Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Deutsche Bank MLPs and Natural Gas Conference 2017
52 slides from Kinder Morgan's conference presentation, May 9, 2017
Slide 1: Run for Shareholders, By Shareholders
Run for Shareholders, By Shareholders David Michels Vice President Finance & IR May 9, 2017
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
Forward-Looking Statements / Non-GAAP Financial Measures This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements are identified a
Slide 3: Unparalleled Asset Footprint
Unparalleled Asset Footprint One of the Largest Energy Infrastructure Companies in North America Largest natural gas network in North America — Own or operate ~70,000 miles of natural gas pipeline — Connected to every important natural gas resource play in the U.S. Largest independent transporte
Slide 4: KMI Overview
KMI Overview Management Aligned with Investors; 14% Stake in KMI Simple Public Structure Management & Public Directors(a) Float ~319MM (14%) ~1,920MM (86%) Kinder Morgan, Inc. Simple Structure: (C-corp, NYSE: KMI) One equity base and dividend Market Equity $46.7B(b) One debt rating Net Debt 37.8
Slide 5: Our Strategy
Our Strategy Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments — Fees largely independent of underlying commodity prices and substantially secured by take- or-pay contracts Maintain a strong balance sheet — Our
Slide 6: Capital Invested
Capital Invested ~$59 Billion of Asset Investment & Acquisitions Since Inception(a,c) ($ in billions) Total Invested by Type(a,c) Total Invested by Year(b,c) $35 $11 $30 Expansion $10.1 $25 $10 Acquisition $20 $9 $15 $31.4 $8.4 $27.3 $10 $8 $5 $7 $6.6 $- Expansions Acquisitions $6 $5.8 $5 Total Inve
Slide 7: Returns on Invested Capital
Returns on Invested Capital Segment ROI(a): 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Natural Gas Pipes 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% 10.9%(b) 10.9%(b) 10.3%(b,c) 9.9%(b,c) Products Pipelines 11.9 11.8 12.8 12
Slide 8: 2017 Guidance
2017 Guidance Supported by Diversified, Fee-based Cash Flow 2017 Published Budget DCF of $4.46 billion(a) — 2017 DCF per share of $1.99 — 2017 declared dividend of $0.50 per share — ~$3.3 billion of DCF generated in excess of dividend (before growth capex) Growth capital of $3.2 billion includin
Slide 9: Segment Overview
Segment Overview 93% Pipelines & Terminals Natural Gas Pipelines 73% interstate pipelines 2017 Budgeted Segment 9% intrastate pipelines & storage EBDA = $7.7 billion(a) 18% gathering, processing & treating — 88% fixed-fee (~27% of which is take-or-pay) CO2 KM Products Pipelines S&T Canada CO2
Slide 10: Capacity Utilization
KMI Overview by Product Served(a) Natural Gas is our Largest Market Stability of Cash Flows Natural gas: ~80% take-or-pay cash flow Refined products: competitively advantaged connection NGLs Other between refineries and end markets CO2 — SFPP, Plantation, etc., ~61% of KMT liquids business Crude
Slide 11: KMI's High Quality Cash Flow
KMI’s High Quality Cash Flow Not all “fee-based” cash flow is created equal 2017 Budgeted Segment Composition of 91% EBDA = $7.7 billion(a) Fee-based Cash Flow CO2 S&T $0.2 3% Commodity- /Other 6% Hedged based <1% $0.5 Terminals Cash Flow 6% 25% Fee- Products Pipelines 10% Other 72% based Cash $1.9
Slide 12: 5-year Growth Project Backlog
5-year Growth Project Backlog(a) ~$12 Billion of Attractive, Fee-based Projects World class asset footprint has driven attractive growth opportunities, secured by long-term, fee-based contracts with creditworthy counterparties — ~88% of backlog is for fee-based pipelines, terminals and associated
Slide 13: Market Update
Market Update Strong Demand Natural Gas Refined Products Continued steady, modest volume growth Multiple trends driving increased demand for U.S. natural gas Inflation-based tariff adjustment mechanism 2014 2015 2016E 2017E 2018E 16 Power Nat gas-share 28% 33% 34% 32% 32% U.S. Refined Product
