Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Wachovia 2006 Pipeline / MLP Conference
33 slides from Kinder Morgan's conference presentation, Dec 5, 2006
Slide 1: Overview of KMI & KMP
Overview of KMI & KMP November 2000 Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and securities values of Kinder Morgan Inc. and Kinder Morgan Energy Partners, L.P. (collectively known as “Kinder Morgan”) may diff
Slide 2: Table of Contents
1 Table of Contents I. Overview II. System Map III. Distribution Mechanism IV. KMP Overview & Strategy – Segment Overview – Internal Growth Strategy – Acquisition Strategy V. KMI Overview Strategy – Segment Overview – Internal Growth Strategy – Acquisition Strategy
Slide 3: I. Overview
KINDER“ MORGAN I. Overview
Slide 4: Unique Financial Structure
3 Unique Financial Structure Management Public Shareholders Rich Kinder and Bill Morgan have 25% 75% largest equity stake in energy industry – $1/yr in salary KMI (a) – no bonus, no options (Corporation) Market Equity $4.6bn KMI targets 20-30% EPS Growth Debt 3.6 – half internal growth Enterprise Va
Slide 5: II. System Map
KINDER“ MORGAN ll. System Map
Slide 6: System Map
5 System Map Natural Gas Operations Pipelines Storage Processing Plants Products Operations Pipelines Trailblazer Bulk Terminals KMIGT Mid- Transmix Facilities Continent Chicago Pacific Denver Operations Orange CO2 NGPL County Plantation Pipe Line Houston KMTP
Slide 7: III. How KMP's Growth Affects KMI
III. How KMP’s Growth Affects KMI
Slide 8: GP Incentive Distribution Calculation
7 GP Incentive Distribution Calculation Under KMP’s unique structure, as unitholder distributions are increased, the General Partner gets an increasingly larger share of the upside (a) * LP Distribution/Unit LP% GP% LP Share GP Share Tier 1 $0.00 to $1.21 98% 2% $81.7 $ 1.7 Tier 2 1.21 to 1.43 85 15
Slide 9: How KMP Impacts KMI
8 How KMP Impacts KMI As the per-unit KMP distributions have increased, the GP’s percentage of total cash flow has grown dramatically KMP Distribution/Unit KMI % of KMP Cash Flow (a) $3.40 34% $2.85 29% $2.47 25% $1.88 15% $1.26 2% 1996 1997 1998 1999 2000(e) 1996 1997 1998 1999 2000(e) (a) Includes
Slide 10: How KMP Impacts KMI
9 How KMP Impacts KMI The combination of growth in both KMP’s total cash flow and KMI’s share of that total has produced dramatic cash flow growth for KMI’s GP interest KMP Total Cash Flow KMI’s 2% G.P. Interest (a) $330.0M $111.7M L.P. Share G.P. Share $198.3M $58.4M $152.9M $38.0M $30.1M $16.8M $4
Slide 11: IV. KMP - Overview & Strategy
KINDER“ MORGAN IV. KMP - Overview & Strategy
Slide 12: Kinder Morgan Energy Partners
11 Kinder Morgan Energy Partners Segment Overview Market Position (a) Financial Profile (b) Largest pipeline MLP Market Cap: $3.1bn Largest independent Enterprise Value: $4.4bn refined products pipeline Cash Distribution: $3.40 system Distribution Yield: 7.0% Segment Earnings for the First 9 Months
Slide 13: Product Pipelines
12 Product Pipelines KMP Segment Profile 8,100 mile multiple product and JV pipeline systems Predominant market share in West, transporting bulk of refined products used in CA, AZ and NV Rapid population growth driving consumption of refined petroleum products in Western and Southeast region of U.S.
Slide 14: Natural Gas Pipelines
13 Natural Gas Pipelines KMP Segment Profile KMIGT (formerly KN Interstate) – Transports gas from Rockies and mid- continent to end users – Pony Express connects to Kansas City KMIGT and pipes moving east Red Cedar Trailblazer – 650mmcf/day gathering in North San Juan basin – 49% partner with Southe
Slide 15: CO2 Pipelines
14 CO2 Pipelines KMP Segment Profile Premier integrated CO2 transporter Utah Colorado and marketer in North America McElmo Dome Kansas Most revenues from long-term contracts with minimum delivery Br avo Dome guarantees Cor tez Pipelin e Oklahoma Arizona Brav o Dome Pipeline New acquisitions at under
Slide 16: Bulk Terminals
15 Bulk Terminals KMP Segment Profile 25 owned or operated bulk terminals – Coal – Petroleum Coke – Cement and other Long-term contracts and geographic diversity lead to stable cash flows Growth from: – Low sulfur western coal – Increased coking of heavy crude – Inadequate domestic cement capacity
Slide 17: KMP Internal Growth Strategy
16 KMP Internal Growth Strategy Enhance utilization of existing assets to capture upside of fixed cost economics – Southern California expansions – Plantation mainline expansion Continue to reduce costs – Plantation operations – Enhanced productivity in field operations Stay focused on midstream ass
Slide 18: KMP - Historical Growth
17 KMP - Historical Growth KMP existing operations should provide a platform for growth * Earnings Before DD&A Business Last 12 months Growth Outlook Products Pipelines $255M (a) 7% growth for 9 months ended 9/30/00 - expect growth to continue at or above that level - fueled by population growth in
