Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — BofA Global Energy Conference 2020
35 slides from Kinder Morgan's conference presentation, Nov 19, 2020
Slide 1: Investor Update
INVESTOR UPDATE November 2020
Slide 2: Disclosure
Disclosure Forward-looking statements / non-GAAP financial measures / industry and 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 c
Slide 3: Leader in North American Energy Infrastructure
Leader in North American Energy Infrastructure Unparalleled & irreplaceable asset footprint built over decades Largest natural gas transmission network Connecting major U.S. natural gas resource plays to key demand centers — ~70,000 miles of natural gas pipelines — 659 bcf of working storage capacit
Slide 4: A Core Energy Infrastructure Holding
A Core Energy Infrastructure Holding Generating significant cash flow & returning significant value to shareholders >$25 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 interests >8% curren
Slide 5: 2020 Updated Guidance
2020 Updated Guidance Revised to incorporate estimated impact of pandemic & commodity price declines Key metrics 2020 Budget 2020 Forecast down slightly Adjusted EBITDA $7.6 billion more than 8% Expected reduction in DCF to be more than down slightly Distributable Cash Flow (DCF) $5.1 billion offset
Slide 6: U.S. Natural Gas Demand Expected to Grow
U.S. Natural Gas Demand Expected to Grow >85% of the forecasted demand growth is driven by Texas and Louisiana LONG-TERM DEMAND TRENDS Bcfd, 2020 – 2030 +12.2 LNG exports +5.8 Industrial +2.2 Mexico exports, net +0.9 Commercial +0.7 Transport +0.4 Residential LNG -0.9 Power Exports to Mexico +21.2 O
Slide 7: Hydrocarbons Required to Meet Long-Term Energy Demand
Hydrocarbons Required to Meet Long-Term Energy Demand U.S. energy infrastructure will be critical for decades GLOBAL PRIMARY ENERGY DEMAND BY FUEL GLOBAL PRIMARY ENERGY DEMAND BY billion tons oil equivalent % mix 2019 2025 2030 2040 Oil Natural gas Coal Nuclear Renewables 5 4 14% 22% 5% natural gas
Slide 8: $2.6bn of Commercially-Secured Capital Projects Underway
$2.6bn of Commercially-Secured Capital Projects Underway Project backlog as of 9/30/2020 DEMAND SUPPLY CAPITAL ESTIMATED PIPELINE PULL PUSH ($ billion) IN-SERVICE CAPACITY Permian takeaway projects (PHP, TX Intrastates) • $ 0.9 Q4 2020 – Q1 2021 3.5 bcfd Supply for U.S. power & LDC demand (TGP, FGT,
Slide 9: 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 Origi
Slide 10: Weathering the Storm
Weathering the Storm Disciplined management of the balance sheet improves financial position relative to prior downturns NET DEBT / ADJUSTED EBITDA CFFO – CAPITAL EXPENDITURES – DIVIDENDS PAID(c) $ in millions 5.6x $604 5.3x 5.1x 4.5x 4.3x $365 $315 $137 2015 2016 2017 2018 (a) 2019 (b) 2016 2017 20
Slide 11: Highly-Contracted Cash Flows
Highly-Contracted Cash Flows Stable cash flows with ~74% take-or-pay or hedged earnings(a) CONTRACT MIX(a) Contract type Payment feature Example assets Natural gas interstates / LNG (>90%) Natural gas intrastates (~75%b) Entitled to payment regardless of throughput Liquids terminals (>75%) 68% Take-
Slide 12: Customers Are Primarily End-Users of the Products We Handle
Customers Are Primarily End-Users of the Products We Handle Net revenues underpinned by investment grade counterparties & credit support | Ratings as of 10/7/2020 CUSTOMER TYPE CREDIT RATING End-user IG or substantial credit support Producer - IG or substantial credit support BB+ to B Producer - non
Slide 13: Prioritizing Environmental, Social & Governance (ESG)
Prioritizing Environmental, Social & Governance (ESG) Ongoing enhancements to ESG disclosures | Long-standing commitment to reducing methane emissions SUSTAINALYTICS ESG RISK RATING(a) SUCCESSFUL METHANE EMISSIONS REDUCTIONS(b) bcf, cumulative across our operations reported to EPA Natural Gas STAR &
Slide 14: Biofuels Important to Growing Global Transportation Demand
Biofuels Important to Growing Global Transportation Demand Our network includes substantial blending, pipeline, terminaling & export capabilities for ethanol & other biofuels ETHANOL BIODIESEL RENEWABLE DIESEL Our existing assets Fuel-grade ethanol breakout (e.g., unit-train Biodiesel services inclu
Slide 15: Compelling Investment Opportunity
Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with attractive investment opportunities Stable cash flows with ~74% take-or- pay or hedged earnings(a) >8% current dividend yield Dividends and capex funded with operating cash flow since 2016 Highly-
Slide 16: Appendix
KINDER/MORGAN Appendix
Slide 17: Gathering & Processing Assets Across Multiple Key Basins
