion Capital Katz Tall Cotton GLSAU 1% 1% -1% Katz S&T 7% 4% Tall Cotton 3% GLSAU S&T 34% 16% Sacroc Yates SACROC Complex 57% 12% 58% Yates 6% __________________________ Note: CO2 purchases and staff overhead are
Slide 111: Impact of Oil Price / Volume Variance on 2016 DCF
CO2 Impact of Oil Price / Volume Variance on 2016 DCF ($ in millions) 2016 Budget: $904MM Volume +/- 1,000 Bbl/d SACROC / Katz / GLSAU $11.0MM Yates $5.8MM CO2 Volume +/- 50 MMcf/d $7.0MM Oil Price +/- $1/Bbl WTI NGL $1.7MM CO2 $0.1MM Crude $3.0MM TOTAL: $4.8MM NGL/Crude Ratio +/- 1% $1.6MM Mid/Cush
Slide 112: CO2 Asset Summary
CO2 CO2 Asset Summary KMI Remaining CO2 Reserves Interest Location Deliverability Operator McElmo Dome 45% SW Colorado 20+ years KMI Doe Canyon 87% SW Colorado 10+ years KMI Bravo Dome 11% NE New Mexico 10+ years Oxy KMI Capacity Pipelines Interest Location (MMcf/d) Operator McElmo Dome to Cortez 50
Slide 113: 2016 Expansion Program Summary
CO2 2016 Expansion Program Summary Capex Program $218MM(a) S&T – $9MM Capex (incl. $1MM Cap OH) $9MM 4% Complete Cow Canyon development CO2 Production 1,235 MMcf/d SACROC Complex – $127MM Capex(b,c) (incl. $57MM Cap OH & Cap CO2) $127MM 58% Activate 11 patterns Expand success of Infill Progr
Slide 114: CO2 Entitlement Volumes
CO2 CO2 Entitlement Volumes Produced and Sold to our Customers CO2 KM-share Significant growth since 2008: MMcf/d CAGR: volumes +3.14% 900 2016 vs 2015: volumes +0.92% 800 700 As a reminder: 600 Sales revenues are based on our working 500 interest entitlement and not deliveries 400 KM share
Slide 115: Demand Growth and Regeneration
CO2 Demand Growth and Regeneration 5-year Contracted CO2 Volumes CO2 Daily Contract Quantities 2006 2016 1,200 1,000 800 600 MMcf/d 400 200 - 1 2 3 4 5 Year Weighted average contract life with 3rd parties is 10.28 years 49
Slide 116: Oil and Gas Segment Production and DCF
CO2 Oil and Gas Segment Production and DCF Net Hydrocarbon Production (Mboe/d) Original oil in place (Billion Bbls) SACROC Yates Katz GLSAU Tall Cotton Gas Processing 60 SACROC 2.8 50 Yates 5.0 40 Katz 0.23 30 GLSAU 0.48 20 Gross production (Bbl/d)(a) 2015 2016 10 SACROC oil 33,764 30,378
Slide 117: CO2 Oil Production Hedge Profile
CO2 CO2 Oil Production Hedge Profile Net Oil Production(b) Avg Hedge Px WTI & WTS $69.03 $72.66 $75.19 $64.97 ($/Bbl) 50 Hedge CO2 BOE equivalent Net Equity Production 40 — Targeted minimum hedge amounts: (MBoe/d)(b) 30 70% Current Year: 70% Year 2: 50% 20 Year 3: 30% 54% Year 4: 10% 10 39% 21% 0%
Slide 118: Oil & Gas Margins and Cost Structure
CO2 Oil & Gas Margins and Cost Structure Oil & Gas Cash Cost Structure(a) ($/Net Boe) $100 O&G cost structure has strong correlation to energy prices $90 $80 Power is tied to gas prices $70 $60 Purchased CO2 and TOTI(b) are $50 strongly correlated to oil prices $40 $30 Market conditions have d
Slide 119: Oil and Gas Segment
CO2 Oil and Gas Segment Over past 8 years capex 2.1% below plan, oil production 0.8% below plan Capex ($MM) Net Oil Production (MBbl/d) $600 45 40 $500 35 $400 30 25 $300 20 $200 15 10 $100 5 $- - 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013 2014 2015 Budget Actual Budget Ac
Slide 120: Oil and Gas Segment Production Forecasts
CO2 Oil and Gas Segment Production Forecasts Production expectations tend to grow over time Evolution of Forecasted 2016 Production(a) over Time (MBbl/d, 8/8ths) We expect production to exceed our reserve 50 report over the long-term 2010 2011 2012 2013 2014 2015 2016 40 Higher recoveries and addi
