Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — JPMorgan Energy Infrastructure 1x1 Forum 2015
30 slides from Kinder Morgan's conference presentation, May 14, 2015
Slide 1: Run By Shareholders, For Shareholders
INC. Run By Shareholders, For Shareholders David Michels VP Finance & Investor Relations May 14, 2015
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
INC. 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, concernin
Slide 3: KMI Acquisition of KMP, KMR & EPB
INC. KMI Acquisition of KMP, KMR & EPB Simplicity is Bliss Value enhancing combination paves way for significant growth, simplifies structure $77 billion transaction closed 11/26/2014 Greater dividend growth and visibility — 2015 budgeted dividend of $2.00 (15% growth over 2014) — 10% annual gro
Slide 4: Weathering the Storm
INC. Weathering the Storm Well-positioned Assets, Stable Cash Flow KMI Bond Trading Since Oil was last $90(b) Low commodity price sensitivity October 6, 2014 April 30, 2015 Change KMI 24s UST+189 bps UST+205 bps +16 bps — 2015 budgeted EBDA is ~85% fee-based, ~94% fee- IG Energy Index UST+156 bps
Slide 5: Our Strategy
INC. 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 Maintaining strong balance sheet is paramount — Accessed capital markets for approximately $46 b
Slide 6: Unparalleled Asset Footprint
INC. Unparalleled Asset Footprint Largest Energy Infrastructure Company in North America 3rd largest energy company in N. America with an enterprise value of over $135 billion Over $18 billion of currently identified organic growth projects Largest natural gas network in N. America — Own an in
Slide 7: 18 Years of Stable Growth
INC. 18 Years of Stable Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP Distribution per Unit(a) KMI Annual Dividend per Share(c) $6.00 $5.58 $2.50 $5.33 $4.98 $2.00 $5.00 $4.61 $2.00 $4.40 $4.20 $1.74 $4.02 $1.60 $4.00 $3.48 $3.26 $1.50 $1.40 $3.13 $2.87 $1.20 $3.00 $2.44 $2.63
Slide 8: Capital Invested
INC. Capital Invested ~$48 Billion of Asset Investment & Acquisitions Since Inception(a,b) ($ in billions) Total Invested by Type Total Invested by Year $30 $25.7 $11 $25 $21.8 Expansion $10.1 $20 $10 Acquisition $15 $9 $10 $8 $5 $7.3(c) $7 $6.6 (b) $- Expansions Acquisitions $6 $5.8 $5 Total Invest
Slide 9: Returns on Invested Capital
INC. Returns on Invested Capital Consistent Returns Demonstrate Asset Performance, Management Discipline 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Segment ROI(a): Natural Gas Pipes–KMP 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% 11.6
Slide 10: Financial Rigor
INC. Financial Rigor Promises Made, Promises Kept Promises Made Promises Kept KMI Budgeted KMI Actual Dividend: Dividend: 2011: $1.16(a) 2011: $1.20(a) KMI has exceeded 2012: $1.35 2012: $1.40 its dividend target 2013: $1.57 2013: $1.60 in each of past 4 yrs. 2014: $1.72 2014: $1.74 KMP Budgeted KMP
Slide 11: 2015 Budget Guidance
INC. 2015 Budget Guidance Supported by Diversified, Fee-based Cash Flow 2015 Budget Commodity Price Sensitivity KMI 2015 budgeted dividend of $2.00 per share 2015 budgeted coverage over declared — 15% growth over 2014 dividend of $654 million (assumes $70/Bbl oil price and $3.80/MMBtu natural ga
Slide 12: 2015 Budgeted Segment Earnings Profile
INC. 2015 Budgeted Segment Earnings Profile Driven by Natural Gas 2015 Budgeted Segment Natural Gas Pipelines EBDA = $8.2 billion(a) 71% interstate pipelines 21% gathering, processing & treating 8% intrastate pipelines & storage CO2 S&T Products Pipelines CO2 Oil 66% refined products Product
Slide 13: 2015 Growth Capital Expenditure Forecast
INC. 2015 Growth Capital Expenditure Forecast ($ in millions) 2015 2015 Forecast Budget Growth capital Natural Gas $ 1,922 $ 2,002 CO2 ‐ S&T 310 713 CO2 ‐ EOR 452 524 Products 541 327 Terminals 876 731 Kinder Morgan Canada 99 84 Subtotal, excl. large acquisitions(a ) 4,198 4,381 Hiland acquisition 3
Slide 14: 5-year Project Backlog
INC. 5-year Project Backlog(a) Over $18 Billion of Currently Identified Organic Growth Projects Tremendous footprint provides $18.3B of currently identified growth projects over next 5 years 5-year Growth Capex Backlog ($B) 2015 2016 2017 2018+ Total Natural Gas Pipelines $0.7 $0.7 $2.0 $1.9 $5.3 Pr
Slide 15: Natural Gas Megatrend
