Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — NAPTP 2013 MLP Investor Conference
35 slides from Kinder Morgan's conference presentation, May 23, 2013
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Kimberly Dang Chief Financial Officer May 23, 2013
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
Forward-Looking Statements / Non-GAAP Financial Measures 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 fut
Slide 3: Four Ways to Invest: KMI, KMP, KMR & EPB
Kinder Morgan Four Ways to Invest: KMI, KMP, KMR & EPB 666MM Public Kinder Morgan, Inc. (64%) Float Market Equity $44.4B (a) Cash Debt 9.4B (b) dividends to KMI 301MM (d) Management/ shareholders (C-corp) (29%) Original S/H Enterprise Value $53.8B 1,036 MM shares (a) 2013E Dividend per Share $1.60 (
Slide 4: Our Strategy
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 foot
Slide 5: Unparalleled Asset Footprint
Kinder Morgan Unparalleled Asset Footprint 3rd largest energy company in North America with combined enterprise value of approximately $115 billion (a) Largest natural gas network in U.S. — Own an interest in / operate almost 70,000 miles of natural gas pipeline — Connected to every important U.
Slide 6: 17 Years of Consistent Growth at KMP
17 Years of Consistent Growth at KMP KMP Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (c) $3,997(a) $6.00 $4,000 $5.33 (a) GP LP $4.98 $3,500 $3,230 $4.61 $5.00 $4.40 $3,000 $2,737 $4.20 $4.02 $2,450(b) $4.00 $3.48 $2,500 $2,171 $3.13$3.26 $1,877 $2.87 $3.00 $2.63 $2,000 $
Slide 7: Significant Historical Returns
Significant Historical Returns (a) KMP: 25% CATR Since ‘96 (b) KMI: 18% CATR Since Inception (e) $4,000 KMP = $3,792 $150 KMI = $147 Dollars Dollars RMZ = $145 $3,500 $125 $3,000 UTY= $134 $100 S&P 500 = $133 $2,500 $2,000 $75 $1,500 AMZ (d) = $1,282 $50 $1,000 $25 $500 ⇐ IPO 2/10/2011 S&P 500 = $30
Slide 8: Budget Guidance: Promises Made, Promises Kept
Budget Guidance Promises Made, Promises Kept Promises Made Promises Kept KMI Budgeted KMI Actual Dividend: Dividend: 2011: $1.16 (a) 2011: $1.20 (a) 2012: $1.35 2012: $1.40 KMP Budgeted KMP Actual LP Distribution: LP Distribution: 2000: $1.60 2000: $1.71 KMP achieved 2001: $1.95 2001: $2.15 LP distr
Slide 9: 2013 Guidance
2013 Guidance Supported by Diversified Cash Flow CO2 S&T CO2 Oil Production 5% KMI Forecast: Natural Gas 14% Pipelines KMI 2013 dividend: $1.60/sh (14.3% growth) Terminals 11% 56% Fully-consolidated year-end 2013 debt / EBITDA = 5.0x (a) B 3% 11% KM Canada Products U Pipelines S CO2 S&T I 7% CO2
Slide 10: 5-year Project Backlog
5-year Project Backlog Over $13 Billion of Identified Organic Growth Projects Tremendous footprint provides over $13B of growth opportunities over next 5 years (a) Approximate Growth Capex (a) ($B) Natural Gas Pipelines $3.5 Products Pipelines 0.9 Terminals 1.7 CO2 – S&T 1.1 CO2 – EOR (b) Oil Produc
Slide 11: Vast Opportunity Set
Vast Opportunity Set Leverages Diverse Energy Themes Pipeline / terminal expansions for Oilsands export to Asia Canadian natural Cochin conversion/ gas demand reversal for leading to expansion Oilsands diluent opportunities Northeast power demand growth Pipeline to be fueled by conversion / natural
Slide 12: KMP / KMR
KINDER/MORGAN KINDER MORGAN ENERGY PARTNERS, L.P. KMP /KMR
Slide 13: KMP's Diversified Cash Flow
KMP’s Diversified Cash Flow Natural Gas Pipelines 2013E KMP Segment 55% interstate pipelines Earnings before DD&A 31% gathering, processing & treating = $5.7 billion (a) 14% intrastate pipelines & storage Products Pipelines CO2 S&T 56% pipelines 44% associated terminals & transmix Natural
Slide 14: KMP 2013 Growth Expenditure Forecast
KMP 2013 Growth Expenditure Forecast Without acquisitions With acquisitions = $2.8 billion (a) = $10.0 billion CO2 CO2 S&T Oil S&T Terminals 3% 3% Natural Gas Natural Gas CO2 Oil Pipelines Pipelines Production Products 9% 9% Pipelines (b) 13% 29% 7% 27% 22% Terminals 78% Products Pipelines (b) _____
Slide 15: $40B of Growth Capital Invested at KMP
$40B of Growth Capital Invested at KMP (a,b,c) ($ in billions) Total Invested by Type Total Invested by Year $24 $11.0 $20 JV Contributions $3.5 $10.0 $16 $10.0 Expansion $12 $21.8 $9.0 Acquisition $8 $14.8 $8.0 $4 $7.0 $- Expansions Acquisitions $6.0 (c) $5.1 $5.0 Total Invested by Segment $4.0 $3.
