Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (February 2015)
32 slides from Kinder Morgan's investor presentation, Feb 4, 2015
Slide 1: Run By Shareholders, For Shareholders
Run By Shareholders, For Shareholders Steve Kean President & Chief Operating Officer February 4, 2015
Slide 2: 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 3: Set to Weather the Storm
Set to Weather the Storm Low commodity price sensitivity — 2015 budgeted EBDA is ~85% fee-based, ~94% fee-based or hedged — $1/Bbl change in oil price = $10 million DCF impact; 10¢/MMBtu change in natural gas price = $3 million DCF impact Existing backlog largely insulated from oil price fluctua
Slide 4: Our Strategy
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 investors’ money, not management’s – treat it that way Leverage asset footprin
Slide 5: KMI Acquisition of KMP, KMR & EPB
KMI Acquisition of KMP, KMR & EPB Simplicity is Bliss Value enhancing combination paves way for significant growth, simplifies structure $77 billion transaction closed 11/26/2014 Greater dividend growth and visibility — 2015 budgeted dividend of $2.00 (15% growth over 2014) — 10% annual growth e
Slide 6: Unparalleled Asset Footprint
Unparalleled Asset Footprint Largest Energy Infrastructure Company in North America 3rd largest energy company in North America with an enterprise value of approximately $130 billion Nearly $18 billion of currently identified organic growth projects Largest natural gas network in North America
Slide 7: 18 Years of Growth
18 Years of Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP Distribution per Unit(a) KMI Annual Dividend per Share(c) $6.00 $5.58 $2.50 $5.33 $4.98 $2.00 $5.00 $4.61 $4.40 $2.00 $4.20 $1.74 $4.02 $1.57 $4.00 $3.48 $3.13$3.26 $1.50 $1.35 $2.87 $1.16 $3.00 $2.63 $2.44 $2.15 $1.00
Slide 8: Capital Invested
Capital Invested ~$48 Billion of Asset Investment & Acquisitions Since Inception(a,b) ($ in billions) Total Invested by Type Total Invested by Year $30 $11 $25 Expansion $10.1 $20 $10 Acquisition $15 $9 $25.7 $10 $21.8 $8 $5 $7 (b) $- $6.6 Expansions Acquisitions $6 $5.8 $5 $4.4(c) Total Invested by
Slide 9: Returns on Invested Capital
Returns on Invested Capital Consistent Returns Demonstrate Asset Performance, Management Discipline 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Segment ROI(a): Natural Gas Pipes–KMP 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% 11.6%(b)
Slide 10: Financial Rigor
Financial Rigor 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 KMI has exceeded its dividend target 2013: $1.57 2013: $1.60 in each of past 4 yrs. 2014: $1.72 2014: $1.74 KMP Budgeted KMP Actu
Slide 11: 2015 Budget Guidance
2015 Budget Guidance Supported by Diversified, Fee-based Cash Flow 2015 Budget Commodity Price Sensitivity KMI 2015 budgeted dividend of $2.00 per share 2015 budgeted coverage over declared dividend of $654 million (assumes — 15% growth over 2014 $70/Bbl oil price and $3.80/MMBtu — Excess covera
Slide 12: 2015 Budgeted Segment Profile
2015 Budgeted Segment Profile Driven by Natural Gas 2015 Budgeted Segment Natural Gas Pipelines EBDA = $8.2 billion(a) 71% interstate pipelines 21% gathering, processing & treating 8% intrastate pipelines & storage CO2 S&T Products Pipelines CO2 Oil 61% pipelines Production 5% 39% associat
Slide 13: 2015 Growth Expenditure Budget
2015 Growth Expenditure Budget 2015E Growth Capital Budget = $4.4 billion CO2 S&T Natural Gas Pipelines 16% CO2 Oil Production 12% 46% 17% 7% Terminals 2% KM Products Canada Pipelines __________________________ Notes: Includes equity contributions to joint ventures of $251 million and acquisitions o
Slide 14: 5-year Project Backlog
5-year Project Backlog(a) Nearly $18 Billion of Currently Identified Organic Growth Projects Tremendous footprint provides $17.6B of currently identified growth projects over next 5 years 5-year Growth Capex Backlog ($B) 2015 2016 2017 2017+ Total Natural Gas Pipelines $0.6 $0.5 $1.9 $1.6 $4.6 Produ
Slide 15: Natural Gas Megatrend
Natural Gas Megatrend Strong Natural Gas Footprint & Market Opportunity Set… U.S. Natural Gas Projected Supply & Demand(a) …Generates Real-time, Demand (Bcf/d) 2015 2020 2025 KM Natural Gas Asset Footprint Long-term Benefits LNG exports 0.0 7.3 10.8 Mexican net exports 2.4 4.0 4.6 $641B of investm
Slide 16: Business Risks
Business Risks Regulatory — Products Pipeline FERC rate cases — Natural Gas FERC rate cases — Legislative and regulatory changes Crude oil production volumes Commodity prices Project cost overruns / in-service delays Economically sensitive businesses (e.g., steel terminals) Environmental
Slide 17: KMI: Attractive Value Proposition
