Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Mitsubishi UFJ Securities Oil & Gas Conference 2012
41 slides from Kinder Morgan's conference presentation, May 10, 2012
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Peter Staples Director Investor Relations May 10, 2012
Slide 2: Important Additional Information Will Be Filed With the SEC
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC Kinder Morgan, Inc. (“KMI”) has filed with the SEC a Registration Statement on Form S-4 in connection with the proposed transaction including a definitive Information Statement/Prospectus of KMI and a definitive Proxy Statement of El Paso C
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures KMP The non-generally accepted accounting principles ("non-GAAP") financial measures of distributable cash flow before certain items (both in the aggregate and per unit), segment earnings before depreciation, depletion, amortization and amortization of excess cost
Slide 4: Use of Non-GAAP Financial Measures – Cont'd
Use of Non-GAAP Financial Measures – Cont’d "Certain items" are items that are required by GAAP to be reflected in net income, but typically either (1) do not have a cash impact, for example, goodwill impairments, allocated compensation for which we will never be responsible, and results from assets
Slide 5: Use of Non-GAAP Financial Measures – Cont'd
Use of Non-GAAP Financial Measures – Cont’d KMI The non-generally accepted accounting principles, or non-GAAP, financial measure of cash available to pay dividends is presented in this news release. This non-GAAP financial measure should not be considered as an alternative to a GAAP measure such as
Slide 6: Kinder Morgan: Three Ways to Invest
Kinder Morgan: Three Ways to Invest Kinder Morgan Energy Partners, L.P. Kinder Morgan, Inc. Market Equity $27.3B (a) LP & GP Market Equity $25.4B (d) Debt 12.6B (b) Distributions Debt 3.2B (e) Enterprise Value $39.9B $1.6B (c) Enterprise Value $28.6B 2012E LP Distribution per Unit $4.98 (c) 2012E Di
Slide 7: KMR 101
KMR 101 (a) KMR is KMP KMR Discount to KMP KMR shares are pari passu with KMP units 10% KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment 5% program (b) Like KMP units, KMR shares are tax efficient — but with 0% simplified tax repor
Slide 8: Our Strategy: Stay the Course
Our Strategy: Stay the Course Same Strategy Since Inception Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments Control costs — It’s the investors’ money, not management’s – treat it that way Leverage asset foo
Slide 9: Asset Footprint
Asset Footprint Largest independent transporter of petroleum products in the U.S. — Transport ~1.9 MMBbl/d (a) 2nd largest transporter of natural gas in the U.S. — Own an interest in / operate over 25,000 miles of natural gas pipeline — Connected to many important natural gas shale plays includi
Slide 10: 16 Years of Consistent Growth
16 Years of Consistent Growth Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (b) $4.98 $3,500 $5.00 $4.61 $3,118 $4.40 GP LP $4.50 $4.20 $3,000 $2,737 $4.02 $4.00 $2,450(a) $3.48 $2,500 $2,171 $3.50 $3.13 $3.26 $2.87 $1,877 $3.00 $2.63 $2,000 $2.44 $1,469 $2.50 $2.15 $1,500
Slide 11: Significant Historical Returns
Significant Historical Returns (a) KMP: 26% CATR Since ‘96 (b) KMI: 25% CATR Since ‘11 IPO (e) $4,000 $140 Dollars KMP = $3,306 Dollars KMI = $124 $3,500 MSCI = $118 $120 $3,000 $100 $2,500 UTY = $117 $80 S&P 500 = $108 $2,000 $60 $1,500 AMZ (d) = $1,046 $40 $1,000 $500 $20 ⇐ IPO 2/10/2011 S&P 500 =
Slide 12: Promises Made, Promises Kept
Promises Made, Promises Kept Promises Made Promises Kept KMP Budgeted KMP Actual LP Distribution: LP Distribution: 2000: $1.60 2000: $1.71 2001: $1.95 2001: $2.15 2002: $2.40 2002: $2.435 2003: $2.63 2003: $2.63 KMP achieved 2004: $2.84 2004: $2.87 LP distribution 2005: $3.13 2005: $3.13 target in 1
Slide 13: Kinder Morgan 2012 Goals (Excludes El Paso)
