Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — NAPTP MLP Investor Conference 2011
36 slides from Kinder Morgan's conference presentation, May 26, 2011
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Park Shaper President May 26, 2011
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning future actions, conditions or eve
Slide 3: 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 before certain items (both in the aggregate and per unit), segment earnings before depreciation, depletion, amortization and amortization of excess cost of e
Slide 4: Different Ownership Interests in Same Set of Assets
Different Ownership Interests in Same Set of Assets Kinder Morgan Energy Partners, L.P. Kinder Morgan, Inc. Market Equity $22.3B (a) LP & GP Market Equity $19.7B (d) Debt 11.6B (b) Distributions (c) Debt 3.2B (e) Enterprise Value $33.9B $1.3B Enterprise Value $22.9B 2011E LP Distribution per Unit $4
Slide 5: KMR 101
KMR 101 (a) KMR is KMP KMR Discount to KMP KMR shares are pari passu with KMP units 10% KMR dividend equal to KMP cash distribution, but paid in 5% additional shares; effectively a dividend reinvestment 0% program (b) -5% Like KMP units, KMR shares are tax efficient — but with -10% simplified
Slide 6: Our Strategy: Stay the Course
Our Strategy: Stay the Course Same Strategy Since Inception Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments Control costs — It’s the investors’ money, not management’s – treat it that way Leverage asset foo
Slide 7: Asset Footprint
Asset Trans Mountain Footprint 2 Cochin Puget Largest independent transporter of petroleum products in the U.S. Pacific Express — Transport ~1.9 MMBbl/d (a) 2nd largest transporter of natural gas in the U.S. Horizon — Own an interest in / operate over 24,000 Trailblazer 2 2 4 4 miles of intersta
Slide 8: 15 Years of Consistent Growth
15 Years of Consistent Growth KMP Total Distributions (GP + LP) ($MM) (a) KMP Annual LP Distribution Per Unit (b) $3,000 $5.00 $4.60 $2,648 $4.40 GP LP $2,420 $4.20 $2,500 $4.02 $4.00 $2,132 $3.48 $1,854 $3.13 $3.26 $2,000 $2.87 $3.00 $2.63 $1,469 $2.44 $1,500 $1,265 $2.15 $1,162 $978 $2.00 $1.71 $8
Slide 9: Significant Historical Returns
Significant Historical Returns (a) KMP: 26% CAGR Since ‘96 (b) KMR: 14% CAGR Since ‘01 (c) Dollars Dollars $3,000 $450 AMZ (d) KMP = $2,783 = $416 $2,500 $375 KMR = $366 $2,000 $300 $1,500 $225 AMZ (d) = $899 $1,000 $150 $500 $75 S&P 500 = $130 S&P 500 = $233 ⇐ IPO 5/14/2001 $0 $0 Dec-96 Dec-98 Dec-
Slide 10: Promises Made, Promises Kept
Promises Made, Promises Kept Promises Made Promises Kept KMP Budgeted KMP Actual Distribution per unit: Distribution per unit: 2000: $1.60 2000: $1.71 2001: $1.95 2001: $2.15 2002: $2.40 2002: $2.435 2003: $2.63 2003: $2.63 2004: $2.84 2004: $2.87 2005: $3.13 2005: $3.13 2006: $3.28 2006: $3.26 2007
Slide 11: Kinder Morgan 2011 Goals
Kinder Morgan 2011 Goals KMP KMI Distribution Target Dividend Target — $4.60 per unit (4.5% growth) (a) — $1.16 per share (a,b) — Excess coverage of ~$37MM (a) — $820MM in total 2011 dividends (a) Maintain Solid Balance Sheet Maintain Solid Balance Sheet — Yr-end 2011 debt / EBITDA = 3.6x (a
Slide 12: KMP
KINDER/MORGAN KMP
Slide 13: Diversified Cash Flow
(KMP) Diversified Cash Flow KMP Segment Earnings before DD&A CO2 2011E = $3.8 billion (a,d) Natural Gas Pipelines $1,098MM segment EBDA (a) $1,079MM segment EBDA (a,d) — 28% CO2 transport and sales — 50% Interstate — 72% oil production related — 50% Intrastate (e) — Production hedged (b): 2011=8
