Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Raymond James Institutional Investors Conference (March 2013)
36 slides from Kinder Morgan's conference presentation, Mar 5, 2013
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Kimberly Dang Chief Financial Officer March 5, 2013
Slide 2: Important Additional Information Will Be Filed With The SEC
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC Kinder Morgan Energy Partners, L.P. (the “Partnership”) has filed with the SEC a Registration Statement on Form S-4 that includes a prospectus of the Partnership and a preliminary proxy statement of Copano Energy, L.L.C. (“Copano”). The Reg
Slide 3: 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 4: 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 $40.2B (a) Cash Debt 11.4B (b) dividends to KMI 301MM (d) Management/ shareholders (C-corp) (29%) Original S/H Enterprise Value $51.6B 1,036 MM shares (a) 2013E Dividend per Share $1.57
Slide 5: 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 6: Unparalleled Asset Footprint
Kinder Morgan Unparalleled Asset Footprint 3rd largest energy company in North America with combined enterprise value of approximately $100 billion (a) Largest natural gas network in U.S. — Own an interest in / operate approximately 62,000 miles of natural gas pipeline — Connected to every impor
Slide 7: 17 Years of Consistent Growth at KMP
17 Years of Consistent Growth at KMP KMP Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (b) $4,000 $3,791 $6.00 $5.28 GP LP $4.98 $3,500 $3,230 $4.61 $5.00 $4.40 $3,000 $2,737 $4.20 $4.02 $2,450 (a) $4.00 $3.48 $2,500 $2,171 $3.13$3.26 $1,877 $2.87 $3.00 $2.63 $2,000 $2.44 $
Slide 8: Significant Historical Returns
Significant Historical Returns (a) KMP: 25% CATR Since ‘96 (b) KMI: 15% CATR Since Inception (e) $4,000 $150 KMI = $133 Dollars KMP = $3,661 Dollars RMZ = $129 $3,500 $125 $3,000 $100 $2,500 UTY= $123 S&P 500 = $120 $2,000 $75 $1,500 AMZ (d) = $1,180 $50 $1,000 $25 $500 ⇐ IPO 2/10/2011 S&P 500 = $27
Slide 9: 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 10: 2013 Budgeted Guidance
2013 Budgeted Guidance Supported by Diversified Cash Flow CO2 S&T CO2 Oil Production 6% KMI Budget: Natural Gas 14% Pipelines KMI 2013 dividend: $1.57/sh (12.1% growth) Terminals 12% 54% Fully-consolidated year-end 2013 debt / EBITDA = 5.0x (a) B KM Canada 3% 11% Products U Pipelines S CO2 S&T K
Slide 11: 5-year Project Backlog
5-year Project Backlog Over $12 Billion of Identified Growth Projects Tremendous footprint provides over $12B of growth opportunities over next 5 years (a) Approximate Growth Capex (a) ($B) Natural Gas Pipelines $2.7 Products Pipelines 0.7 Terminals 1.4 CO2 – S&T 1.5 CO2 – EOR (b) Oil Production 0.9
Slide 12: Vast Opportunity Set
Vast Opportunity Set Leverages Diverse Energy Themes Pipeline / terminal expansions for Oilsands export to Asia Cochin conversion/ reversal for Northeast power Oilsands dilluent demand growth Pipeline to be fueled by conversion / natural gas handling for shale liquids Terminals export coal handling
Slide 13: KMP / KMR
KINDER/MORGAN KINDER MORGAN ENERGY PARTNERS, L.P. KMP /KMR
Slide 14: KMP's Diversified Cash Flow
KMP’s Diversified Cash Flow Natural Gas Pipelines 2013E KMP Segment 62% interstate pipelines Earnings before DD&A 19% intrastate pipelines & storage = $5.4 billion (a) 19% gathering, processing & treating Products Pipelines CO2 S&T 55% pipelines 45% associated terminals & transmix Natural
Slide 15: KMP 2013 Growth Expenditure Budget
KMP 2013 Growth Expenditure Budget Without dropdowns With dropdowns = $2.9 billion (a,c,d) = $4.5 billion (b,c,d) CO2 Oil CO2 S&T CO2 S&T Production Natural Gas Natural Gas CO2 Oil Pipelines 6% Pipelines Production 9% 8% 13% 33% Terminals 15% 25% 58% Terminals 20% 13% Products Products Pipelines (b)
Slide 16: $30B of Growth Capital Invested at KMP
$30B of Growth Capital Invested at KMP (a,b,c) ($ in billions) Total Invested by Type (a,b,c) Total Invested by Year (a) $16 $5.5 $3.3 JV Contributions $5.1 (c) $12 $5.0 Expansion $4.5(d) $8 $15.0 $4.5 Acquisition $11.8 $4.0 $4 $3.5 $3.3 $- Expansions Acquisitions $3.0 $2.8 $2.5 $2.6 $2.5 $2.4 Total
Slide 17: 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 18: KMP to Purchase Copano for ~$5 Billion
KMP to Purchase Copano for ~$5 Billion Transaction Announced 1/29/2013 KMP announced a definitive agreement to acquire Copano — KMP to acquire all of Copano’s outstanding units — 100% unit-for-unit transaction; exchange ratio of 0.4563 KMP units per Copano unit — Subject to customary closing condi
Slide 19: 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 20: EPB
KINDER/MORGAN EL PASO PIPELINE PARTNERS j EPB
Slide 21: EPB System Map
EPB System Map Pipelines: 100% Wyoming Interstate Co. (WIC) 100% Colorado Interstate Gas (CIG) 100% Cheyenne Plains (CPGP) 100% Southern Natural Gas (SNG) 100% Elba Express (EEC) LNG: 100% Southern LNG (SLNG) 21
Slide 22: 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 23: KMI
KINDER/MORGAN INC. KINDER MORGAN KMI
Slide 24: KMI Remaining Assets Available For Dropdown
KMI Remaining Assets Available For Dropdown Plan to move all assets to KMP / EPB over time, except NGPL 24
Slide 25: 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 ~11% of total limited partner (LP) interests • EPB: – GP inter
Slide 26: 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 27: Summary
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 28: Appendix
KINDER/MORGAN Appendix
Slide 29: 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 30: 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 31: Natural Gas Pipelines
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $2.7 billion of identified growth projects over next five years (a), including: — TGP Northeast upgrade — LNG liquefaction (FTA @ Gulf & Elba Island) — SNG / E
Slide 32: Products Pipelines
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $0.7 billion of identified growth projects over next two years (a), including: — Cochin reversal & diluent conversion — Condensate processing — Sweeney lateral — Parkway Long-term Growth
Slide 33: Terminals
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Project Backlog: $1.4 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 34: CO2 Segment Outlook
CO2 Segment Outlook Own and operate best source of CO2 for EOR (a) Project Backlog: Identified growth projects totaling $1.5 billion and $0.9 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 35: Kinder Morgan Canada
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 36: Kinder Morgan
KINDER/MORGAN
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