Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan Energy Partners — Debt Investor Presentation (March 2009)
26 slides from Kinder Morgan's debt investor presentation, Mar 24, 2009
Slide 1: Barclays 2009 Fixed Income Energy and Pipeline Conference
ENERGY PARTNERS, L.P. Barclays 2009 Fixed Income Energy and Pipeline Conference March 24, 2009
Slide 2: Forward Looking Statements
ENERGY PARTNERS, L.P. Forward Looking Statements 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 future acti
Slide 3: Use of Non-GAAP Financial Measures
ENERGY PARTNERS, L.P. Use of Non-GAAP Financial Measures The non-generally accepted accounting principles ("non-GAAP") financial measures of distributable cash flow before certain items, segment distributable cash flow before certain items, and earnings before interest, taxes and DD&A ("EBITDA") bef
Slide 4: Capital Structure
ENERGY PARTNERS, L.P. Capital Structure Kinder Morgan Energy Partners, L.P. Market Equity (a) $12.3B Debt (b) 8.4B Enterprise Value $20.7B 2009E EBITDA (c) $2.7B 2009E DCF (d) $2.1B Additional Cash Incentive Shares Distribution Distribution KMR KMP (LLC) (Partnership) 80 million i- i-units (a) 194 m
Slide 5: The Kinder Morgan Strategy
ENERGY PARTNERS, L.P. The Kinder Morgan Strategy Same Strategy Since Inception Focus on stable, fee-based assets which are core to the energy infrastructure of growing markets Increase utilization of assets while controlling costs Classic fixed cost businesses with little variable costs Impr
Slide 6: Unmatched Footprint
ENERGY PARTNERS, L.P. Unmatched Trans Jet Mountain Fuel Footprint Pipeline 2 Cochin Largest independent transporter of petroleum products in the U.S. Express Pacific Transport nearly 2 million barrels per day (Bbl/d) 2 2nd largest transporter of natural Trailblazer gas in U.S. (a) REX 4 2 KMIG
Slide 7: Well-diversified Asset Base
ENERGY PARTNERS, L.P. Well-diversified Asset Base KMP CO2 2009 DCF Natural Gas Pipelines 32% CO2 transport and sales Profile (b) 58% Interstate (c) 68% oil production related 42% Texas Intrastate Production hedged (a): 2009=73% ($49/Bbl) CO2 Natural Gas 2010=63% ($56) 27% Pipelines 2011=57
Slide 8: Twelve Years of Consistent Growth
ENERGY PARTNERS, L.P. Twelve Years of Consistent Growth Total Distributions (GP + LP) ($MM) Annual LP Distribution Per Unit (b) $2,250 $2,112 $4.50 $4.20 GP (a) $4.02 $2,000 $1,854 $4.00 = 16% LP 5% GR $3.48 $1,750 =4 $3.50 9C A $3.13 $3.26 GR $1,469 200 $2.87 $1,500 CA $1,265 $3.00 6- $2.63 $1,250
Slide 9: Significant Historical Returns
ENERGY PARTNERS, L.P. Significant Historical Returns (a) KMP: 25% CAGR (b) KMR: 9% CAGR (c) Dollars Dollars $2,000 $300 KMP = $1,522 $1,750 $270 $1,500 $240 $1,250 $210 KMR = $202 $1,000 $180 $750 $150 Alerian = $190 Alerian = $410 $500 $120 $250 $90 S&P 500 = $132 S&P 500 = $74 $0 $60 14-May-2001 D
Slide 10: Promises Made, Promises Kept
ENERGY PARTNERS, L.P. Promises Made, Promises Kept Promises Made Promises Kept Budgeted Actual Distribution per unit: Distribution per unit: 2000: $1.60 2000: $1.71 2001: $1.95 2001: $2.15 2002: $2.40 2002: $2.435 2003: $2.63 2003: $2.63 2004: $2.84 2004: $2.87 2005: $3.13 2005: $3.13 2006: $3.28 20
Slide 11: 2009 Partnership Goals
ENERGY PARTNERS, L.P. 2009 Partnership Goals 2009 Distribution Target $4.20 per unit (4.5% growth) Excess coverage of ~$14 million Maintain Solid Balance Sheet Expansions / acquisitions financed 50% equity, 50% debt Deliver Projects on Current Schedule and Cost Forecast 11
Slide 12: Recent Trends
ENERGY PARTNERS, L.P. Recent Trends Impact Offset / Response Decline in product demand – Impacts volumes on product pipelines – Annual PPI adjustment – Ethanol Lower oil prices – Impacts unhedged crude oil and NGL – Lower cost environment; e.g. drilling, volumes in CO2 segment equipment, capital
Slide 13: Continued Growth Opportunities
ENERGY PARTNERS, L.P. Continued Growth Opportunities Current Projects (2009-2011) Additional Opportunities Shifting Natural Gas Supply Sources — Rockies – Rockies Express pipeline – Expansions, extensions and added service on current projects and — Shale Plays – Midcontinent Express pipeline exist