Gathering & Processing Assets Across Multiple Key Basins Represents ~9% of KMI EBDA with ~7% in Natural Gas & ~2% in Products (primarily Bakken) SHORT-TERM DRY GAS PRODUCTION OUTLOOK Bcfd, 2019 – 2022 ~17% Other 14 Multiple systems in Uinta, Our primary areas expected Oklahoma, San Juan & other area
Slide 18: Forecasted U.S. Natural Gas Production
Forecasted U.S. Natural Gas Production Bcfd 2020, 2021, 2025, 2030 40 35 30 25 20 15 10 5 0 Northeast Permian Haynesville Eagle Ford SCOOP-STACK Niobrara & PRB Bakken Associated Non-Associated 140 120 100 80 60 40 20 0 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Source
Slide 19: Natural Gas Segment is Predominantly Transport Pipelines
Natural Gas Segment is Predominantly Transport Pipelines ~80% take-or-pay | Fee-based gathering & processing assets focused on the Bakken, Eagle Ford & Haynesville NATURAL GAS SEGMENT VOLUMES Bbtu/d Transport Sales Gathering % Gathering 50,000 20% 45,000 18% 40,000 16% KMI overall 35,000 14% busines
Slide 20: Leading the Way Out of the Permian
Leading the Way Out of the Permian Successfully completed GCX on time & budget | PHP close to completion Leveraging existing footprint into new takeaway capacity Natural Gas Pipelines Under Construction — Reaches across Texas & the Desert/Southwest (DSW), connecting into major demand markets — Our a
Slide 21: 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 22: 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 23: 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 24: Products Segment Transports Multiple Essential Fuels
Products Segment Transports Multiple Essential Fuels Fee-based revenues from critical infrastructure providing mix of feedstock & finished products to refineries & end users Crude oil 27% Products KMI overall Gasoline business mix volume mix 44% 15% 2019 Products Segment: Jet fuel 13% 64% Refined pr
Slide 25: Refined Products Pipes Historically A Steady Contributor
Refined Products Pipes Historically A Steady Contributor Fee-based with stable volumes over time, including through prior crude oil price downturns | ~9% of total KMI EBDA REFINED PRODUCTS VOLUMES(a) mmbbld KM refined products volumes (left) Domestic consumption (right) HISTORICAL VOLUME GROWTH 2.0
Slide 26: CO2 Segment Predictable Volumes & Hedged Commodity Price
CO2 Segment Predictable Volumes & Hedged Commodity Price Mitigating uncertainties where possible | EOR oil & gas production represents ~6% of KMI business mix NET OIL PRODUCTION: ACTUALS VS. BUDGET HEDGED VOLUMES mbbld as of 9/30/2020 Actual Budget Oct - Dec 45 2020 2021 2022 2023 2024 Crude oil - W
Slide 27: CO2 Segment Consistently Generates Free Cash Flow
CO2 Segment Consistently Generates Free Cash Flow Low cash cost structure yields healthy margins through multiple commodity price cycles EOR OIL & GAS CASH OPERATING COSTS CO2 SEGMENT FREE CASH FLOW $ per net barrel $ millions Cash costs Avg. realized oil price FCF Capex Acquisitions Adj. Segment EB
Slide 28: 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 2020 EBDA %(a) 62% 15% 14% 9% Refined Liquids Jones Act CO2 & Interstate / LNG Intrastate G&P products Crude terminals tankers Bulk terminals EOR Oil & Ga
Slide 29: Our Pandemic Response
Our Pandemic Response Prioritizing the health of our co-workers & their families while maintaining safe & reliable operations of our assets Leveraging well-established and previously utilized business continuity & pandemic response plans Kinder Morgan’s Pandemic Preparedness Committee actively m
Slide 30: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 30
Slide 31: 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 32: 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 33: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of DCF 2019 Reconciliation of Adjusted EBITDA 2019 Net income attributable to Kinder Morgan, Inc. (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 c
Slide 34: GAAP Reconciliations
GAAP Reconciliations $ in millions Segment Adjusted EBDA Segment Reconciliation of 2019 Adjusted Segment EBDA (GAAP) Certain Items EBDA Reconciliation of interest, net 2019 Natural Gas Pipelines $4,661 ($51) $4,610 Interest, net (GAAP) $ (1,801) Products Pipelines 1,225 33 1,258 Certain Items (15) T
Slide 35: Reconciliation of CO2 Segment Free Cash Flow
Reconciliation of CO2 Segment Free Cash Flow $ in millions Reconciliation of CO2 Segment Free Cash Flow 2015 2016 2017 2018 2019 Segment EBDA $ 657 $ 827 $ 847 $ 759 $ 681 Certain items: Non-cash impairments and project write-offs 622 29 - 79 75 Derivatives and other (138) 63 40 90 (49) Severance ta