Slide 19: KMP Annual Internal Growth Potential
18 KMP Annual Internal Growth Potential Business Segment (Growth Driver) Growth Potential ($mm) Total Internal Cash Flow Growth Potential $27 – 36 KMP / Distribution Per Unit (a) $0.20-$0.27 KMI / After Tax Earnings Per Share (b) $0.08-$0.11 * The above figures regarding growth potential are based o
Slide 20: KMP Acquisition Strategy
19 KMP Acquisition Strategy Rationalization by major oil companies – FTC requirements – Internal restructuring – Other oil companies following suit Liquids pipelines and terminals consolidation opportunities Bulk terminals acquisition opportunities Continued restructuring in the natural gas industry
Slide 21: Acquisitions Provide Cash Accretion
20 Acquisitions Provide Cash Accretion Cash accretion to KMP unitholders for acquisitions based on various multiples of distributable cash flow (a) 5.0X 6.5X 8.0X 9.5X Purchase Price $1,000.0M $1,000.0M $1,000.0M $1,000.0M Debt Issued @ 7.4% $ 400.0M $ 400.0M $ 400.0M $ 400.0M Units Issued @ $48.75
Slide 22: Acquisition Matrix
21 Acquisition Matrix For a given dollar amount of acquisitions, KMP unitholders realize a significant amount of cash accretion per unit (a) * Value of Acquisitions 5.0X 6.5X 8.0X 9.5X $1000M $ 0.67 $ 0.38 $ 0.20 $ 0.08 $750M $ 0.52 $ 0.30 $ 0.16 $ 0.06 $500M $ 0.36 $ 0.21 $ 0.11 $ 0.04 Target $0.20
Slide 23: V. KMI - Overview & Strategy
KINDER“ MORGAN V. KMI - Overview & Strategy
Slide 24: Kinder Morgan, Inc.
23 Kinder Morgan, Inc. Segment Overview Market Position Financial Profile (a) One of the largest midstream Market Cap: $4.6bn energy companies in U.S. Enterprise Value: $8.2bn 30,000 miles of natural gas and products pipelines Segment Earnings for the First 9 Months of 2000 (b) KMTP 4% Retail 7% Pow
Slide 25: Natural Gas Pipeline of America
24 Natural Gas Pipeline of America KMI Segment Profile Transport natural gas to Chicago and other Midwest markets Over 10,000 miles of pipe and 200 bcf of storage with peak deliverability of 5.7 bcf/day Recent 3-5 year contract extensions with largest LDC customers NGPL 3rd party construction of gas
Slide 26: Power
25 Power Segment Profile Plan to develop power generating plants along gas pipelines Orion configuration - Innovative plant design that can be ramped up or down quickly – Little Rock, AK project with Southern Power Company (under construction) – Jackson, MI project to serve Detroit (under constructi
Slide 27: Retail
26 Retail KMI Segment Profile Provides natural gas to approximately 225,000 residential, commercial, industrial and agricultural customers in Nebraska, Colorado and Wyoming Promote choice gas, which un- Retail bundles supplier of gas from transporter 6-8% load growth on western slope of Colorado mit
Slide 28: Kinder Morgan Texas Pipeline
27 Kinder Morgan Texas Pipeline KMI Segment Profile Expected to be contributed to KMP in 4Q 2000 Processes, transports and sells natural gas within the Texas market More than 2,600 miles of pipe Primarily serves utilities and industrial customers in the Houston and southeast Texas area KM Texas Prov
Slide 29: KMI Growth Overview
28 KMI Growth Overview General Partner incentive structure will drive earnings growth in future – Internal growth on KMP’s pipes and terminals – Acquisition opportunities Growth in gas-fired power generation – Near-term opportunities for KMI Power earnings growth – Longer-term growth for NGPL
Slide 30: KMI Internal Growth
29 KMI Internal Growth KMI business segments provide growth going forward * Business Segment Comments KMP Internal KMI is expected to realize approximately 60% of KMP’s internal growth ($27-$36M per Page 17) Power & Other Expect significant growth, primarily from development of Orion power plants NG
Slide 31: KMI Benefits from KMP Acquisitions
30 KMI Benefits from KMP Acquisitions KMP Acquisition Economics * KMI Impact* 8.0X Purchase Price $1,000.0M GP Dist. on New Units $ 21.4M Debt Issued @ 7.4% $ 400.0M GP Share of Excess $ 16.1M Units Issued @ $48.75 12.3M GP Accretion on Units Owned (a) $ 2.8M Pretax Cash Flow $ 125.0M Less: Less: In
Slide 32: KMI - Acquisition Matrix
31 KMI - Acquisition Matrix For acquisitions completed at KMP, KMI stockholders receive a significant EPS contribution (a) * Value of Acquisitions 5.0X 6.5X 8.0X 9.5X $1000M $ 0.43 $ 0.29 $ 0.20 $ 0.14 $750M $ 0.33 $ 0.22 $ 0.15 $ 0.11 $500M $ 0.22 $ 0.15 $ 0.10 $ 0.07 Target $0.20 - 0.30 (a) Assume
Slide 33: KMI Going Forward
32 KMI Going Forward * Comfortable with analyst consensus of approximately $1.25 EPS for 2000 Now targeting higher end of previously announced 20 - 30% EPS growth for 2001 * The above figures regarding growth potential are based on various forward-looking assumptions made by the management of Kinder
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