Kinder Morgan 2012 Goals (Excludes El Paso) KMP (a) KMI (a,b) Distribution Target Dividend Target (declared) — $4.98 per unit (8.0% growth) — $1.35 per share (12.5% growth) — Excess coverage of $71MM — $985MM in cash available for dividends Maintain Solid Balance Sheet Maintain Solid Balance
Slide 14: KMP
KINDER/MORGAN KMP
Slide 15: Diversified Cash Flow
(KMP) Diversified Cash Flow 2012E KMP Segment Earnings before DD&A CO2 = $4.4 billion (a,d) Natural Gas Pipelines $1,381MM segment EBDA $1,303MM segment EBDA (d) — 26% CO2 transport and sales — 41% Interstate — 74% oil production related — 59% Intrastate (e) — Production hedged (b): 31% 30% 2012
Slide 16: 2012 Growth Expenditure Forecast
(KMP) 2012 Growth Expenditure Forecast 2012E Total KMP Growth Expenditures = $2.2 billion (a,b,c) CO2 Oil Production Natural Gas Pipelines (a,c) CO2 S&T (c) 15% 29% 8% 31% 17% Terminals (a,c) Products Pipelines (a,b) __________________________ Note: excludes any impact from the proposed acquisition
Slide 17: Natural Gas Pipelines Segment
(KMP) Natural Gas Pipelines Segment Well-positioned in the Rockies, shales and in Texas 2012 Growth Drivers: Growth and full year contribution on Kinder Hawk Full year contribution from Eagle Hawk and SouthTex Eagle Ford shale development (on Trailblazer standalone basis, and under JVs with RE
Slide 18: Products Pipelines Segment
(KMP) Products Pipelines Segment Well-located with origin in refinery / port hubs and terminus in population centers 2012 Growth Drivers: PPI tariff escalator Modest organic volume growth Cochin Initial year of Crude and Condensate operations, Cochin E/P project, and terminal projects includin
Slide 19: Terminals Segment
(KMP) Terminals Segment Well-located in refinery / port hubs and inland waterways 2012 Growth Drivers: Increase in rates on existing contracts Higher coal throughput Full year of 2011 acquisitions (Cushing, Total, Watco) and expansion projects (Carteret, Cushing, Deer Park, Port of Houston)
Slide 20: CO2 Segment
(KMP) CO2 Segment Own and operate best source of CO2 for EOR 2012 Growth Drivers: Higher overall oil / NGL prices CO2 S&T price increases Relatively flat oil production Longer-term Growth Drivers: Strong demand for CO2 KMCO2 Katz — Expansion of CO2 source fields SACROC and pipelines ESPL Cla
Slide 21: Kinder Morgan Canada Segment
(KMP) Kinder Morgan Canada Segment Sole oil pipeline from Oilsands to West Coast / export markets 2012: Trans Mountain Extending new toll settlement on Trans Mountain pipeline (TMPL); results in relatively flat financial performance 2 between 2011 and 2012 Puget Longer-term Growth Drivers: Express
Slide 22: ~$25B of Growth Capital Invested
(KMP) ~$25B of Growth Capital Invested (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year (a) $15 $12 $3.1 $3.5 $3.3 JV Contributions $9 Expansion $3.0 $6 $11.7 Acquisition $2.8 $10.2 $2.6 $3 $2.5 $2.5 $2.4 $- $2.2 Expansions Acquisitions $2.0 $2.0 $1.6 $1.5 Total Invested by
Slide 23: Returns on Capital
(KMP) Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% 13.4% 13.7% 12.9% 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 CO2 27.5 24.6 22.0 21.9 2
Slide 24: KMI
KINDER/MORGAN KMI
Slide 25: Overview – 99% of Cash Comes from KMP
(KMI) Overview – 99% of Cash Comes from KMP 2012E KMI Total Cash Receipts Limited capital expenditures at KMI = $1.6 billion (a) In 2012: — KMI expects to receive $1.6 GP Interest billion in distributions 88% — $985 million budgeted cash available for dividends after paying cash taxes, cash inte
Slide 26: Growth in KMP Distributions Leads to KMI Growth
(KMI) Growth in KMP Distributions Leads to KMI Growth Growth in KMP Distributions Received by KMI $1,585 $1,600 $64 $1,380 Total Distributions to KMI ($MM) $1,400 LP Interests $1,200 GP Interest $1,000 GP Distribution on $1,340 Additional 16MM KMP Units $800 $1,217 $600 $400 $200 $163 $181 Budgeted
Slide 27: KMP Risks