Slide 14: Shifting Natural Gas Supply Sources
ENERGY PARTNERS, L.P. Shifting Natural Gas Supply Sources Natural Gas Supply (a) % Production Volumes (Bcf/d) 2008E 2013 Change Change Rockies 8.9 10.9 2.0 22% Barnett Shale 3.9 5.5 1.6 41% Fayetteville Shale 0.7 2.9 2.2 314% Rockies Haynesville Shale 0.1 3.7 3.6 n/m production Gulf Coast LNG Import
Slide 15: Newbuild Natural Gas Pipelines
ENERGY PARTNERS, L.P. Newbuild Natural Gas Pipelines Wyoming Nebraska Illinois Indiana Ohio Colorado Kansas Missouri ROCKIES EXPRESS PIPELINE Oklahoma IN-SERVICE ROCKIES EXPRESS PIPELINE Arkansas Mississippi FAYETTEVILLE EXPRESS PIPELINE Alabama Texas MIDCONTINENT EXPRESS PIPELINE Louisiana KM LOUIS
Slide 16: Increased Use of Renewable Fuels
ENERGY PARTNERS, L.P. Increased Use of Renewable Fuels EPA guidelines require significant Renewable Fuels Standard (RFS) (a) ethanol/biodiesel blending in 2009 40 Incremental Impact R 36.0 and beyond 35 of EISA - 2007 % CAG 10.4 22 30 EPACT - 2005 8-20 Leverage Existing Assets to be Most Efficient,
Slide 17: Increased Production and Use of Heavy Crude
ENERGY PARTNERS, L.P. Increased Production and Use of Heavy Crude North American Petcoke Production (a) Despite drop in crude price, oil slate still getting heavier – 1.4MMbbl/d of incremental heavy ‘1 GR 75 69 refining capacity forecast to be added by 2015 (c) 8- A Rest of N. America ‘0 C 5 7% U.S.
Slide 18: Current Major Projects
ENERGY PARTNERS, L.P. Current Major Projects $6 Billion In Current Projects 2009-2011 (a) Estimated Est. Remaining Project Cost Project Cost KM-Share KM-Share Expected Project ($MM) ($MM) (b) Completion Rockies Express East $1,825 (a,c) $845 (a,c) 2009 (d) Midcontinent Express 1,114 (a,e) 695 (a,e)
Slide 19: ~$17 Billion in Capital Invested To Date
ENERGY PARTNERS, L.P. ~$17 Billion in Capital Invested To Date (a,b) (billions) Total Invested by Type (a,b) Total Invested by Year (a) $9 $0.5 $3.0 $2.9 $2.8 $6 JV Contributions $2.7 $8.4 Expansion $7.7 Acquisition $3 $2.5 $0 $2.0 $1.9 Expansions Acquisitions $1.6 $1.5 $1.3 Total Invested by Segmen
Slide 20: Returns on Capital
ENERGY PARTNERS, L.P. Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 16.7 17.6 16.9 CO2 27.5 24.6 22.0 21.9 23.8 25.7 23.1 21.8 25.9 Terminal
Slide 21: Balance Sheet Has Remained Solid
ENERGY PARTNERS, L.P. Balance Sheet Has Remained Solid (millions) Credit Summary Budgeted Current (a) Yr-end 2009 L-T Debt Rating Baa2/BBB (b) Credit Metrics Debt / EBITDA (c,d) 3.4x 3.6x EBITDA / Interest (d) 6.1x 5.9x Revolver Liquidity (a,e) a,e) Long-term Debt Maturities (a,g) a,g) Total Bank Cr
Slide 22: Will We Distribute $4.20 in 2009?
ENERGY PARTNERS, L.P. Will We Distribute $4.20 in 2009? Vast majority of $2.1 billion 2009 budgeted DCF is very secure Impact of oil price at $50/Bbl (vs. $68 in budget) = ~$100 million 4.7% of total DCF Sensitivity is ~$6 million per $1/Bbl change in crude price Potential offsetting facto
Slide 23: Do Not Require Access to Capital Markets in 2009
ENERGY PARTNERS, L.P. Do Not Require Access to Capital Markets in 2009 (millions) Uses – Budget Sources Sources – Alternative Growth Expenditures: Sources: Already Secured: Expansion Capex $1,188 Dec‘08 Debt Issue $500 Cash on Hand @ 12/31/08 $63 Contributions to JVs 1,472 (a) Dec‘08/Jan‘09 Swap Unw
Slide 24: Risks
ENERGY PARTNERS, L.P. Risks Regulatory Pacific Products Pipeline FERC/CPUC case Periodic rate reviews Unexpected policy changes Crude Oil Production Volumes Crude Oil Prices Budget assumes $68/Bbl realized price on unhedged barrels 2009 Sensitivity is ~$6 million DCF per $1/Bbl chang
Slide 25: Summary
ENERGY PARTNERS, L.P. Summary KMP’s model works Stable Cash Flow Own assets core to energy infrastructure Fixed Cost Business Drop growth to bottom line Available Internal/External Growth Opportunities Critical mass KMP/KMR: Well-located assets/favorable demographics 8-9% Yield At at
Slide 26: Kinder Morgan Energy Partners, L.P.
ENERGY PARTNERS, L.P. KINDER/MORGAN
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