Slide 14: $1.4 Billion Growth Expenditures Forecast in 2011
(KMP) $1.4 Billion Growth Expenditures Forecast in 2011 KMP Growth Expenditures 2011E = $1.4 billion (a,b,c) CO2 Natural Gas Pipelines (a) 26% 34% 13% 27% Products Pipelines (b,c) Terminals (b) __________________________ (a) Includes equity contributions to joint ventures (b) Includes acquisitions;
Slide 15: Sources Of Future Growth
(KMP) Sources Of Future Growth KM Opportunity – Growth Drivers Leverage Footprint – System expansion / extension (e.g. Eagle Ford) – Cheap, abundant, domestic and clean – – Acquisitions (e.g. KinderHawk) natural gas is the logical fuel of choice – Greenfield development (e.g. FEP) Natural Gas – In
Slide 16: Over $22B of Growth Capital Invested
(KMP) Over $22B of Growth Capital Invested (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year (a,b) $15 $12 $3.5 $2.7 JV Contributions $3.3 $9 Expansion $3.0 $2.8 $6 Acquisition $9.3 $10.4 $2.5 $3 $2.5 $2.4 $- $2.0 Expansions Acquisitions $2.0 $1.6 $1.5 $1.4 Total Invested by
Slide 17: Returns on Capital
(KMP) Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% 13.4% 13.7% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 16.7 17.5 16.9 14.0 11.9 CO2 27.5 24.6 22.0 21.9 23.8 25.7 23.1 21
Slide 18: Balance Sheet Remains Solid
(KMP) Balance Sheet Remains Solid (a) ($ in millions) Credit Summary Debt / EBITDA (b,c) 3.6x EBITDA / interest (c) 6.1x Long-term debt rating Baa2 / BBB / BBB (d) Revolver Capacity Long-Term Debt Maturities Total bank credit $2,000 2011 $7 (e) Less: 2012 $967 (f) Commercial paper (343) 2013 $507 Le
Slide 19: KMP Focused on Distribution Growth
(KMP) KMP Focused on Distribution Growth Annual LP Distribution Per Unit (b) History of Delivering Distribution $4.60 $4.40 Growth (a): $4.02 $4.20 $3.48 — 1-year growth = 4.8% $3.13 $3.26 $2.87 — 3-year growth = 8.1% $2.44 $2.63 $2.15 — 5-year growth = 7.0% $1.42 $1.71 $1.24 $0.94 $0.63 1996 1997
Slide 20: KMI
KINDER/MORGAN KMI
Slide 21: 98% of Cash Comes from KMP
(KMI) 98% of Cash Comes from KMP KMI Total Cash Receipts Interests in KMP (b) 2011E = $1.36 billion (a) NGPL General Partner interest receives A major interstate natural gas incentive distributions from KMP pipeline and one of the largest GP natural gas storage operators in KMI owns ~11% of to
Slide 22: Growth in KMP Distributions Leads to KMI Growth
(KMI) Growth in KMP Distributions Leads to KMI Growth Hypothetical KMP Distributions of Cash from Operations Received LP Interests $1,369 with incremental GP Interest 14MM units outstanding (+$53MM) Additional 14MM units $1,316 $1,500 $1,453 $1,384 Total Hypothetical Distributions $1,248 $53 $1,250
Slide 23: Liquidity Summary
(KMI) Liquidity Summary (a) ($ in millions) Credit Summary Net debt / distributions received less G&A (b) 2.5x Long-term debt rating Ba1 / BB / BB+ (c) Revolver Capacity Long-Term Debt Maturities (d) Total bank credit $1,000 2011 --- Less: 2012 $839 Revolver drawn (365) 2013 --- Letters of credit (4
Slide 24: KMP Drives KMI Growth
(KMI) KMP Drives KMI Growth KMP Cash Distributions Received by KMI $1,330 Substantial cash flow GP $1,202 LP Units Owned Minimal capital expenditures at $1,079 KMI level $902 $1,169 Strong balance sheet $682 $632 $1,054 $574 $940 $477 Growing distributions and $406 $582 $783 $333 $536 $472 i
