Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Citi 2011 Power & Gas Conference
40 slides from Kinder Morgan's conference presentation, Jun 2, 2011
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Steve Kean Chief Operating Officer June 2, 2011
Slide 2: Forward-Looking Statements
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 actions, conditions or eve
Slide 3: 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 before certain items (both in the aggregate and per unit), segment earnings before depreciation, depletion, amortization and amortization of excess cost of e
Slide 4: Different Ownership Interests in Same Set of Assets
Different Ownership Interests in Same Set of Assets Kinder Morgan Energy Partners, L.P. Kinder Morgan, Inc. Market Equity $22.9B (a) LP & GP Market Equity $20.6B (d) Debt 11.6B (b) Distributions Debt 3.2B (e) Enterprise Value $34.5B $1.3B (c) Enterprise Value $23.8B 2011E LP Distribution per Unit $4
Slide 5: Our Strategy: Stay the Course
Our Strategy: Stay the Course Same Strategy Since Inception Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments Control costs — It’s the investors’ money, not management’s – treat it that way Leverage asset foo
Slide 6: Asset Footprint
Trans Mountain Asset Footprint 2 Cochin Puget Largest independent transporter of petroleum products in the U.S. Pacific Express — Transport ~1.9 MMBbl/d (a) 2nd largest transporter of natural gas in the U.S. Horizon — Own an interest in / operate over 24,000 Trailblazer 2 2 4 4 miles of intersta
Slide 7: 15 Years of Consistent Growth
15 Years of Consistent Growth KMP Total Distributions (GP + LP) ($MM) (a) KMP Annual LP Distribution Per Unit (b) $3,000 $5.00 $4.60 $2,648 $4.40 GP LP $2,420 $4.20 $2,500 $4.02 $4.00 $2,132 $3.48 $1,854 $3.13 $3.26 $2,000 $2.87 $3.00 $2.63 $1,469 $2.44 $1,500 $1,265 $2.15 $1,162 $978 $2.00 $1.71 $8
Slide 8: 2011 Goals
2011 Goals KMP KMI Distribution Target Dividend Target — $4.60 per unit (4.5% growth) (a) — $1.16 per share (a,b) — Excess coverage of ~$37MM (a) — $820MM in total 2011 dividends (a) Maintain Solid Balance Sheet Maintain Solid Balance Sheet — Yr-end 2011 debt / EBITDA = 3.6x (a) — Yr-end 201
Slide 9: $1.4 Billion Growth Expenditures Forecast in 2011
(KMP) $1.4 Billion Growth Expenditures Forecast in 2011 (a) KMP Growth Expenditures 2011E = $1.4 billion (a,b,c) CO2 Natural Gas Pipelines (a) 26% 34% 13% 27% Products Pipelines (b,c) Terminals (b) __________________________ (a) 2011 forecast, does not yet include recently announced acquisitions in
Slide 10: Sources Of Future Growth
(KMP) Sources Of Future Growth KM Opportunity – Growth Drivers Leverage Footprint – System expansion / extension (e.g. Eagle Ford) – Cheap, abundant, domestic and clean – – Acquisitions (e.g. KinderHawk) natural gas is the logical fuel of choice – Greenfield development (e.g. FEP) Natural Gas – In
Slide 11: Kinder Morgan Gas Pipeline Position in Shales
(KMP) Kinder Morgan Gas Pipeline Position in Shales Predominantly Fee-based Extension of shale strategy Significant transactions : — PetroHawk Haynesville / Eagle Ford gathering combined investment $1.8B (expected Jul-1 close) (a) — KM Treating ($266MM) — Gas chill and dew point control ($13MM)
Slide 12: Petrohawk Haynesville / Eagle Ford Transaction & Condensate Line Overview
Petrohawk Haynesville / Eagle Ford (KMP) Transaction & Condensate Line Overview On 5/5/2011, KMP announced it will acquire Petrohawk’s 50% interest in the KinderHawk Haynesville natural gas gathering joint venture and a 25% interest in Petrohawk’s natural gas gathering business in the Eagle Ford sha
Slide 13: Eagle Ford
