Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Wells Fargo Securities 2016 Pipeline, MLP, and Utility Symposium
40 slides from Kinder Morgan's conference presentation, Dec 6, 2016
Slide 1: Run for Shareholders, By Shareholders
Run for Shareholders, By Shareholders Steve Kean Chief Executive Officer December 6, 2016
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: 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 cash in excess of dividend (before growth capex) Growth capex of $3.2 billion in expansions and J
Slide 4: Trans Mountain Expansion Update
Trans Mountain Expansion Update Project Supported by Binding Long-term Contracts November 29, 2016 – the Trans Mountain Expansion Project (TMEP) received final Trans Mountain Expansion Project (TMEP) approval from the Government of Canada Next steps (expected by end of 1Q 2017): — Granting of pr
Slide 5: Unparalleled Asset Footprint
Unparalleled Asset Footprint Largest Energy Infrastructure Company in North America World class asset footprint: Largest natural gas pipeline network in North America — Own an interest in / operate over 69,000 miles of natural gas pipeline — Connected to every important U.S. natural gas resource p
Slide 6: KMI Overview
KMI Overview Management Aligned with Investors; 14% Stake in KMI Simple Public Structure Management / Public Original S/H(a) Float ~319MM (14%) ~1,920MM (86%) Simple Structure: One equity base Kinder Morgan, Inc. (C-corp, NYSE: KMI) One dividend policy Market Equity $51.3B(b) One debt rating N
Slide 7: 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 Maintaining a strong balance sheet is paramount — Our primary investing entity has been investment grade for our entire 19-year history — Reduced d
Slide 8: Capital Invested
Capital Invested ~$54 Billion of Asset Investment & Acquisitions Since Inception(a,c) ($ in billions) Total Invested by Type(a,c) Total Invested by Year(b,c) $30 $28.8 $25.0 $11 $25 Expansion $20 $10 $9.8 Acquisition $15 $9 $10 $8 $5 $- $7 $6.5 $6.6 Expansions Acquisitions $6 $5.8 Total Invested by
Slide 9: Returns on Invested Capital
Returns on Invested Capital Consistent Returns Demonstrate Asset Performance, Management Discipline Segment ROI(a): 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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)
Slide 10: 19 Years of Stable Growth
19 Years of Stable Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP DCF per Unit(a) KMI Annual DCF per Common Share $6 $5.61 $2.50 $5.39 $5.07 $2.14 $4.68 $2.00 $2.01 $5 $4.43 $2.00 $4.15$4.25 $1.65 $4 $3.65 $1.46 $3.38$3.29 $3.10 $1.50 $1.22 $3 $2.69 $2.54 $2.18 $1.00 $1.78 $2 $
Slide 11: Segment Overview
Segment Overview 2016 Budgeted Segment Natural Gas Pipelines 72% interstate pipelines EBDA = $8.0 billion(a) 20% gathering, processing & treating — 87% fixed-fee(b) — 13% other CO2 S&T KM Canada 8% intrastate pipelines & storage CO2 Oil 4% 2% Products Pipelines Production 60% refined product
Slide 12: KMI's High Quality Cash Flow
KMI’s High Quality Cash Flow Not all “fee-based” cash flow is created equal 2016 Budgeted Segment Composition of 91% EBDA = $8.0 billion(a) Fee-based Cash Flow 3% Commodity- CO2 S&T based $0.3 / Other 6% Hedged $0.5 Terminals <1% Cash Flow 5% 24% Fee- Products 9% Other based Cash $1.9 Pipelines 74%
Slide 13: Natural Gas Transportation & Storage
Natural Gas Transportation & Storage 57% of KMI 2016 Budgeted Segment EBDA(a) Natural gas transport & storage is KMI’s largest business U.S. Natural Gas Supply & Demand(a) (Bcf/d) U.S. natural gas demand expected to rise 35% through 2025(b) Increase Demand 2015 2020 2025 5-yr 10-yr KM moves abou
Slide 14: Liquids Transportation, Storage & Handling
Liquids Transportation, Storage & Handling 33% of KMI 2016 Budgeted Segment EBDA(a) Strong Fundamentals & Demand Drivers Highlighting Asset Utilization Stable refined products demand: vital pipeline network connecting refinery / port Location matters, contracts matter hubs to stable / growing de
Slide 15: Market Update: Natural Gas & Natural Gas Liquids
Market Update Natural Gas & Natural Gas Liquids Natural Gas(a) NGLs(b) U.S. natural gas-fired power generation Significant NGL supply growth driving — In 2016, SNG recorded its five highest power gen infrastructure development days ever — NGL exports projected to be 1.3 MMBbl/d by 2018, a — Week
Slide 16: Market Update (Cont'd): Crude Oil & Refined Products
Market Update (Cont’d) Crude Oil & Refined Products Refined Products(a) Crude Oil Continued steady, modest volume growth Oil price decrease leading to curtailed U.S. production(b) Inflation-based tariff adjustment mechanism U.S. Monthly Oil Production (MMBbl/d) 10.0 U.S. Refined Product Consum
Slide 17: KMI Counterparty Exposure
KMI Counterparty Exposure Strong Customer Credit Profiles Limit KMI’s Risk(a) High-Quality, Diversified Customer Base Estimate approximately 2/3 of revenue(b) generated by end-users (utilities, LDCs, refineries, chemical, large integrateds, etc.) KMI’s average customer represents less than 0.10%
Slide 18: 5-year Growth Project Backlog
