Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Credit Suisse 2013 Energy Summit
36 slides from Kinder Morgan's conference presentation, Feb 5, 2013
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Steve Kean Chief Operating Officer February 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”) plans to file with the SEC a Registration Statement on Form S-4 in connection with the transaction. The Partnership and Copano Energy, L.L.C. (“Copano”) plan to file with the SEC and C
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: 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 5: Copano Acquisition
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 6: EP Acquisition
EP Acquisition Initial management guidance: Commitment achieved: Close EP acquisition in 2Q 2012 Acquisition completed 5/25/2012 Identified and implemented year-one cost savings Targeted cost savings of $350 million of more than $400 million Completed sale of EP E&P business as one Sell EP E&P asset
Slide 7: Unparalleled Asset Footprint
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 important U.S. natu
Slide 8: 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 $40.8B (a) Cash Debt 11.4B (b) dividends to KMI 301MM (d) Management/ shareholders (C-corp) (29%) Original S/H Enterprise Value $52.2B 1,036 MM shares (a) 2013E Dividend per Share $1.57
Slide 9: 17 Years of Consistent Growth at KMP
17 Years of Consistent Growth at KMP KMP Total Distributions (GP + LP) ($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 10: Promises Made, Promises Kept
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 distribution 2002: $2
Slide 11: 2013 Budget Guidance
2013 Budget 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 KMP
Slide 12: 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 13: 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 conversions / natural gas handling for shale liquids Terminals export coal handling
Slide 14: Natural Gas Pipelines Segment Outlook
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 15: Products Pipelines Segment Outlook
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 16: Terminals Segment Outlook
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 17: 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 18: 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 19: KMP / KMR
KINDER/MORGAN KINDER MORGAN ENERGY PARTNERS, L.P. KMP /KMR
Slide 20: 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 21: 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 22: $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 23: 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 24: EPB
KINDER/MORGAN EL PASO PIPELINE PARTNERS j EPB
Slide 25: 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) 25
Slide 26: 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 27: KMI
KINDER/MORGAN INC. KINDER MORGAN KMI
Slide 28: KMI Remaining Assets Available For Dropdown
KMI Remaining Assets Available For Dropdown Plan to move all assets to KMP / EPB over time, except NGPL 28
Slide 29: 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 30: 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 31: Summary
Summary KMI, KMP, KMR & EPB: Attractive Value Proposition Unparalleled asset footprint Highly visible, attractive dropdown inventory Long-term Growth Rates (a) Significant, identified growth Next 3 to 5 Years (2012+) opportunities KMP = ~5-6% Attractive returns driven by EPB = ~5-6% comb
Slide 32: Appendix
KINDER/MORGAN Appendix
Slide 33: KMR 101
KMR 101 Discount Has Narrowed (Again), But Still Wide 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 a
Slide 34: 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 35: 2013 Business Segment Growth Drivers
2013 Business Segment Growth Drivers Natural Gas Pipelines Terminals Full-year of EP acquisition Expansion projects: coal, Edmonton Expansions Canadian crude tankage, BOSTCO, BP Whiting Dropdowns Increase in contracted rates on Cost savings existing business Full-year of 2012 acquisiti
Slide 36: KINDER/MORGAN
KINDER/MORGAN