Slide 14: Natural Gas Transportation & Storage
Natural Gas Transportation & Storage 55% of 2017 Budgeted Segment EBDA before Certain Items(a) Natural gas transport & storage is KMI’s largest business U.S. natural gas demand(b) expected to rise by 35% through 2026(c) U.S. Natural Gas — KM moves about 40% of natural gas consumed in the U.S. Supp
Slide 15: Business Risks
Business Risks Regulatory — FERC rate cases (Products pipelines and Natural Gas pipelines) — Legislative and regulatory changes CO2 crude oil production volumes Throughput on our volume-based assets Commodity prices — 2017 budget price assumptions: $53/Bbl average strip price for crude, and
Slide 16: The Best is Yet to Come
The Best is Yet to Come Positioned to Succeed for the Long-Term World class set of midstream assets Secure and growing fee-based cash flows Disciplined allocator of capital; high bar for new investment opportunities Investment grade balance sheet and substantial liquidity As future cash fl
Slide 17: Appendix
KINDERMORGAN Appendix
Slide 18: Energy Toll Road
Energy Toll Road Security of Cash Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada – Interstate & LNG: take-or-pay – Liquids & Jones Act: – Refined products: – S&T: primarily – Intrastate: ~77% take-or-pay(a,b) primarily take-or-pay Volume primarily volume-based minimum
Slide 19: Asset Integrity and Safety are Top Priorities
Asset Integrity and Safety are Top Priorities Consistent, Better-than-industry Performance Across our Businesses Safe operation of our assets is mission critical to our long-term success Continuous reduction in risk to the public, employees, contractors, assets and the environment We strive fo
Slide 20: Incidents & Releases: Liquids Pipeline Right-of-way
Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipelines Liquids Pipelines Incidents per 1,000 Miles(a) Release Rate(a) 1.0 50 Barrels per billion barrel miles 0.8 40 Incidents per 1,000 Miles 0.6 0.57 30 0.45 0.39 0.4 20 17.96 0.29 15.50 0.24 13.05 0.21 0.2 0.16 0.15 10 6.00 0.08 0.08 0
Slide 21: Incidents & Releases: Natural Gas Pipeline Right-of-way
Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipelines Natural Gas Pipelines Incidents Rate All Reportable Incidents(a) Incidents Rate Onshore Ruptures-only(c) 1.0 0.5 0.8 0.4 Incidents per 1,000 Miles Incidents per 1,000 Miles 0.6 0.3 0.45 0.41 0.4 0.37 0.37 0.2 0.32 0.27 0.27
Slide 22: Employee Safety Statistics
Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate 4 7 Lost-time injuries per 200k hours 6.4 OSHA Recordable Incidents per 3.6 6 6.0 200k Hours Worked 3 5 worked 4 2 3 2.5 2.6 2.5 2.5 2 1.8 1 0.9 0.6 1.3 1.3 0.5 0.5 1.1 0.9 1.0 1 0.8 0.7 0.4 0.5 0.6 0.7 0.9
Slide 23: Natural Gas Pipelines Segment Outlook
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resources with major demand centers Long-term Growth Drivers: LNG exports — Liquefaction facilities — Pipeline infrastructure Exports to Mexico Gas demand for power generation — Coal plant retirements — Regional g
Slide 24: New Firm Transport Capacity
Natural Gas Pipelines New Firm Transport Capacity Significant Contracting of Existing & New Capacity __________________________ (a) As of 1/1/2017. 24
Slide 25: Drivers of Future Growth: LNG Exports
Natural Gas Pipelines Drivers of Future Growth LNG Exports LNG Export Opportunity(a) Contracted KM Project/Transportation Capacity In-Service KM Capital — 18.5 Bcf/d of FERC approved projects KM Asset (Terminal) (MDth/d) Date ($MM) — 10.3 Bcf/d of projects under construction NGPL Firm Transport (S
Slide 26: Liquefaction at Elba Island
Natural Gas Pipelines Liquefaction at Elba Island Elba Liquefaction Company (ELC) / SLNG Capacity: — LNG output capacity equivalent to 350 MMcf/d Capital (100%): — ELC: $1,436.4 MM — SLNG: $433.8 MM Phased In-service: Mid 2018 through early 2019 Project Scope: — Facilities for liquefaction (