5-year Growth Project Backlog(a) ~$13 Billion of Attractive, Fee-based Projects World class asset footprint has helped secure growth projects with attractive returns, and secured by long-term, fee-based contracts with creditworthy counterparties — ~87% of backlog is for fee-based pipelines, termin
Slide 19: Business Risks
Business Risks Regulatory — Products Pipeline FERC rate cases — Natural Gas FERC rate cases — Legislative and regulatory changes CO2 crude oil production volumes Throughput on our volume-based assets Counterparty credit Commodity prices — 2016 budget price assumptions: $38/Bbl average stri
Slide 20: KMI: Attractive Value Proposition
KMI: Attractive Value Proposition Unparalleled asset footprint Stable, fee-based cash flows Strong and improving investment grade balance sheet $13 billion of capital committed to attractive growth projects No need to access capital markets to fund growth projects Experienced management
Slide 21: Appendix
KINDERMORGAN Appendix
Slide 22: 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: ~73% take or pay(a,b) primarily take or pay Volume primarily volume-based minimum
Slide 23: 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 0.16 10 6.00 0.08 0.08 2
Slide 24: 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 0.4 0.37 0.2 (d) 0.16 0.32 0.27 0.27
Slide 25: Employee Safety Statistics
Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate 4 3.7 7 6.4 Lost-time injuries per 200k hours OSHA Recordable Incidents per 6 6.1 200k Hours Worked 3 5 4 worked 2 3 2.5 2.6 2.5 2.5 1.0 2.0 1.8 1.8 1 2 0.7 0.7 0.7 0.9 1.0 1 1.7 0.8 0.6 0.6 0.6 0.6 0.5 1.5
Slide 26: 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: Shale-driven expansions / extensions LNG exports — Liquefaction facilities — Pipeline infrastructure Gas demand for power generation — Coal plant retir
Slide 27: Contracted Capacity and Term by Region
Natural Gas Pipelines Contracted Capacity and Term by Region(a) Contracted Avg. Term Region Service Capacity Remaining Storage 356 Bcf 3 yrs., 7 mos. North Transport 19.1 Bcf/d 5 yrs., 7 mos. Storage 52 Bcf 1 yrs., 10 mos. Interstate South Transport 13.0 Bcf/d 7 yrs., 11 mos. Transport Contracts LNG
Slide 28: Products Pipelines Segment Outlook
Products Pipelines Segment Outlook Stable refined product demand; opportunities for growth from increased liquids production Long-term Growth Drivers: Miles of Pipe: ~9,900 Transmix: 5 facilities with process capability of Increased demand for refined product volumes Terminals: 69 22.5 MBbl/d(b)
Slide 29: Historical Demand and 2016 EIA Outlook
Products Pipelines Historical Demand and 2016 EIA Outlook(a) U.S. Refined Product Consumption U.S. Refined Product Demand Outlook 2014 2015 2016E (MMBbl/d) 10 Mogas 0.9% 2.6% 1.1% 9 Distillate 5.5% -1.9% 2.1% 8 Jet Fuel 2.5% 4.8% -0.5% 7 Total – EIA 2.3% 1.6% 1.2% 6 5 KM 3.5% 3.1% 1.9% 4 3 2 FERC Ta
Slide 30: Terminals Segment Outlook
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Long-term Growth Drivers: KM Terminal Facilities* Refined product supply and demand Bulk 59 Terminals growth Liquids 52 Terminals Total KMT 111 Terminals Gulf Coast liquids exports KMPP 69 Liquid Terminals Chem
Slide 31: Terminals Segment
Terminals Terminals Segment 76% of Terminals 2016 Budgeted Segment EBDA is Liquids-based(a) Terminals 2016 Budgeted Segment EBDA(a) Liquids Revenue(b) 79% of liquids revenues secured by 100% take-or-pay contracts Other — Fixed monthly advanced lease Volume- 1% payments for use of our assets 90% ba
Slide 32: Houston Ship Channel
Terminals Houston Ship Channel Market: World’s largest integrated refined product terminaling system Infrastructure: 43 million barrels of capacity connected to 10 refineries Customers: Refiners, integrated majors, international traders, chemical producers, wholesale marketers Greensport Crude by Ra
Slide 33: 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 34: 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 — The Trans Mountain Pipeline Expansion Project (TMEP) would more than double capacity, from 300 MBbl/d currently to
Slide 35: 2016 Budgeted Growth Capital
2016 Budgeted Growth Capital (millions) 2016 2015 (a) Growth capital Forecast Actual Natural Gas Pipelines $ 1,190 $ 1,528 CO2 - S&T - 163 CO2 - EOR 257 449 Products Pipelines 209 431 Terminals 954 854 Kinder Morgan Canada 113 105 Corporate/Other - 2 (a) Subtotal - growth capital excl. large acquisi
Slide 36: Credit Ratios and Liquidity
Credit Ratios and Liquidity(a) ($ in millions) 2016 Leverage metrics 2012 2013 2014 2015 Forecast (b) Net debt to Adjusted EBITDA 5.4x 5.0x 5.5x 5.6x 5.3x Adjusted EBITDA to interest 4.0x 3.9x 4.1x 3.5x 3.6x (c) (d,e) Revolver capacity Long-term debt maturities Committed revolving credit facility $
Slide 37: 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 38: GAAP Reconciliation
GAAP Reconciliation ($ in millions) 2015 2015 Reconciliation of DCF Actual Reconciliation of Adjusted EBITDA Actual Net income $ 208 Net income $ 208 Certain items 1,441 Certain items 1,441 Net income before certain items 1,649 Net income before certain items 1,649 DD&A 2,360 Book taxes (b) 976 (a)
Slide 39: Notes
Notes KINDERMORGAN 39
Slide 40: KINDER/MORGAN
KINDER/MORGAN
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