Slide 25: KMP Risks
KMP Risks Regulatory — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes Crude Oil Production Volumes Crude Oil Prices — 2011 budget assumes $89/Bbl realized price on unhedged barrels — 2011 sensitivity is ~$5 million DCF per $1/Bbl change in crude
Slide 26: KMI, KMP & KMR: Attractive Value Proposition
KMI, KMP & KMR: Attractive Value Proposition Unparalleled asset footprint Established track record Industry leader in all business segments Experienced management team Supportive general partner Transparency to investors Attractive returns driven by combination of yield plus growth 26
Slide 27: Appendix
KINDER/MORGAN Appendix
Slide 28: KMP 2011 Budget
KMP 2011 Budget (a) ($ in millions, except per unit) 2010 2011 Change Actual Budget $ % Segment EBDA $3,311.8 $3,636.7 $324.9 10% Segment EBDA w/JV DD&A (b) $3,457.4 $3,813.6 $356.2 10% Distributable cash flow Net income $1,505.5 $1,746.9 $241.4 16% DD&A (b) 1,056.2 1,100.1 43.9 4 Book / cash tax di
Slide 29: KMP Quarterly Profile
KMP Quarterly Profile (a) ($ in millions, except per unit) 1Q 2Q 3Q 4Q Year Segment EBDA w/JV DD&A (b) 2011B Total Segments (c) 24% 23% 25% 28% $3,813.6 2010 Products Pipelines 24% 26% 25% 25% $687.5 Natural Gas Pipelines 26% 22% 23% 29% 981.4 CO2 26% 25% 24% 25% 960.2 Terminals 23% 25% 25% 27% 646.
Slide 30: KMP's Stable Asset Base
KMP’s Stable Asset Base Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada – Interstate: virtually all – Liquids: take or pay – S&T: primarily take or pay – Bulk: minimum Volume Security – Volume based minimum volume – No volume risk – Intrastate: ~75% volume guarantee, gu
Slide 31: KMP Natural Gas Pipelines Segment
KMP Natural Gas Pipelines Segment Well-positioned in the Rockies, shales and in Texas 2011 Growth Drivers: Fayetteville Express (FEP) pipeline in- service Eagle Ford shale development (under JV Trailblazer with Copano, and on standalone basis) REX KinderHawk full year plus volume growth Stor
Slide 32: KMP Products Pipelines Segment
KMP Products Pipelines Segment Well-located with origin in refinery / port hubs and terminus in population centers 2011 Growth Drivers: PPI tariff escalator (PPI + 2.65 = ~6.8% (a)) Organic volume growth Full year of 2010 acquisitions (Chevron, Cochin Shell, High Sierra) and expansion projects
Slide 33: KMP Terminals
KMP Terminals Well-located in refinery / port hubs and inland waterways 2011 Growth Drivers: Increase in rates on existing contracts Higher coal and ethanol throughput Full year of 2010 acquisitions (Slay, USD, Watco) and expansion projects (Carteret and Pier IX) Partial benefit from $174 mi
Slide 34: KMP CO2 Segment
KMP CO2 Segment Own and operate best source of CO2 for EOR 2011 Growth Drivers: Over 1,000 Bbl/d production increase at Katz Higher overall oil / NGL prices CO2 S&T price increases Relatively flat production at SACROC and Yates KMCO2 Katz Long-term Growth Drivers: SACROC Billions of barrel
Slide 35: KMP Kinder Morgan Canada Segment
KMP Kinder Morgan Canada Segment Sole oil pipeline from oilsands to West Coast / export markets Trans Mountain 2011 Growth Drivers: 2 New toll settlement pending on Trans Puget Mountain pipeline (TMPL) Express Long-term Growth Drivers: Expand oilsands export capacity to West Coast and China — TM
Slide 36: Kinder Morgan
KINDER/MORGAN