Slide 27: Drivers of Future Growth: Exports to Mexico
Natural Gas Pipelines Drivers of Future Growth Kinder Morgan Delivers ~76% of U.S. Exports to Mexico Exports to Mexico are forecasted to increase by 2.0 Bcf/d Contracted KM to 5.6 Bcf/d by 2021(a) KM Project / Transportation Capacity Capital KM Asset (Shipper) (MDth/d) In-Service Date ($MM) KM d
Slide 28: Drivers of Future Growth: Other
Natural Gas Pipelines Drivers of Future Growth Other Power generation — Continued trend of generators procuring firm transportation and storage services to ensure their performance in ISO capacity reliability programs — Increasing need for transportation, storage and ancillary services to backstop
Slide 29: Contracted Capacity and Term by Region
Natural Gas Pipelines Contracted Capacity and Term by Region Contracted Average Term Region Capacity Remaining Storage 355 Bcf 3 yr, 1 mo North Transport 19.7 Bcf/d 6 yr, 2 mo Storage 52 Bcf 1 yr, 8 mo Interstate South Transport 13.5 Bcf/d 7 yr, 8 mo Transport Contracts LNG 18 Bcf 15 yr, 5 mo Avg. =
Slide 30: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Stable, Strategic Assets Long-term Growth Drivers: Miles of Pipe: ~9,760 Transmix: 5 facilities Increased demand for refined products Terminals: 67 Condensate Processing: volumes Tank Capacity: Capability of 100 MBbl/d Terminal ~42 MMBbls 2016 Throughput: Devel
Slide 31: Products Pipelines Stability and Growth
Products Pipelines Stability and Growth(a) Refined Products(b): U.S. Refined Product Consumption(c) 2016: — Refined products volumes 1,651 MBbl/d, up 0.3% vs. 2015 10 Motor Gasoline Distillate Fuel Oil Jet Fuel — Gasoline up 1.2%, diesel down 3.5%, jet fuel up 1.7% 9 2017: 8 — 1,676 MBbl/d budge
Slide 32: Utopia Pipeline Project
Products Pipelines Utopia Pipeline Project Project Scope — 50/50 JV with Riverstone Holdings closed on June 28, 2016 — 215 mile new build and existing 67 mile 12” pipeline — Will transport ethane and ethane-propane mix from points in Harrison County, Ohio to Windsor, Ontario, Canada — Supported by
Slide 33: Terminals Segment Outlook
Terminals Segment Outlook Diversified terminaling system in key refinery / market hubs KM Terminal Facilities Long-term Growth Drivers Bulk(b) 37 Terminals Refined product supply and demand Liquids 51 Terminals growth Total KMT 88 Terminals KMPP 67 Liquid Terminals Gulf Coast liquids exports Tot
Slide 34: Terminals: Stable Fee-Based Business
Terminals Stable Fee-Based Business ~2/3 of KMT’s 2017 budgeted EBDA is supported by take-or-pay contracts 100% 90% Liquids Other Fee- 73% Take-or-pay based - fixed monthly lease 80% 27% payments (MWC) - minimum throughput Take-or- 70% guarantees Pay - Jones Act tanker charters Liquids 73% 60% 81%
Slide 35: Terminals: Diversified Revenues
Terminals Diversified Revenues Diversified revenues across liquids and bulk KMT Product Revenues $ millions 2017 Budget(a) ($ millions) (percent) $0 $100 $200 $300 $400 $500 $600 Liquids $1,426 74% Gasoline Crude Bulk $500 26% Diesel / Jet Total Revenue $1,926 100% Chemicals Petcoke Top-10 Ethanol
Slide 36: KMT Presence in Liquids Hubs
Terminals KMT Presence in Liquids Hubs North 40 Edmonton South Alberta Crude Terminal Rail Edmonton South Rail Terminal KMT Liquids 90 million Bbls of capacity Van Wharves Edmonton ~1.0 billion Bbls throughput Alberta 97.5% utilization(a) $1.43 billion revenues $957 million EBDA Tankers Ed
Slide 37: High Demand Liquids Hubs
Terminals High Demand Liquids Hubs Critical infrastructure to industry and our customers, 100% contracted Houston Ship Channel – largest integrated refined product terminaling system in the world New York Harbor – global refined product clearing hub with liquid, transparent markets Edmonton –
Slide 38: Tankers – APT Jones Act Fleet