INC. Natural Gas Megatrend Strong Natural Gas Footprint & Market Opportunity Set U.S. Natural Gas Projected Supply & Demand(a) Real- time, Long-term Benefits of Footprint Demand (Bcf/d) 2015 2020 2025 LNG exports 0.0 7.3 10.8 Natural Gas Segment Asset Footprint $641 billion of investment in Mexica
Slide 16: Business Risks
INC. Business Risks Regulatory — Products Pipeline FERC rate cases — Natural Gas FERC rate cases — Legislative and regulatory changes Crude oil production volumes Commodity prices — CO2 oil production • 2015 budget assumes $70/Bbl realized price on unhedged barrels • Crude 2015 commodity price
Slide 17: Summary
INC. Summary Unparalleled asset footprint Diversified energy infrastructure platform with stable, fee-based cash flow Industry leader in all business segments KMI: ~4.5% current yield and ~10% expected Highly visible, attractive growth project backlog annual dividend growth Continued focus
Slide 18: Appendix
KINDER/MORGAN Appendix
Slide 19: Energy Toll Road
INC. Energy Toll Road Diversified, Fee-based Business Model Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada – Interstate & LNG: take or pay – Liquids & Jones Act: – Refined products: – S&T: primarily – Intrastate: ~75% take or pay(a) primarily take or pay primarily volume
Slide 20: Natural Gas Pipelines Segment Outlook
INC. Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $5.3 billion of identified growth projects over next six years(a), including: — LNG liquefaction (Elba Island) — Pipe projects supporting LNG liquefaction
Slide 21: Products Pipelines Segment Outlook
INC. Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $1.9 billion of identified growth projects over next four years(a), including: — UTOPIA — Eagle Ford condensate processing (phase 2) — KMCC extensions — KMCC-Double Eagle interconnec
Slide 22: Terminals Segment Outlook
INC. Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Project Backlog: $2.3 billion of identified growth projects over next four years(a), including: — BOSTCO Phase 3 — Alberta crude by rail projects — Chemical terminal development — Jones Act tanker builds — Hou
Slide 23: CO2 Segment Outlook
INC. CO2 Segment Outlook Own and operate best source of CO2 for EOR(a) Project Backlog: Identified growth projects totaling $1.4 billion and $2.0 billion in S&T and EOR, respectively, over next five years(b), including: — S&T • Southwest Colorado CO2 production • Cortez pipelines — EOR • SACROC /
Slide 24: Kinder Morgan Canada Segment Outlook
INC. Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Project Backlog: $5.4 billion expansion of Trans Mountain Pipeline (TMEP) Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia — Following successful open season,
Slide 25: Credit Ratios and Liquidity
INC. Credit Ratios and Liquidity(a) ($ in millions) Credit Ratios 2015 2011 2012 2013 2014 Budget (b) Net debt to EBITDA 4.5x 5.4x 5.0x 5.5x 5.6x EBITDA to interest 5.0x 4.0x 3.9x 4.1x 3.6x Revolver Capacity(c,d) Long-term Debt Maturities(c,e) Committed revolving credit facility $ 4,000 (f) 2015 $ 7
Slide 26: Cost of Capital
INC. Cost of Capital A whole new ballgame No more incentive distribution rights Prior long-term hurdle rate for accretion (at KMP) = ~9% pre-tax New long-term hurdle rate for accretion = ~4% after-tax — 50% equity(a) x 4.1% yield(b) Analyst Day Hurdle Rate: + 50% debt(a) x 2.4%(c) cost of debt
Slide 27: Incidents & Releases: Liquids Pipeline
INC. Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipeline Incidents per 1,000 Miles(a) Liquids Pipeline Release Rate(a) 0.8 50 Barrels per billion barrel miles Incidents per 1,000 Miles 40 0.6 30 0.4 20 0.57 0.57 0.45 0.2 0.39 0.29 10 17.96 16.49 0.24 15.50 0.21 13.05 - 0.08 0.08 6.00
Slide 28: Incidents & Releases: Natural Gas Pipeline
INC. Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipeline Incidents Rate Natural Gas Pipeline Incidents Rate All Reportable Incidents(a) Onshore Ruptures-only(c) 0.8 0.20 Incidents per 1,000 Miles Incidents per 1,000 Miles 0.6 0.15 (d) 0.4 0.10 0.16 0.2 0.37 0.05 0.32 0.30 0.3
Slide 29: Employee Safety Statistics
INC. Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate Lost-time injuries per 200k hours worked 5 7 6.35 4.90 6 OSHA Recordable Incidents per 4 5.20 5 200k Hours Worked 3 4 2 3 2.50 2.60 2.50 2.50 2 1.60 1.54 1 0.89 0.50 1.20 1.20 0.50 0.50 1 0.11 0.85 0.7
Slide 30: INC.
INC. KINDER/MORGAN
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