KMP Risks Regulatory — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes Crude Oil Production Volumes Crude Oil Prices — 2012 budget assumes $93.75/Bbl realized price on unhedged barrels — 2012 sensitivity is ~$5.8 million DCF per $1/Bbl change in
Slide 28: KMI, KMP & KMR: Attractive Value Proposition
KMI, KMP & KMR: Attractive Value Proposition Unparalleled asset footprint Established track record Industry leader in all business segments Experienced management team Supportive general partner Transparency to investors Attractive returns driven by combination of yield plus growth 28
Slide 29: Pending Acquisition of El Paso
Pending Acquisition of El Paso
Slide 30: Strong Asset Base
Strong Asset Base (a) __________________________ (a) Kinder Morgan and El Paso assets combined excluding KMP assets held for sale 30
Slide 31: El Paso Transaction Update
El Paso Transaction Update El Paso announced E&P sale — Definitive agreement to sell entire E&P business for $7.15 billion — Expect to close about the same time as close of El Paso acquisition Integration plan developed – targeting $350 million of synergies Shareholders overwhelmingly approved
Slide 32: Strategic Combination
Strategic Combination Creates Largest Midstream Energy & Natural Gas Pipeline Company in N. America Fourth largest energy company in North America with a combined enterprise value of nearly $100 billion Industry leader in all business lines — More than 75,000 (a) miles of pipeline transporting n
Slide 33: Dividend and Distribution Growth Targets
Dividend and Distribution Growth Targets KMI KMP Current targets excluding El Paso Current targets excluding El Paso Declare budgeted 2012 dividends of $1.35 Declare budgeted 2012 LP distributions of per share (12.5% growth) $4.98 per unit (8.0% growth) Targeted 10% long-term dividend growth
Slide 34: Appendix
KINDER/MORGAN Appendix
Slide 35: Stable Asset Base
(KMP) Stable Asset Base Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada – Interstate: virtually all – Take or pay, – S&T: primarily take or pay minimum volume – Essentially no Volume Security – Volume based minimum volume – Intrastate: ~75% guarantees, or volume risk gu
Slide 36: KMP 2012 DCF Budget
(KMP) KMP 2012 DCF Budget (a) (millions, except per unit) 2011 2012 Change Actual Budget $ % Distributable cash flow Net income $1,742 $2,148 $406 23% DD&A (b) 1,133 1,206 73 6 Book / cash tax difference 27 26 (1) (4) Eagle Ford / Express / Endeavor (c) 15 7 (8) (53) Sustaining capex (d) (212) (249)
Slide 37: KMP 2012 Income Budget
(KMP) KMP 2012 Income Budget (a) (millions, except per unit) 2011 2012 Change Actual Budget $ % Segment earnings before DD&A (EBDA) Products Pipelines $694 $734 $40 6% Natural Gas Pipelines 951 1,133 182 19 CO2 1,094 1,381 287 26 Terminals 701 757 56 8 Kinder Morgan Canada 199 201 2 1 Total segment
Slide 38: KMP 2012 Budgeted Quarterly Profile
(KMP) KMP 2012 Budgeted Quarterly Profile (a) ($ in millions, except per unit) 1Q 2Q 3Q 4Q Year Total Segment EBDA w/JV DD&A (b) 2012B 25% 24% 24% 27% $4,377 2011 24% 23% 26% 27% $3,810 DCF/unit (c) 2012B 27% 22% 23% 28% $5.19/unit 2011 26% 22% 25% 27% $4.68/unit Earnings/unit 2012B 27% 20% 22% 31%
Slide 39: KMI 2012 Budget for Cash Available to Pay Dividends
(KMI) KMI 2012 Budget for Cash Available to Pay Dividends ($ in millions) Declared Basis 2011 2012 Change Actual Budget $ % Distributions KMP distributions To general partner $1,217 $1,404 $187 15% On KMP units owned by KMI 100 108 8 8 On KMR shares owned by KMI 63 73 10 16 Total KMP distributions t
Slide 40: KMI 2012 Budgeted Quarterly Profile
(KMI) KMI 2012 Budgeted Quarterly Profile ($ in millions, except per share) KMI – yield-oriented investment valued on a cash flow basis 1Q 2Q 3Q 4Q Year Cash available to pay dividends 2012B 31% 18% 21% 30% $985 2011 (a) 30% 19% 22% 29% $866 Earnings per share 2012B 24% 24% 25% 27% $1.03/sh 2011 n
Slide 41: Kinder Morgan
KINDER/MORGAN
Kinder Morgan — Mitsubishi UFJ Securities Oil & Gas Conference 2012 on 6ix