Terminals Tankers – APT Jones Act Fleet All of APT’s available vessels are sailing under time-charter with limited 2017 exposure Average term contract length of 2.8 0 12 KM 24 Fleet Charter 36 Status 48 60 72 years across 16-vessels Palmetto State 4 new vessels to be delivered in ‘17 American Fr
Slide 39: CO2 Segment Outlook
CO2 Segment Outlook(a) Own and operate best source of CO2 for EOR Long-term Growth Drivers: Demand for scarce supply of CO2 drives volume and price Expect to maintain current CO2 production levels with minimal incremental investment Billions of barrels of domestic oil still in place to be reco
Slide 40: KM CO2 Current Outlook
CO2 KM CO2 Current Outlook $4.7 Billion Cumulative Free Cash Flow Generated Since Inception(a) Development Plans 2017-2026 SACROC Total Business IRR (2000-2026): 28.2% — Continue platform development/redevelopment Net BOE(b) KM Share — Expand Bypass Pay/Infill programs 2017-2026 (MMBOE) Capex ($
Slide 41: 2017 Projects – Price Sensitivity
CO2 2017 Projects – Price Sensitivity AT IRR % vs Oil Price $50 $53 $60 Forward $/Bbl flat flat flat Curve(a) SACROC-Bypass (Long Lateral) 27% 32% 44% 37% SACROC-Bypass (Sidetrack Lateral) 41% 47% 61% 50% SACROC Hawaii 14% 19% 30% 22% Yates Horizontal Drain Hole Program 65% 73% 96% 75% Tall Cotton P
Slide 42: Kinder Morgan Canada Segment Outlook
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia — Following successful regulatory process, major expansion plans Trans Mountain Expansion Project under way — The Tra
Slide 43: Trans Mountain Expansion Project (TMEP)
KM Canada Trans Mountain Expansion Project (TMEP) Only Oilsands Pipeline Serving the West Coast Expansion to 890 MBbl/d from 300 MBbl/d today Western Canada Supply vs Takeaway Capacity (MMBbl/d)(a) — 615 miles new pipe; 12 new pump stations 6.5 — 630 MBbl/d tanker export capacity; 3 new berths 6.0
Slide 44: Two Decades of Stable Growth
Two Decades of Stable Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP DCF per Unit(a) KMI Annual DCF per Common Share $6 $2.50 $5.39 $5.61 $5.07 $5 $4.68 $4.43 $2.00 $2.14 $4.15 $4.25 $2.02 $2.00 $1.99 $4 $3.65 $3.38 $3.29 $1.50 $3.10 $1.65 $3 $2.54 $2.69 $1.46 $2.18 $1.00 $1.22
Slide 45: KMI Counterparty Exposure
KMI Counterparty Exposure Strong Customer Credit, Valuable Services Limit KMI’s Risk(a) High-Quality, Diversified Customer Base Top 25 Customers(b) KMI’s 2016 DCF was impacted by less than $10 million due to oil & gas bankruptcies A- Rated or BBB Rated Greater than 2/3 of revenue(b) generated by
Slide 46: 2017 Growth Capital Forecast
2017 Growth Capital Forecast (millions) 2017 budgeted growth capital fully funded by internally generated cash flow, with no requirement to access capital markets 2017 2016 (a) Growth capital Forecast Actual Natural Gas Pipelines $ 1,812 $ 1,304 CO2 - S&T 52 (2) CO2 - EOR 372 265 Products Pipeline
Slide 47: Credit Ratios and Liquidity
Credit Ratios and Liquidity(a) ($ in millions) 2017 Leverage metrics 2013 2014 2015 2016 Forecast (b) Net debt to Adjusted EBITDA 5.0x 5.5x 5.6x 5.3x 5.4x Adjusted EBITDA to Interest, net 3.9x 4.1x 3.5x 3.6x 3.8x (c) (d) Revolver capacity Long-term debt maturities Committed revolving credit facility
Slide 48: 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 (DCF), both in the aggregate and per share, segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investments
Slide 49: GAAP Reconciliation
GAAP Reconciliation ($ in millions) Yr. Ended Yr. Ended Reconciliation of DCF 12/31/16 Reconciliation of Adjusted EBITDA 12/31/16 Net Income $ 721 Net Income $ 721 Certain Items 933 Certain Items 933 Net Income before Certain Items (Adjusted Earnings) 1,654 Net Income before Certain Items (Adjusted
Slide 50: Notes
Notes KINDERMORGAN 50
Slide 51: Notes
Notes KINDERMORGAN 51
Slide 52: Kinder Morgan
KINDER/MORGAN
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