KMI: Attractive Value Proposition Unparalleled asset footprint Diversified energy infrastructure platform with stable, fee-based cash flow Industry leader in all business segments Highly visible, attractive growth project backlog Continued focus on strong balance sheet Established track
Slide 18: Appendix
KINDERMORGAN Appendix
Slide 19: Energy Toll Road
Energy Toll Road Diversified, Fee-based Business Model Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada – Interstate & LNG: take or pay – Intrastate: ~75% take or pay(a) – Take or pay, minimum – S&T: primarily minimum – Essentially no Volume Security – G&P: ~77% fee-base
Slide 20: Natural Gas Pipelines
Natural Gas Pipelines Segment Outlook Well-positioned connecting key natural gas resource plays with major demand centers Project Backlog: $4.6 billion of identified growth projects over next seven years(a), including: — LNG liquefaction (Elba Island) — Pipe projects supporting LNG liquefaction pr
Slide 21: Products Pipelines
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Project Backlog: $1.9 billion of identified growth projects over next two years(a), including: — UTOPIA — Eagle Ford condensate processing — KMCC extensions — KMCC-Double Eagle interconnect — Palmetto Lon
Slide 22: Terminals
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways Project Backlog: $2.1 billion of identified growth projects over next five years(a), including: — BOSTCO Phase 3 — Alberta crude by rail projects — Chemical terminal development — Jones Act tanker builds — Houston
Slide 23: CO2 Segment Outlook
CO2 Segment Outlook Own and operate best source of CO2 for EOR(a) Project Backlog: Identified growth projects totaling $1.8 billion and $1.8 billion in S&T and EOR, respectively, over next five years(b), including: — S&T • Southwest Colorado CO2 production • St. Johns build-out • Cortez and Lobos
Slide 24: Kinder Morgan Canada
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Project Backlog: $5.4 billion expansion of Trans Mountain Pipeline (TMEP) Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia — Following successful open season, major
Slide 25: KMI to Acquire Hiland Partners for ~$3 Billion
KMI to Acquire Hiland Partners for ~$3 Billion Transaction Announced 1/21/2015 KMI announced a definitive agreement to acquire Hiland Partners — KMI to acquire Hiland from its founder, Harold Hamm and certain Hamm family trusts — ~$3 billion purchase price, including assumption of ~$975 million of
Slide 26: Hiland Acquisition: Strategic Acquisition of Premier Midstream Position in the Bakken
Hiland Acquisition: Strategic Acquisition of Premier Midstream Position in the Bakken Strategic Acquisition: Establishes premier midstream platform in the core of the Williston, ND Tioga, ND Bakken, one of the most prolific oil producing basins in North America Systems overlay some of the most att
Slide 27: Credit Ratios and Liquidity
Credit Ratios and Liquidity(a) ($ in millions) Credit Ratios 2015 2011 2012 2013 2014 Budget Net debt(b) to EBITDA 4.5x 5.4x 5.0x 5.5x 5.6x EBITDA to interest 5.0x 4.0x 3.9x 4.1x 3.6x Revolver Capacity(c) Long-term Debt Maturities(d) Committed revolving credit facility $ 4,000 2015 $ 1,316 Less: 201
Slide 28: Cost of Capital
Cost of Capital A whole new ballgame No more incentive distribution rights Prior long-term hurdle rate for accretion (at KMP) = ~9% pre-tax New long-term hurdle rate for accretion = ~4% after-tax — 50% equity(a) x 4.1% yield(b) Analyst Day Hurdle Rate: + 50% debt(a) x 2.4%(c) cost of debt = 3.
Slide 29: Incidents & Releases: Liquids Pipeline Right-of-way
Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipeline Incidents per 1,000 Miles(a) Liquids Pipeline Release Rate(a) 0.8 50 Barrels per billion barrel miles Incidents per 1,000 Miles 40 0.6 30 0.4 20 0.57 0.45 0.2 0.39 0.29 10 17.96 0.24 15.50 0.21 13.05 - 0.08 0.08 6.00 - 0.01 0.11 0.6
Slide 30: Incidents & Releases: Natural Gas Pipeline Right-of-way
Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipeline Incidents Rate Natural Gas Pipeline Incidents Rate All Reportable Incidents(a) Onshore Ruptures-only(c) 0.8 0.8 Incidents per 1,000 Miles Incidents per 1,000 Miles 0.6 0.6 0.4 0.4 0.2 0.37 0.2 0.32 0.30 0.27 0.27 0.26 (d) 0.
Slide 31: Employee Safety Statistics
Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate Lost-time injuries per 200k hours worked 6 7 5.20 6.35 6 OSHA Recordable Incidents per 5 5.70 5 200k Hours Worked 4 4 3 3 2.50 2.60 2.50 2.50 2 2 2.10 2.10 2.10 1 0.70 0.88 0.80 0.70 1.70 1 1.88 0.70 0.60 0
Slide 32: KINDERJMORGAN
KINDERJMORGAN
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