Slide 16: How We Have Done: KMP Returns on Capital
How We Have Done: KMP Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Segment ROI (a): 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% 11.9% 11.9% Products Pipelines 11.9 11.8 12.8 12.9 12.4 11.6 11.8 13.2 12.5 13.4 13.7 12.
Slide 17: EPB
KINDER/MORGAN EL PASO PIPELINE PARTNERS j EPB
Slide 18: EPB System Map
EPB System Map Pipelines: 100% Wyoming Interstate Co. (WIC) 100% Colorado Interstate Gas (CIG) 100% Cheyenne Plains (CP) 100% Southern Natural Gas (SNG) 100% Elba Express (EEC) LNG: 100% Southern LNG (SLNG) 18
Slide 19: EPB Focused on Natural Gas Pipelines
EPB Focused on Natural Gas Pipelines 2013E EPB Segment Natural Gas Earnings before DD&A Highly stable cash flow stream = $1.2 billion (a) — 89% interstate pipelines • Average contract life = ~7 years — 11% LNG • Average contract life = ~19 years (b) — Minimal throughput and commodity exposure Natu
Slide 20: KMI
KINDER/MORGAN INC. KINDER MORGAN KMI
Slide 21: KMI Remaining Assets Available For Dropdown
KMI Remaining Assets Available For Dropdown Plan to move all assets to KMP / EPB over time, except NGPL 21
Slide 22: KMI Overview
KMI Overview KMI pays regular c-corp dividend with attractive combination of yield plus growth KMI Investments / Assets: — Investment in MLPs • KMP: – General Partner (GP) interest receives incentive distributions from KMP – KMI owns ~10% of total limited partner (LP) interests • EPB: – GP inter
Slide 23: Risks
Risks Regulatory (KMP/EPB/KMI) — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes Crude oil production volumes (KMP) Crude oil prices (KMP) — 2013 budget assumes $91.68/Bbl realized price on unhedged barrels — 2013 sensitivity is ~$5.9 million DCF
Slide 24: Summary: Attractive Value Proposition
Summary KMI, KMP, KMR & EPB: Attractive Value Proposition Unparalleled asset footprint Highly visible, attractive dropdown inventory Long-term Growth Targets (a) Significant, identified growth Next 3 to 5 Years (2012+) opportunities KMP = ~5-6% Attractive returns driven by EPB = ~5-6% co
Slide 25: Appendix
KINDER/MORGAN Appendix
Slide 26: KMR 101
KMR 101 KMR is KMP KMR Discount to KMP (b) — KMR shares are pari passu with KMP units 10% — KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment 5% program (a) 0% — Like KMP units, KMR shares are tax efficient - but with simplified tax rep
Slide 27: Toll Road-like, Fee-based Business Model
Toll Road-like, Fee-based Business Model Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada (KMP) (KMP) (KMP/EPB/KMI) (KMP) (KMP) – Interstate & LNG: take or pay – Take or pay, minimum – S&T: primarily minimum – Intrastate: ~75% take or pay (a) – Essentially no Volume Secu
Slide 28: Natural Gas Pipelines Segment Outlook
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $3.5 billion of identified growth projects over next five years (a), including: — TGP Northeast upgrade — LNG liquefaction (FTA @ Gulf & Elba Island) — Eagle F
Slide 29: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $0.9 billion of identified growth projects over next two years (a), including: — Cochin reversal & diluent conversion — Condensate processing — Sweeney lateral — Parkway — Double Eagle Lo
Slide 30: Terminals Segment Outlook
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Project Backlog: $1.7 billion of identified growth projects over next three years (a), including: — Liquids • Edmonton Phase I / II expansions • BOSTCO project • Houston terminal network expansion — Bulk • Deepwate
Slide 31: CO2 Segment Outlook
CO2 Segment Outlook Own and operate best source of CO2 for EOR (a) Project Backlog: Identified growth projects totaling $1.1 billion and $1.0 billion in S&T and EOR (a), respectively, over next five years (b), including: — S&T • McElmo / Doe Canyon expansion • St. Johns build-out — Oil Production
Slide 32: Kinder Morgan Canada Segment Outlook
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Project Backlog: $5.4 billion expansion of TMPL Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia — Following successful open season, major expansion plans under way
Slide 33: KMP Purchase of Copano for ~$5 Billion
KMP Purchase of Copano for ~$5 Billion Transaction Announced 1/29/2013, Closed 5/1/2013 KMP announced a definitive agreement to acquire Copano — KMP acquired all of Copano’s outstanding units — 100% unit-for-unit transaction; exchange ratio of 0.4563 KMP units per Copano unit Immediate and long-
Slide 34: Copano Acquisition: Strategic Combination
Copano Acquisition Strategic Combination Strategic Combination: Complementary assets broaden KMP’s midstream services footprint and provide entry into new production areas Provides gathering, processing, and fractionation growth platform Proven operations team with track record of delivering gro
Slide 35: KINDER/MORGAN
KINDER/MORGAN