(KMP) Eagle Ford Eagle Ford Copano JV 50 / 50 joint venture with Copano in South Texas Total KM capex approximately $136MM Supply Lateral ~111 miles of 30” and 24” pipeline under construction Partial in-service Jun-2011, full in-svc Jul-2011 Capacity expanded from 375,000 to 600,000 MMBtu/d
Slide 14: KinderHawk Field Services (KHFS)
(KMP) KinderHawk Field Services (KHFS) KHFS Gathering and treating services for Haynesville / Bossier Shale 408 miles of pipe installed as of May-2011 Over 2 Bcf/d of capacity Well-positioned to access over 20 Tcf of gas 2,350 GPM of treating capacity in service (19 plants / 11 locations)
Slide 15: Risks
(KMP) Risks Regulatory — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes Crude Oil Production Volumes Crude Oil Prices — 2011 budget assumes $89/Bbl realized price on unhedged barrels — 2011 sensitivity is ~$5 million DCF per $1/Bbl change in cru
Slide 16: Bringing it all Together
(KMP) Bringing it all Together 16
Slide 17: Appendix
KINDER/MORGAN Appendix
Slide 18: KMP
KINDER/MORGAN KMP
Slide 19: KMR 101
(KMP) 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 5% additional shares; effectively a dividend reinvestment 0% program (b) -5% Like KMP units, KMR shares are tax efficient — but with -10% simpl
Slide 20: Significant Historical Returns
(KMP) Significant Historical Returns (a) KMP: 26% CAGR Since ‘96 (b) KMR: 14% CAGR Since ‘01 (c) Dollars Dollars $3,000 $450 AMZ (d) KMP = $2,845 = $424 $2,500 $375 KMR = $379 $2,000 $300 $1,500 $225 AMZ (d) = $915 $1,000 $150 $500 $75 S&P 500 = $129 S&P 500 = $232 ⇐ IPO 5/14/2001 $0 $0 Dec-96 Dec-9
Slide 21: Promises Made, Promises Kept
(KMP) Promises Made, Promises Kept Promises Made Promises Kept KMP Budgeted KMP 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 2006: $3.2
Slide 22: Diversified Cash Flow
(KMP) Diversified Cash Flow KMP Segment Earnings before DD&A CO2 2011E = $3.8 billion (a,d) Natural Gas Pipelines $1,098MM segment EBDA (a) $1,079MM segment EBDA (a,d) — 28% CO2 transport and sales — 50% Interstate — 72% oil production related — 50% Intrastate (e) — Production hedged (b): 2011=8
Slide 23: Stable Asset Base
(KMP) Stable Asset Base Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada – Interstate: virtually all – Liquids: take or pay – S&T: primarily take or pay – Bulk: minimum Volume Security – Volume based minimum volume – No volume risk – Intrastate: ~75% volume guarantee, gu
Slide 24: Over $22B of Growth Capital Invested
(KMP) Over $22B of Growth Capital Invested (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year (a,b) $15 $12 $3.5 $2.7 JV Contributions $3.3 $9 Expansion $3.0 $2.8 $6 Acquisition $9.3 $10.4 $2.5 $3 $2.5 $2.4 $- $2.0 Expansions Acquisitions $2.0 $1.6 $1.5 $1.4 Total Invested by
Slide 25: Returns on Capital
(KMP) Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% 13.4% 13.7% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 16.7 17.5 16.9 14.0 11.9 CO2 27.5 24.6 22.0 21.9 23.8 25.7 23.1 21
Slide 26: Balance Sheet Remains Solid
(KMP) Balance Sheet Remains Solid (a) ($ in millions) Credit Summary Debt / EBITDA (b,c) 3.6x EBITDA / interest (c) 6.1x Long-term debt rating Baa2 / BBB / BBB (d) Revolver Capacity Long-Term Debt Maturities Total bank credit $2,000 2011 $7 (e) Less: 2012 $967 (f) Commercial paper (343) 2013 $507 Le
Slide 27: Focused on Distribution Growth
(KMP) Focused on Distribution Growth Annual LP Distribution Per Unit (b) History of Delivering Distribution $4.60 $4.40 Growth (a): $4.02 $4.20 $3.48 — 1-year growth = 4.8% $3.13 $3.26 $2.87 — 3-year growth = 8.1% $2.44 $2.63 $2.15 — 5-year growth = 7.0% $1.42 $1.71 $1.24 $0.94 $0.63 1996 1997 199
Slide 28: 2011 Budget