Slide 121: SACROC Unit – Long Range Plan
CO2 SACROC Unit – Long Range Plan Changes from 2015 plan — Infill count reduced from 104 to 73 wells — Infill recovery downgraded — Commodity prices have pushed projects out in time 55
Slide 122: Oil & Gas, and Business Unit IRR
CO2 Oil & Gas, and Business Unit IRR 30% All-in O&G IRR (2000-2025): 21.8% Required disclosures in 10-K plus proved 10-K + Reserve Report Total reserves cash flows: 14.6% Gas Processing 25% Adding in Gas Processing excluded from disclosures increases IRR to 17.1% Adding in reserves discounted
Slide 123: Trans Mountain Pipeline
KM Canada Trans Mountain Pipeline Current Capacity Regulation 300 MBbl/d ex-Edmonton National Energy Board 241 MBbl/d to Puget Sound Regulated New 2016–2018 toll settlement Markets British Columbia ‒ Crude and Refined Products Washington State Refineries Westridge Marine Terminal ‒ Off
Slide 124: Market Access Drivers
KM Canada Market Access Drivers million bpd Transportation Capacity(a) 8.0 Northern Gateway 7.0 Keystone XL Supply(b) 6.0 Energy East Trans Mountain 5.0 Expansion Line 3 Alberta Clipper 4.0 Existing Pipeline Capacity 3.0 2014 2016 2018 2020 2022 2024 2026 2028 2030 $/bbl Brent - WCS Spread(c) millio
Slide 125: Definitions and GAAP Reconciliation
Definitions and GAAP Reconciliation
Slide 126: Explanation of Return Calculations
Explanation of Return Calculations Formula Notes Segment Segment DCF (a) Return on Investment = Average total investment (c) DCF (b) Return on Investment = Average total investment (c) Return on Equity = DCF (d) Average equity (e) __________________________ (a) Segment DCF is defined as the applicab
Slide 127: Explanation of Return Calculations (Cont'd)
Explanation of Return Calculations (Cont’d) Formula Notes Gross PP&E Investments (a) Calculation of Goodwill Total Investment: Gross intangibles (excluding amortization) Plus: Asset write-offs / retirements Cumulative environmental reserves Legal reserves / expenditures (b) Cumulative cash spent on
Slide 128: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The non-generally accepted accounting principles (non-GAAP) financial measures of distributable cash flow (DCF), both in the aggregate and per share, segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investments
Slide 129: Use of Non-GAAP Financial Measures (Cont'd)
Use of Non-GAAP Financial Measures (Cont’d) DCF is a significant performance measure used by us and by external users of our financial statements to evaluate our performance and to measure and estimate the ability of our assets to generate cash earnings after servicing our debt and preferred stock d
Slide 130: GAAP Reconciliation
GAAP Reconciliation ($ in millions) 2016 2015 2016 2015 Reconciliation of DCF Budget Actual Reconciliation of Adjusted EBITDA Budget Actual Net income (a) $ 1,840 $ 208 Net income (a) $ 1,840 $ 208 Certain items (88) 1,441 Certain items (88) 1,441 Net income before certain items 1,752 1,649 Net inco
Slide 131: Investor Relations Contacts
Investor Relations Contacts Institutional Investors / Sell-side Analysts David Michels VP Finance & Investor Relations (713) 369-9895 david_michels@kindermorgan.com Peter Staples Director Investor Relations (713) 369-9221 peter_staples@kindermorgan.com Retail Investors / Brokers Miguel Garcia Invest
Slide 132: KINDER/MORGAN
KINDER/MORGAN