(KMP) 2011 Budget (a) ($ in millions, except per unit) 2010 2011 Change Actual Budget $ % Segment EBDA $3,311.8 $3,636.7 $324.9 10% Segment EBDA w/JV DD&A (b) $3,457.4 $3,813.6 $356.2 10% Distributable cash flow Net income $1,505.5 $1,746.9 $241.4 16% DD&A (b) 1,056.2 1,100.1 43.9 4 Book / cash tax
Slide 29: Quarterly Profile
(KMP) Quarterly Profile (a) ($ in millions, except per unit) 1Q 2Q 3Q 4Q Year Segment EBDA w/JV DD&A (b) 2011B Total Segments (c) 24% 23% 25% 28% $3,813.6 2010 Products Pipelines 24% 26% 25% 25% $687.5 Natural Gas Pipelines 26% 22% 23% 29% 981.4 CO2 26% 25% 24% 25% 960.2 Terminals 23% 25% 25% 27% 64
Slide 30: Natural Gas Pipelines Segment
(KMP) Natural Gas Pipelines Segment Well-positioned in the Rockies, shales and in Texas 2011 Growth Drivers: Fayetteville Express (FEP) pipeline in- service Eagle Ford shale development (under JV Trailblazer with Copano, and on standalone basis) REX KinderHawk full year plus volume growth St
Slide 31: Products Pipelines Segment
(KMP) Products Pipelines Segment Well-located with origin in refinery / port hubs and terminus in population centers 2011 Growth Drivers: PPI tariff escalator (PPI + 2.65 = ~6.8% (a)) Organic volume growth Full year of 2010 acquisitions (Chevron, Cochin Shell, High Sierra) and expansion projec
Slide 32: Terminals
(KMP) Terminals Well-located in refinery / port hubs and inland waterways 2011 Growth Drivers: Increase in rates on existing contracts Higher coal and ethanol throughput Full year of 2010 acquisitions (Slay, USD, Watco) and expansion projects (Carteret and Pier IX) Partial benefit from $174
Slide 33: CO2 Segment
(KMP) CO2 Segment Own and operate best source of CO2 for EOR 2011 Growth Drivers: Over 1,000 Bbl/d production increase at Katz Higher overall oil / NGL prices CO2 S&T price increases Relatively flat production at SACROC and Yates KMCO2 Katz Long-term Growth Drivers: SACROC Billions of barr
Slide 34: Kinder Morgan Canada Segment
(KMP) Kinder Morgan Canada Segment Sole oil pipeline from oilsands to West Coast / export markets Trans Mountain 2011 Growth Drivers: 2 New toll settlement pending on Trans Puget Mountain pipeline (TMPL) Express Long-term Growth Drivers: Expand oilsands export capacity to West Coast and China —
Slide 35: KMI
KINDER/MORGAN KMI
Slide 36: 98% of Cash Comes from KMP
(KMI) 98% of Cash Comes from KMP KMI Total Cash Receipts Interests in KMP (b) 2011E = $1.36 billion (a) NGPL General Partner interest receives A major interstate natural gas incentive distributions from KMP pipeline and one of the largest GP natural gas storage operators in KMI owns ~11% of to
Slide 37: Growth in KMP Distributions Leads to KMI Growth
(KMI) Growth in KMP Distributions Leads to KMI Growth Hypothetical KMP Distributions of Cash from Operations Received LP Interests $1,369 with incremental GP Interest 14MM units outstanding (+$53MM) Additional 14MM units $1,316 $1,500 $1,453 $1,384 Total Hypothetical Distributions $1,248 $53 $1,250
Slide 38: Liquidity Summary
(KMI) Liquidity Summary (a) ($ in millions) Credit Summary Net debt / distributions received less G&A (b) 2.5x Long-term debt rating Ba1 / BB / BB+ (c) Revolver Capacity Long-Term Debt Maturities (d) Total bank credit $1,000 2011 --- Less: 2012 $839 Revolver drawn (365) 2013 --- Letters of credit (4
Slide 39: KMP Drives KMI Growth
(KMI) KMP Drives KMI Growth KMP Cash Distributions Received by KMI $1,330 Substantial cash flow GP $1,202 LP Units Owned Minimal capital expenditures at $1,079 KMI level $902 $1,169 Strong balance sheet $682 $632 $1,054 $574 $940 $477 Growing distributions and $406 $582 $783 $333 $536 $472 i
Slide 40: KINDER/MORGAN
KINDER/MORGAN